Ofcom to offer greater transparency over competition law investigation process

Out-Law News | 27 Jul 2012 | 3:40 pm | 2 min. read

Ofcom will set out a formal timetable for completing investigations into alleged breaches of competition law in the communications sector and will publish an explanation on its website if it fails to comply with its specified deadline, the regulator has said.

In response to Government complaints that competition law cases were costing too much and taking too long to complete, the regulator has issued new enforcement guidance (47-page / 315KB PDF) on how it will handle competition complaints.

"Investigations under the Competition Act are typically complex, requiring a great deal of detailed information gathering and analysis," its guidance said. "Experience has shown us that Competition Act investigations therefore tend to take longer than other types of investigations – in some cases, several years. Ofcom has therefore decided not to set a target for completion of such investigations."

"However, at the outset of any new competition law investigations, Ofcom will publish on our website an indicative timetable of key milestones expected up to the point that we issue a statement of objections or a draft no grounds for action decision. These timescales will be set on a case-by-case basis rather than having a ‘one size fits all’ timetable and be updated as the case progresses. We will also publish an explanatory note on our website if we fail to deliver a phase of our investigation on time," Ofcom said.

Ofcom's guidelines, which took effect Wednesday, set out its processes for investigating alleged wrongdoing by broadcasters, premium rate service providers and communication providers, including telecoms firms, among others under the scope of its powers. It has the power to open competition investigations if it has "reasonable grounds for suspecting" that a breach of the UK's Competition Act has taken place.

Under the Competition Act companies are generally prohibited from establishing agreements with other UK trading firms that "have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom". Under the Act organisations are also generally prohibited from engaging in activity that amounts to an abuse of a dominant market position.

The Office of Fair Trading (OFT) currently has general overall responsibility for regulating competition in the UK, but some sectors have additional regulators, such as Ofcom, to oversee compliance with the UK competition rules. Ofcom can fine organisations up to 10% of their turnover in a particular market if it finds they have breached competition laws.

The guidelines explain that Ofcom will listen to businesses' complaints about breaches of competition laws by rivals, providing their submissions meet certain "minimum standards" and that allegations of the breaches are "supported by evidence".

Ofcom said that it aims to resolve issues "informally" within 15 working days, but that in some cases it may choose to open a formal investigation. In its guidance Ofcom explained that it may take into account a number of factors, such as whether alleged unlawful conduct is ongoing and what the risk to consumer interests are, before deciding to open investigations in order to make sure it uses its resources effectively. Ofcom added that it may also choose to open a competition investigation on its own initiative.

During the investigations process Ofcom said its case team would, generally, "hold at least two ‘state of play’ meetings" to update those involved in the case on the "progress of the investigation" and cover "substantive" as well as "procedural" issues.

"At these meetings the case team will update parties on progress in an investigation and, where appropriate, share emerging thinking," it said. "Parties will also have the opportunity to raise concerns or arguments they have. These meetings will take place early on in the investigation and close to Ofcom’s decision on whether or not to issue a statement of objections. Where we issue a statement of objections, we will generally hold a further ‘state of play’ meeting after the parties have submitted their written representations and the oral hearing has been held."

Ofcom would issue a 'statement of objections' in cases where it holds the view that a breach of the Competition Act has occurred, and would detail Ofcom's reasoning behind this among other things, it said.

The regulator may in some cases accept undertakings from firms to address problems it identified which would involve firms making legally binding commitments to alter their behaviour.