Why Labour Is Wrong on Competition

Article excerpt

The last thing we want is more lawyers pursuing antitrust cases, US-style, argues Stephen Pollard

For new Labour, there is no word more sacred than "competition". Anything "anti-competitive" ought to be destroyed. And because the US has the most competitive economy in the world, it follows that American competition policy is the model to which we should aspire.

Thoughts of the virile antitrust busters -- court orders blazing -- of the US Federal Trade Commission (FTC) are enough to make new Labour policy-wonks go weak at the knees. So, when Gordon Brown and Patricia Hewitt boasted on 18 June that Labour was remodelling UK competition law along US lines, it was surely the triumph of Labour as the party of the market and of the consumer.

Except that Labour has got it wrong. America's competition law is almost the worst thing we could import. The reasoning behind the proposed reforms is that aggressive multinationals are an enemy that can only be fought properly in the courtroom and the office of the regulator; that, left to the market place, such companies simply run rampant. In addition, "boosting enterprise", as Brown puts it. will strengthen the UK's status as a haven for investment--just like the US.

The problem is that there isn't one US competition law, there are 51: the federal edict, and those of all 50 states. Business needs to have a common standard against which to operate, and the wide variations within the US market mean that a rabid competition policy hurts, rather than benefits, consumers. The European Single Market is, in that respect, exactly the same. Instead of one standard, there are 15--and the 18 June announcement complicates things further.

In April, the FTC -- along with the Department of Justice, the federal competition enforcer -- settled a complaint against the French pharmaceutical company Aventis. Aventis had reached an agreement with a US company over that company's manufacturing of a generic version of Aventis's patented drug Cardizem. The FTC found that, contrary to the allegation, the agreement was not anti-competitive, and had not delayed the introduction of the generic drug on to the US market place.

That, one might think, would be that. But, in May, the attorneys-general of 15 American states and the District of Columbia launched their own separate and further action against Aventis, alleging that the agreement had indeed somehow harmed buyers of Cardizem, and demanding $ l00min damages. As each US state has its own competition law, to which any company operating in its jurisdiction is subject, state attorneys-general can and do bring competition cases -- even when, as with Aventis, the alleged culprit has already been investigated and cleared, or settled, by the federal competition authorities.

The federal competition authorities have, over the years, developed highly professional staff who take the consumer interest as the standard for judging corporate behaviour. …