One of the worst-kept secrets in the world of competition law became official last week: the UK Government is planning to merge the Office of Fair Trading (OFT) and the Competition Commission (CC). Along with the Advisory Committee on Historic Wreck Sites, the Pesticides Residues Committee and the Zoos Forum, these pillars of the UK competition system have been singled out for attention in Vince Cable's bonfire of the quangos.

The Department for Business, Information and Skills' statement and the OFT press release both refer to the creation of a "competition and markets authority" – no capital letters, at least not yet. A consultation is to be launched, although not until 2011, and since the change will require primary legislation, the new body – the CMA? – will surely not be with us until 2012 or 2013.

Word on the street is that the OFT will be the main survivor of this reorganisation. Either way, the question looming large is how the institutional design will replicate the current role of the CC to serve as a fresh pair of eyes once the OFT has identified troublesome cases where corrective action may be needed – be it in a merger or in a market investigation.

Business circles have tended to welcome the proposal on the basis that it may speed up the review timetable, but this reveals a curious disconnect from the concerns that business circles voice on the other side of the Channel. There, the concern has long been that the Directorate General for Competition (DGComp) at the European Commission develops an institutional momentum in favour of a particular outcome and can rarely be restrained from reaching its pre-ordained result. The complaint that DGComp is judge, jury and prosecutor has resonated over many years.

Famously, in 2002, the European Union's Court of First Instance rocked DGComp on its heels by overturning some fast and loose merger prohibitions, and new administrative procedures have succeeded in keeping DGComp out of similar headlines since then. But it is a commonplace view among practitioners that this is a system with inherent flaws, compensated by work-arounds. It is in no way a blueprint for the model competition authority of the 21st century.

The debate on institutional reform matters. It should be informed by the systems existing elsewhere. Some countries do indeed have monolithic competition bodies with their own variations and safeguards. But another model is practised in the US, where the Department of Justice investigates and then has to mount its case in court to the satisfaction of a judge; the same is true in some areas of the Federal Trade Commission's work. Similar systems exist, for example, in Australia, Canada, Ireland, New Zealand and Sweden.

Our own Competition Appeals Tribunal is not threatened by the present down-sizing by Government and is an obvious candidate to be given a similar role. Its functions today vary depending on the route a case has taken in coming before it – sometimes it performs a marginal review but in other instances a full merits examination. Perhaps its membership might be extended to include the kind of lay expertise which has, until now, given the CC its distinctive quality, through its panel members drawn from business and the professions.

This solution will not address all functions of the CC. Notably its role in market investigations is not one readily transferable to a court. A panel of wise reviewers might have a role here – perhaps like a CC panel, but shorn of the rest of that institution's resources. Separateness from the new CMA would be essential – different views voiced publicly are key to a healthy process, rather than having a hidden debate within closed walls. The pressures within any institution, for example the pressure to get a result at the end of an investigation, yield many perverse incentives on officials that are not conducive to balanced decision-making.

Historians may look back with puzzlement on the week which first gave us the Court of Appeal's judgment in the saga over the CC's ruling in the BAA case. Here, the judges had to agonise over the existence of apparent bias affecting one panel member – who was not for a moment suspected of actual bias. Yet within days the Government seems to be driving us towards a system in which mixed motives might play a real role. There will be a lot to say once the consultation paper is launched.

Alec Burnside is a partner at Linklaters and former co-head of the firm's competition practice.