{"id":79506,"date":"2017-03-07T12:06:00","date_gmt":"2017-03-07T12:06:00","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=723cbb1a741204dadd5d09f2730658af"},"modified":"2017-03-07T12:06:00","modified_gmt":"2017-03-07T12:06:00","slug":"speech-what-has-competition-ever-done-for-us","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=79506","title":{"rendered":"Speech: What has competition ever done for us?"},"content":{"rendered":"
\n

Who cares about competition?<\/h2>\n

I\u2019m going to start on a downbeat note \u2013 always a great way to energise the audience! I\u2019m going to tell you about a setback for the CMA<\/abbr> \u2013 the Competition and Markets Authority, the organisation where I work \u2013 which caused a great deal of heartache for us. It happened about a year and a half ago, when we were undertaking the criminal prosecution of 3 individuals for being directly involved in a cartel between their companies, competing manufacturers, to fix the prices at which they sold their products, rather than competing on price.<\/p>\n

There is no doubt that there was a cartel. And some criminality was clearly involved \u2013 1 defendant of the 3 we had charged pleaded guilty. But the other 2 elected for a jury trial \u2013 and (here\u2019s the setback) the jury found them not guilty.<\/p>\n

Of course the CMA<\/abbr> accepts the verdict. Nevertheless, this outcome \u2013 the jury\u2019s acquittal of 2 of the 3 defendants we had charged \u2013 was felt as a serious setback for my colleagues at the CMA<\/abbr>, who were shocked and disappointed after having put in so much work into investigating this cartel, gathering and analysing the evidence, and preparing the prosecution. There is no suggestion that my colleagues were in any way remiss; on the contrary, the trial judge praised the CMA<\/abbr>\u2019s handling of procedural aspects of the case, in stark contrast to the previous criminal cartel prosecution, 5 years earlier, which had collapsed because of procedural errors.<\/p>\n

As I say, there was certainly a cartel in operation \u2013 an agreement between competitors to fix prices, rather than compete against each other to undercut each other and offer customers lower prices. The companies involved admitted as much. Last December, in an investigation we launched against the companies (rather than individuals), using our \u2018civil\u2019 rather than our criminal law powers, all 4 companies involved in the cartel admitted their infringement, and fines totalling \u00a32.7 million were paid (albeit that these fines were reduced as a \u2018discount\u2019 to reward them for early admission of their infringement). And in the criminal case \u2013 to repeat: one of the defendants pleaded guilty.<\/p>\n

So, given that there was clearly a price-fixing cartel \u2013 subsequently admitted by all 4 companies involved \u2013 and that 1 of the 3 defendants pleaded guilty to the criminal cartel offence, why did the jury acquit the 2 defendants who had pleaded not guilty?<\/p>\n

In the nature of things, it\u2019s impossible to know for sure. In prosecuting the case, the CMA<\/abbr> had to deal with the technical legal point that, under the criminal law for the cartel offence, for cartels that took place before April 2014 (as this one did), to secure a conviction the prosecution needed to prove not only that the individuals were involved in a cartel, but also that in doing so they acted \u2018dishonestly\u2019. The defendants who pleaded not guilty based their defence on the argument that they had not met this criterion \u2013 ie, that they had not acted \u2018dishonestly\u2019. A change in the law since then means that, for cartels since April 2014, it will no longer be necessary to prove \u2018dishonesty\u2019 to establish that the criminal cartel offence has been committed.<\/p>\n

But I have a suspicion that this legal point is not the only factor at play. I fear that it may be that, quite often, juries who are asked to consider cartel cases don\u2019t immediately grasp what is at stake \u2013 by which I don\u2019t mean to criticise their decision-making, but rather to suggest that, for the ordinary men and women who make up juries, it\u2019s quite hard to grasp the harm that cartels \u2013 anti-competitive agreements \u2013 cause. There is such harm, it is serious harm, and those who participate in cartels typically know that. But it\u2019s sometimes harder to persuade a jury of the harm caused by cartels and anti-competitive agreements than in the case of, say, shoplifting. That of course makes it incumbent on us as prosecutors to explain all the more why cartels matter.<\/p>\n

