UK Competition Policy - History

The origins and culture of the UK competition regime can be traced back to a 1943 paper by (future leader of the Labour Party) Hugh Gaitskell and George Allen which led to the 1944 White Paper on Employment .  Both papers looked forward to the need to generate economic growth and employment after the end of the Second World War, including by abolishing the monopolies and cartels that had been created to aid the war effort. . The genius of the Gaitskell/Allen paper was to establish the link between the control of monopoly and the creation of employment:-

'... it should be emphasised that an attack on private monopoly is not be confused with an attack on private enterprise."

The 1948 Monopolies and Restrictive Practices (Inquiry and Control) Act established the Monopolies Commission whose first Secretary was the wonderful Alix Kilroy (by now Dame Alix Meynell).  From 1956, restrictive trade practices (now known as cartels and abuse of dominance) were dealt with by a legal process involving a registrar and a specialist court, eventually subsumed into the Office of Fair Trading (OFT).  The Monopolies Commission became the Monopolies and Mergers Commission (MMC) responsible for what are now merger control and Market Investigations.   The MMC was in due course renamed the Competition Commission and eventually merged with the OFT to create the Competition and Markets Authority (CMA)

Public Interest?

Despite the relatively rapid introduction of monopoly/merger controls after the war,  the UK's policy (apart from restrictive practices) was for many years relatively gentle.  The MMC was not 'anti-monopoly' of course.  It spent most of its time dealing with oligopolies.  And it was tasked with ascertaining 'the public interest', a wonderfully vague concept, and so took account of the short term employment and other consequences of its decisions.  Writing in 1985, Tom Sharpe noted that 'the UK really does not have an anti-monopoly policy, as that term is recognised in the USA, Germany and the [European Economic Community]. What the UK possesses is less a legal framework designed to establish standards of acceptable behaviour [and instead it has] a mechanism whereby certain defects or failures in the market mechanism can be investigated and ad hoc remedies applied.'

And the MMC (and its successor the Competition Commission - CC) was not an implementor or regulator.  Its reports were written by part-time Commissioners supported by a team of civil servants, including accountants, economists and lawyers.  It investigated and reported, almost as though it was a permanent Royal Commission.  Its investigations were agnostic and there was no presumption of fault.  In seeking to ascertain the public interest, it had no wish to create a court of law, or a body of evangelical prosecutors, or a process of technical evaluation of economic welfare.  It reported to Ministers who took decisions after taking account of its advice, as well as advice from the OFT. Its reports became a most remarkable series of studies of industrial and commercial sectors.  But it could be (and indeed was) accused of being prosecutor and judge. 

One weakness (or strength?) of both organisations was that only the Commissioners/Members could ask questions of the industrialists and others that attended for cross-questioning whilst reports were being written.  Staff, or a lawyer, could almost certainly have questioned more incisively, but then the members might have felt less ownership of the eventual report.

The MMC/CC's advice was almost always accepted.  On the four occasions when it was not (in the period 1982-1997), the Secretary of State or junior Minister was able to point to opposing advice in a minority report, twice with the support of the Director-General of the OFT.

The public interest test was in effect abolished, in most cases, in 1984 by Secretary of State Norman Tebbit.  The Tebbit Doctrine held that competition decisions would in future be decided primarily on competition grounds.  This was enshrined in law in the Enterprise Act 2002which also took Ministers and the OFT out of the CC's process so that its decisions were final unless appealed to a new body, the Competition Appeal Tribunal (CAT).  The OFT's cartel and abuse decisions also then became appealable to the CAT.

A small number of merger cases remain subject to the public interest test.  Further detail is here.

Follow this link to learn more about developments since 2002.


This web page draws on information in Stephen Wilks'  In the Public Interest  - a history of competition policy and the Monopolies and Mergers Commission.


Martin Stanley

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