OFT Launches Consultation on Competition Act Procedures Guidance

Jack Humphrey, Regulatory journalist
March 30, 2012 /

The OFT launched its consultation on proposals to strengthen its Competition Act (CA98) decision-making processes, through introducing a new system of decision-makers who are separate from investigation teams.

The OFT is also extending the trial of its Procedural Adjudicator role for a further year, to 21 March 2013, with an expanded remit.

To improve the speed and robustness of investigations, as well as increase engagement with the parties involved, the OFT is making further enhancements to its processes for handling CA98 investigations including:

More interactive oral hearings, to provide greater opportunity for dialogue between parties to an investigation and the decision-makers on the case.
More ‘state of play’ meetings, to update parties on the OFT’s progress in an investigation and provide a forum for parties to make their points of view known during the investigation.
A new ability for parties to make representations on key elements of draft penalty calculations, giving parties an opportunity to comment ahead of the final decision being taken.
New arrangements for internal checks and balances within the OFT, involving scrutiny by lawyers and economists who are not part of the investigation team.
Publishing case opening notices and case-specific administrative timetables on the OFT website to improve transparency of ongoing CA98 investigations.

The extension of the Procedural Adjudicator trial for a further year will expand the role, including responsibility for chairing oral hearings in CA98 cases and reporting to the decision-makers on whether the parties’ procedural rights have been respected.

OFT Chairman, Philip Collins, said: “These proposals and enhancements are part of an ongoing process of further improving our Competition Act processes to make them more transparent and robust, whilst also ensuring investigations are carried out more quickly than in the past.

“We believe these measures will deliver improvements now, but are also important stepping stones towards the competition enforcement regime that will be transferred in due course to the proposed new Competition and Markets Authority.”

Over recent years, the OFT has already introduced various streamlining initiatives designed to increase the speed and quality of its CA98 investigations. These include: tighter scoping of cases in order to ensure more focused investigations, more focused information requests, tighter timescales for parties to provide non-confidential versions of documents submitted to the OFT, tighter deadlines for parties to provide responses to information requests, a range of transparency measures, and the launch of the Procedural Adjudicator trial in March 2011, which provides a mechanism to resolve disputes on procedural issues swiftly.

The OFT consultation was foreshadowed in the Government’s recent response to its consultation on the Competition Regime.

The OFT is responsible for applying the Chapter I and Chapter II prohibitions of the CA98, which prohibit agreements preventing, restricting or distorting competition in the UK as well as certain anti-competitive conduct by undertakings holding a dominant position. The OFT also has powers to apply and enforce Articles 101 and 102 of the Treaty on the Functioning of the European Union, which are similar to the Chapter I and II prohibitions, but which apply to agreements or conduct which may affect trade between Member States of the European Union.

The proposed collective decision-making model involves the establishment by the OFT board of a CA98 Decisions Committee. This will include the OFT’s senior staff, composed of the Chief Executive, other executive members of the OFT Board, the Chief Economist, the General Counsel and the head of policy, which would be consulted on all CA98 cases past the Statement of Objections phase. The Committee would appoint a group of three decision makers to take the final decision, which would not include any member of the initial investigation team.

On 15 March 2012, the Government announced significant reforms to the UK competition regime (Growth, Competition and the Competition Regime: Government Response to Consultation), centred around the creation of a new single Competition and Markets Authority (CMA), bringing together functions of the OFT and the Competition Commission. The Government has decided to retain an administrative approach to antitrust enforcement, but embedding improvements to the speed of the process and the robustness of decision-making, addressing perceptions of confirmation bias.

In its March 2011 Procedural Guidance, the OFT also committed to other measures such as: offering pre-complaint discussions to help potential complainants decide whether to commit the necessary time and effort to prepare a formal, reasoned complaint; a commitment to send a case initiation letter on opening a formal investigation setting out the details of the investigation team including the decision-maker on the case; and a commitment that the decision-maker would attend the oral hearing unless this was impractical.

 

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