7^th February 2001

Mr Charles Clarke, M.P.
House of Commons
Westminster
London SW1A 0AA

On the 17th of July I wrote to you about "USA companies having monopolies covering large parts of the IT sector". You passed my letter on to the DTI who referred it to the Director General of Fair Trading (DGFT). In his letter to you, dated the 18th September, which you past on to me, the DGFT said the Office of Fair Trading would reply to me direct. They sent me a letter on the 7th November in which they said that on the "basis of the information provided" they would not "launch a full investigation under the Competition Act".

Chapter II of the Competition Act says that two things need to be proved to take action. First that the company has to have a dominant position, market share of over 50% percent is accept as proof, Microsoft has a market share over 80% (as does Intel). The second criteria is abuse of the dominant position, there are a several different things that count as abuse, e.g. selling Internet Explorer below cost.

I rang Justin Webb of the OFT who is handling the case to find out which of these criteria I did not meet, so that I could give the OFT more information to meet them. When asked repeatedly this question he dodged it. Later in the conversation he said that the OFT policy was to let the US and EU competition authorities handle the problem. Though he agreed that it was unlikely that they would take effective action. In what may be the most important admission, he said the OFT knew that these anti-competitive practices were taking place but they did not have the power to take effective action, and therefore to save resources wanted to ignore the problem. The maximum penalty the OFT can give a company is a fine of 10% percent of 3 years of UK revenue. I ended the call after pointing out the consequences of taking no action.

Clearly such a fine would be better than doing nothing, and it's failure to solve the problem would highlight the need for larger action. A quicker solution would be to take effective action straight away. Is there anything you can do to improve the situation, I am able to travel to London to meet people.Thank you for the help you have given so far.