New pledge to give OFT power to search and seize

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The Government yesterday promised to revive plans to give the Office of Fair Trading tough new powers to search business premises and requisition information.

ut Jonathan Evans, the corporate affairs minister at the Department of Trade and Industry, rebuffed proposals by the present and immediate past director generals of the OFT for a wholesale reform of the way competition law is enforced to bring it into line with European practice.

Mr Evans told the Commons trade and industry committee, which is investigating competition policy, that the Government was committed to giving the OFT additional investigative powers including the right to undertake searches of premises.

ut he made clear that the Government wanted an "evolutionary approach", not a wholesale change to competition policy.

Sir ryan Carsberg, who is about to leave the OFT, and his predecessor, Sir Gordon orrie, have both urged the Government to create a tough new investigative body with powers to put immediate legally enforceable bans on anti-competitive behaviour and fine companies for misbehaviour.

This system, used in most of Europe, contrasts with the UK, where the OFT's most important role is to recommend referrals to the Monopolies Commission. Ministers make the final decisions both on referrals and on what action to take afterwards.

Mr Evans said it was "settled government policy" dating from 1993 to bring in new legislation on the abuse of market power and to reform the Restrictive Trade Practices Act.

Sir ryan complained to the committee last month about delays in the promised legislation, some of which was first announced as long ago as 1989.

He told the MPs that the reforms, including a strengthening of the enforcement system against cartels, were "very necessary."

ut Sir ryan also went much further and suggested that the best solution could be a single competition authority combining the powers of the Monopolies Commission and the Office of Fair Trading into a "unitary authority."

He also praised the advantages of a European-style competition system, under which the authorities have the power to deal directly with cartels and other instances of anti-competitive behaviour.

The DTI said in evidence to the committee that the Government was content with the present broad structure in which the powers are shared between the Office of Fair Trading, the Monopolies Commission and the DTI.

It praised a modification to the system last year under which the OFT gained the power to negotiate legally binding undertakings from companies as an alternative to recommending a reference to the commission.

Mr Evans said he would be happy to see the OFT making full use of these new powers, which were introduced in the Deregulation and Contracting Out Act 1994.

He claimed that a switch to a European "prohibition" system along the lines recommended by Sir ryan would not make procedures any quicker.

Instead of the delays while monopolies investigations are carried out there would be lengthy court appeals by companies after a new competition body had taken action against them.