Merger of the Office of Fair Trading (OFT) and the Competition Commission to create shake-up of Britain’s competition regime

Analysts are sounding the alarm over the looming merger of the UK’s competition watchdogs, the Office of Fair Trading and the Competition Commission. The move by the two investments and competition agencies is expected to cause major ripples in the country’s competition regulations. Plans have been underway to merge the two for some time now and it is expected the merger will result in considerable changes in the UK’s competition regime.

The UK’s Cabinet Office announced that it will commence consultation next year over its plans to merge the two and do away with the current “two tier” regulatory regime. The move is expected to save cash by merging the two agencies’ competition functions. In that regard, the two merged watchdogs will create an entity that will still have the task for investigating firm mergers, cartels and concerns of unfair market dominance.

However, the Cabinet Office’s proposals will result in the transfer of the Office of Fair Trading’s consumer and enforcement functions, currently understood to be earmarked for Citizens Advice and the trading standards divisions of local authorities. Regardless, the Office of Fair Trading and the Competition Commission termed the announcement as welcome. Peter Freeman, chairman of the Competition Commission said the firm welcome’s the government’s proposal as it signals its commitment to a strong competition policy.

He further added that the Competition Commission will be ready and willing to work with concerned parties towards creating a new, robust competition regulator. On his part though, Office of Fair Trading chief executive John Fingleton said the agency had already proposed such a merger with its counterpart before and will certainly be welcome to such a move. According to Fingleton, with the right design, a single competition and markets authority can deliver better, faster results for consumers and the economy, and greater consistency for businesses, he said.

But the move for the merger has met controversy in the quango overhaul, even though it is believed the former Labor government had as well tried to undertake it before halting it. Regardless, the UK business community has shown immense support for the merger as it promises to reduce some of the time involved in market investigations. But even with that support, there are fears that the merger could weaken the government’s powers to deal with anti-competitive behavior in the country.

17 Oct 2010.