Camelot, the Lottery and commercial services

Fans of the obscure jurisprudence surrounding Article 106 TFEU will be interested to note that the National Lottery Commission is consulting on a proposal by Camelot, the owners of the lottery infrastructure (terminals etc) to offer commercial services through this structure. Camelot wants, in particular, to run payment services through the infrastructure and this has reportedly caused a number of potential competitors to object, saying that Camelot could cross-subsidise its commercial operations and thus abuse its dominant position (See the Sunday Telegraph for 25^th April). It will be very interesting to watch a national regulator navigate these murky waters!

Details of the consultation, but no substantive discussion of the competition law issues, which closed on 25th April, are here:  http://www.natlotcomm.gov.uk/CLIENT/content_inner.ASP?ContentId=419

OFT's first competition advice

The OFT has today (27 April), for the first time, given advice to two businesses on the competition law implications of a proposed collaboration agreement. Two grocery wholesalers, Makro Self-Service and Palmer & Harvey, received advice on a joint purchasing agreement which the OFT felt would secure better prices from common suppliers and would be unlikely to restrict competition in the market. The OFT did have a concern with certain exchanges of information between the parties, but the arrangements were altered to ensure that the data supplied was general and aggregated. A non-confidential version of the OFT's opinion will be published shortly.

This is a potentially very interesting development because, with the demise of the notification process for agreements, companies have had to depend on their own assessment, in the light of whatever guidance has been issued by the competition authorities. This is the first example of the OFT giving an opinion and it will be interesting to see if this process becomes more popular in the future.

Sky, Ofcom and pay TV

Attachments:

Sky has lodged an application with the CAT seeking to have Ofcom's decision on pay TV suspended until Sky's proposed appeal against this decision is heard. The hearing on interim relief will be hear on 23^rd April. Details of the application are here: http://www.catribunal.org.uk/237-6095/1152-8-3-10-IR-British-Sky-Broadcasting-Limited-.html

 

Links to Ofcom's decision are here: http://www.ofcom.org.uk/consumer/2010/03/delivering-consumer-benefits-in-pay-tv/

The Liberal Democrats, competition and regulation

Today it's the turn of the Liberal Democrats. They have two specific proposals for competition law. The first is to restore the public interest test in merger control so that regulators can consider a broader range of factors. This misses a key point in the Enterprise Act arrangements, namely that unelected regulators (the OFT and the Competition Commission) are quite good at deciding on competition matters, but don't have greater expertise on non-competition matters. Hence a regime for specified public interest matters, involving the Minister. This would take us back to the Fair Trading Act system, although without the politicians and, much as I have respect for members of the Competition Commission, letting them loose on non-competition factors could be quite worrying.

The second idea is to introduce a local competition test for all planning applications for retail developments, which is a development of the Competition Commission's remedy in the Groceries investigation. This is linked into establishing a local competition office within the OFT which will investigate anti-competitive practices at a local and regional level. I suspect that the OFT will be surprised to discover that it doesn't do this already!

The banks come in for a predictable bashing and those which have public support will be split into retail and investment banks.

In energy, rising block tariffs will apparently become compulsory. So that will help to make the industry more competitive – not.

Unfairness in water charging will be addressed by consulting on the implementation of the Walker review, there will be a crack down on wasting water (I think they mean leakage here) and compulsory smart meters will be installed in areas of water stress.

The Conservative Party, competition and regulation

Following yesterday's look at the Labour Party Manifesto, today I turn to the Conservatives.

They do not have anything to say about substantive competition law or, explicitly, about the institutions that enforce competition law. There is a statement that any quangos that do not perform a technical function or a function that requires political impartiality, or act independently to establish facts, will be abolished. This would seem to protect the Competition Commission from outright abolition, although not necessarily merger with the OFT.

 

They are proposing to remove Ofgem's competition and consumer protection powers and pass them to the OFT, leaving Ofgem free to execute energy policy for which Ministers will be unambiguously responsible. Assuming that you want Ofgem to carry on regulating the industry, and that competition law powers are a useful tool in that armoury, as is the case in some other regulated sectors, this proposal makes no sense. Since the consumer protection powers are tied into license conditions, it again isn't clear why transferring these to the OFT would lead to an improvement.

Like the Labour Party, the conservatives have plans for the banks. Competition will be increased in the banking industry, starting with a study of competition in the sector to inform their strategy for selling the government's stakes in the banks. They also want to pursue international agreement to prevent retail banks from engaging in activities which put the stability of the system at risk. This latter sounds nice, but formidably difficult to implement – not buying Greek bonds anyone?

The water industry will be reformed (no idea what this is supposed to mean – it's followed by comments about improving efficiency) and poorer households protected against excessive rises in water bills. Just what exactly did Ofwat think it was doing in the last price control?

 

So, in summary, not many changes proposed here, which is not a bad thing. Energy policy is more worrying and needs a closer look, and for that see Catherine Waddams at: http://competitionpolicy.wordpress.com/

Labour Party Manifesto, competition law and regulation

The Labour Party has launched its Manifesto today, so I thought I would take a look and see what it has to say about competition law and policy.
The first point is a non-barking dog; namely, that no change is mentioned in relation to the competition authorities or the substantive rules that they operate.

There is, arguably, one exception to this (which will teach me to just do a word search for "competition"), namely the proposal to extend the public interest test to proposed takeovers of infrastructure and utility companies which is hidden away in the section on proposals for renewing the national infrastructure. What this means is anybody's guess. To implement it, certain considerations would have to be specified for the purposes of s. 58 of the Enterprise Act, rather than just listing companies. Presumably, as in communications, you would want the opinion of the regulator as well. You would probably have to be careful to set up arrangements which did not impinge on free movement of capital in the EU. Having done all this, there is the not so minor issue of making the right decisions and the Labour Party does not have a glorious history here - Lloyds/HBOS anyone? So, really, waving the public interest flag just won't do here.

There are, also, proposals for increasing competition in the banking and energy industries.

In the banking sector it is proposed to break up the banks in which the government has a controlling stake (RBS and Lloyds), transform the Post Office into a People's Bank offering a full range of competitive, affordable products and introduce portable bank account and cash ISA numbers. In energy, they want to ensure greater competition in the energy supply market while at the same time ending fuel poverty and creating a fair energy system.

Although in principle greater competition in the UK banking system looks desirable, there are a lot of unanswered questions here. For example, how do you juggle breaking up banks with ensuring a return to the state for its investments? Do you really want the Post Office to enter, for example, the financing of small businesses? Both of these developments could also raise state aid questions and require approval from the European Commission. Similar points can be made in relation to energy. As Catherine Waddams has pointed out (in relation to the Conservative's document on energy policy on April 6^th at http://competitionpolicy.wordpress.com/) trade-offs will need to be made between the different objectives of energy policy, something notably absent from a Manifesto which talks about "revolutionising Britain's energy system." For a non-party political take on problems in energy regulation see: http://www.communityni.org/group/next-generation-utilities-forum

Finally, there are apparently good and not so good regulators. Ofcom's independence is to be safeguarded, while the role of Ofwat is to be reviewed to ensure customers get the best deal and that their voice is heard in the process of price-setting. Ofwat presumably being surprised to hear that it did not listen to customers and hasn't got the best deal for consumers.

One should not expect too much from party manifestos, although given that such commitments may drive future policy decisions, they need to be subject to more critical scrutiny. I'll have a look at the other parties in these areas as the manifestos are published.