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Guidance on DTI procedures for handling
Monopoly references and
reports
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Introduction
The
purpose of this guidance is to explain the legislation and
procedures which govern the Department’s handling of Competition
Commission monopoly reports and to advise interested parties on when
and how to make representations.
When assessing possible monopoly situations the competition
authorities (the
Department of Trade and Industry (DTI), the Office
of Fair Trading and the Competition
Commission) seek to give all interested parties a chance to make
representations. There are also forms for those who are involved in
an inquiry to complete if they want to be alerted to publication of
a particular Competition Commission monopoly report.
You
should therefore consider whether you need to complete and return
the form at Annex A
In
Section 1 the monopolies process is explained together with the
particular functions assigned to the Director General of Fair
Trading (DGFT), the Secretary of State and the Competition
Commission. This section also contains guidance about the
arrangements for publication of Competition Commission reports which
will be of particular relevance to companies involved in a monopoly
situation which has been referred to the Competition Commission.
Section
2 contains guidance on how to make representations on a case at the
various stages in the decision-making process. In addition there is
advice about the procedures for making representations on the
excision of material from the published version of Competition
Commission monopoly reports.
 Monopolies
- Who Does What
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Section 1 - General Information on procedures for dealing with
monopoly reports |
1. The Legislation
1.1
The statutory provisions relating to monopolies are contained in the
Fair Trading Act 1973 as amended by the Companies Act 1989,
the Deregulation and Contracting Out Act 1994 and the Competition
Act 1998. The competition authorities with responsibility for
dealing with monopolies are:
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the
Secretary of State for Trade and Industry,
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the
Director General of Fair Trading who heads the Office of Fair
Trading and,
-
the
Competition Commission.
This
note describes in broad terms their respective duties and powers in
relation to monopolies. These are defined in more detail in the Fair
Trading Act.
1.2
Useful information both about monopolies and about competition
policy more generally can be found on the web sites of the DTI,
OFT and Competition
Commission. The addresses are listed at the end
of section 2.
2.
Functions of the Director General of Fair Trading in relation to
monopolies
2.1
The Director General of Fair Trading:
-
keeps
an eye on the market and considers complaints about abuses of
market power;
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investigates
markets where he suspects there may be a monopoly situation
operating against the public interest;
-
decides
whether to refer a market to the Competition Commission for
investigation;
-
or
alternatively, considers, publishes, consults, and proposes
undertakings for the Secretary of State to accept as an
alternative to a monopoly reference;
-
monitors
undertakings accepted in lieu of reference
After
a Competition Commission report is completed;
-
advises
the Secretary of State on action in response to the report;
-
if
asked by the Secretary of State to do so in response to a
Competition Commission report seeks undertakings to remedy the
adverse effects found by the Competition Commission;
-
monitors
compliance with undertakings accepted and Orders made following
a report;
-
advises
the Secretary of State on action if undertakings are broken or
an Order is breached. This might include an action in the Courts
to enforce the Order.
3.
Functions of the Secretary of State in relation to monopolies
3.1
The Secretary of State:
-
has
power of veto over references made by the DGFT;
-
may
make monopoly references to the Competition Commission (see para
10.1 for references that can only be made by the Secretary of
State);
-
may
decide to accept undertakings proposed by the DGFT as an
alternative to a reference.
Where
a reference is made the Secretary of State;
-
receives
the report from the Competition Commission once they have
completed their investigation;
-
considers
requests for excision of material from the report as published;
-
publishes
the report;
-
decides
on action in response to the report. If the report is favourable
(ie not against the public interest) the Secretary of State has
no power to act. If the report is adverse (ie against the public
interest), the Secretary of State may make an Order or ask the
DGFT to obtain undertakings to remedy the public interest
detriments identified by the Competition Commission.
4.
