Monday, April 21, 2008

Law Society's price fixing and monopoly on Scottish legal services market must be resolved from outside Scotland

Anyone who isn't aware of the fact that you have to use a member of the Law Society of Scotland to access justice, legal services or the courts in Scotland, has obviously never had the need to use a lawyer.

The problems which have been generated by very singular policies pursued by the legal profession's leadership in Scotland, principally those of outgoing (phew) Law Society Chief Executive Douglas Mill, where monopoly and retention of control over everything from admissions to the profession to qualifications, fees and regulation, have left the Scots legal profession in its worst state since it was formed.

With the apparent reluctance of the Justice Secretary Kenny MacAskill to follow the OFT's recommendations and fully open up the Scots legal services market to all & sundry, some are arguing that the severe problems of Scots competition law should be sent to Europe for fixing ... which may be all very well for some .. but not others as recent revelations show the Law Society itself to be very active in the EU, lobbying against any change of its monopoly control over legal services in Scotland ...

The Scotsman reports :

Has devolution proved to be a winner for Scottish competition law?

By Catriona Munro and Johan Sahl

ANTI-competitive behaviour continues to be a serious problem in Scotland, with consumers and businesses losing out from bid-rigging, price fixing and other market abuse. In recent years, investigations into sectors such as construction, dairy and newspapers have uncovered a disproportionately high number of breaches north of the Border.

Nonetheless, there is a strong rationale for reserving this area of law to Westminster. UK competition law is inextricably – and increasingly – linked to EU law, leaving any devolved government with little or no scope to plough its own furrow.

So, although the OFT opened an office in Edinburgh last year, its main focus is on advocacy and discourse. Investigation and enforcement are still handled by the OFT in London.

But is that body best placed to handle enforcement in all cases? Looking to Europe, there is some doubt whether this is the most effective arrangement. In 2002, Spain gave its regions the option to set up their own competition authorities. Catalonia did so in 2003 and seven others have followed suit. The regional authorities are independent and operate alongside the national Comisión Nacional de la Competencia, with power to take up local cases. One reported benefit of the Spanish system is that the regional authorities are closer to local consumers and have a greater understanding of small businesses. Another is that they have the resources to investigate local cases that the CNC do not prioritise. This has led to a steep increase in the number of local investigations.

A similar Scottish authority – applying UK rules at a local level – might well be better placed to focus more resources on investigating cartels and abuses of dominance in Scotland than the OFT currently is.

But a proposal to establish a Scottish authority would not be without problems. First, its impact would be limited, since it would only have jurisdiction to handle exclusively or at least principally Scot
tish cases.

Second, like the OFT, it would be obliged to follow the principles of EU competition law. Differing domestic competition law principles would only disadvantage Scottish businesses.

Finally, the cost of assembling a sizeable team of experts would, presumably, need to be met by Holyrood. This extra cost must be weighed against anybenefit to consumers in the form of "healthier" markets.

It may be that some of these effects will be achieved by the OFT's efforts to engage with the Scottish government, business and consumers. After all, this "touchy-feely" approach is backed up with a big stick – the "feds" can be flown in from London at any time. If, however, the OFT is to make this set-up work effectively it will need to embed itself in Scotland's institutions.

• Catriona Munro and Johan Sahl are from Maclay Murray & Spens' EU, Competition & Regulatory group

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