UK has lost competitive edge, says Carsberg

Sir Bryan Carsberg, the Director General of Fair Trading, is not a man to get angry or to hog the headlines. That could be why his swingeing attack two weeks ago on the Government's approach to competition policy stunned the House of Commons Trade and Industry Committee. That, and the fact that he delivered it even before questioning had begun.

After three years in the hot seat at the OFT, Sir Bryan is secure in his belief that UK competition policy has lost its edge. The Government, smug in its view that Britain leads in the free-market stakes, might be shocked to hear that his opinion is shared by authorities around the world.

According to Sir Bryan: "We were in the lead in the development of competition policy in the mid-1970s. Now we have fallen behind. We were well regarded then and you can't say that we are now."

He notes positive developments in countries including Italy, Spain and Sweden and appears to admire the system in Germany. As for Britain? "All I can say is that I observe that there is not the kind of zeal for making the changes one might have expected," he says.

Now that he is within a few months of leaving the OFT to become the Secretary General of the International Accounting Standards Committee, his thoughts are crystallising on what those changes should be.

Like his predecessor, Sir Gordon Borrie, Sir Bryan has long argued for a "prohibition" approach to restrictive agreements - prohibiting restrictive trading practices and introducing hefty penalties for those who fall foul of the rules. Under the present system in Britain, nothing is prohibited, but "questionable" behaviour can be investigated and subsequently prohibited.

Sir Bryan believes that this gives no incentive to avoid anti-competitive behaviour and points to European Union rules, which impose fines of up to 10 per cent of worldwide turnover on companies engaging in certain prohibited acts.

The change now is that he has "been struck by the desirability of taking that approach further". He favours extending it to companies abusing a dominant position by refusing to supply, or indulging in predatory pricing, for example - or just treating one party more favourably than others. "All of these are pretty clear competition offences when carried out by dominant firms," he argues, which leave the British system of redress looking "pretty weak".

He would extend prohibition also to the utilities. When companies breach price controls or other regulatory rules he sees no reason a fine should not be immediately slapped on. His eight years' experience as director general of the telecommunications regulator, Oftel, adds weight to his view that utility regulators haven't enough power.

The vehicle for this change would be a unitary authority sweeping aside Britain's tripartite competition structure of the OFT, the Monopolies and Mergers Commission and the Department of Trade and Industry, which makes the final decisions on action after an MMC inquiry.

Sir Bryan is firm in his conviction that political meddling in the competition system goes too far in Britain. "In other countries you do not get politicians making the final decision. Internationally it is seen as weakening the process. Internationally it is seen as non-political activity and the view of people around the world is that political interference here weakens the system."

"There should be law and the law should be applied. Establishing the policy is the role of Parliament and it is for others to carry it out," he adds.

Irritation with politicians may not be something he easily admits to, but he is clearly concerned about lack of political action on improving competition law. The change he and Sir Gordon requested on restrictive practices has been promised since the Government published a White Paper on the subject in July 1989. Ministers have also stated their intention to increase his powers to some extent, but nothing has happened so far.

"Ministers say they at least intend to implement the 1989 White Paper and its various knobs and whistles. It's clearly not a priority because they would have done it by now."

He finds this strange in a Government that embraces the free market. "Perhaps it does not rank highly in the public attention," he adds.

Sir Bryan is also dismayed that the Monopolies and Mergers Commission saw no public interest problems with a number of cases he referred to them, including those involving fine fragrances - where some outlets were refused the right to sell by the manufacturers - and complaints about the cost of compact discs. Here he becomes cautious.

"I have had the policy of not criticising the MMC on particular cases. I might feel free to reflect more fully later on, but I never disguised the fact that I do not agree with the MMC in every case."

In spite of his unshakeable opinion that there is a need for a radical review, he says that he would have been happy to stay at the OFT until his original five year stint ended.

The accountancy profession, however, is what he came from and, he says, the package was too good to refuse. He relishes the challenge of turning his attention again to the topics that engaged him in the past - issues such as the the accounting treatment of pension obligations, how to make world capital markets work more efficiently, and how to make companies best accountable to shareholders.

"There are enormously important issues in accounting - in a sense the most difficult I have had to deal with. There are always more things to be done. It is going back to my professonal roots in a way. But public office has become my home and I am very comfortable in it. It is both going home and leaving home."

Then there is his age and the political climate to consider. "I am 56. They offered a five-year contract and I have two years here with an uncertain future, to put it circumspectly.

"There is an increasingly uncertain political picture. It was not difficult for them to come up with a package that was attractive to me," he said.

It seems unlikely that the change of role will slow Sir Bryan down. He still runs four times a week, although he gave up marathon distances in the mid-1980s. He spends typically three evenings a week out working but "tries to keep Fridays free". "I don't think I'm a workaholic," he muses. "I am just enormously interested in what I do. I get a great deal of pleasure from what I do."