The Competition Authority has rejected a suggestion from the Competition and Mergers Review Group that smaller companies should be exempted from competition law, saying it would be "a substantial gutting" of the Acts.

Mr William Prasifka, a member of the authority, called on the review group to explain to customers why they should not be protected against "rip-offs" if small and medium-sized companies could operate cartels.

The review group's report, published last Thursday, suggested competition law should not apply to companies with a turnover of less than £500,000 (€635,324) or a market share below 5 per cent.

If such a rule existed, however, the authority could not have brought proceedings against the travel agents, road hauliers and publicans, according to Mr Prasifka

"Given that price fixing and other types of cartel behaviour are virtually always harmful, both to customers and to the economy at large, there appears to be absolutely no justification for excluding such arrangements because they happen to involve small companies."

The review group has made recommendations that "whistle blowers" should be protected if reporting infringements of competition law and that the Competition Authority's powers should be increased.

On the question of a de minimis rule, where the law would only apply to companies of a certain size or with a certain market share, it has stated that it will consider submissions.

Mr Prasifka added that the adoption of such a rule using a £500,000 turnover threshold would leave small and medium-sized towns open to price fixing from "virtually every class of retailer". "Similarly, most self-employed professionals would also be able to engage in such practices," he said.

The Competition Authority is expected to submit a formal response on the report to the Department of Enterprise, Trade and Employment later this month.