Successes and Failures in Regulating and Deregulating Utilities

Successes and Failures in Regulating and Deregulating Utilities

Evidence from the UK, Europe and the USA

Edited by Colin Robinson

This book is the latest annual review of utility regulation and deregulation, published in association with the Institute of Economic Affairs and the London Business School

Chapter 3: The Enterprise Act: pluses and minuses for competition policy

George Yarrow

Subjects: economics and finance, competition policy, public finance, public sector economics

Extract

George Yarrow INTRODUCTION Following a long period of review and relative inaction, two ʻlegislative busesʼ have now turned up in what, for this type of exercise, is an unusually brief period of time. First came the Competition Act in 1998, which brought UK competition law into much closer alignment with EC law. Now we have the Enterprise Act (EA) which, at least at first sight, appears to be more influenced by antitrust on the other side of the Atlantic. The headline-grabbing aspects of the new Act are the criminalization of certain types of cartel activity and, to a lesser extent, the ʻdepoliticizationʼ both of merger control and of those aspects of the old regime that were retained when the Competition Act was introduced. For the rest, it might be argued that the Act is little more than a tidying up exercise. Arguably the economic content of the Act, at least in terms of its practical impact, is minimal. The public interest criteria of the Fair Trading Act (FTA) are, in relation to mergers, replaced by a substantial lessening of competition (SLC) test, and the notion of complex monopoly is eased out, to be replaced by market investigations of situations where, for one reason or another, there is cause to believe that competition might not be as effective as it could potentially be. It is not immediately clear, however, that, in practice, these changes will make a significant difference to the way in which policy currently operates. On the other hand,...

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