Companies have always struggled to protect themselves from abusive behaviour of competitors which hold a position of market power.

Problems arise for a number of reasons.

It is difficult to persuade the authorities to take up complaints.

Much depends on the 'weight of the mail bag', and whether the authorities have a particular interest in a market.

The Office of Fair Trading (OFT) and the Monopolies and Mergers Commission (M MC) have limited powers to investigate and there are no financial penalties for those who are subject to an investigation.A further problem facing those seeking redress is that despite the creation of the single European market on 1 January 1993, companies in the UK are still subject to two different systems of monopoly control; under national law and under the Treaty of Rome (the treaty).

With the advent of the single market, there has been a trend in Europe for member states to align national laws more closely to the provisions of the treaty.

For example, the Irish government enacted the Irish Competition Act 1991 which mirrors the competition rules set out in arts 85 and 86 of the treaty.In November 1992, the government published a consultative document outlining proposals for new legislation in its green paper entitled 'Abuse of market power.

A consultative document on possible legislative options' (the Green Paper).

The government has made some tentative proposals for reform but reform is unlikely in the near future, particularly in light of the absence of progress following publication of the government's white paper on restrictive trade practices in 1989.

The white paper contains proposals to reform existing UK law governing restrictive trade practices between competitors on a horizontal level.

The proposal is to create a new system based on art 85 of the treaty.Existing legislation is contained in the Competition Act 1980 and the Fair Trading Act 1973 (FTA).

The former gives the OFT the power to investigate alleged anti-competitive practices and concentrates on activities of individual companies.

An anti-competitive practice is defined as a 'course of conduct which has the effect of restricting, distorting or preventing competition'.

If the OFT decides to investigate, it will report on whether there is an anti-competitive practice and if there is such a finding, it has the option to refer the matter to the MMC for further investigation.

In practice, however, the OFT usually negotiates informal undertakings from the parties concerned.

If the matter is referred to the MMC, it will investigate whether the practice operates against the public interest and, if so, the secretary of state has the power to obtain undertakings to remedy adverse findings or can make formal orders by statutory instrument.The Fair Trading Act focuses on industry-wide investigations and gives the MMC the power to investigate and report on whether alleged monopoly situations exist and, if so, whether the activities of the identified 'monopolists' are expected to operate against the public interest.

It controls both 'scale' and 'complex' monopolies.

A scale monopoly exists where one company has a share of at least 25% of a particular goods or services market in the UK or within a particular part of the UK.

A complex monopoly is similar, except that the 25% market share is enjoyed by a number of independent companies.The MMC is entitled to take into account various factors when deciding whether a monopoly is operating against the public interest, but the existence of effective competition is usually the central issue.

The current regime has certain flaws.

There is no obligation on either OFT or MMC to commence investigations following receipt of complaints.

It is often difficult to persuade the authorities to act.

Much will depend on the degree of pressure which parties are able to exert and on whether the OFT/MMC has a particular interest in a market.Procedures are long and cumbersome and no interim relief is available.

Investigations under t he Competition Act usually take around six to nine months and approximately 12 months under the FTA.

By the time the authorities have been persuaded to act, the complainant may have suffered extensive financial losses.In 1989 the MMC commenced an investigation into the supply of electrical contracting services at large exhibition halls within Greater London ('Electrical contracting at exhibition halls in London.

A report on the supply in Greater London of electrical contracting services at large exhibition halls' Cm 995, April 1990).

One of the public interest issues was whether certain hall owners/exhibition organisers were squeezing out independent electrical contractors by persuading exhibitors to use only specified electrical contractors in exchange for being granted reduced tenancies at exhibitions.The MMC's findings were published in April 1990 but these were then subject to judicial review proceedings which did not conclude until July 1991.

Some independent contractors may have suffered heavy financial losses as a result of the lapse of time.

Would this have happened had some form of interim relief been available to those contractors?The OFT and MMC do not possess the wide investigatory powers enjoyed by the European Commission.

Unlike the latter institution, the UK authorities are not entitled to carry out dawn raids on premises or to impose fines.

The existing system is seen as a weak deterrent by those who have power to wield their strength in the market.

The government has suggested three 'options' for reform.

