Competition Commission annual report 2006/2007

Annual report and accounts (86 pages, 4.4M PDF) of the Competition Commission for the financial year 2006/2007.

The Commission continues its campaign — started by its submission (12 pages, PDF) to a parliamentary committee in February 2007 — to be given larger, more important cases:

Looking forward, we see opportunities to improve the impact and quality of our workload yet further as the OFT consults on increases in its merger de minimis referral threshold. We would also welcome a review of the jurisdictional thresholds in the Enterprise Act, and in particular the appropriateness of the share of supply test, which has led to our being referred some relatively small mergers. We recognize the public interest in protecting consumers from exploitation by monopolies of any size and in any market, but it is far from clear to us that it makes sense to deploy the full might and expense of the CC (to the taxpayer and to the affected companies) in every small case.

This argument is linked to its argument for compulsory pre-notification of mergers.

The report also notes the absence of price control references from the utility regulators Ofgem, Ofwat and Ofreg in their recent price control reviews, and argues that some references are needed “for the strength and credibility of the regulatory framework and for the interest of consumers”.

Comment: The Commission acknowledges that its process of in-depth inquiry is expensive and demanding for businesses (and regulators) under investigation, to the point where it doubts the wisdom of imposing it on smaller companies in merger cases. With provisions such as Section 54 of the Water Act 2003 increasing the risk that shareholders, rather than consumers, will end up paying for the process, it may not be all that surprising that price controlled companies and their regulators prefer to settle directly without involving the Competition Commission, even if they do not agree on everything. Should the possibility of a regulatory appeals tribunal which would hear targeted criticisms of particular aspects of a price control decision without conducting a complete re-investigation of all aspects be reconsidered? Franck

For further information or advice please contact Franck Latrémolière.

Filed under Competition Commission, Regulators.

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