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DTI consults on reform of competition law


A consultation document on the modernisation of UK competition law was published last week by the Department of Trade and Industry, in light of changes to EU competition law that come into effect in May 2004. The aim is to ensure that UK businesses have one, rather than two, regimes with which they have to comply.

The DTI is trying to find out whether there are any competition exemptions given under the existing UK laws (mostly in the Competition Act 1998), which should be amended or removed so as to bring UK and the forthcoming EU law into line.

A consultation document has already been published on the general effect of the changes that the new EU Regulation will make. However, a separate consultation was thought necessary to cover exclusions and exemptions to the new regime, because of the specific issues that each exclusion and exemption will raise.

The new Regulation is designed to implement Articles 81 and 82 of the Treaty of Rome, which deal with competition aspects of the European Union. In particular, Article 81 prohibits agreements, decisions and concerted practices by undertakings that prevent, restrict or distort competition unless they meet certain exemption criteria. Article 82 prohibits the abuse of a dominant market position by undertakings.

The new Regulation has four main effects:

  1. It abolishes the current system under which businesses must notify their restrictive agreements to the Commission in order to obtain an exemption. It replaces notifications with a "legal exception" regime under which agreements which fall within the prohibition but which meet the exemption criteria are automatically exempt and legally enforceable at the outset.
  2. It devolves powers to national competition authorities (NCAs) and courts in Member States to apply Articles 81 and 82 in full and requires them to apply these Articles to any case where there is an effect on inter-state trade. National law may be applied in parallel but NCAs and courts in Member States must not make decisions under national law, the outcome of which differs from that which would be reached under Community law.
  3. It provides for Member States to co-operate closely in enforcing competition law by exchanging information and conducting investigations on each other's behalf. To facilitate this process, a European Competition Network (ECN) has been established.
  4. It strengthens and clarifies the Commission's powers of investigation, widens the range of available remedies and provides tougher sanctions for procedural infringements.

A DTI spokesperson said:

"Five years on from the drafting of the Competition Act 1998 it is important to review whether the exclusions we introduced then still have a place in our domestic competition regime.

"Modernisation may have removed the value of some exclusions and some are likely to result in different treatment under the two systems of law."

The new consultation document therefore considers four areas of competition exemptions - block exemptions; vertical agreements; competition scrutiny regimes; and agreements given directions under the Restrictive Trade Practices Act of 1976.

The deadline for comments to the consultation is 12th August. The new Regulation will come into effect on 1st May 2004.

The consultation document can be found at:
www.dti.gov.uk/ccp/consultpdf/modconsult1.pdf

The Competition Act can be found at:
www.hmso.gov.uk/acts/acts1998/19980041.htm

The new Regulation can be found here

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