There was much speculation last year that changes to the tone of
competition policy under the new Labour government - specifically to the
structure of competition authorities when the 1998 Competition Act was
implemented - would have profound implications for public affairs
Nine months after the Monopolies and Mergers Commission was abolished by
the 1998 Act, and replaced by the Competition Commission, and two months
before the final stages of the Act come into effect, opinions are mixed
over whether this speculation was justified.
In part it was a simple change of name, with the new body taking on the
key function of its predecessor: to investigate and report on mergers
and acquisitions when the Office of Fair Trading refers them. But it was
also a change of emphasis. The stress on competition was evidence of the
Government’s commitment to the industrial consolidation process being a
means to a different end: better services for consumers rather than just
better prospects for shareholders.
The test to be applied by the CC would be whether a decision benefited
consumers and increased competition in the sector. Since an estimated
1,200 mergers and acquisitions involving British companies take place
each year, any major improvements to the existing regulatory system
would have widespread consequences.
The former chairman of the Monopolies and Mergers Commission and now of
the Competition Commission, Oxford economist Dr Derek Morris, set out
the renewed philosophy of the CC in a speech last November to a
conference on UK competition law, after six months at the helm. He
highlighted four central themes for the work of the commission.
The body would, he said, promote ’intense competition’; it would
prioritise consumer interest over ’all others in society’; it would
drive the necessary shift towards greater independence for competition
authorities and it would be more transparent, making more information
available to companies and consumers alike.
The problem, as far as some public affairs consultants were concerned,
was that traditional techniques of lobbying - putting a case to
ministers or their advisers, lining up MPs in support of a client’s
position - would no longer be viable if politics was removed from
decision-making and all could see clearly what was happening.
The companies involved in competition cases vary and the role of the
lobbyists who work with them is almost always unique. If a rigid test
was established on the principle of consumer interest, the lobbyists who
sought to influence policy or communicate a specific point to decision
makers would need to learn new tricks. Right?
Well, up to a point.
Chris Savage, director of competition and regulation at Shandwick Public
Affairs, anticipated the shift in direction for lobbyists, away from
what he termed an ’old-fashioned’ focus on Parliament and politicians
and towards a much more broad-based approach, ’relying on effective case
presentation and generating support from third parties’.
The key point, Savage says, was that the principal parties in a merger
enquiry were not the only ones affected by its outcome. Certainly, he
argued, their views were important, and the amount of time a CC
investigation spent scrutinising their views would reflect that. However
the positions of third parties would assume extra significance given
that the views of parties to a case can sometimes seem predictable. ’A
key feature of any lobbying strategy in the emerging policy framework
will be the ability to build coalitions and mobilise support. Future
effective lobbying will call for new skills,’ Savage concluded.
Charles Miller at Citigate Public Affairs claims little has changed in
the last year.
’Because the body’s name changed, people assumed the way it would be
lobbied would also change,’ he says. To start with, Miller maintains, it
was never really possible to lobby the old Monopolies and Mergers
Commission, in the sense of approaching its members with an argument
Parties to enquiries, he says, would try to apply pressure by ensuring
the case they had was as good as possible and cajoling third parties
into supporting their position.
In an industry enquiry, for example, groups representing a lobbyist’s
client’s customers, their suppliers, government departments and the
relevant regulator would be lined up to add weight to a case. Only in
occasional instances would the lobbyist urge MPs to enter the fray.
Sometimes, commissioners take into account an MP’s views, but only if
they are intelligent - as opposed to standard or wearisome, in Miller’s
formulation - and only if the MP represented a specific, relevant
constituency of interest.
Miller gives the example of GEC and British Aerospace wanting to buy
Vickers shipyard in Cumbria. The MMC took notice of MPs writing in about
the issue, but ultimately GEC secured the bigger bid. ’That sort of
lobbying has not changed a jot,’ says Miller.
Rod Cartwright, the head of GCI Political Counsel, doubts the new body’s
ability to remain above politics. While on most matters it is fine for
officials to take decisions in line with the organisation’s competition
aims, this is not sustainable on matters where there is a public
’It is very difficult for the Government to remain neutral on issues
with a clear political dimension,’ Cartwright says.
The move away from political decision-making may be enshrined in
legislation after the next general election, but a mergers policy White
Paper published last summer spoke of ’reserved powers,’ where the
Secretary of State for trade and industry would retain decision-making
rights and exercise them in cases where there is a ’compelling public
interest’. Supporters of the new approach say this caveat takes the
sting out of depoliticisation, allowing for accountability in delicate
industry issues; critics say it leaves depoliticisation fatally
The key consideration is who determines when there is a compelling
public interest. If there is ministerial involvement in this decision,
independence will be damaged. The current proposals will require the
minister to consult Parliament if he or she wishes to use ministerial
With a massive Labour majority, this may seem little impediment to
ministerial interference, but Chris Savage thinks it will act as a
useful deterrent, if only because of the attendant media interest if a
minister wishes to get involved in an ostensibly legal decision.
