OFFICE OF FAIR
TRADING News Release (162/07) issued by The Government News Network
on 26 November 2007
The OFT has today
published recommendations to Government to improve the
effectiveness of redress for consumers and businesses that have
suffered loss as a result of breaches of competition law. The
recommendations follow an informal consultation on an OFT
discussion paper published in April. OFT's full
recommendations are available on the website.
Infringements of competition law cause significant harm to both
consumers and businesses. Recent experience shows that harm to
consumers may run into tens of millions of pounds in any given
case.
However, responses to the consultation have confirmed
that consumers and businesses wishing to bring legal proceedings
continue to face significant barriers. As a result, their
prospects of obtaining redress remain remote and the incentives
for business to comply with competition law are more limited than
was intended. The OFT recommends that Government consult on a
number of proposed measures to make private actions in competition
law as effective as the Government's 2001 White Paper, A
World Class Competition Regime, intended them to be.
Philip Collins, OFT Chairman, said:
'An effective
private actions system will enable consumers and businesses to
obtain redress where they have suffered loss as a result of
unlawful agreements or conduct. Increasing the incentives of
businesses to comply with competition law will stimulate interest
in good corporate governance and encourage the development of a
competition culture, in which responsible business leaders and
boards recognise the benefits of competition in properly
functioning, open markets. This will have positive effects on the
productivity and competitiveness of the UK economy.'
NOTES
1. The OFT recommends strengthening the private actions
regime by:
- changing procedures to allow representative
bodies to bring actions on behalf of consumers and businesses,
irrespective of whether a competition authority has previously
taken public enforcement action,
- modifying restrictions
which limit the funding of actions, to ensure that claimants can
find lawyers willing to represent them,
- encouraging the
courts to consider limiting risks of claimants having to pay the
other side's costs in appropriate cases,
- ensuring that
funding is available for meritorious cases which would not
otherwise be brought,
- requiring UK courts to pay close
attention to competition authorities' decisions and guidance,
and
* safeguarding the effectiveness of the leniency regime
for cartel investigations by excluding the use in private actions
of certain documents provided by whistleblowers and limiting their
liability in certain cases.
2. HM Treasury stated in its 2007 Pre-Budget Report that the
Government intends to consult on, among other things, measures to
reduce the barriers preventing those suffering loss as a result of
anti-competitive behaviour from obtaining redress, through the
courts where necessary, without encouraging ill-founded claims.
The OFT's recommendations will inform the content of the
Government's consultation. The OFT will also respond to the
European Commission's forthcoming White Paper on damages
actions for breach of the EC anti-trust rules.
3. The OFT published its discussion paper in April 2007. See http://www.oft.gov.uk/news/press/2007/63-07.
Responses to the consultation are available at http://www.oft.gov.uk/advice_and_resources/resource_base/consultations/private.
4. The following recent examples illustrate the impact that
cartels and other anti-competitive practices have on consumers in
the UK. In the Hasbro/Argos/Littlewoods case, a leading toy
supplier entered into agreements to fix prices with major
retailers. The OFT estimates that if the cartel had not been
brought to an end by the OFT's intervention, consumers would
have been overcharged by over £40 million as a result. In a
separate case price fixing agreements to increase the price of
replica football kits would, the OFT estimates, have cost the
consumer over £50 million had they not been brought to an end.
During the OFT's current bid-rigging cartel investigation, 57
companies have been raided, and 37 companies have applied for
leniency. As a result of the investigation, the OFT has uncovered
evidence of bid rigging in thousands of tenders with a combined
estimated value approaching £3 billion.
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