This worries me. I don\u2019t think people get it. I don\u2019t think they really feel the importance \u2013 the social and moral importance \u2013 of combating anti-competitive practices. I\u2019m not sure they really \u2018get\u2019 why public authorities like the CMA<\/abbr> should spend time, energy and taxpayers\u2019 money on taking enforcement action to stamp out anti-competitive practices and, more generally, on taking action to protect and promote competition. I might be wrong, but I think that most people see competition (to the extent that they think about it at all) as a technical and somewhat abstruse aspect of commercial law. They wonder, in a manner akin to the characters in Monty Python\u2019s \u2018Life of Brian\u2019, \u201cWhat has competition ever done for us?\u201d.<\/p>\n

It worries me, not just because that means they don\u2019t see the importance of the job I\u2019m paid to do (which is a rather deflating thought) \u2013 but because protecting and promoting competition is important. And I think it\u2019s also important that people should realise that it\u2019s important.<\/p>\n

Here\u2019s why.<\/p>\n

This is what competition has done for us<\/h2>\n

Practices that frustrate competition cause real harm to the public. People talk about \u2018victimless\u2019 breaches of the law. But anti-competitive practices, mergers that substantially lessen competition, markets which have features that adversely affect competition \u2013 the things that my organisation the CMA<\/abbr> is required by law to tackle, and is funded by the taxpayer to tackle \u2013 are not victimless. Weakening competition harms the public. It is seriously bad for our society. It is not at all victimless.<\/p>\n

Conversely, protecting and promoting competition is of significant benefit to the public.<\/p>\n

My colleagues in the world of competition law \u2013 not just at the CMA<\/abbr>, but in other public authorities charged with enforcing competition law in Britain and in numerous countries around the world, as well as competition lawyers, competition economists, competition academics \u2013 will, I fear, be shocked and embarrassed by what I\u2019m about to say. Not because they\u2019ll disagree with it, but because they\u2019ll regard it as a \u2018statement of the bleeding obvious\u2019, not worth wasting a speech on. But that\u2019s just the perspective of competition specialists \u2013 and we\u2019re a peculiar bunch. Beyond our specialism, I\u2019m not at all sure that the benefits of competition are obvious to everyone in our society \u2013 not to our juries, not to our media, not to our opinion formers, not to the general public, not to many of the politicians whom the public elect.<\/p>\n

And so I think it\u2019s important to spell this out. Competition is not some technical, abstruse area of law. It is fundamental to the public good \u2013 and particularly to ordinary people. And, for your Institute which is dedicated to improving customer service, competition is of absolutely critical importance.<\/p>\n

Let\u2019s start with a really basic point. Businesses make money. They are in business in order to make money. That\u2019s not a criticism; it\u2019s a fact. Of course they are.<\/p>\n

Competition harnesses that desire of businesses to make money, and directs it to the public good. And that\u2019s why competition is so valuable.<\/p>\n

If you\u2019re in business and you face competition, the way you make money is to push your prices down to the lowest level that is consistent with a reasonable profit or rate of return \u2013 that is, the lowest price consistent with making it worthwhile to be in business at all, to invest your capital, to take some risks, to work damn hard, to have a lot of worry (rather than just using your capital to buy gold ingots and then lying on the beach all day).<\/p>\n

Where there is competition, if you as a business don\u2019t keep your prices down, you won\u2019t make money because you will lose customers to your competitors who will undercut you. So you keep your prices down. And where there is competition, you won\u2019t compromise on quality either. If you supply shoddy goods, or shoddy service, you won\u2019t make money because customers will go to your competitors. So competition gives businesses the incentive to keep prices down, and to keep quality and service standards up, all to the benefit of consumers.<\/p>\n

