The Goals of Chapter I of the UK’s Competition Act 1998

54 Pages Posted: 26 May 2010 Last revised: 27 Nov 2013

See all articles by Christopher Townley

Christopher Townley

King's College London - The Dickson Poon School of Law; A Dickson Poon Transnational Law Institute

Date Written: May 25, 2010

Abstract

This is a paper about UK competition law’s goals. It focuses on Chapter I of the Competition Act 1998 (CA98). The Office of Fair Trading (OFT), which is a key actor in this area, seems to pursue consumer welfare as Chapter I’s sole goal. The Office of Communications (Ofcom) and the OFT have concurrent powers to apply Chapter I, when the competition issue relates to activities connected with ‘communications matters.’ The High Court can hear private Chapter I actions, too.

It is problematic if these actors would decide the same case differently. This could create contradictions in legal duties, making ‘knowing the law’ impossible. It certainly undermines legal certainty for firms and their customers, increasing legal risk. This paper focuses on one potential area of divergence, which goes to the heart of almost every decision in this area, the objectives of Chapter I. I will argue that if the OFT pursues consumer welfare as Chapter I’s sole goal, then this is wrong in law. Furthermore, I believe that Ofcom is unlikely to follow the OFT’s lead on this issue. My focus is on the OFT and Ofcom; but, the High Court could diverge too.

Let me start by presenting a factual scenario where a disagreement as to Chapter I’s goals might matter. Public service broadcasting (PSB), for example, regional news, does get made by the market, but not in any quantity. Furthermore, outside the BBC, the UK’s PSB system is under great pressure. Ofcom believes that it is unsustainable; some firms might not renew their PSB licenses in 2014.

Given this scenario, how can Ofcom ensure that innovative and original programs, fulfilling public purposes, are delivered? The BBC has offered to set up partnerships with others to enhance PSB. They would help new entrants into the market through horizontal co-operation of some kind. Ofcom welcomed this, principally because of its duty to protect citizens as well as consumers. Is it possible that Ofcom, if applying Chapter I to such arrangements, would accept less competition than the OFT, if it meant that some of these public policy goals to protect citizens (which Ofcom also pursues) would be delivered in this new system?

This paper argues that the OFT should consider public policy goals in its Chapter I analysis. Part 2 starts by sketching out the UK’s concurrency regime; I show why I think the OFT pursues the sole consumer welfare goal in Chapter I and why Ofcom is likely (at least sometimes) to disagree. To explain why the OFT should consider wider public policy goals, Part 3 explores Article 101 TFEU’s goals; Chapter I is based upon this EU provision. Many believe that consumer welfare is now Article 101’s sole goal; however, several Court of Justice (ECJ) judgments belie this view. Part 4 unpicks Chapter I’s substantive provisions, looking at internal and external aids to interpretation to see what the UK law’s goals should be. Once again, I argue that public policy is relevant there. Part 5 concludes.

Keywords: United Kingdom, Competition Law, Antitrust, Goals, Objectives, European Union

JEL Classification: K20, K21, K23, K32, L4, L5

Suggested Citation

Townley, Christopher, The Goals of Chapter I of the UK’s Competition Act 1998 (May 25, 2010). Available at SSRN: https://ssrn.com/abstract=1615592 or http://dx.doi.org/10.2139/ssrn.1615592

Christopher Townley (Contact Author)

King's College London - The Dickson Poon School of Law ( email )

Somerset House East Wing
Strand
London, WC2R 2LS
United Kingdom

HOME PAGE: http://www.kcl.ac.uk/schools/law/about/staff/t/townleyc.html

A Dickson Poon Transnational Law Institute ( email )

London, England WC2R 2LS
United Kingdom

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