Functions of the Competition Commission in relation to monopolies
4.1
The Competition Commission is an independent body
which has the responsibility of examining possible monopoly
situations referred by the Secretary of State or the DGFT and
deciding whether they are against the public interest. Once a
reference has been made, the Competition Commission:
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hears
evidence from all interested parties on the possible monopoly
situation;
-
considers
the evidence carefully before deciding whether there is a
monopoly situation and if so whether it operates or may operate
against the public interest;
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if
a monopoly situation is found to operate or may operate against
the public interest, may recommend possible remedies;
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considers
requests for excision of material from the report before it is
sent to the Secretary of State;
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delivers
its report to the Secretary of State together with any remaining
requests for the Secretary of State to excise material from the
version which is published.
5.
Acceptance of undertakings as an alternative to a monopoly reference
5.1
Before making a reference, it is open to the DGFT
to consider whether to propose certain undertakings for the
Secretary of State to accept as an alternative to a monopoly
reference. Such undertakings may be proposed by the potential
monopolists themselves to the DGFT.
5.2
Where the DGFT considers that undertakings may be
a suitable alternative, he must publish various things before
putting the matter to the Secretary of State. These include: the
draft terms of the proposed monopoly reference; the facts relating
to the identified monopoly situation and the adverse effects which
they may have; and the terms of the draft undertakings designed to
remedy those adverse effects. All interested parties will have the
opportunity to comment to the DGFT on these matters.
5.3
If the Secretary of State accepts the
undertakings proposed, they must be published together with the
DGFT’s statement of the adverse effects remedied. Undertakings
accepted are legally enforceable by the competition authorities or
by third parties.
5.4
The DGFT monitors undertakings accepted in lieu
of a reference, and advises the Secretary of State in case of breach
or on any variation or release as necessary.
6.
Disclosure of information relating to Competition Commission
monopoly reports
6.1
The contents of a Competition Commission monopoly
report will have material implications for the parties involved and
are usually highly market sensitive. If the contents are disclosed
outside Government before they become publicly available parties may
suffer prejudice, dealings in securities may be distorted and there
is a risk of insider dealing. For this reason they must remain
strictly confidential until publication. Those in receipt of any
information about Competition Commission monopoly reports in advance
of publication should have regard to the following relevant
provisions: the Criminal Justice Act 1993; Section 5, Chapter 2,
para 1 of the Stock Exchange Listing Rules; Section 133 of the Fair
Trading Act 1973; the Copyright Designs and Patents Act 1988. As
monopoly reports are laid before both Houses of Parliament,
Parliament is entitled to expect that no improper advance disclosure
will take place.
6.2
Any information which might enable the content of
the report to be inferred must also remain confidential. This
includes information about the Secretary of State’s decisions in
relation to requests for excision of material from the report.
6.3
The timing of publication of monopoly reports is
also commercially sensitive and is kept strictly confidential.
6.4
Circulation of monopoly reports and disclosure of
their contents within Government is limited on a strictly
‘need-to-know’ basis.
7.
Timing of publication of monopoly reports
7.1
The Department has an administrative (non-statutory) target to
publish monopoly reports within 10 weeks of receipt of the report by
the Secretary of State from the Competition Commission.
7.2
The Secretary of State is required to publish all
monopoly reports. It is the Secretary of State’s policy to do so
as soon as is practicable. However, it is important to note that a
number of factors may influence the timing of publication. If, for
example, a report is adverse and raises particularly complex issues,
the Secretary of State will need time to consider his response.
Further consultation within Government may be required if any
follow-up action relates to matters of wider policy. If the
Secretary of State is away, for example on overseas business, this
may also affect the timing of publication. Similarly, if several
monopoly reports are delivered to the Secretary of State within a
short period of time, there may be some delay due to ‘bunching’.
7.3
It is therefore not possible to indicate exactly when a monopoly
report will be published. In any case, to do so might fuel
speculation about the contents of the report which might in turn
have an effect on the financial markets. If for example the
Secretary of State plans to publish a report slightly more quickly
or slowly than the average, this may encourage speculation about the
contents of the report when in fact his decision on the timing
of publication may have been determined by other factors. In all
cases the Secretary of State is mindful of the need to ensure that
uncertainty about the outcome of Competition Commission monopoly
inquiries is not prolonged. Reports are therefore published as
quickly as is practicable.
