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Tuesday, 13 April 2010

The Conservative Party, competition and regulation

Following yesterday's look at the Labour Party Manifesto, today I turn to the Conservatives.

They do not have anything to say about substantive competition law or, explicitly, about the institutions that enforce competition law. There is a statement that any quangos that do not perform a technical function or a function that requires political impartiality, or act independently to establish facts, will be abolished. This would seem to protect the Competition Commission from outright abolition, although not necessarily merger with the OFT.


 

They are proposing to remove Ofgem's competition and consumer protection powers and pass them to the OFT, leaving Ofgem free to execute energy policy for which Ministers will be unambiguously responsible. Assuming that you want Ofgem to carry on regulating the industry, and that competition law powers are a useful tool in that armoury, as is the case in some other regulated sectors, this proposal makes no sense. Since the consumer protection powers are tied into license conditions, it again isn't clear why transferring these to the OFT would lead to an improvement.

Like the Labour Party, the conservatives have plans for the banks. Competition will be increased in the banking industry, starting with a study of competition in the sector to inform their strategy for selling the government's stakes in the banks. They also want to pursue international agreement to prevent retail banks from engaging in activities which put the stability of the system at risk. This latter sounds nice, but formidably difficult to implement – not buying Greek bonds anyone?

The water industry will be reformed (no idea what this is supposed to mean – it's followed by comments about improving efficiency) and poorer households protected against excessive rises in water bills. Just what exactly did Ofwat think it was doing in the last price control?


 

So, in summary, not many changes proposed here, which is not a bad thing. Energy policy is more worrying and needs a closer look, and for that see Catherine Waddams at: http://competitionpolicy.wordpress.com/

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