The first would be to give the OFT and the MMC stronger investigatory powers similar to those enjoyed by the European Commission, including the ability to enter and search premises and obtain copies of documents.

The government has suggested that this might involve companies being liable to damages and subject to fines from the point when a reference has been made to the MMC.Although a significant improvement, drawbacks in the existing system would remain.

Procedures would remain slow and there would only be a limited amount of redress for companies suffering financial damage as a result of abusive conduct.

Moreover, UK companies would still be subject to two different legal regimes.Alternatively, a system of prohibition could be introduced, based on art 86 of the treaty -- which prohibits the abuse of a dominant position within the common market by any one or more undertakings insofar as it may affect trade between members states.

It would involve the introduction of a general prohibition of abuse of market power and stronger investigatory powers being given to the OFT and MMC.

It would also involve the imposition of fines for infringement and the possibility of actions by third parties for injunctive relief and damages.

Examples of prohibited conduct would be tying-in customers by giving discriminatory discounts and rebates, refusal to supply competitors or unfair pricing policies.The advantages of this option are that companies would be subject to a new system based on European competition rules.

European case law and previous guidance from the European Commission on the application of the European competition rules would help to remove uncertainty for businesses.

Higher investigatory powers and fines would provide a stronger deterrent and the possibility of interim relief for aggrieved parties would prevent financial ruin.Unfortunately, art 86 only addresses the abusive conduct of individual companies.

No mention is made of control of oligopolies.

The possibility of a group of independent companies being in a position of joint dominance has been considered by the European authorities in a number of cases.

However the Court of First Instance has not yet made a decision specifically on the question of joint dominance (see Alsatel v Novasam [1990] 4 CMLR 434, Italian Flat Glass [1992] 5 CMLR 297, Ahmed Saeed [1990] 4 CMLR 102).Until now, joint dominance under art 86 has been applied where there were agreements in existence between the relevant companies and which were attacked under art 85.

On the other hand, the monopoly provisions of the FTA provide for the investigation of markets where several independent companies together hold a strong position.

The attraction is that it is not necessary to show any element of collusion.

A new system of prohibition would need to be structured to cover such situations.

This could lead to disparities between the new regime and existing European rules.The third option is the creation of a dual system involving the introduction of a prohibition based on art 86, the repeal of the Competition Act and retention of the monopoly provision of the FTA.

This would provide for the introduction of a similar system to the European regime while allowing for wider industry investigations.

Although a dual system seems attractive, companies would still need to comply with two different systems of control.An announcement was made in Parliament in April of last year indicating that the government has chosen the first of the above options: strengthening the existing system.

This is disappointing for the reasons given above.Although each option has its advantages and drawbacks, a prohibition system based purely on art 86 would be a step in the right direction, particularly if combined with the new system of control of cartels based on art 85 suggested by the government in the white paper.In creating such a system, the government would be following steps already taken by other member states to align their own laws with arts 85 and 86, thereby providing greater certainty to participants in the single market.Increased investigatory powers, the imposition of fines and the creation of a statutory right of redress for third parties would be a stronger deterrent and would protect smaller businesses from powerful companies seeking to wield economic power in the market place.The absence of any control over 'joint dominance' under art 86 should not be seen as a stumbling block.

The European judiciary may develop its position on joint dominance.

Indeed, the Court of First Instance recently commented in the Italian Flat Glass case that there was nothing to prevent two of more independent companies from holding a joint dominant position in the same market, albeit by means of a network of agreements or licences.In any event, if a new system is created based on both arts 85 and 86, the authorities would be able to use the national equivalent to art 85 to control conduct of separate undertakings in the market.

Although, admittedly, there must always be proof of collusion before art 85 can apply.

It is questionable whether any reform will be made in the near future.

There has been a lack of progress following publication of the white paper.

Numerous economic sectors are excluded from the Restrictive Trade Practices Act 1976.

Several professions (eg medical) are included among those exempt and it has been suggested that the delay has partly been because of the motivation not to upset these groups.It remains to be seen whether any progress will be made in 1994.

No mention was made of the white paper in the Queen's speech in November.

It is therefore unlikely that it will be implemented within the legislative programme of the current parliamentary session.