Deterrence and competition law

One of the more entertaining pre-Christmas reads was the report by London Economics for the OFT, The impact of competition interventions on compliance and deterrence (available at: http://www.oft.gov.uk/OFTwork/publications/publication-categories/reports/Evaluating/oft1391). The headline was that for every OFT investigations in the following categories, numerous cases were deterred: 28 cartel cases, 40 other commercial agreements and 12 abuse of dominance cases. The key drivers of compliance were identified as: knowledge of competition law, sanctions and enforcement and voluntary compliance measures. So far, so good but looking beneath the headlines unearths some interesting points. Perhaps the most entertaining part is the report of a behavioural experiment conducted with a number of competition compliance officers that tested their willingness to engage in a cartel. One of the results of this experiment was that those participants with a higher level of knowledge about competition law were more likely to choose to participate in a cartel! Or, to put it another way, some knowledge of competition law is desirable from the competition authorities' perspective, but not too much.

Also interesting is that the OFT's effectiveness on rightly detecting anti-competitive conduct and clearing competitive conduct is rated as no better than mediocre (between 5.7 and 5.9 on a ten point scale). Knowledge and awareness of competition law and specific competition interventions is limited, especially amongst small businesses, and few companies have compliance measures in place. The legal professionals surveyed suggested that the probability of detection was relatively low in competition cases, which might tie into the experimental results above. So, although the headlines look good, the pictures beneath them look more murky.