Monitor’s Advice to the OFT and the New Healthcare Regulation

(by Mary Guy)[1] On 11 February, Monitor (the UK’s independent regulator of NHS foundation trusts) published its advice to the Office of Fair Trading (OFT) regarding the anticipated merger of Poole Hospital NHS Foundation Trust and The Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust (hereafter “the Dorset FT merger”). This is the first NHS merger to be assessed on competition grounds under the Enterprise Act 2002 (EA02) merger provisions as implemented by the Health and Social Care Act 2012 (HSCA 2012). It has been referred by the OFT to the Competition Commission (CC), which will produce its final report by June 24, 2013.

Why Keep a Dog and Bark? The UK Government Replicates the Actions of its Independent Energy Regulator

(by Catherine Waddams) The Department of Energy and Climate Change yesterday published a discussion paper which virtually duplicates the consultation document published by Ofgem four weeks ago as part of its Retail Market Review (a few days ahead of the original schedule because of the prime minister’s surprise announcement that all consumers would be put onto their supplier’s  cheapest energy tariff).  Yesterday’s  discussion paper was intended to clarify the prime minister’s announcement, but even this is still somewhat obscure (the paper talks about ‘our ambition’ and ‘all customers will have been placed on the cheapest tariff’ without specifying the mechanism for achieving the objective).  While the government’s discussion document explicitly supports and builds on Ofgem’s proposals, it invites responses by January 4^th., while response to the Ofgem consultation document are due in by December 21^st. It will be interesting to see whether respondents change their views over Christmas, or perhaps as a result of their New Year resolutions. But why is a government department replicating the actions of its supposedly independent agent?

Should Libor-Rigging be treated like Price Fixing?

(by Andreas Stephan) With multi-million pound fines, high profile resignations, heated arguments in Parliament and calls for criminalisation by the UK government, one would be forgiven for thinking that Libor rigging is worse than price fixing. Few fully understand the practice of falsely reporting expected borrowing rates, but everyone seems to want it severely punished. The scandal first came to light in 2008 when traders realised  the Libor rate was no longer reflecting reality. The question is whether calls for punishment and criminalisation are the best way to deal with Libor-fixing or whether the case has simply become a vent for wider public anger at the perceived evils of the banking sector.

Ofcom’s Report on Measuring Media Plurality – The Outstanding Questions

(by Michael Harker) On 19 June, Ofcom published its report on the future of the media plurality rules. The process began in October last year, with the Culture Secretary, Jeremy Hunt asking the regulator a series of questions including: the metrics for the measurement of media plurality across platforms, the use of absolute limits on news market shares, and controversially whether there should be provision for a plurality review in the absence of a merger trigger.  Against the backdrop of the derailed News Corp/BSkyB merger, and the Leveson Inquiry’s probing of the Culture Secretary’s role in that bid, the Report and its recommendations may have important implications for the way in which media plurality is secured in the UK. 

Too High a Price for a ‘Fairer’ Outcome? Non-Discrimination Clauses in Retail Energy Regulation

(by Catherine Waddams) Ofgem is considering renewing its undue discrimination clause requirements in residential energy markets.  This is not a good idea from a competition perspective. Evidence is accumulating to suggest these requirements have dampened competition in exactly the way predicted by a CCP research paper.[1] The history of electricity privatisation left a strong local incumbent in each geographic area and effective competition requires them to compete out of their own area. The ability to cut prices in a target market is precisely what is needed to attract customers from a local incumbent.  The regulator’s non-discrimination clauses introduced in 2009 have limited the allowable price differential a firm offers in and out of its home area.  The evidence suggests that this has been achieved by raising out-of-area prices and not by cutting in-area prices.  The non discrimination clauses may have produced a ‘fairer’ outcome but only at the cost of higher prices for consumers.