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Office of Fair Trading

Volume 735: debated on Monday 13 February 2012


Asked by

To ask Her Majesty’s Government what proposals they have to review the performance, management and remit of the Office of Fair Trading following the recent quashing of cases on appeal.

My Lords, 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.

Is my noble friend aware of just how many of our great companies—British Airways, Shell, Unilever, Tesco, the Co-op 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. Will my noble friend call for a review of the board’s oversight and the senior management’s lack of quality control over which cases to tackle? After all, there are 600 employees at the OFT costing us £60 million per annum, let alone compensation to the companies that have been improperly charged.

I obviously cannot anticipate the Government's announcement, but we aim 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 we have a reputation in the world as being one of the best places in which markets work. Markets work well here. 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.

My Lords, does the Minister agree 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? Does she also agree that in relation to the cases referred to by the noble Lord, Lord Naseby, 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. Since money has been referred to by the noble Lord, Lord Naseby, is it not the case that 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?

The noble Lord, Lord Borrie, was of course director-general of the Office of Fair Trading when I chaired the National Consumer Council. I have enormous respect for his view and have listened carefully to what he has just said. As I said in my original Answer, one reason why we looked to 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 face. 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.

I shall try to be very brief. The Minister will be aware that for the ordinary consumer trying to deal with the combination of the OFT, Consumer Focus, Consumer Direct, the CBA and the Competition Commission, knowing where to go when there is an issue that needs to be raised is next to impossible. With the restructuring coming, the confusion is just adding laying layer upon layer. Would it be possible for the department to 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?

Change is always difficult, but it does give us the opportunity to listen to things like my noble friend has just brought up, such as access to information. My noble friend knows, of course, that we are trying to streamline these things and bring them forward as fast as we can, but her point is well made.

May I ask a very simple question? Is it not rather curious to rely on a decision of a first court on argument in this House until it has been accepted by the Court of Appeal or the Supreme Court? The whole of my life has been dependent on decisions that have been rejected by both of them.

The noble Lord was a very fine lawyer in his time, as I can witness, because he worked for me once and we won, wonderfully. I am inclined to want to agree with him, but at the moment the consultation is going through and I cannot make any statement at this stage. But I shall be interested in his views when the Government come out with theirs in the next few weeks after the finalisation of the consultation.

Will the Minister agree to speak to the Office of Fair Trading? One area that it could shed a bit more light on is payment protection insurance misselling claims. A whole industry has developed around it whereby people can put a claim in; they can go to a company, are given 25 per cent of the money that they have lost, and have to pay the companies. That is quite disgraceful.

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.