Competition guru will need skills from other side of fence

A competition guru with a taste for the intellectual, Dr John Fingleton is a driven man

A competition guru with a taste for the intellectual, Dr John Fingleton is a driven man. He does not deny that the Competition Authority has had a hard time of late but, as its new chairman and director of enforcement, he plans renewal and expansion at the troubled body.

Recently appointed to a five-year term, he was regarded as something of an outsider by people in the State sector. But Dr Fingleton's contacts in the highly-specialised world of competition law are many and his track record is as well-defined as it is impressive.

A former academic at Trinity College, Dublin, with a slew of post-graduate qualifications from Oxford, he has advised software giant Microsoft and the credit card associations Visa and MasterCard in their difficult legal battles with the antitrust authorities in the US.

In 1997, he produced a report for the Tanaiste, Ms Harney, which called for the liberalisation of the taxi market in Dublin.

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That Microsoft is this week facing the prospect of an unseemly break-up after it was found guilty of systematically violating antitrust law may be ironic. Competition is big news in the US, where the trial of Visa and MasterCard on similar charges began this week.

Yet in Ireland, to which Dr Fingleton has returned after a stint working with a Chicago consultancy, the Competition Authority has been in the news for all the wrong reasons.

Relations with the Department of Enterprise, Trade and Employment, to which the Competition Authority answers, are said to have been poor. However, Dr Fingleton claims they are "excellent". Highly publicised departures of key staff members and revelations that the body has been unable to pursue new investigations into alleged cartels have fostered a perception that the authority is without teeth.

While two cases against alleged cartels in the drink bottling and milk industries are with the Director of Public Prosecutions (DPP), the authority has yet to secure a criminal conviction for anti-competitive behaviour.

Given the burden of proof required by the courts in criminal cases - beyond reasonable doubt - Dr Fingleton says it would be fruitless to pursue cases with insufficient evidence. Observers maintain that the Garda has had to mount separate investigations into cases already referred to the DPP, with consequent delays and inefficiencies. In this respect, it is no secret that the authority would like assistance from the Garda in its investigations. "The quality of evidence has to be superb," says Dr Fingleton. On the need to renew the authority, he says the first step will be the appointment of new staff members, which has been sanctioned. "I see our challenge being to retain those people once they have worked here for a year or two."

But a consistent problem is that the authority is unable to compete with the high salaries available to competition specialists in the private sector. This question, says Dr Fingleton, will be addressed this summer in a report by consultants Deloitte & Touche, which is reviewing the authority's resource requirements.

Long term, Dr Fingleton would like the authority established as an independent entity, similar to the sectoral regulators in telecoms and energy. This would enable it to offer higher salaries and enhanced career prospects to staff. It would also offer an opportunity to assume regulatory control over mergers, which is currently the responsibility of the Department. "Having the Competition Authority look after mergers would introduce consistency into overall policy. It's best practice internationally."

What of the authority's shortage of resources?

"There is a political appetite to beef up resources, because fostering competition is counter-inflationary." But is there the political will to separate the authority from the Department?

"If it's done the right way, with the right degree of accountability, I think that it shouldn't be a politically difficult issue.

"It's important in that context to say it needs to be accountable both to the courts and Oireachtas in terms of its overall functions."

Dr Fingleton says he would be happy to appear before Oireactas committees to explain the functions and activities of the authority.

It is crucial to strengthen its role, he says, since private actions against alleged cartels, while permitted by law, are expensive and difficult to mount.

US law provides for "triple damages" in antitrust cases and class actions are also possible. Neither option is available here. The US system also provides for a leniency programme, similar to plea bargaining, in which parties guilty of anti-competitive behaviour face less severe sanctions in return for revealing details to the authorities.

But, while Dr Fingleton is in no doubt of the need to police effectively anti-competitive practices, he does not see his role as offering succour to companies facing the rigours of competition in the market.

"We will not be concerned with protecting producers from competition . . . We will be looking for what the Americans call `consumer injury' as a general rule for intervention. We're there to make sure the consumer isn't damaged."

Of contentious disputes such as that earlier this year between farmers and meat processors, he says the authority will intervene only where there is evidence of buyers restricting access to the market by pushing down producer prices. An alternative possibility is that falling producer prices reflect a general decline internationally.

In relation to the Dublin taxi market, he says the authority cannot intervene because it is the State which restricts access to the market with the licensing structure.

When asked whether there was a possible conflict in taking the dual role of chairman and director of enforcement, Dr Fingleton said there was not. "The director of competition enforcement has three statutory functions: to carry out investigations; to provide recommendations and advice to the authority; and to refer criminal and civil proceeding to the courts. None of those in any way conflicts with chairing a meeting."

He accepts, however, that the recently published final report of the Competition & Mergers Review Group says that the director of enforcement should be an officer and not a member of the authority. He argues that this should only be considered in the context of "fairly large-scale reform" of the authority in general.

Dr Fingleton says he took a salary cut to accept the role. "I think I can make a lasting contribution in this position and that it involves public benefits . . . I feel strongly that vested interest shouldn't be allowed interfere with the market."

Time will tell whether he succeeds.