The Competition Commission’s approach to determining the

appropriate remedy

Sections 60 and 61 of The Act concern “Directions relating to distortion,

prevention or restriction of competition” (relating to restrictive practices
under sections 44, 45 and 46) and “Remedies in merger control” (relating to
mergers, as set out in sections 47 and 48), respectively. Directions under
both of these sections are referred to here as “remedies”.

Remedies are not penalties, but rather actions taken by the Competition
Commission to improve market functioning. Penalties are for intentional or
negligent breaches of collusive agreements, while remedies aim to enhance
or prevent future breaches. The Commission may make directions to remove
restrictions or enhance market competition, addressing the root cause of the
problem. However, Sections 60 and 61 also specify that the Commission
may remedy adverse effects, addressing both the symptoms and causes of
the problem. Remedies should not be seen as penalties, but as a deterrent
against future breaches.
This section describes how the Competition Commission will select a
remedy, or package or remedies, to achieve these aims. In selecting a
remedy, or package of remedies, the Competition Commission will have
regard to:
(a) Effectiveness;
(b) Timeliness; and
(c) Proportionality of implementation costs to the expected benefits of the
remedy.

The Competition Commission's published report will outline the choice of

remedy, with reasons. The process of remedy design typically involves an
interactive dialogue with the parties applying remedies and other interested
parties. Parties' interests are typically prioritized, such as offering
undertakings to address the Commission's concerns. This dialogue is likely
to result in better-focused and less burdensome remedies than if the
Commission had to design remedies without such dialogue .

Types of remedy

Remedies applied by competition authorities are often divided into

structural remedies, such as divestment, which aim to restore or enhance
competition by changing the market structure, and behavioural remedies,
which aim to change the behaviour of enterprises (through orders or
contractual undertakings).
Structural remedies require minimal monitoring, while behavioral remedies
require the Competition Commission or a nominated agent to monitor
compliance. The Commission may also make non-binding recommendations
to the Government.
Viability

The package of assets must be viable, whether in independent ownership or

under the control of an existing player in the market. Viability requires that
the divested business be able to offer an effective competitive threat to
other producers in the market, while remaining profitable. It may well be the
case that a larger divestment package is required, to create a viable
competitor.

The Competition Commission will generally regard a complete existing

business as more likely to be viable than a package of assets extracted from
existing businesses. In assessing the viability of a divestiture package, the
Competition Commission will consider not only the physical assets to be
transferred, but also access to intellectual property, to customer
relationships, staff expertise and any required regulatory permissions.

Sale value of the divested package

The Competition Commission allows enterprises to choose the manner of

divesting their assets as long as the effectiveness of the remedy is
preserved and the divestment proceeds in a timely fashion. Enterprises are
typically responsible for the sale, and the Commission will not impose
conditions that could adversely affect the sale value of the assets unless
necessary to preserve the effectiveness of the remedy.
The Commission sets a deadline for the enterprise to sell the assets, and if it
fails to do so without good cause within the deadline, the Commission takes
steps to ensure the assets are sold, typically by appointing a third party to
act as a trustee with power to dispose of the assets. Fees and other costs
incurred as a result of appointing such a trustee would normally be the
responsibility of the divesting party.
The Competition Commission may also place restrictions on the types or
specific identities of allowed buyers of the divested assets. Before
proceeding to due diligence, enterprises divesting assets must obtain the
Competition Commission's approval of the preferred buyer. If the assets
cannot be sold to any acceptable buyer, the Commission may review its
decision and consider allowing sale to less acceptable buyers.
Divestment remedies typically require no monitoring or enforcement by the
Competition Commission once the sale of assets is complete. However, the
divestiture order usually specifies that the divested assets cannot be
repurchased by the divesting enterprise or come back under its control.
Behavioural remedies