But if there is no competition, or only weak competition, why bother? If as a business you don\u2019t face strong competition, you can make money by pushing prices up, and you won\u2019t risk losing customers. You can cut corners on product quality and service standards.<\/p>\n

So it is vigorous competition that gives business the incentive not to push prices up, and not to cut corners on quality and service standards.<\/p>\n

But the way competition works is even better than that. It\u2019s not just a matter of stopping businesses from raising their prices or compromising on quality and service standards. Competition gives businesses reasons to improve \u2013 to get better and better \u2013 in all these respects, to the benefit of consumers. It\u2019s dynamic. Because businesses, wanting to make money, and facing vigorous competition, don\u2019t just want to avoid losing customers to their competitors; they want to make money by winning new customers from their competitors. So it\u2019s not just that they won\u2019t raise prices. They\u2019ll try to be more efficient so that they can reduce their prices, undercut their competitors, and win customers from their competitors. It\u2019s not just that they won\u2019t compromise on quality; they\u2019ll invest to improve quality and service standards; they\u2019ll innovate.<\/p>\n

And where there\u2019s vigorous competition, of course every one of those competitors will want to do the same \u2013 to win over customers by improving price, quality and service standards for their customers, each one leapfrogging the other in these respects, provided they make a reasonable return that makes it worthwhile to stay in business rather than lie on the beach. All to the benefit of consumers.<\/p>\n

So, in respect of every product and every service where there\u2019s vigorous competition, businesses have the incentive to become more efficient to keep prices low, to improve quality and service, to innovate. Think about any product where there\u2019s been vigorous competition \u2013 cars, say, or TVs. Over the years, they\u2019ve become cheaper in real terms (in the number of hours people have to work to be able to afford the product), they\u2019ve become sturdier, they\u2019ve got more features, they\u2019ve become more attractive, they\u2019ve got safer. All to the benefit of consumers. And all thanks to competition.<\/p>\n

In fact, if we think about it, most of us have seen the effect of competition arriving, over the past 30 to 40 years, in industries which were previously monopolistic, a process sometimes called \u2018liberalisation\u2019. Take air travel, for example, which used to be the preserve of the privileged few, in a world of generally national monopoly airlines, known as \u2018flag carriers\u2019 \u2013 Air France, Alitalia, Swissair and so on. The markets were opened to competition, with low-cost airlines such as easyJet and Ryanair, and more recently WizzAir, being allowed to enter the market and offering a fresh competitive challenge, in which prices not just on those airlines but across the industry have been lowered, and flying off on holiday is now taken for granted by the ordinary consumer.<\/p>\n

So increased competition between airlines has led to greater affordability, for the benefit of millions of ordinary consumers.<\/p>\n

Let me take another example, which happens to be in a related sector \u2013 airports \u2013 although the way it worked was different. In 2009, the Competition Commission, one of our 2 predecessor bodies, ordered the introduction of competition between London\u2019s 3 major airports, by ordering Heathrow\u2019s owner, BAA, to relinquish ownership of Gatwick and Stansted. It also ordered BAA to relinquish ownership of either Edinburgh or Glasgow airport, so as to introduce more competition between Scottish airports. The break-up of BAA was completed in 2013. Last year, in May 2016, we published a formal detailed evaluation<\/a> of the effects of this introduction of competition between airports which had previously been under the same ownership and therefore had not been competing against each other. One of the effects was on service quality. As our report noted:<\/p>\n

\n

Service quality to passengers and airlines has improved markedly at Gatwick, the first airport that was sold. At the airports more recently under new ownership, improvements are expected at Stansted and Edinburgh as the investment in new terminal facilities now under way and new operational initiatives are fully embedded.<\/p>\n<\/blockquote>\n

Most strikingly, facing new competitors improved competition at Heathrow, which remained under BAA\u2019s ownership, but faced new competition from Gatwick and Stansted, now under separate ownership. Our report found that:<\/p>\n

