Competition laws to get teeth

Companies found guilty of operating cartels or abusing their market power could be fined up to 10 per cent of turnover under a draft Bill to reform British competition law published yesterday by the Government.

The overhaul of existing laws would also give the Office of Fair Trading powers to raid company premises in search of incriminating evidence of cartels or anti-competitive agreements.

The European Commission's competition directorate has had such powers for a long time.

Until now British competition authorities had been pressing for similar rights but to no avail.

However, the draft Bill unveiled yesterday has yet to be laid before Parliament and some observers believe that is unlikely to happen before the next election.

Publishing the Tackling Cartels and the Abuse of Market Power draft Bill, the President of the Board of Trade, Ian Lang, would only say he would lay it before Parliament "when the legislative programme permits".

The reform of the law would replace the Restrictive Trade Practices Act, widely seen as too cumbersome and prescriptive, with a general prohibition of cartels, anti-competitive agreements and concerted parties.

It would also strengthen the powers of the Director General of Fair Trading, John Bridgeman, to tackle abuses of market power under the Fair Trading Act 1973 and the Competition Act 1980.

However, a DTI spokesman said that the proposed law would have no impact on the right of appeal under law that British Telecom is seeking against rulings that the Oftel director general Don Cruickshank may make using his new fair trading powers.

The Government's intention to bring forward a draft Bill was foreshadowed in the Competitiveness White Paper published in June. Comments on the proposed changes are requested by 1 October.

Under the changes there would be a right of appeal to an independent tribunal and, in limited cases, to the High Court. Companies will also be able to apply for exemptions in the case of agreements which breach the new law but provide offsetting benefits.