Europe's airline passengers may get a better deal if a challenge by the UK's Office of Fair Trading (OFT) is successful.

Mr John Bridgeman, directorgeneral of the OFT in the UK, was in Dublin yesterday to meet his counterparts in the Competition Authority and the Office of Consumer Affairs. He explained his challenge to the International Air Transport Association (IATA).

"We have served notice on IATA that 28 clauses on airline ticketing are outside the terms of the European regulations. We have given them 30 days to respond."

The OFT's action, under the Unfair Terms in Consumer Contracts Regulations, contests the refusal of airlines to allow passengers to transfer to others tickets they are unable to use, the rescheduling of flights without compensation and restrictions on compensation for loss or damage to baggage. The OFT has told IATA that contract terms must be reviewed and amended or dropped if they unfairly disadvantage consumers.

"The airlines have made a number of excuses for such terms, but I see no good reason why they should be allowed to continue. Arguably the most unfair term of all enables carriers to prevent consumers from transferring tickets. We have evidence from consumer complaints that this rule is applied harshly, unbendingly and without good reason. In practice, the term also obstructs the Package Travel Regulations which enable consumers to nominate another passenger if they are unable to go on holidays themselves," he said.

The OFT, which will operate updated competition legislation from March 1st, 2000, has some 390 employees. The staff of 150 in the competition division will be increased to 200 with the new legislation, and 240 people are employed in the consumer affairs division.

The UK legislation will mean the powers and responsibilities of the UK and Irish authorities will be similar. But an important difference is that the OFT is responsible for regulation of both competition and consumer affairs, whereas in Ireland two separate authorities carry out these functions.

Mr Bridgeman's view is that the OFT's structure offers complainants a one-stop shop. But he stressed that as long as the institution/s have the people with the right skills, the regulations can be implemented in several ways. Among the OFT's recent high-profile cases has been the challe nge to the Premiership league clubs' exclusive TV deal with BSkyB. When the parties agreed the contract, they were obliged to register it with the OFT.

But Mr Bridgeman found the contract - which gave BSkyB exclusive rights to broadcast 60 Premiership games on the subscription TV channel and forbade the clubs from selling games to other TV channels - was against the public interest.

The case was eventually taken to the Restrictive Practices Court in January, where it was heard over some 47 days. Judgment is expected before the Premiership season starts in August.

Mr Bridgeman is interested in the US's corporate leniency programme as a means of breaking up cartels. He is considering whether to recommend the introduction of a similar system in Britain.

The programme operates by allowing a company which has been a member of a cartel, as long as it is not the instigator or leader, to reveal the details to the authorities, including the names of others involved. That company is not fined or penalised. The second party to come forward willingly and confess gets a reduced fine, but third and subsequent parties face the full force of the law.

"This programme appeals to my sense of fair play," Mr Bridgeman said. His powers against cartels are limited by the need to establish that improper activity has taken place before he can investigate. His powers will be improved under the new legislation - allowing him to investigate if he suspects improper activity.

He says informed consumers are tremendous allies for competition authorities, adding that one way to identify cartels is to spot prices that are too similar.

The OFT is active in the supervision of supermarket chains in the UK. "We have a general view that as long as market power is deployed so that the consumer benefits, there is little reason to intervene."

But he said that last year his office examined the market and found supermarket shareholders were getting "a very reasonable rate of return", that there was evidence that agricultural prices were depressed but no evidence of comparable falls in food prices in supermarkets, and that there were effective barriers to entry and expansion because large land sites were not available.

The outcome was a referral of the matter to the Competition Commission, which is investigating whether the supermarket sector works effectively.