A Fair Market Place
2.0.1 Liberal Democrats believe in the development and maintenance of well-functioning and competitive markets throughout the private sector and of efficient and well functioning arrangements for the supply of services across the public sector. Our concern is that in many areas of the economy the mechanisms for securing these ends are not working adequately.
2.1 Competition Policy
2.1.1 There are three UK bodies that manage competition policy:
Office of Fair Trading (OFT): primarily responsible for consumer protection and the first phase of merger inquiries.
Competition Commission (CC): an independent body covering the second phase of competition inquiries. The CC has extensive powers to act only when there is an “adverse effect on competition” and cannot consider environmental or social concerns. The CC also has a duty to act in a proportionate manner.
Competition Appeal Tribunal: - the appellate body for CC & OFT judgements.
Their remits:
Cartels: Illegal co-operation (to both civil and criminal liabilities) between firms to exploit consumers. These are the sole responsibility of the OFT, subject to appeal to the CAT.
Abuse of Dominant Position: Erecting illegal barriers to entry (e.g. Microsoft) and using market power to undercut competitors. This is the sole responsibility of the OFT.
Merger control: Preventing conglomerations that may cause a “substantial lessening of competition”. First phase carried out by the OFT (relatively easy to pass), then referred to the CC for a more in-depth investigation (about 50% pass).
Market Studies and Investigations: The OFT has the power to launch informal market studies, often referred to the CC (can also be referred by utility regulators), e.g. the recent investigation into the ownership of London & Scottish airports.
2.1.2 The Labour Government passed both the Competition Act (1998) & Enterprise Act (2000), moving much responsibility to the OFT and CC, and dictated that decisions were to be made on purely competitive considerations, and were subject to appeal from the new CAT.
2.1.3 The DBERR Secretary of State also has the right to intervene in merger references in situations of national security, media plurality and financial stability.
2.1.4 As a result of the way the existing competition regime is structured, it is directed principally at prohibiting anti-competitive activity in the marketplace. We need to consider what steps can be taken positively to encourage further competition where we believe that existing markets work inefficiently or to the detriment of consumers.
2.2 Balancing the Needs of Business and Consumers
2.2.1 Empowering people, strengthening their hand in their interactions with large or faceless institutions, makes markets more competitive – not less. Competitiveness is not just about firms competing for your money. It is also about you having enough protections, information and confidence to be able to judge that you are being treated fairly. It is also crucial to Liberal Democrats that consumer protection is targeted to protecting the most vulnerable in society.
2.2.2 Businesses (and even public sector service providers) cannot be railroaded into changing the way they work. But businesses, in the long run, know that what is good for their customers and clients is ultimately good for them.
2.3 Organisational Size and Shape
2.3.1 No thorough review of the consumer experience can ignore the fundamental question of the size of organisations consumers have to deal with. There is no set rule that “small is better”. There is often a trade-off between local, personable, people-friendly businesses (or public services) and an administrative/bureaucratic procedure in place to deal with consumer issues consistently. But nobody wants to see local colour and character disappear from our goods and services. This is about broadening the meaning of localism – not just about decision-making, but about the shape and size of the institutions producing, selling and providing goods and services in any given locality.
Questions
- Is the existing competition regime working satisfactorily?
- What steps, if any, should we take to encourage greater competition, where the existing regime does not intervene?
- Should governments worry about the size of organisations? If so, what would we do about it?
September 3rd, 2009 at 12:24 am
The size of organisations is not as important as their responsiveness to people. I wonder whether consumer rights groups who have found that “this group refused to respond” has become the norm (to me a sign that the normal PR based mechanism for dealing with this is failing) may submit a complaint of protracted non-interaction with customers.
Now I have no idea what the legal requirements are towards customer service and accountability, apart from clarity on bills, but perhaps there could be some way of dealing with those who refuse to deal with customer concerns.
Now having said this, I wouldn’t want to encourage a heavily punitive framework, or if I did, it would have to be combined with clear ways for companies to avoid it and help/advice in doing so. The objective is to make businesses treat people like human beings, not to damage them.