8.
Arrangements for announcing publication
8.1
Monopoly reports are usually laid before
Parliament and published at 11.00am. Announcement of publication is
made via the Stock Exchange’s Regulatory News Service and the
Department simultaneously issues a press notice. Occasionally the
Secretary of State may decide to announce publication of the report
and his decision on any remedies in Parliament. In these instances,
publication of the monopoly report will take place at 3.00pm and
again will be announced via the Regulatory News System and in a
Departmental press notice. The press do not receive embargoed copies
of either the report or the press notice prior to publication.
8.2
The arrangements for notifying interested parties
of publication of monopoly reports are as follows:
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Named
monopolists will be told the date and time of publication on the
day before. Immediately after publication, a copy of the
press notice announcing the Secretary of State’s decision will
be faxed to them (or they can collect it from the DTI).
They will also be able to collect a copy of the report from DTI
officials after publication. If you believe you are or
may be a named monopolist, and should therefore receive advance
notice of publication, please fill in the form attached at Annex
A1. This will enable the Department to ensure that the
report is delivered to the correct address.
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Other
parties with an interest in a monopoly report who wish to be
notified when the report is published should fill in and return
the form attached at Annex A2.
8.3
It is not possible for the Department to confirm
whether or not a company is a named monopolist in advance of
publication, except when notifying named monopolists the day before,
because to do so might allow the Competition Commission’s
conclusions on the existence of a monopoly situation to be inferred.
8.4
The constraints on disclosure referred to in
paragraphs 6.1-6.4 continue to apply to named monopolists who are
notified of the date of publication in advance, in the period
between notification and publication.
8.5
Previously, section 83(1A) of the Fair Trading Act provided
that copies of MMC monopoly reports had to be transmitted to every
person named in the report as a person in whose favour a monopoly
situation existed at least 24 hours in advance of a report being
laid before Parliament and published. Section 83(1A) was
repealed by section 69 of the Competition Act 1998, which was
brought into effect on 11 January 1999 by The Competition Act 1998
(Commencement No.2) Order 1998 (SI No. 3166).
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Section 2 - Guidance on making representations on monopoly reports |
9. Representations before a
monopoly reference is made by the DGFT
9.1
The DGFT investigates complaints about suspected
abuses of monopoly power and subject to special exceptions he has
the power to make references to the Competition Commission as
appropriate. The Secretary of State, acting alone or in conjunction
with other Ministers as appropriate, may also make a monopoly
reference, and is not subject to the exceptions applying to the DGFT.
In practice a monopoly reference is usually made by the DGFT except
where only the Secretary of State has powers to do so.
9.2
As indicated in section 5 above, the DGFT must
also publish a notice seeking representations where he is
considering whether to propose to the Secretary of State the
acceptance of undertakings as an alternative to a reference.
9.3
Representations relating to the possible
existence of a monopoly situation or an abuse of market power which
is not currently under investigation by the Competition Commission
or has not been the subject of a recent Competition Commission
investigation and representations relating to draft undertakings in
lieu of reference should be directed to the OFT at the following
address:
The
Office of Fair Trading
Competition Policy Division
Fleetbank House
2-6 Salisbury Square
LONDON EC4Y 8JX
Tel: 020 7211 8000 (switchboard)
10.
Representations before a monopoly reference is made by the Secretary
of State
10.1
Schedules 5 and 7 to the Fair Trading Act (as
amended by subsequent legislation) list a number of goods and
services which are outside the DGFT’s monopoly reference powers.
The Secretary of State, acting with other Ministers as appropriate,
may make a monopoly reference of these goods or services instead.
