The OFT and Regulation

OK, so yet another investigation into the supermarkets. But this is the bit I found most interesting:

The OFT has also been plagued by actions from rivals of companies against whom it has dropped investigations – and this is the Irishman\’s biggest bugbear.

"People out in the market should compete in the market. Not by using public resources as a way of manipulating their rivals," he says.

That\’s extraordinarily naive: perhapos businesses should compete out there in the market, but that doesn\’t mean they will.

That, of course, being the very basis of having an Office of Fair Trading, that while they should compete in the market, they don\’t always do so.

And if you\’ve got a regulator out there that you can complain to, if that complaint is successful your competitor gets fined 10% of turnover, well, why wouldn\’t you make the complaint? And if the complaint isn\’t successful, you\’ve still caused them great expense and management time defenmding themselves from the allegation.

In fact, you\’ve actually got an incentive to enter into a collusionary pact, or at least discuss doing so. Go along, nod at the right time and then shop your rival to the OFT and see them being fined 10% of turnover. You get off scott free because of the whistelblower\’s provision, that he who confesses first don\’t get punished.

The housebuilders\’ fines are expected to dwarf the OFT\’s record £121.5m fine levied on BA last summer.

Of course, no one has deliberately done that to a rival yet, but they could do.

2 thoughts on “The OFT and Regulation”

  1. The joke “why is there only one monopolies and mergers commission?” was slightly funny at the age of 14. Good to see you’ve grown up…

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