New trade and industry secretary Patricia Hewitt this week outlined plans for a clamp-down on price-fixing cartels which include a threat of jail sentences for company executives.

The Office of Fair Trading will be given stronger powers to seek anti-competitive behaviour and a reformed Competition Commission will be empowered to break up monopolies.

Two years ago, the Competition Commission said many carmakers appeared to be contravening fair trading laws with their pricing policies. John Bridgeman, then Fair Trading director general, condemned Volvo for "disgraceful" conduct, though the company blamed isolated incidents four years earlier.

Mrs Hewitt, who replaced Stephen Byers in the post-election Cabinet reshuffle, will enforce the Government's measures to make British business more competitive.

The bill was among those set to be included in the Parliamentary Queen's Speech tomorrow which presents the legislative measures for Labour's second term.

Chancellor Gordon Brown had earlier disclosed the main ingredients of the competition package which is intended to close the productivity gap. Compared with the UK, output is higher in the US by a margin of 45%, in France by 19% and Germany 7%.

David Evans, Retail Motor Industry Federation chief executive, welcomed the proposals for effective implementation of a better UK competition policy. "We should begin to seen an end to some of the travesties which have adversely affected retail motor industry businesses over the years," he said.

"Major players like vehicle manufacturers, insurance companies and oil conglomerates will be brought to book if there is evidence of them engaging in anti-competitive behaviour.

"For too long these giants have held their own designated retailers in a stranglehold and it is gratifying to see the Government acting to counter this behaviour."