The roles of the Competition Commission and Department of Trade and Industry in promoting competition

Introduction

The purpose of this statement is to set out the aims of the Government in respect of the promotion of competition and the roles of the DTI and the Competition Commission (CC) in the achievement of this objective.
The Government is committed to promoting competition in the economy to improve the UK’s productivity performance and to make markets work well for consumers so as to achieve prosperity for all. The White Paper on Competition in 2001 set out the Government’s vision for the CC as a world class competition authority.

DTI’s aims

The DTI had agreed with HM Treasury a Public Sector Agreement target which is to place empowered consumers at the heart of an effective competition regime, bringing UK levels of competition, consumer empowerment and protection up to the level of the best by 2006, measuring the effectiveness of the regime by peer review and other evidence, to ensure a fair deal for consumers and business, working in collaboration with the relevant regulatory authorities. The Competition Commission is a significant contributor to achieving this target. DTI will monitor progress according to the key performance indicators (KPIs) in paragraph 16.

The CC and its contribution to the government’s aims

The CC is an executive Non Departmental Public Body (NDPB) independent from Government though wholly funded by the DTI. The detailed Management Statement and Financial Memorandum for the CC is published on the CC’s web site. The CC contributes towards the achievement of the DTI’s target.
In becoming a world class competition authority, the CC’s activities will contribute:

to an increase in the level of competition in the UK economy
to the UK’s economic performance and productivity in the international economy, where competitive pressures are becoming increasingly global.

The CC’s contribution will also make markets work for consumers. In many cases consumers will benefit from:

lower prices
a wider range of choice
more innovation
higher quality products and services.

Responsibilities

The DTI has responsibilities for setting the overall policy and legal framework for competition and consumer issues in the UK and for negotiating in the European Union and increasingly internationally. The Secretary of State is responsible specifically for the appointment of Members of the Competition Commission, for the provision and monitoring of its funding and for assessing the Commission’s contribution towards the overall DTI PSA target.
The CC has statutory powers and responsibilities covering competition issues. It conducts in depth inquiries into mergers and markets. It makes decisions against the competition tests set out in the Enterprise Act 2002. In the event of adverse findings it decides on appropriate remedies. It also investigates references on the regulated sectors of the economy.

CC’s contribution to wider national and international competition issues.

Given its expertise on competition issues, the CC is able to contribute to Government policy when requested. But in such interaction the CC does not refer to any specific current inquiries or contribute in any way that would bring into question its independence.

Meetings and informal contact

There will be meetings at least once a year between the Secretary of State or the Minister for Competition and Consumer Affairs and the Chairman of the CC for a general exchange of views. The substance of active inquiries will not be discussed, but discussion of the Commission’s procedures or lessons learnt from completed inquiries may be included if appropriate, as may discussions of the Commission’s overall workload and planning assumptions.
These meetings will be underpinned by regular meetings at official level. In particular, there will be meetings at least every six months between the Director General of Fair Markets Group and the Head of CCP and the Chairman and Chief Executive of the CC to discuss, inter alia, the Commission’s progress against the key performance indicators set out below. Again the substance of active inquiries will not be discussed, but discussion of the Commission’s procedures or lessons learnt from completed inquiries may be included if appropriate, as may discussions of the Commission’s overall workload and planning assumptions.
Professional staff in the CC may interchange views with DTI professionals on best practice in economics and other professional topics relating to competition. DTI may arrange, at suitable times, short secondment opportunities within DTI for Commission staff in order to broaden their appreciation of the overall competition policy framework. But such secondments would avoid involvement with any issues which might come to the CC. The CC may make similar arrangements for secondments from the DTI.
As the Secretary of State has responsibilities for setting the overall framework for competition and consumer issues in the UK, the DTI has responsibility for legislative initiatives in the UK and negotiating new competition and consumer law at European level and increasingly internationally. Given its wide ranging competition expertise, the CC has a valued advisory role in both these regards.
The DTI might also be a party to an inquiry conducted by the CC and under certain prescribed circumstances make references to the CC. Communications on such matters will be separate from those set out in paragraphs 10-13 above.

Key Performance Indicators

The CC will provide for each financial year a rolling corporate & business plan to be sent to DTI by March of the previous financial year. This document will include a range of qualitative and quantitative key performance indicators (KPIs) which the Council of the CC will use to monitor the overall performance of the CC including for example progress in achieving high skills and expertise of staff and members; and progress will be covered in the annual review.
For the purposes of accountability DTI will monitor a particular set of these KPIs:

level of satisfaction of the Commission's stakeholders as measured annually by an independent third party.
assessment of the CC's performance against the objective of being a world class competition authority carried out by independent consultants (every 3 years)
value for money offered as measured by budget compliance, and progress achieving annual efficiency improvements to be agreed with DTI.

June 2003