Out-Law News | 16 Mar 2011 | 2:21 pm | 2 min. read
The proposals could also increase the number of competition cases heard by the authorities, according to Guy Lougher, a competition law specialist at Pinsent Masons, the law firm behind OUT-LAW.COM.
The Government has published plans to merge the UK's two main competition authorities; put some small mergers outside of the scope of competition law; and reduce the timescales for competition investigations.
It has also proposed changing how the current criminal cartel offence is drafted, so that there would in the future be no requirement for someone to be shown to have been dishonest in order to be convicted of the criminal cartel offence.
"There is a ‘dishonesty’ element in the offence that seems to make the offence harder to prosecute," said the consultation (173-page / 830KB PDF). "It also puts the UK at odds with developing international best practice on how to define a hard core cartel offence."
"[The Government proposes] removing the ‘dishonesty’ element from the offence and defining the offence so that it does not include agreements made openly," it said. "[This plan] appears to decrease the likelihood of defendants seeking to rely on complex economic evidence that juries will find difficult to understand."
Lougher said that this change would make it easier to prosecute people under the criminal cartel offence.
"This would increase the number of cases where individuals would find themselves vulnerable to criminal prosecution," he said. "This could be quite a significant change."
The Government's proposals would put mergers between companies with small turnovers outside of the scope of the UK's merger control law, but the Government is consulting on whether all cases above the thresholds would have to be pre-notified to the UK's competition authorities.
The proposed thresholds are where the target company's turnover is below £5 million and the acquiring company's worldwide turnover is below £10m.
The current scheme for notification of mergers to the authorities is voluntary, but the Government is considering making it compulsory for mergers that are above the thresholds.
"The change on pre-notification is far-reaching because the thresholds being discussed under one option have been set at what are really low levels," said Lougher. "This would be likely to lead to a very significant rise in the number of acquisitions being pre-notified."
The Government plans to merge the Office of Fair Trading and the Competition Commission into a single competition authority. Lougher said that this would benefit business.
"That is likely to speed up decision making; reduce duplication; and potentially reduce the cost to business of complying with the law," he said. "The plan would need to ensure that the best parts of both systems were not lost but that should be possible to achieve."
“This is an excellent opportunity to strengthen and streamline the competition regime to deliver better outcomes for consumers and increase business confidence and certainty," said Business Minister Edward Davey. "At the same time we are taking advantage of this chance of reforming it to assist small and medium enterprises."
Matthew Fell, CBI director for competitive markets, said in a statement that ensuring that regulatory regimes kept up with the needs of fast moving businesses was essential.
"Market investigations take a long time, are resource intensive and have a chilling effect on investment, so they should not be entered into lightly or used as fishing expeditions," said Fell. "Instead they must be limited to clear failures of competition and be subject to strict timetables."