The Competition
Commission (CC) has today published recommendations arising from a
review of its approach to remedies in market investigations.
The review followed two partly successful appeals to the
Competition Appeal Tribunal (CAT) last year against aspects of
remedies resulting from the CC’s market investigations into
Groceries and Payment Protection Insurance (PPI). In both cases,
the CC’s overall findings were not affected.
The Chairman of the CC, Peter Freeman, initiated the review in
October 2009 and its terms of reference were to examine the way in
which the CC assesses the effectiveness, timeliness and
proportionality of remedies in market investigations and how the
CC’s reasoning is expressed in its reports. Three members of the
CC, Laura Carstensen (Chair), Roger Witcomb and Professor Simon
Evenett, conducted the review and were assisted by a small staff
team. The CC’s Council considered the review, endorsed its
recommendations and agreed proposed action in January.
Among other matters, the review found that the amount of time
spent considering competition problems in the market
investigations it considered did not leave enough time to consider
remedies in sufficient detail during the two-year statutory
timetable. The review group has therefore recommended allowing
more time for the remedies phase within market investigations
timetables (which will aim for completion in 18 months) giving
greater scope for detailed consideration—in part by placing
stricter time limits on the earlier stages of the investigation.
This will allow more time for design and evaluation of remedies.
The review also recommended greater focus on the mechanisms and
impacts of remedies, and a more structured framework for
developing, expressing and scrutinizing remedies decisions.
Chairman of the CC, Peter Freeman, said:
"We often seek to review and improve our processes in
the light of experience. The CAT judgments last year made it an
appropriate time to do so in this case, as did the fact that the
market investigation regime is relatively new. Most of these
investigations have only come to fruition quite recently—and
therefore so have the actions and remedies arising from them. By
their very nature, these investigations give us the power to
intervene in a direct and extensive manner in the operation of
markets. As such, it is only to be expected that we have faced
challenges from parties with relevant commercial interests when
attempting to bring in significant changes. There are some lessons
to be learned from our initial experiences in using these powers
and in how to design and assess remedies which enable markets to
function more effectively for customers.
The review identified the danger that diagnosing problems in
these investigations has left too little time—in some cases—to
consider fully the cure. Whilst defining the problem in the
markets we investigate is clearly essential, it is just as
important—and challenging—to get the subsequent measures right and
backed up with robust reasoning and consideration to withstand, if
necessary, any legal challenge.
This means changing our own procedures to allow us to do so but
equally we must also now take a firmer line with timetables, so
that assessment of competitive problems does not restrict the
remedies phase.
We welcome the review group’s recommendations and plan to act on
them at the earliest opportunity."
It is intended that many of the proposed actions will be
implemented, where appropriate, on a trial basis in the current CC
market investigation into local bus services. The CC also intends
to begin consultation in the near future on new guidelines for
market investigations incorporating proposals on the CC’s approach
to remedies.
Notes to Editors
1. The CC is an independent public body, which carries out
investigations into mergers, markets and the regulated industries.
Further information on the CC and its procedures can be obtained
from its website at www.competition-commission.org.uk.
2. Since the market investigation regime came into force under
the Enterprise Act 2002, the CC has reported on nine market
investigations. Five of these published final reports in the last
three years, namely Northern Ireland Personal Banking, Groceries,
PPI, BAA Airports and Rolling Stock Leasing. The remedies
resulting from the Groceries and PPI investigations were the
subject of partially successful appeals before the CAT. In a
further appeal on BAA Airports, the CAT upheld the CC’s decision
on proportionality of remedies while supporting the appellant on
the separate ground of ‘apparent bias’. The CC has sought leave to
appeal to the Court of Appeal on the latter judgment.
3. The CC began its market investigation into local bus services
in January.
4. Biographies:
Laura Carstensen was recently appointed as a
Deputy Chair of the CC (from 1 February 2010) having been a member
since 2005. She was previously a partner in the law firm Slaughter
and May, specializing in UK and EU competition law.
Professor Simon Evenett is Professor of International Trade
& Economic Development, University of St Gallen,
Switzerland and was appointed as a member of the CC in 2009.
Roger Witcomb is a non-executive director of a number of
companies and was appointed as a member of the CC in 2009. He was
previously Finance Director of National Power from 1996 to 2000.
Further biographical details are available from the CC website.
5. Enquiries should be directed by e-mail to Rory Taylor and
John Park or by ringing 020 7271 0242.
Contacts:
John Park
john.park@cc.gsi.gov.uk
Rory Taylor
Phone: 0207 271 0242
Rory.Taylor@cc.gsi.gov.uk