Approaches to failing markets

Daniel Gordon

Office of Fair Trading

BIICL Transaltantic Antitrust Dialogue

2 May 2007

OFT uses a wide range of tools to address failing markets

Soft HardInformalAdvice

Published Papers

EnforcementCompetitionConsumer

Market Reference

Market Study

Regulatory Impact

Assessment

PurposeHelp policy makers while they develop their policies

Thought pieces on key competition issues

Feedback to Government on how the policy proposed affects competition

Holistic view of markets or sectors to identify changes that will improve consumer benefit and/or productivity

Refer markets where problems exist that can be solved through order

Cartels Agreements Dominance Unfair Contract Terms Misleading Adverts etc.

Market Studies

Scoping/Fact-finding

Further OFT Action

Market Investigation by

Competition Commission

Recommendations to Government

Action by others

Market Studies – What have we done?24 market studies completed to date:

●Care homes

●Classified directory advertising services

●Commercial Use of Public Information

●Consumer IT services

●Debt consolidation

●Doorstep selling

●Estate agents

●Extended warranties for electrical goods

●Financial Services and Markets Act

●Liability insurance market

●Liability insurance follow-up review

●New car warranties

●Payment Protection Insurance

●Payment Systems

●Pharmacies

●Pharmaceutical price regulation scheme

●Private dentistry

●Property searches

●Public sector procurement

●Public subsidies

●Store cards

●Taxi Services

●Ticket agents

●UK Airports

The approach we take

● A presumption against intervening in markets

● Evidence-based approach

● Strong focus on government activity

● Flexible approach subject to principles of good project management

● Active stakeholder strategy for each study

How we choose what to look at?

Initial set of ideas

Prioritisation Criteria

Launch

Some comments/observations

●How do we choose between instruments?

●Role of evaluation

●What are the limits to what we should look at?