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By John Cassels
The UK's Office of Fair Trading (or more correctly, the office of the Director General of Fair Trading) was, together with the Monopolies and Mergers Commission, established by the Fair Trading Act 1973. It had a number of general functions, including keeping under review the carrying on of commercial activities in the UK with a view to ascertaining whether there were any practices which might adversely affect consumers, or which related to monopoly situations or uncompetitive practices. In addition, it had a broad sweep of consumer protection functions (e.g. labelling, methods and terms of sale) and competition functions which primarily involved requesting information about complex monopolies, mergers or uncompetitive practices and making references to the MMC or bringing proceedings in the Restrictive Practices Court.
Over the period since 1973, the OFT's functions and powers have evolved, with the competition regime now focused around prohibitions and backed up by extensive powers of investigation (including covert surveillance) and severe penalties. The organisational split between the OFT and (now) the Competition Commission has, however, persisted.
Starting this year and with a proposed 'go live' date of April 2014, the OFT and CC will be merged, to become the Competition and Markets Authority. The change will be made under the Enterprise and Regulatory Reform Bill and is designed to do two things:
Most of the consumer protection functions of the OFT have been transferred to trading standards and the Government's hope is that the focus on competition will encourage the CMA to prosecute more competition cases, more quickly and effectively than did the OFT. By merging the OFT and CC, one of the key strengths of the old system ('fresh eyes review' on a referral to the CC) has been lost. It must be hoped that the internal review mechanisms at CMA will offer a sufficiently robust challenge function.
If you would like to discuss these issues, please do not hesitate to contact John Cassels at email@example.com.