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Monday 7 July 2008

Gordon is right about one thing

Guess what? Gordon has done something right

He is spot on about anti-competitive practice in business

Given the right tweaking of the law, increased private resources will more readily be available to supplement the rather limited budgets of the enforcement agencies. Third-party investors are willing to cover the costs of litigation in return for a portion of the damages awarded to successful plaintiffs. MKM Longboat, a London-based hedge fund that manages $2.3 billion in assets, has hired a former litigator to seek out $100 million of investments in British and European legal disputes. Smith & Williamson, a financial services group, and the giant German insurer Allianz are also looking for opportunities to fund litigation. Sonya Leydecker, the head of dispute resolution at Herbert Smith, one of the most prominent law firms in Britain, told the Times, ‘Third-party litigation funding is now an established factor in the UK market.... Large firms cannot simply ignore this change in the market.’ So she has been assigned the task of determining the impact of this new funding mechanism on law firm operations.

It would be a boon to what the OFT in its latest report calls ‘effective redress for consumers and business’ if the Prime Minister would facilitate the investment of these available resources by throwing his weight behind the legislation that the OFT has requested in its latest report. And it would be a boon for the UK economy if he would decide that what he knows to be sauce for the private sector goose is also sauce for the public sector gander. The same competition that forces manufacturers and shops to offer high-quality goods and services at reasonable prices could have the same effect if unloosed on the health care and education markets. But Brown holds to the view that consumers are too ignorant to decide which schools are best for their children, the hospitals from which they are likely to emerge alive, and the doctors most responsive to their needs.

He also seems to feel that competition alone can produce the rapid rate of innovation that Britain needs in order to compete in the world. It cannot. What Brown the pro-competition politician giveth, Brown the tax master taketh away. A bit of joined-up policy-making would be useful here.

Too much to ask, perhaps. But he might at least unleash the private sector to come to the aid of the overstretched public sector in turning up the heat on cartelists and other businessmen who subvert the competitive process.

More articles from: Irwin Stelzer | this section

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