\n

Service quality at Heathrow, which also adopted new commercial strategies \u2026 has reached a historic high. In 2015 passengers scored Heathrow\u2019s overall service quality above the average of the highest scoring European airports. This is a marked improvement from service scores achieved by Heathrow in 2008 when the airport ranked 97th out of 127 airports surveyed.<\/p>\n<\/blockquote>\n

So increased competition among airports has led to better service quality, enjoyed by millions of passengers.<\/p>\n

By contrast, where competition is weaker or less vigorous, there is no such incentive for businesses to bother. If a business doesn\u2019t face vigorous competition, it can make money without having to cut prices, to win customers from its competitors, because it\u2019s not really worried about its competitors; rather, a business, facing weak or no competition, can make money by raising prices. By being shoddy on product quality and sloppy on service. And who loses out? Consumers. Millions of ordinary people. You and I. And especially the people who can least afford higher prices, or poor service.<\/p>\n

Businesses lose out too, if there\u2019s weak competition. Businesses are customers of inputs to the products and services they supply. If those become more expensive, or of poorer quality because of insufficient competition among their upstream suppliers, those businesses as customers suffer.<\/p>\n

And there\u2019s another effect on businesses. I\u2019ve talked about how competition gives the incentive for businesses to become more efficient, so that they can put downward pressure on price to make money by attracting customers from their competitors. Without the pressure of vigorous competition, businesses become less efficient. And that\u2019s important for the economy as a whole, and for our society. Inefficient businesses won\u2019t flourish and grow, so jobs aren\u2019t created. Inefficiency means we don\u2019t make the best use of our resources; we are wasteful. That\u2019s bad for the economic well-being of all of us \u2013 for our prosperity as a society. For our overall economic growth, our ability to generate jobs and well-being, and to fund public services \u2013 and indeed, if we\u2019re inefficient and wasteful of resources, for our environment.<\/p>\n

Conversely, where there is vigorous competition, it acts as a spur to efficiency \u2013 and so contributes to improved productivity and to our overall economic well-being.<\/p>\n

And so the public \u2013 ordinary people, consumers, businesses, especially the hard-pressed who can least afford higher prices \u2013 win out when there is vigorous competition, and lose out when there isn\u2019t.<\/p>\n

Practices that weaken competition are bad for consumers, bad for ordinary people, bad for the public. Two hundred and fifty years ago the great economist Adam Smith put it very pithily. He described collusion between businesses, as opposed to vigorous competition between businesses, \u201ca conspiracy against the public\u201d (1 – see footnote at the end). Much more recently, a similar idea was expressed by David Lewis, who was the first head of the Competition Tribunal in post-apartheid South Africa. His book describing his experiences of enforcing the country\u2019s competition laws took as its title \u2018Thieves at the dinner table\u2019. This referred to a cartel he had to deal with which had had the effect of raising the price of bread in South Africa, so putting bread at the dinner table beyond the reach of millions of poorer South Africans. \u2018Thieves at the dinner table\u2019 is a fairly dramatic, but I think not an inaccurate, way of characterising anti-competitive practices. It makes graphically clear how weakening competition is bad \u2013 seriously harmful \u2013 for consumers, for millions of ordinary people, including for the least well-off in our society.<\/p>\n

Competition and regulation<\/h2>\n

When I was first invited to speak at this conference, it was suggested to me that I should speak about how regulation helps customer service. I think it was assumed that the CMA<\/abbr> is a regulator. I\u2019m not criticising that \u2013 many people make that assumption.<\/p>\n

But we are not a regulator, but a competition and consumer agency \u2013 unlike, say, Ofwat which regulates the water companies, or Ofgem the energy regulator, or the ORR the rail regulator. As I pointed out to the organisers \u2013 politely, I hope \u2013 the job of the CMA<\/abbr> is not to regulate businesses, but to ensure that they are left to compete as vigorously as possible in any way they see fit, and to ensure that competition between them isn\u2019t significantly restricted or weakened.<\/p>\n

