Newsroom

OFT consults on competition law modernisation documents

66/04    7 April 2004

The OFT has today published for consultation its proposed revisions to its competition law guidelines, related guidance and procedural rules in light of the EC 'Modernisation Regulation' which substantially changes the framework for enforcement of European competition law.

EC Regulation 1/2003, known as the Modernisation Regulation, comes into force on 1 May 2004.

The Modernisation Regulation empowers national competition authorities and courts of the member states to apply and enforce Articles 81 and 82 of the EC Treaty (see note 3) alongside the European Commission.

The OFT already has powers under the Competition Act 1998 to tackle domestic cases involving anti-competitive agreements and abuse of dominance. Under Modernisation it will also become one of a network of competition authorities in Europe applying Articles 81 and 82 to anti-competitive practices which affect trade between member states.

The key changes arising out of Modernisation which are addressed by the documents published today include:

• the application of Articles 81 and 82 by the OFT and the concurrent regulators (see note 6)
• the abolition of the notification system and the introduction of a system under which businesses must self-assess compliance with both European and national competition law
• how the OFT will work  with the European Commission and the national competition authorities of the member states in the European Competition Network (ECN) to coordinate enforcement of Articles 81 and 82 (see note 5).

Amendments have also been made to the documents to incorporate changes introduced by the Enterprise Act 2002 (see note 7) and to reflect experience in applying the Competition Act.

Penny Boys, OFT Executive Director, said:

'From 1 May the OFT will be taking on further enforcement powers. The documents we have published for consultation set out how the OFT proposes to use these powers and will help to ensure that business understands how Modernisation will work in the UK'.

The deadline for consultation is 4 June 2004. The documents may be ordered free of charge both online and on 0870 60 60 321.

NOTES

1. Written comments on the documents published today are welcomed. Where appropriate, respondents are asked to supply a brief summary of the interests and organisations they represent.

2. The 16 documents that the OFT has today published for consultation are: Modernisation (OFT442), The major provisions (OFT400), Article 81 and the Chapter I prohibition (OFT401), Article 82 and the Chapter II prohibition (OFT402), Market definition (OFT403), Powers of investigation (OFT404), Concurrent application to regulated industries (OFT405), Enforcement (incorporating the OFT's guidance as to the circumstances in which it may be appropriate to accept commitments) (OFT407), Trade associations, professional bodies and self-regulating organisations (OFT408), Assessment of conduct (OFT414), Assessment of market power (OFT415), Vertical agreements (OFT419), Land agreements (OFT420), Services of General Economic Interest Exclusion (OFT 421), the OFT's guidance as to the appropriate amount of a penalty (OFT423) and the Competition Act 1998 (Office of Fair Trading's rules) Order 2004. The OFT's Guidance as to the circumstances in which it may be appropriate to accept commitments (annexed to Enforcement (OFT407)), the OFT's Guidance as to the appropriate amount of a penalty (OFT423) and the Competition Act 1998 (Office of Fair Trading's rules) Order 2004 require the approval of the Secretary of State prior to final publication.

3. Article 81(1) of the EC Treaty prohibits agreements which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the common market.   However, an agreement which satisfies the conditions set out in Article 81(3) will not be prohibited under Article 81(1).  Article 81(3) provides that an agreement is not prohibited if it:

4. The Chapter I prohibition and the Chapter II prohibition of the Competition Act 1998 are based on Article 81 and Article 82 of the EC Treaty respectively, but apply to anti-competitive practices which affect trade within the United Kingdom. The Government has prepared secondary legislation amending the Competition Act 1998 to reflect and facilitate the Modernisation changes. The draft secondary legislation amending the Competition Act 1998 is available on the HMSO website. 

5. The European Competition Network (ECN) has been set up to facilitate close co-operation between the national competition authorities of the member states and the European Commission and to ensure an effective and consistent application of Articles 81 and 82.

6. The Competition Act 1998 is also enforced by the regulators for communications matters, gas, electricity, water and sewerage, railway and air traffic services (under section 54 and Schedule 10 of the Competition Act 1998). These regulators can exercise powers under the Competition Act 1998 concurrently with the OFT. These regulators will also be responsible for enforcing Articles 81 and 82 following the introduction of the Modernisation Regulation.

7.  The Enterprise Act 2002 came fully into force on 20 June 2003 and has wide-ranging implications for business and consumers. The Enterprise Act has made a number of significant reforms to competition law and consumer law enforcement in the UK.  The new provisions work alongside the Competition Act 1998 and various pieces of consumer legislation. For further information see Enterprise Act section or telephone Enterprise Act enquiries on 020 7211 8181.

Back to:2004