The Significance of China’s First Fine on an International Cartel

(by Andreas Stephan) On 4 January 2013, China’s National Development and Reform Commission (NDRC) announced that CNY 353 million (around £35m) would be paid by six South Korean and Taiwanese manufacturers of liquid crystal display (LCD) panels for price fixing during 2001-2006. Never before had China imposed a cartel fine on foreign firms. Indeed this first instance of Chinese international cartel enforcement involved both settlements and a leniency application from a revealing firm in return for immunity.  But should China’s venture into international cartel enforcement be treated as a welcome development?

Do Pub Tenants need a Special Regulator to Adjudicate Contracts with Pub Owners?

(by Morten Hviid) On January 8^th Business Secretary Vince Cable announced plans for an Independent Adjudicator to address unfair practices in the British Pub industry.  It will apply to rents and beer ties (exclusive purchasing agreements) between pub owners and their tenant publicans, but only if the former own at least 500 pubs (known as pubcos).  The Adjudicator will be based on the untried model being introduced for supermarkets.  This proposal arises from prolonged lobbying by part of the industry, and in particular from the Campaign for Real Ale [CAMRA] and extensive public scrutiny by Select Committees and competition authorities, though the latter did not recommend this intervention.  After many attempts to generate self-regulation, the government now wants to impose a “solution”.   But what is the problem that the government seeks to redress?

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?

Beware of Siren Advice for Political Control of Foreign Mergers

(by Bruce Lyons) Lord Heseltine, a former UK trade minister, has just published a review, invited by the Prime Minister, titled ‘No stone unturned in pursuit of growth’.  One of the stones he proposes to turn is to empower government ministers to intervene in foreign acquisitions of British companies “to ensure our long term industrial capabilities are given proper consideration”.  The objective would be to negotiate commitments to build R&D capacity in the UK, develop domestic supply chains and develop the skills base against a threat to prohibit the merger.  This siren call might sound enticing, but it would not be wise to listen.

The Likely Effects of Compelling Energy Firms to Give Customers ‘The Lowest Tariff’

(by Catherine Waddams) This week the Prime Minister championed the idea of making each energy supply company put all its consumers on the cheapest tariff. Sounds like a great idea until you think how the companies will react. If everyone is on the cheapest tariff, there is only one tariff – but it is unlikely to be the lowest price they offer now.

Two Major Problems with the BIS / EU Approach to Above Cost Surcharges

(by Pinar Akman) Following on from Morten Hviid’s recent blog post on above-cost surcharges, this comment seeks to point out two major problems with the Department for Business, Innovation and Skills’ plans to bring forward the EU ban on surcharges (due to come into force in 2014 by the EU Consumer Rights Directive 2011/83/EU). This ban will ‘prohibit traders from charging consumers, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of such means’ (Article 19). This approach wrongly assumes that payment surcharges actually relate(d) to costs of payment methods, and fails to address the danger that companies will simply rename the surcharge and present it as relating to a cost other than payment processing.

Above-Cost Surcharges: Prohibition vs. Transparency

(by Morten Hviid) Surcharges have become a common feature of purchasing products and services online. The airline industry has been subject to particular criticism for charging excessive surcharges that are often hidden until the payment stage of the transaction, and for not offering a free payment option. Under the EU Consumer Rights Directive (2011/83/EU), due to come into force in 2014, “Member States shall prohibit traders from charging consumers, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of such means.” (Article 19). The focus here is on the level of the surcharges. The UK’s Department for Business, Innovation and Skills (BIS) are consulting on whether to bring the implementation of this prohibition forward. However, an OFT report responding to a super-complaint by the consumer group, Which? proposed a different remedy. This would have required firms to “provide clear information on the surcharges/discounts that apply to different payment mechanisms, when first displaying prices on a website” (para 1.22). It would thus focus on the transparency of the surcharges. I argue that the measure proposed by the OFT would be more appropriate than the prohibition prescribed by the EU directive and pushed forward by BIS.