Let me say what I understand as the difference between competition and regulation. This is a bit of a simplification, but I don\u2019t think it\u2019s misleading.<\/p>\n

Competition, as we\u2019ve discussed, creates incentives for businesses to keep prices low, and service and quality high, as that\u2019s the only way those businesses will retain and win customers from their competitors. Regulation works differently, and in some ways more directly. Price regulation involves the regulator specifying a maximum price, a price cap, which the regulated business can\u2019t exceed. As for service standards, regulators typically set out conditions in the regulated businesses\u2019 licences which include minimum service standards that the regulated businesses are obliged to adhere to.<\/p>\n

After the financial crash nearly 10 years ago, it became quite commonplace to say that the problem was caused by too much competition, and too little regulation, in financial services, harming consumers and damaging \u2013 seriously damaging \u2013 the economy as a whole. And in some quarters that morphed into the proposition that, not just in financial services but generally, there\u2019s been too much competition and too little regulation.<\/p>\n

I\u2019d like to challenge that idea. Direct regulation \u2013 a public authority setting compulsory maximum prices and compulsory minimum service standards \u2013 is necessary in some circumstances. This is chiefly where there is no scope for competition \u2013 principally, where there are \u2018natural monopolies\u2019, which is typical for utility networks. It is very often economically wasteful, and sometimes environmentally wasteful, to duplicate gas pipelines or water reservoirs and pipes or electricity networks or broadband wire networks. So these are natural monopolies, where it\u2019s not thought beneficial to have competition between the networks. Because there can\u2019t be competition, and because there is a risk therefore that the businesses concerned, not worrying about losing customers to their competitors (because there aren\u2019t any), would keep prices too high, and would compromise on service standards and quality, direct regulation steps in to mandate price caps and minimum service and quality standards. That\u2019s why direct regulation of price and service standards has been a feature of the privatised utilities or at least their natural monopoly elements, such as gas networks or water infrastructure.<\/p>\n

But regulation is a proxy, and usually a poor substitute, for competition. That\u2019s not a criticism of regulation \u2013 it\u2019s necessary to protect consumers when they can\u2019t be protected by competition \u2013 but it\u2019s seldom better than competition if competition is available (eg if there is no \u2018natural monopoly\u2019).<\/p>\n

A public authority applying direct regulation will do its best, when setting price caps, to guess the most efficient price, the price you\u2019d get naturally if there were competition rather than natural monopoly. Over the years, regulators have become more sophisticated about doing this. But it can only ever be a rough guess \u2013 it\u2019s impossible actually to know what efficiency and what downward pressures on price would result from real competition. This is not in any way a criticism of regulators; on the contrary, I think they do their job incredibly impressively. But it is merely to point out the inherent difficulty, the impossibility really, of attempting to second-guess the efficiencies and the price pressures that competition, if it were available, would generate naturally.<\/p>\n

Likewise with service standards set in regulators\u2019 licences and other obligations applied to regulated businesses. Yes, you can require, by the legally binding determination of a regulator, specified minimum service standards. But no public authority, however sophisticated, can replicate the upward pressure on service and quality standards, and the innovation, that competition \u2013 where it is available \u2013 can generate.<\/p>\n

I don\u2019t mean to suggest that direct regulatory intervention is only appropriate for natural monopoly utility networks. There are other circumstances where, for one reason or another, natural competition alone can\u2019t generate good consumer outcomes \u2013 circumstances sometimes described as \u2018market failures\u2019 \u2013 where the incentives in vigorous competition are not sufficient to guarantee, for example, consumer safety, or informed choice, or necessary health or environmental protections. In those circumstances, more direct regulatory intervention may be necessary. At the CMA<\/abbr> we have ourselves, for example in our market investigations, proposed such direct interventions to address market failures. But where there is no such necessity, the best protection offered to consumers, the strongest pressures to improve price, quality and service standards \u2013 to give consumers value for money \u2013 come from competition.<\/p>\n

