Tuesday, 21 January 2014

Why Labour never tackled monopoly before


Some years ago now, I was involved with the team at the New Economics Foundation running the highly influential Clone Town Britain campaign - the one that argued that every high street was beginning to look the same.

As an aside at this point, I might say that - although I still think we were right - I don't think any of us expected that the situation would be changed, not by the disappearance of the little shops, but by the euthanasia of most of the clone retailers.  But that is beside the point, for now.

During the umpteenth Competition Commission review of the retail market, I had come to the conclusion that proper competition was the way forward - competition that would allow a diversity of retail formats to exist, not just a bit more competition between the big four.

But how were we going to put any pressure on the competition commissioners, shadowy people at the best of times.  We decided to hold an academic seminar at an outpost of London University, and invite them.

Lots of people came, including a contingent from the Office of Fair Trading and some of my think-tank colleagues involved in the Clone Town campaign.  We went round the table introducing ourselves and two things became immediately and worryingly clear.

First, nearly all those from the Competition Commission had been seconded from the European Commission, and were not much interested in what I would call competition.  They were interested in building up giant European champions to take on the giant American champions in great transatlantic clashes.

Second, it was clear after the first two people spoke that - almost without exception - the representatives of the Competition Commission hated us with a deep and bitter loathing.

I was staggered that they had even heard of us.  It was a little disturbing, especially for a mild, unpolitical person like myself, unused to being disliked quite so intensely.

"What should we do?" one of my colleagues asked.  I said we should reply, as George Bush used to say about terrorist outrages, at a time and place of our choosing.

But I also came away wondering why competition had been so sidelined in this country.  I came to the conclusion it was largely the fault of the Lib Dems.

Hear me out on this one.  Competition used to be the central economic plank of the Liberals.  After the 1950s, they tended to forget it.  They abandoned 'free trade' as a Liberal maxim and consequently lost control of its meaning to the so-called neo-Liberals (if such people really exist).

The Conservatives have never been very interested in competition.  They think, rather like the Competition Commission, that if a company has an absolute market dominance, then it is because people must want them do.  If they have it, they must deserve it.

Labour has never been interested in competition ether.  In fact, Blair and Brown both seemed to prefer a situation where a handful of mega-companies dominated their own markets, believing they could then control them - which of course they never did.

It was left to Liberals, as it always is, to bang the drum and keep up the pressure for market diversity.  When they fell silent, it was hardly surprising that the diversity got squeezed.

So when Ed Miliband starts talking about competition, that is for me a hopeful sign.  It is so because we urgently need competition back on the agenda, and because it might encourage Liberals everywhere to dust down the central plank of their traditional approach to economics.

What I found surprising about Miliband's intervention on the subject is that he only talked about the banking and energy markets.  I fear this means he is simply chasing headlines because it implies he won't tackle the others.

What about retailing for example?  Where one retailer has over a third of the grocery market - and consequently pays its suppliers in 90 days, rather than the usual 30, funding itself to the tune of an interest free loan equal to two month's stock.  Will he tackle that?

What about pharmaceuticals or seed manufacturers, who are attempting to lock us into a semi-monopoly with their GM food patents?

And most of all, what about the new generation of intermediaries, which push up inflation by taking a slice of every transaction if they possibly can - Amazon, Visa, Google?  Will Miliband dare?  I certainly hope he does, before we are all trussed up in the most illiberal monopoly power since the days of Standard Oil.

2 comments:

Richard T said...

it would be nice to hope that the Lb Dems take on the inadequacy of the whole regulatory structure in the UK as the central point of the manifesto for 2015. It is hard to think of one regulator that acts effectively, let alone makes more than futile hand flapping gestures in favour of consumers and the public in general. Indeed there must be some tie up with the whitewash makers since all the regulators use their product in industrial quantities.

Mark Scott said...

Why is there only one competition commission? Could be a clue there...