Following the announcement of a General Election in the UK and subsequent publication of party Manifestos, we provide an outline of what the Labour Party, the Conservative Party and the Liberal Democrats have to say about competition (antitrust) and economic regulation and we describe the implications for business. This is part of The Election Briefing, which covers: climate change and energy; competition and economic regulation; corporate governance, takeovers policy and company law; employment and equality; environment; financial services regulation; Islamic finance; media and electronic communications; pensions; PFI and PPP; planning and local government; rail; and tax.
The years of the Labour Government have seen the most comprehensive and radical transformation of UK competition law for a generation. Having inherited a relatively weak system in 1997, Labour introduced tougher penalties for anti-competitive behaviour, more emphasis on economic effect than legal form in assessing behaviour, and greater (although not complete) consistency with the EU competition regime.
In this General Election, the Conservatives are committed to avoiding any major upheavals in the current legal and institutional arrangements, with no major change of direction. They do, however, propose incremental changes, including exposing the competition authorities to greater accountability, so as to avoid business being burdened with unnecessary competition investigations. The Conservatives also propose to launch major market investigations by the Competition Commission into the energy and banking sectors.
In this Election, Labour is proposing one major change in competition policy, which the Conservatives oppose. In response to concerns raised by the Kraft/Cadbury takeover, Labour is proposing to make certain takeovers harder, and in the field of UK merger control (control by competition authorities of mergers and acquisitions) would allow acquisitions of infrastructure and utility companies to be reviewed, and blocked, on “public interest” grounds as well as just competition grounds. (The Liberal Democrats go even further than Labour, proposing that all acquisitions should be subject to a “public interest” assessment under UK merger control.)
In the field of economic regulation of the utility sectors (electricity, gas, water, rail and telecoms), the Conservatives propose more significant changes, with regular reviews to examine whether the regulators can be stripped of some of their powers to intervene. They express a preference for the regulators’ applying ordinary competition policy rather than direct ex ante regulation in the utility sectors wherever possible1 - although the Conservative Manifesto envisages stripping the energy regulator Ofgem of its competition law powers. Labour envisages reforms of energy regulation, to improve incentives for private sector investment, and of water regulation, to give consumers a greater say in price control reviews.
This briefing examines the policies of the major parties on competition (antitrust) and economic regulation, and explains the practical implications for business.