Other areas where ministers will become involved are defence matters -
on national security grounds - and the newspaper industry, for less
distinct reasons of real politik.
Cartwright admits the tactics of lobbying have changed slightly, backing
Savage’s predictions. ’Our role has always been to help clients build a
groundswell of support for an issue. That remains intact. But the
importance of support from third parties has grown. The emphasis has
moved away from Office of Fair Trading officials and the Competition
Commission to a support role offering strategic advice,’ Cartwright
The increased importance of building grassroots coalitions has forced
the media relations part of lobbying centre stage. In short, the set of
audiences - the publics - to whom public affairs consultants must
communicate, has expanded. There may now be more room for lobbyists,
since people trained in investor relations, public affairs, change
management and straight PR will all be involved in the work. ’It would
be foolhardy for people to think the market is now closed. Strategic
message delivery needs more work than before,’ Cartwright says. As if to
emphasise the point, GCI is now looking to appoint a ’big hitter’ in the
competition lobbying field.
Chris Savage says the real shift in the situation is not the name change
to the CC, which he dismisses as just that. True scope for change lies
in the Government’s commitment to making the workings of the competition
authorities more open and transparent. ’Greater openness is good from a
public policy perspective and it changes the lobbying position. It used
to be discouraged to publish the contents of representations to the MMC.
Now they encourage publication and are happy for the various parties to
see what each other are putting forward,’ he says.
The CC has held public hearings to encourage openness. The first example
of this was the hearing on price-fixing in the motor industry, held in
London last July. While members of the public were not invited to make
submissions to the investigating panel, they were allowed to attend
hitherto private meetings, and those lobbying on behalf of parties to
the enquiry - much of the motor trade - could see what others were
arguing and take up points raised by opponents when making their own
Further public hearings were held in November concerning retail
competition issues and alleged retail market dominance by some
Savage warns against going down the US route of total transparency,
highlighting the argument that it can lead to unnecessary and costly
litigation and obscure the purpose for which companies and other
interested parties make submissions. He does, however, spot a lobbying
opportunity in the new openness.
As well as companies, charities, public sector bodies and consumer
groups being able to communicate with each other and not having to
submit their material ’blind,’ he says, ministers and civil servants
from other government departments can make their views known to the CC
or the Office of Fair Trading, (which refers cases to the CC.) They can
also be lobbied and built into the coalitions of support which are so
vital to successful competition lobbying. The scope for growth in the
field, he claims, is vast.
This view is supported by Simon Nayyar, director at Citigate Public
Affairs and chairman of the PRCA’s public affairs committee.
He welcomes the Competition Act, and the tougher powers it gives to
mergers and acquisitions authorities, including a fine of up to ten per
cent of turnover on companies violating the new competition laws.
Suggestions that bread will be removed from the lobbyists’ table through
depoliticised decision-making is firmly put to rest by Nayyar.
Describing the whole idea as a ’nonsense,’ he says: ’There will always
be a role for public affairs professionals since many of the decisions
the competition authorities make - concerning job losses, pricing
differentials or whatever - have huge political implications.
Politicians rightly think they have a duty of care to their constituents
in certain areas.’
Because the 1998 Competition Act is being implemented piecemeal,
opportunities to assess the legislation’s impact on lobbying are rare.
The various provisions in the act - establishing the Competition
Commission, giving teeth to regulators, prohibiting certain
anti-competitive practices and creating an appeals function within the
CC to hear appeals from those alleged to have infringed the new
competition laws - dribbled into force at different times. Some applied
from when the Bill became an Act, receiving its Royal assent in November
1998. Other sections became law last January, others still will come
into force in March.
Assessing the effects of changes to the institutional architecture of
competition at this early stage does yield some insights, however. A
respected leader in the competition lobbying field is Andrew Gifford,
the GJW chief executive who has lobbied extensively for Vodafone
AirTouch on the pounds 80 billion Mannesmann takeover deal.