Behavioural remedies are interventions aimed at changing market

participant behaviour, with the Competition Commission's preference being
for those that promote and protect competition itself. These remedies can
take the form of orders by the Commission or undertakings by parties
involved, which require monitoring and periodic review. The Commission will
consider the costs of monitoring and enforcement, focusing on costs
imposed on third parties, the public sector, or the Commission itself. If
monitoring and enforcement are carried out on the Commission's behalf, the
costs will be borne primarily by the enterprises at fault.
All behavioural remedies will contain arrangements for review, triggered
either by a specific date or set of objective circumstances. The Commission
will establish clear criteria for lifting the remedy when it makes its original
order or accepts undertakings, and all remedies will contain a sunset clause,
typically 10 years, to ensure they lapse if not reviewed.
Enabling measures are remedies that seek to create better access for new
entrants or allow smaller existing competitors to expand. These measures
typically force enterprises to behave in ways that go against their incentives
to maximize profits and require careful design and monitoring to minimize
distortion to normal competition. When large enterprises have been found to
be abusing a monopoly position, behavioural remedies could be used as an
alternative to divestment to enable new entrants or smaller existing players
to compete more effectively. However, such measures can distort
competition and must be time-limited to promote competition by
encouraging entry.
Informational remedies

Competition problems typically become more acute the more ignorant or

confused customers are about competitive alternatives. Either as a remedy
for a general failure of competition, or to correct a problem specifically
arising from a lack of information, the Competition Commission may require
enterprises to provide more information7. More directly, enterprises might
also be required specifically to draw the attention of customers to the
existence of competitors or to procedures for cancelling or amending their
decision to buy (such as ‘cooling off periods’) so that it is easier for
customers to switch to competitors. General consumer regulations from
Government are a better approach to long-run consumer protection than
can be provided by Competition Commission decisions, applied only to
enterprises which have been investigated.

Price control remedies

The Competition Commission can impose a requirement for enterprises to

cease or amend conduct related to prices for breaches of sections 44-46
(monopoly situations) and adopt or desist from such conduct in the case of
mergers. However, the Commission does not have the power to control
prices generally in the economy. Price controls can only be imposed on
enterprises found to be in breach of the Competition Act and not on any
other enterprises active in the market.

The ability to control prices as a remedy to abuse of monopoly or

anticompetitive merger is a powerful tool in the Competition Commission's
toolkit, but it should be used with caution. The Competition Commission
regards free competition as the best guarantor of good outcomes for
customers and the economy in general, and would expect price controls to
act as a poor second-best alternative to remedies that enhance or protect
competition.

Price controls provide rapid and direct relief to customers suffering

excessive prices due to monopoly power, but they may also be ineffective,
costly to implement, and distortionary compared to free competition. If price
controls are expected to be required indefinitely, it may be more appropriate
to recommend that the Government impose price controls in that sector,
rather than through Commission decisions on a case-by-case basis.

General consumer regulations from the Government are a better approach

to long-run consumer protection than can be provided by Competition
Commission decisions, applied only to enterprises that have been
investigated.

The Competition Commission can impose a requirement for enterprises to

cease or amend conduct related to prices for breaches of sections 44-46
(monopoly situations) and adopt or desist from such conduct in the case of
mergers. However, the Commission does not have the power to control
prices generally in the economy. Price controls can only be imposed on
enterprises found to be in breach of the Competition Act and not on any
other enterprises active in the market.

The ability to control prices as a remedy to abuse of monopoly or

anticompetitive merger is a powerful tool in the Competition Commission's
toolkit, but it should be used with caution. The Competition Commission
regards free competition as the best guarantor of good outcomes for
customers and the economy in general, and would expect price controls to
act as a poor second-best alternative to remedies that enhance or protect
competition.

Price controls provide rapid and direct relief to customers suffering

excessive prices due to monopoly power. However, they may be ineffective,
costly to implement, and distortionary compared to free competition. They
are sometimes necessary to prevent exploitation of an extreme monopoly
position or promote other government objectives, but should be seen as a
last resort as a solution to a failure of competition. If the Competition
Commission imposes a price control as a remedy, it will specify the
circumstances in which it would be removed.

Recommendations to Government :
The Competition Commission can make non-binding recommendations to
the Government when it finds certain policies or regulations contribute to
competition problems. These recommendations are voluntary, as only the
Government can consider the effects of its policies on competition. If
permanent regulation is necessary, the Government may legislate or
introduce regulation instead of relying on the Competition Commission's
behavioral remedies. These recommendations are non-binding, and the
Competition Commission typically introduces its own remedies as a
temporary or fallback measure, which can be removed or modified if the
Government takes action. The Commission's actions are based on its
investigation and its findings.