The listed goods and services include rail transport, postal
services, the operation of telecommunications systems, certain
agricultural products, port facilities, air navigation services and
scheduled air services. Representations relating to a possible
monopoly reference of goods or services listed in Schedules 5 and 7
should be addressed to DTI Ministers or officials at the following
address:
Department
of Trade and Industry,
Consumer and Competition Policy Directorate
Branch 5a,
4th Floor,
1 Victoria Street,
London SW1H 0ET
Tel: 020 7215 5417
Fax: 020 7215 6491
11.
Representations after a monopoly has been referred to the
Competition Commission
The
Secretary of State’s power of veto on monopoly references
11.1
After the publication of the DGFT’s notice of a
monopoly reference, the Secretary of State has 14 days in which he
or she may direct the Competition Commission not to proceed with the
reference. Representations relating to the Secretary of State’s
power of veto should be addressed directly to the Secretary of
State. Any parties proposing that the Secretary of State should
exercise the power of veto should note that compelling reasons would
be required in order for the Secretary of State to overturn the
DGFT’s decision on a monopoly reference and that to date the power
of veto has never been exercised in respect of a monopoly reference.
All
other representations on monopoly references
11.2
The Competition Commission’s function is to
decide whether there is a monopoly situation and if so whether it
operates against the public interest. To do this, the Competition
Commission conducts a detailed and thorough investigation during
which the views of all interested parties are sought. During the
course of an investigation all representations (including
representations on excisions - see para 11.4-11.8 below) should
therefore be addressed directly to the Competition Commission at the
following address:
The
Competition Commission
New Court,
48 Carey Street,
London WC2A 2JT
Tel: 020 7271 0100
Fax: 020 7271 0367
There
are also e-mail links to current inquiries which can be accessed via
the Competition Commission’s web site at www.competition-commission.org.uk.
More
detailed guidance on how to give evidence to the Competition
Commission can also be obtained by writing to the Competition
Commission direct.
11.3
Requests for meetings with Competition Ministers
while matters are under consideration by the Competition Commission
will not be accepted. Any written representations made to the
Department (or to the Office of Fair Trading) at this stage will be
passed to the Competition Commission for consideration. It should be
noted that it will not be appropriate for DTI Ministers or officials
to comment at this stage on matters under consideration by the
Competition Commission, since the Competition Commission is an
independent body.
Excisions
or exclusions from monopoly reports
11.4
When preparing a report the Competition
Commission has a duty to exclude confidential information about the
private affairs of individuals, and information about the private
affairs of businesses or other bodies if disclosure could have a
seriously prejudicial effect, unless they consider nevertheless that
the inclusion of such information in respect of the business or
other body is necessary for the purpose of their report to the
Secretary of State.
11.5
The Secretary of State also has a duty
under section 83(3) and (3A) of the Fair Trading Act to excise from
the published version of Competition Commission reports any material
whose publication would either be against the public interest or
relating to the private affairs of an individual or the affairs of a
business or other body and which would, in the Secretary of
State’s opinion, seriously or prejudicially affect the interests
of the individual, business or other body unless publication would
be positively in the public interest.
11.6
Requests for excision of material should be made
first to the Competition Commission for it to consider. The
Competition Commission will then forward any remaining requests to
the Secretary of State with the report. The Secretary of State will
then consider any remaining excision requests. This should save time
and assist speedier publication, since the Department can deal with
excision requests earlier. Late excision requests direct to the
Department will still be considered, though this may delay the
report’s publication. These should be made within ten working
days of the Competition Commission sending a report to the Secretary
of State. The Competition Commission will inform parties when
the report has been delivered to the Secretary of State.
11.7
All excision requests receive full consideration.
The Department prefers to act on the basis of the interested
parties’ full written explanation of why publication of particular
material will have a seriously prejudicial effect on it. On rare
occasions a meeting with officials may be necessary for interested
parties to present the arguments in support of their excision
requests.