Gifford believes that the greatest area of growth for the lobbying
industry will be in aspects of competition issues which do not concern
mergers and acquisitions. Areas such as fair trading, anti-competitive
practices and predatory pricing have the potential, Gifford argues, to
open up new areas of work for lawyers, and, ’by association, for public
The appeals function of the new CC takes effect this March, from when
decisions on unfair trading can be appealed to a special panel within
the commission’s 90-strong staff of academics, lawyers, business people
and accountants. Charles Miller is doubtful that lawyers will grasp this
Despite the existence of lobbying units within three major London law
firms - Clifford Chance, Dibb Lupton Alsop and Lovell White Durrant -
Miller thinks legal reluctance to share this work is due less to
professional snobbery than to the residual tarnishing of lobbying’s
image by successive scandals. ’Scandals have inhibited the willingness
of lawyers to embrace a discipline complementary to their own,’ he
While Miller credits this reluctance to a lack of people in the public
affairs industry of sufficient calibre, and agrees with Gifford that the
opportunities for expansion are there, he says, ’lawyers have had years
to do it and in the main they haven’t wanted to get involved,’ he
Perhaps because Gifford spots opportunities for an increased public
affairs workload, he is sceptical of the depoliticisation argument. ’The
Secretary of State has overturned a couple of OFT decisions already, so
there is no evidence that the whole process has become less political,’
He is also wary of the view that open hearings are themselves a sign of
greater transparency. ’If there was more openness you would expect to
see the reasoning of the director general of fair trading published, but
it’s not. The right to see third parties’ submissions is of limited use
because they become more circumspect if they know their comments are to
be on the public record,’ Gifford adds.
The current referred takeover by NTL of Cable and Wireless
Communications - not subject to the openness principle since it is a
mergers inquiry - has highlighted a degree of confusion at the CC.
The head of the inquiry, Denise Kingsmill, invited journalists to give
evidence and is reported to have told them that the CC was minded to
allow the merger on the condition that the merged entity allowed other
media networks to use its cable infrastructure. When this sort of
material emerges into the public domain, it does not inspire confidence
that the competition authorities are at the top of their game, and this
was not the sort of openness Derek Morris had in mind.
Lobbying changes all the time. The discreet, indeed hush-hush,
activities of elderly Tory gents in the Thatcher years were a far cry
from the brash young suits of the Millbank generation, although this may
just be a symptom of a profession in the early stages of
In competition lobbying, the changes wrought by the Blair Government and
the 1998 Competition Act do not constitute a revolution, but taken
together - greater openness, ostensibly apolitical decisions,
authorities working for consumers’ interests - they represent a modified
terrain in which the UK lobbying industry is picking up new skills.
SHANDWICK HELPS BA BID FOR CITY FLYER EXPRESS TAKE OFF
Shandwick’s involvement on behalf of CFE was led by Chris Savage, the
agency’s director of competition and regulation. Savage’s team advised
CFE executives on the procedures of the MMC and its successor body, the
Competition Commission. They also analysed a range of issues the MMC
would look at in the course of the investigation, and advised on how the
ongoing reform of competition policy would affect the Secretary of S
tate’s thinking on the proposed merger.
’There was talk about taking the politics out of merger decisions. We
advised therefore that the minister would be reluctant to overturn the
decision of the commission, and would allow the merger subject to
undertakings,’ says Savage.
Shandwick’s team suggested that Byers would want assurances that other
competition principles would be satisfied, such as there being real
benefits for consumers. It is possible the consultation period following
his initial announcement is a reflection of this. It also had the effect
of giving those opposed to the merger, such as Virgin’s air operations -
represented by Politics International - a chance to have their say.
In line with the spirit of openness in competition matters, the CC
published for the first time the ’issues letter,’ in which it outlined
the issues it was considering having seen written submissions but before
hearing oral evidence. In the course of Shandwick’s work, the importance
of generating third party support came to the fore, as groups
representing Jersey airports (where many CFE flights ended), CFE’s 700
employees and the local authorities affected, were lined up to support
Autumn 1998 British Airways indicated it wanted to buy its franchised
operation, City-Flyer Express. CFE was until then owned by a group of
venture capitalists and its own management, and flew from Gatwick
airport to various destinations across continental Europe.
January 1999 The Office of Fair Trading thought this bid may be against
the public interest, since it would place in BA’s hands a larger share
of flight slots at London’s second airport. The three-month
investigation by the Monopolies and Mergers Commission began in January,
and when the MMC reported back at the end of March, it was followed by
the protocol - determined four weeks of consideration by the Secretary
of State for Trade and Industry, Steven Byers.
June 1999 The four weeks had stretched into almost three months by the
time Byers announced he would allow the merger to go ahead, subject to
conditions. He was prepared to ignore BA’s new and increased share of
overall slots, but he insisted the airline should not increase its share
of slots in the peak hours of early to mid-morning. This was acceptable
to both sides, since it did not unduly disrupt the business plans of
either BA or CFE.
July 1999 In making his announcement, Byers urged a further consultation
period on the conditions he had suggested.
November 1999 The pounds 75 million sale of CFE to BA finally went