There is a further aspect to this. What if customers aren\u2019t satisfied with the standard of service, or the value for money? In the absence of competition \u2013 in regulated sectors like the privatised utilities, for example, or public transport \u2013 the customer can complain, with ultimate recourse to the regulator. If you make a complaint, it helps if you\u2019re well-educated and articulate, if you\u2019re patient and, let\u2019s face it, if you\u2019ve got quite a lot of time on your hands. But for millions of ordinary consumers \u2013 hard-pressed, rushing around between work and taking kids to school and queuing at the shops and trying to make ends meet, it\u2019s not always practicable to go through a complaints process, and most people can\u2019t afford to engage expensive advocates to do it on their behalf. But where there\u2019s competition, and if it\u2019s vigorous and not weakened, if you don\u2019t like a product or service, or if you think it\u2019s too expensive, you don\u2019t have to employ expensive lawyers, and you don\u2019t have to have the time or skill to write eloquent emails to the regulator, or the patience to stay on the line listening to the automated music of the company\u2019s customer service call centre. If you don\u2019t like the service or the quality or the price, and there\u2019s sufficient competition, you can just vote with your feet and take your custom to a competitor. And the fear that you\u2019ll do that creates pressures for all the competitors for that product or service to keep prices down, and service standards up.<\/p>\n

None of this should be read as a criticism of regulators. The UK\u2019s sector regulators \u2013 Ofcom, Ofgem, Ofwat, ORR and so on \u2013 apply direct regulation where that\u2019s necessary. But where there\u2019s scope to do so in their industries, the regulators have been seeking to promote competition and to clamp down on anti-competitive practices. The CMA<\/abbr> works with the sector regulators in this endeavour through a new forum, up and running since 2014, called the UK Competition Network. My first job at the CMA<\/abbr> involved working with the sector regulators on this \u2013 promoting and protecting competition where possible in the regulated sectors \u2013 and I\u2019m proud of work we did, and continue to do.<\/p>\n

In practice: how the CMA<\/abbr>\u2019s competition work benefits consumers<\/h2>\n

So our role at the CMA<\/abbr> is primarily to promote and protect competition for the benefit of consumers, not to regulate.<\/p>\n

Merger control<\/h3>\n

We do that in our merger control work, intervening to prevent mergers, acquisitions and takeovers that would substantially lessen competition.<\/p>\n

Market studies and market investigations<\/h3>\n

We do it with our market studies and market investigations, taking steps to remedy features of markets that have adverse effects on competition. Sometimes our remedies will involve an element of intervention where we feel this is necessary \u2013 in our energy market investigation, on which we reported last summer, we proposed a transitional price cap for consumers using prepayment meters for their gas and electricity, typically the poorer consumers, who find it hard to take advantage of the competitive choice (and therefore to gain the benefits of price competition) available to those who don\u2019t use prepayment meters \u2013 this price cap will remain in place until the introduction of smart meters removes the limitations on such consumers accessing better deals. But for those consumers not on prepayment meters \u2013 the majority of energy users in this country \u2013 who can take advantage of choice, we took measures to enhance real competition so as to benefit consumers \u2013 making it easier for consumers to shop around between competing suppliers, and so increasing the competitive pressure on all suppliers, for example by giving competitors access to consumer databases, and enhancing the role of brokers to \u2018shop around\u2019 on behalf of consumers.<\/p>\n

So too with our market investigation into the retail banks, on which we reported last August, where we have sought to harness new technology to increase the vigour of competition, so benefiting consumers \u2013 specifically our \u2018open banking\u2019 proposal for an app through which banks are to be required to allow their customers to share their own bank data securely with competing banks.<\/p>\n

For these key services for consumers \u2013 energy and high street banking \u2013 the outputs of our major market investigations were aimed at making it easier to shop around, to make competition more vigorous, to increase downward pressure on price and upward pressure on service quality. In short, more competition delivering better value for money for consumers.<\/p>\n

