Has the UK opened the floodgates to private enforcement of competition law?

(by Sebastian Peyer) Private antitrust enforcement is the least effective part of competition law in the UK. Yesterday, the government said what it intended to do about it. Its outline for a new regime of private actions in competition law followed a consultation on options for reform in 2012. It proposes fixes for a number of well-known litigation problems such as the limited jurisdiction of the specialist Competition Appeal Tribunal (CAT). However, of potentially greater interest to consumers and businesses will be the introduction of opt-out class actions. The debate about opt-out class actions has been fierce on national and EU levels but this is still a surprising move – will it work?

Beware of Siren Advice for Political Control of Foreign Mergers

(by Bruce Lyons) Lord Heseltine, a former UK trade minister, has just published a review, invited by the Prime Minister, titled ‘No stone unturned in pursuit of growth’.  One of the stones he proposes to turn is to empower government ministers to intervene in foreign acquisitions of British companies “to ensure our long term industrial capabilities are given proper consideration”.  The objective would be to negotiate commitments to build R&D capacity in the UK, develop domestic supply chains and develop the skills base against a threat to prohibit the merger.  This siren call might sound enticing, but it would not be wise to listen.

OFT’s Proposed Reforms Fall Short of Ensuring Independence in Antitrust Decision Making

(by Bruce Lyons)  The OFT is currently consulting on its proposed new investigation procedures in competition cases.  Much of what is proposed is very good – but the reforms do not ensure independent decision making and compromise the potential role for independent experts of the kind successfully used in Phase II merger cases.

An Unpopular Solution to the Private Enforcement Problem

(by Andreas Stephan) The UK’s Department for Business is currently consulting on a package of reforms aimed at making it easier to bring private actions for damages against firms engaged in anti-competitive behaviour. Compensating consumers harmed by cartels and abuse of dominance is something competition authorities throughout Europe feel is important. However, the price to pay for private actions is the potentially enormous transaction costs of legal representation and economic evidence, coupled with the danger of scuppering public enforcement by undermining the leniency programme. One solution not considered in the current debate is to internalise compensation claims within competition authorities, drawing awards from public fines.

The Hunt/Murdoch Affair: Why a Secretary of State Should Have No Role in Merger Control

(by Andreas Stephan) This week there is continued pressure on the UK Culture Secretary, Jeremy Hunt, to resign. This follows revelations that his department was communicating with a News Corporation lobbyist at the time of its proposed acquisition of BSkyB,  precisely when he was meant to be acting in an independent and impartial manner.  This follows a media sting that revealed the apparent personal prejudice, this time against NewsCorp, which led to the Business Secretary, Vince Cable, being stripped of the role.  Such incidents highlight why it may be inappropriate to retain even the limited role of the secretary of state in UK merger control in relation to public interest considerations.