11.8
Parties will be informed individually of the
outcome of their requests by the Competition Commission or DTI as
appropriate. However, the Department does not comment in public on
the requests received or give any indication prior to publication of
whether or not excision requests have been accepted by the Secretary
of State. If you have made excision requests to the Department,
either directly or through the Competition Commission, you will be
informed in writing whether or not they have been accepted shortly
after publication.
12.
Representations after the Competition Commission have completed a
monopoly investigation but before the report is published
12.1
Once the Competition Commission has completed a
monopoly investigation the report is delivered to the Secretary of
State who is responsible for publishing the report and, if the
report is adverse, for deciding what, if any, action should be taken
in response to the report. During the course of the inquiry the
Competition Commission will have given extremely careful
consideration to all the evidence and arguments put to them by
interested parties.
Representations
on the content of Competition Commission monopoly reports
12.2
When a Competition Commission report is received
by the Secretary of State, it remains confidential until
publication. During this pre-publication period, the Secretary of
State considers the report. If the Competition Commission has
reached adverse findings the Secretary of State must decide what
steps, if any, should be taken to remedy the situation. The
decisions which the Secretary of State takes in response to monopoly
reports are based on the full examination and analysis contained in
the reports.
12.3
Interested parties should bear in mind that,
where further representations are made after the Competition
Commission has reported, it will not be possible for the Competition
Commission to re-open the inquiry in order to consider them. In so
far as circumstances allow, and particularly bearing in mind the
desirability of publishing reports as rapidly as practicable, the
Secretary of State will take into account written representations
received after the Competition Commission has made its report. These
representations will also be brought to the attention of the
Director General, again in so far as circumstances allow, so that he
can take account of them in formulating any advice on the report to
the Secretary of State. Nevertheless, in order to ensure that their
views can be given full and proper consideration, interested parties
are strongly advised to ensure that all their representations are
addressed to the Competition Commission during the course of the
inquiry and, as far as possible, well before the deadline set for
completion of the report.
12.4
Requests for meetings with Competition Ministers
during this period will not be accepted.
13.
Representations after publication of monopoly reports
13.1
The following guidance should be
noted:
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If
the report is a clearance representations may be addressed to
the Department, or to the DGFT who will continue to monitor
developments in the market in accordance with his duty under
section 2(2) of the Fair Trading Act.
-
If
the report is adverse and the Secretary of State announces a
period of consultation on possible remedies, representations
should be addressed to the Department. More precise arrangements
for submitting representations will usually be set out at the
time the decision is announced.
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If
the report is adverse and the Secretary of State decides to
proceed to an Order, representations should be addressed to the
Department. More precise arrangements for submitting
representations will usually be set out at the time the decision
is announced.
-
If
the report is adverse and the DGFT has been asked to seek
undertakings, representations on the content of undertakings may
be addressed to the Office of Fair Trading.
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If
the report is adverse and the Secretary of State decides no
remedial action is necessary, representations may be addressed
to the Department
13.2
Representations relating to a failure to comply
with undertakings given or Orders made following a Competition
Commission monopoly report should be addressed to the DGFT who is
responsible for monitoring compliance with undertakings and Orders.
Annex A
- Forms in PDF format.
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Adobe Acrobat Reader to read these files. If you do not have a copy click
here to download one free of charge.)
Instructions
for notifications of publication
of monopoly reports
Advance
notice of publication of monopoly reports
Request
for copies of press notices on monopoly reports
Contacts
for further information
Department of
Trade and Industry
Consumer and Competition Policy Directorate
4th Floor
1 Victoria Street
London SW1H 0ET
Tel: 020 7215 5417
Fax: 020 7215 6491
Web Site: http://www.dti.gov.uk/ccp/monopolies.htm
The Office of
Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Tel: 020 7211 8000 (switchboard)
Web Site: http://www.oft.gov.uk
The Competition
Commission
New Court
48 Carey Street
London WC2A 2JT
Tel: 020 7271 0101
Fax: 020 7271 0367
Web Site: http://www.competition-commission.org.uk
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