Despite Labour’s much-vaunted pro-business offensive during the
election campaign, its attitude to competition, under President of the
Board of Trade, Margaret Beckett, has taken the business community by
surprise. Lobbyists say they are increasingly being drafted into
mergers, acquisitions and unfair practice cases, and are having to adapt
to the ways of the perhaps uncharitably nicknamed ’Mrs Blockitt’.
Michael Burrell, managing director of Westminster Strategy, whose
clients include US group Texas Utilities - currently preparing a bid to
take over Energy Group - says: ’There is a feeling that under the
Conservatives, whether a case would be referred or not was predictable,
so it was less necessary to employ lobbyists. But Labour’s approach is
seen to be less predictable, so companies are playing it safe and
including lobbyists in their teams. We do have a vested interest in
Beckett’s official line on competition was summed up by the consumer
affairs and competition minister Nigel Griffiths last week: ’Her general
policy continues to be to refer mergers primarily on competition
grounds, but where, as part of a wider public interest scrutiny,
important regulatory issues are raised, she may decide that a reference
Most lobbyists agree that the main difference between the Government’s
policy and that of the previous Tory administrations is Labour’s
emphasis on the public interest alongside purely competitive concerns.
This means that lobbyists must argue that their clients’ merger plans
are in the public, as well as the business community’s interest.
So far, the public interest argument has come to the fore in
politically-contentious cases - those involving vote-winning matters
like household brands or the environment.
Beckett earned her nickname in such a case last June, when she
confounded stock market expectations and blocked the proposed merger
between brewing giants Bass and Carlsberg-Tetley, despite conditional
clearance from the MMC. The merger would have given the new company a
market share close to 40 per cent and, perhaps more importantly, have
cost 2,000 jobs and potentially pushed beer prices up.
Competition policy is regulated by the Office of Fair Trading (OFT) and
the Monopolies and Mergers Commission (MMC). The OFT investigates
takeovers and allegations of anti-competitive practices, and recommends
what action should be taken. With the DTI’s approval, cases can be
referred to the MMC for closer investigation - seven have been referred
since May’s election.
The President of the Board of Trade has the right to veto a conditional
clearance from the MMC, but has no say in unconditional clearances.
Several lobbyists believe that Beckett’s emphasis on public interest has
led to more cases being referred from the OFT to the MMC since May than
would have been under the Tories. Rory Chisholm, a competition
specialist and director of lobbying firm GJW, says: ’The difference
between Labour and the previous government is that, in cases involving
doubt or a dispute between the OFT and the government, the previous
government would water down the OFT’s recommendations whereas this
government takes a tougher line than that recommended by the OFT’.
Lobbyists have also had to adapt to the breadth of opinion likely to
influence the new Government. Because Labour politicians do not have the
established network of links to business which existed under the Tories,
lobbyists must use other networks to influence policy-making, such as
environmental and consumer groups, trade unions, backbenchers and
On top of adapting to the Government’s ways, lobbyists will soon be
working within a new institutional framework. The draft Competition
Bill, now in its final parliamentary stages, will bring UK competition
law in line with the Treaty of Rome, whose underlying competition
principle is that all forms of market agreement are prohibited unless
The OFT’s powers will be beefed up to include halting suspected breaches
of fair trading pending investigation and imposing fines of up to 10 per
cent of a company’s UK turnover if a breach is proved. The MMC will be
replaced by a diminished Competition Commission, which will hear appeals
against OFT decisions.
Opinions differ as to how the new law will practically affect
competition lobbying. While its contents directly concern
anti-competitive practice cases only, takeovers may be inextricably
linked to these. A prospective bidder may be discouraged from launching
a takeover for fear of being forced to partially shut down corporate
activity by the superpowered OFT.
This could in turn mean fewer competition cases available to be lobbied,
but longer-term lobbying activity for those companies which do decide to
take the plunge.