30 April 2001
21 October 2013
21 August 2013
29 January 2013
21 December 2012
King & Wood Mallesons on how the construction industry should prepare for Hong Kong’s new competition regime
2 May 2013
So the Office of Fair Trading (OFT) has done it - £3.2m. Nice one, Johnnie Vickers. I let out a little shriek of delight when I heard. Not that I have anything against Napp Pharmaceuticals (which received the whopping fine). In fact, I had never heard of it before it made this unfortunate leap into the limelight [Napp is to appeal the OFT's decision, The Lawyer, 23 April 2001]. No - the reason for my unseemly show of pleasure goes way back.
In a former life, as a public servant dedicated to righting every anti-trust wrong I could lay my hands on, I had a role in the OFT for the pursuit and prosecution of collusive tenderers in the construction industry. All the big players were there, often in more than one industry's cartel, and doing the same thing in each: fixing the price and the successful bidder in advance, and everyone else bidding higher - or "covering", as we say in the trade.
I took these cartels through to the Restrictive Practices Court. It took a lot of public work and money. And at the end of the day - what? An order of the court saying that they must not do it again. What a fiasco - you could not get into the court on some days for the legions of silks representing the numerous companies, there, effectively, only to apologise to the court for their clients' wrongdoings. I did not feel that we had achieved a result.
Make no mistake - these cartels cost our country dear. For a one-mile stretch of the A1M (Doncaster bypass), a contract for the resurfacing of the road was won at a price of £600,000. Subsequent analysis showed that a competitive tender would have been £480,000. If that 25 per cent premium was applied to every road-surfacing contract in the land (and the cartel did operate throughout England), millions upon millions of pounds of public money has been overpaid.
At about the same time as those cases were proceeding, there was a review of competition law (the Liesner Committee). I made my own personal submission. I stated that the outmoded laws then existing should be scrapped. I recommended their replacement with prohibition-based European Union-style law, with real sanctions for infringement. I did not receive an acknowledgement.
And then the Government passed the 1980 Competition Act - another frightful waste of time and money. I often wonder if my submission is lying in an archive somewhere now. Did it, perhaps, rise up, Phoenix-like, when the 1998 Competition Act was passed?
But the real problem caused by the years and years of ineffective competition law is not over yet. The 1998 act is good - absolutely the right thing. But it has to deal with a culture that will not change overnight.
There has grown up in this country a culture of non-compliance, in so far as competition law is concerned. One of the issues may be that the old regime, with all that mumbo jumbo about "registrable restrictions", was so difficult to understand and apply that only the very scrupulous and/or well-advised ever came near the register. And since, in practical terms, nothing happened if you did operate a registrable agreement that was not registered, the law fell into disrepute. People looked upon competition law as optional. The law without a sanction was effectively no law at all.
That culture will be hard to change. It will take some big fines and a deal of publicity to get the message across. The OFT has done a fine job in publicising the new law. It has produced good material, and its speakers have travelled all over to give talks on the act. But still one feels that the message is not getting through. We lawyers have a role to play here. Apart from digging them out of the hole they should never have fallen into (and for sure, there are lawyers sharpening their pencils to argue about what is or is not discriminatory pricing), our clients need preventative counselling: "compliance, compliance, compliance" must be the message. Nobody really wants a multimillion-pound fine, do they?
David Whibley is a competition law partner at Morgan Cole