Monti launches probe into law firm cartels

Brussels set to crack down on price-fixing in Europe; MDP bans to be scrutinised

The European Commission is launching a high-level inquiry into anticompetitive behaviour in law firms.
Competition Commissioner Mario Monti is examining whether rules set by every legal regulator in Europe encourage anticompetitive behaviour that is against the public interest.

A public hearing to take place in Brussels at the end of this month, chaired by Monti, has been tabled to discuss whether rules insisted upon by some European regulators, such as price regulation and advertising restrictions, are anti-competitive. Monti will also examine rules across most of Europe banning multidisciplinary partnerships (MDPs).

One source attending the hearing said that Brussels is concerned that price regulation in countries such as Germany could be forcing law firms to function as cartels, even though they are not price-fixing in a covert manner. In Germany, for example, lawyers are theoretically required to charge uniform fees on cases and transactions dependent on the size of the job.

England and Wales, where the Secretary of State for Constitutional Affairs, Lord Falconer, is spearheading a deregulation exercise that could see the Law Society and the Bar Council lose many of their powers, is predicted to escape harsh criticism from Monti.

Herbert Smith Brussels managing partner and competition expert Stephen Kinsella said: “The Law Society [of England and Wales] probably doesn’t have much to be concerned about. It’s probably one of the most open and least restrictive of all the regulators.”

The commission is also looking into competition issues surrounding the regulation of other professions, including accountants and architects.

Monti is also understood to be concerned about the lack of regulatory synergy pertaining to law firms across Europe. Last month, Law Society president Peter Williamson stated that the society supports the development of MDPs. However, last year, the European Court of Justice ruled that the Netherlands, and by precedent other member states, have the right to prevent lawyers entering into MDPs with accountants, even though it accepted this might restrict competition in legal services.