Consumer protection law enforcement<\/h3>\n

The CMA<\/abbr> also has powers, along with other authorities, to enforce consumer protection laws. We do this \u201cparticularly to tackle practices and market conditions that make it difficult for consumers to exercise choice<\/a>\u201d. For example, the online reviews of products and services that, as consumers, we increasingly use to choose what\u2019s best value are an invaluable tool in exercising consumer choice. Moreover, by keeping consumers well-informed about what\u2019s best value, online reviews intensify pressures on suppliers, sharpening the incentives to offer lower prices and better quality. But that only works if consumers can rely on them; if not, the value \u2013 for choice, for competition, for consumers \u2013 is lost. So over the past couple of years we at the CMA<\/abbr> have used our consumer protection powers to put an end to practices we have identified where online reviews have been misleading, for instance through the publication online of positive reviews that were fake, or the suppression of reviews that were negative or critical.<\/p>\n

Why it matters if people don\u2019t \u2018get it\u2019<\/h2>\n

But, as I say, I very much fear that many people, and that includes opinion formers who shape our public debate and our policymaking, don\u2019t sufficiently appreciate \u2013 or if they do, don\u2019t convey \u2013 the importance of protecting and promoting competition.<\/p>\n

An example, it seems to me, is the way the media report high-profile takeovers. More often than not, when a big takeover or merger is announced, commentators will pop up on the radio to talk about its likely effects in terms of job losses \u2013 very rarely about the likely loss of competition. Job losses matter \u2013 enormously \u2013 and can affect hundreds, or perhaps thousands, of people working in the particular companies concerned, and in ancillary businesses. But if the takeover results in a substantial loss of competition, millions more ordinary people lose out \u2013 as prices rise, and quality and service \u2013 value for money \u2013 deteriorate. That\u2019s millions of ordinary, hard-pressed consumers. We ought, in our public discourse, to take the competition implications of a major takeover at least as seriously as the consequences for jobs. But all too often we don\u2019t.
\nThe danger of this is that, if our media and opinion formers don\u2019t see the value of competition, and if the mass of people don\u2019t get it either \u2013 that is, the voters who elect our political leaders and the taxpayers who fund our competition authorities and courts \u2013 we\u2019ll end up with policies and laws and outcomes where competition is not promoted and protected, and where we as a society lose all the huge benefits that competition brings.<\/p>\n

Demonstrating the value of competition<\/h2>\n

Faced with this situation \u2013 that competition is hugely important to the well-being of millions of people, to businesses, to our economy, but that this is barely acknowledged or recognised in our public debates and our policymaking \u2013 what can we do? What should public authorities like the CMA<\/abbr> do about it?<\/p>\n

Focusing on products and services that matter to ordinary people<\/h3>\n

One thing we can do is to tackle limitations on competition in respect of products that matter to ordinary people. We did that with our market investigation into energy supplies. Also with our market investigation into banking services supplied to individual customers \u2013 holders of personal current accounts \u2013 and to small businesses. Not just individual consumers, but hard-pressed people who set up and run their own small businesses, suffer real harm when energy prices are unnecessarily high because of insufficient competitive pressures, or when their banking costs are high, or when they have to waste time dealing with poor customer service. The measures proposed in our market investigations, to facilitate more vigorous competition in these markets, should lead to real and lasting long-term improvement.<\/p>\n

Let me talk about my own portfolio: tackling illegal anti-competitive agreements and practices, for which I\u2019ve had responsibility since mid-2015. Last year, 2016, we levied \u00a3142 million of fines on companies we found to have engaged in illegal anti-competitive agreements and practices, up from \u00a31.1 million in the previous year. To emphasise personal responsibility, late last year, for the first time ever, we used our powers to secure director disqualification for an individual director of a company which was party to an illegal anti-competitive agreement or practice. Also in 2016 we secured a criminal conviction in an ongoing criminal cartel investigation.<\/p>\n

In tackling illegal anti-competitive agreements and practices, we have dealt with products and services that matter to ordinary consumers.<\/p>\n