Ofcom will Lose Competition Enforcement Powers

The Enterprise and Regulatory Reform Bill currently going through Parliament will merge the OFT with the Competition Commission creating the Competition and Markets Authority (“CMA”) and in so doing will broadly align the UK enforcement of competition law with systems in continental Europe such as DG Comp and the German cartel office.  In the little noticed clause 45, the new CMA will have the power to insist that Ofcom hands over responsibility of a given competition matter to it.

Up to now, so called concurrent enforcement by Ofcom and the OFT has left Ofcom with the lion’s share of work in the media and telecoms sector.  Whereas OFT reviewed Sky’s position in Pay TV in the mid-90’s and beyond, the most recent review was carried out (with an unsuccessful outcome) by Ofcom.

This shared responsibility has led to some absurdities; thus some mergers are assessed by the OFT and ancillary commercial arrangements relating to the same merger by Ofcom.  This has meant that companies affected are kept waiting while a concurrency dispute is being resolved between the two bodies. 

Under the government’s proposals, the CMA will be given the whip hand.  Interestingly, The House of Lords wants to go even further and wants to give the Secretary of State the power to remove sectoral competition enforcement powers altogether from the likes of Ofcom.

Even if this Lords amendment is rejected, it is quite clear which way the wind is blowing.  It will give primacy to the new body, the CMA to the detriment of Ofcom.  This may ultimately lead to the continental European model being fully adopted, for neither the DG Comp nor the German cartel office have separate sectoral competition law enforcement bodies.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information place contact the author or call 0207 404 0606 and ask for your usual Goodman Derrick contact.