A series of pro-enterprise reforms to competition and bankruptcy rules to ‘make Britain the best place in the world to do business’ has been announced by Patricia Hewitt, Secretary of State for Trade and Industry, through two government white papers.
The changes include measures designed to increase consumer choice, strengthen the economy, put downward pressure on prices and encourage risk-taking entrepreneurs.
The Competition White Paper measures include:
- Taking politics out of competition decisions.
Extending new approach of independent, competition-based test from mergers to investigating sectors and markets as a whole. Competition authorities will have more resources and expertise. There will be greater certainty for business and a more transparent regime.
- Strong deterrents against anti-competitive behaviour.
New criminal offence for individuals who set up and maintain hardcore cartels. Stronger action against cartels will help protect business, reduce prices and benefit consumers.
- Putting the consumer first by introducing ‘super-complaints’.
Named consumer bodies to be given more access to the OFT to voice concerns about markets not operating properly – public response within 90 days.
- New powers for Competition Appeals Tribunals.
Making it easier for individuals to bring claims for damages against anti-competitive behaviour (previously no successful actions in 30 years) and allowing consumer groups to bring claims on behalf of individuals who have suffered.
Commenting on the proposals Patricia Hewitt said, “I want UK firms to get to the future first – an environment which encourages enterprise is central to that. Driving competition into every part of our economy is the key to closing the productivity gap and creating a true enterprise culture in this country. Small businesses are the drivers of enterprise. These measures will give them better chances to compete. This Government is determined to strip away obstacles to competition and put the consumer first. That is good for business, the consumer and the country as a whole.”
The Insolvency White Paper measures include:
- Remove the ‘one size fits all’ approach to bankruptcy
Striking a balance between a fairer deal for the responsible majority and a more stringent regime against the minority who abuse their creditors and the public. Ensuring that where possible viable businesses are saved and do not go to the wall.
- ‘Fresh Start’ proposals to give entrepreneurs another chance.
Bankrupts who are not reckless, irresponsible or dishonest should be discharged from debts and released from restrictions within 12 months.
- Tougher penalties for reckless bankrupts.
New Bankruptcy Restriction Order lasting for between 2 and 15 years.
- Stopping companies going to the wall unnecessarily.
By streamlining the administration procedure making it quicker, more effective and accessible; and moving away from administrative receivership – where control rests with a single secured creditor – to greater use of collective insolvency proceedings such as administration which puts all creditors on an equal footing. Many small businesses will be amongst the unsecured creditors who will benefit.
- Abolishing the Crown’s preferential right to recover unpaid taxes ahead of other creditors
Giving benefits to unsecured creditors and in particular helping small businesses.
- New modernised financial regime
Increased transparency and simplicity for the Insolvency Service while recognising that creditors should not bear the burden of paying for functions carried out in the public interest.
Patricia Hewitt added, “For too long in this country bankruptcy laws have worked against entrepreneurs. I want them to work for them. The prospect of failure puts off many potential entrepreneurs from having a go. The modern framework we are introducing will encourage responsible risk-taking and make it easier to save viable businesses.”
The government’s White Papers on which comments are requested by 5th October, are:
- On competition reform, comments should be sent by email to:
or by post to:
Competition Reform White Paper,
Department of Trade and Industry,
1 Victoria Street,
London, SW1H 0ET
- On insolvency reform, comments should be sent by email to:
or, by post to:
The Insolvency Service,
Policy Unit – Room 505,
London, WC1B 3QW.