Enterprise and Regulatory Reform Bill

ERR 43

Submission from Professor Catherine Waddams, University of East Anglia

The Enterprise and Regulatory Reform Bill – two specific suggestions

Catherine Waddams (formerly Price) is an economist based at the ESRC Centre for Competition Policy at UEA (CCP). CCP is funded by the Economic and Social Research Council to undertake independent interdisciplinary research into competition policy and market regulation, combining real-world policy relevance with academic rigour. Catherine has published widely on privatization, regulation and the introduction of competition, especially in energy markets, and is particularly interested in the distributional impact of regulatory reform, and consumer choice in newly opened markets; she was a part time reporting member of the UK Competition Commission from 2001-2009.

Additional specific comments following oral evidence:

On objectives of the CMA : Part 3 Section 18 (3) – page 12

At present this presumes that promoting competition is necessarily for the benefit of consumers. Given the potential Public Interest issues and other circumstances where competition may not benefit consumers (for example where there are natural monopolies), a better wording might be ‘The CMA must seek to promote competition, both within and outside the United Kingdom, wherever this would benefit consumers’. This would have the merit of reflecting the wording of the sector regulator duties, but in reverse order to indicate the primary duty of the CMA towards the competitive process.

On concurrency : Part 4 Chapter 5 Section 43 (2) and (3)

I am unclear about who is determinative with respect to exercising Part 1 functions. In 43(2) it appears that the CMA may decide. But in 43(3) it seems that they may do so only with the consent of the sector regulator. Does this require clarification? It is clearly an important practical point if a sector regulator is reluctant to allow a competition based enquiry , perhaps because of conflicting non competition objectives (for example social or environmental concerns which are properly the concern of the sector regulators but not of the CMA) . As I noted in my oral evidence (and evidenced by the comments on the objectives of the CMA above ), sector regulators have a different balance of objectives than does the CMA, and so the outcome for markets and consumers may depend on this precedence.

July 2012

Prepared 18th July 2012