Government consultation on Copyright & Anti Competition

The Government’s consultation on copyright, addressed the regulatory impact and costs to business of the proposals to impose statutory codes on collective licensing societies, and to introduce new exceptions.

The initial assessments will be reviewed in the light of evidence collected during the consultation process. SBID participated in this process and is pro-active in the Government’s continuing research programme. The consultation published in December 2011 was accompanied by a set of initial impact assessments; the public outcome to date is available from the Intellectual Property Office website.

Great British companies such as British Airways, Shell, Unilever, the Co-op, Tesco, and Balfour Beatty have been investigated over several years for alleged price fixing, fined nearly a quarter of a billion pounds by the OFT, only for each case to collapse because there was no basis in fact, law or economics to support them. The net result is a huge bill for the taxpayer to pay the legal fees. There are 600 employees at the OFT costing us £60 million per annum, let alone compensation to the companies that have been improperly charged so a review is very much needed.

Last year, the Government consulted on proposals to reform the competition regime including merging the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority. Among other things, the consultation sought views on proposals to improve the enforcement of the anti-trust prohibitions. The Government will announce their conclusions following the consultation shortly.

One reason why the review looked at merging the Office of Fair Trading and the Competition Commission is to make sure that they are right and fit for purpose for our times and that there are the right resources needed for the world that we live in today. There is no doubt about it that the Office of Fair Trading has had a wonderful reputation in the past, and we would like to think that the new merger, if it goes forward, will take forward the very best of the OFT and the very best of the Competition Commission.

The Government’s aims is to build on the best of the OFT and the best of the Competition Commission in the creation of a world-leading Competition and Markets Authority. The Government recognise that the system for the enforcement of the anti-trust prohibitions is not working as well as it should. Cases take too long and a strong challenge to decisions is often mounted on appeal. It is worth remembering that Britain has a reputation in the world as being one of the best places in which markets work. They are open and fair. We have to make sure that we have timely and effective enforcement. That is what the consultation has been about.

The government Ministry for Fair Trade agrees that whatever reorganisation of the competition authorities is to take place in the future, adequate resources must be made available to ensure that there is effective combating of price-fixing cartels and other anti-competitive practices. The record shows that, on the matter of liability as distinct from the precise amount of penalty, the OFT has been upset on appeal to the Competition Appeal Tribunal only relatively rarely. It has admittedly been told by the Competition Appeal Tribunal that the amount of penalty is sometimes too large and has been reduced. Last year, and I think the year before, the OFT brought in some £60 million to the Exchequer from fines. Fines that had been upheld by the Competition Appeal Tribunal! SBID has been actively involved in the programme to review and reform faults in the current system of interior design and propose methods for improvement over the past three years. The SBID report has been submitted.

The Office of Fair Trading is of course an independent body and is best placed to balance the work that it does; it is not the Government’s place to tell it what to do. However, it is almost impossible for the ordinary consumer trying to deal with the combination of the OFT, Consumer Focus, Consumer Direct, the CBA and the Competition Commission to know where to go when there is an issue and this requires further clarity.

With the restructuring coming, the department must decide where change will take place. It will shortly put some real clarity on its website to direct people under the current structure and with some clear indication where restructuring is going to take us.

The Government will reveal their conclusion in the next few weeks after the finalisation of the consultation…… watch here!