Could Politicians Be Driving Up Energy Prices?

October 11, 2013

(by Andreas Stephan) We are once again seeing the familiar picture of one energy company announcing a significant price increase, no doubt soon to be followed by other major players in the industry. SSE is to raise gas and electricity prices by 8.2%, a figure that is three times the current rate of inflation and comes at a time when UK households are continuing to endure declining income in real terms. My colleagues, Catherine Waddams and Chris Hanretty have recently written on this blog about proposals by the Labour party to cap prices and abolish the regulator. However, there is also a possibility that statements made by politicians, intended to reduce prices, may actually be having the opposite effect. Read the rest of this entry »

Labour’s proposal to abolish Ofgem: if you don’t like the answer, change the regulator?

September 25, 2013

(by Chris Hanretty) At its party conference this week the Labour party offered starkly differing views on the value of independent authorities. On Monday, Ed Balls called for the (independent) Office of Budgetary Responsibility to audit the costings of measures in Labour’s election manifesto. On Tuesday, Ed Miliband called for (independent) energy market regulator Ofgem to be abolished and replaced by a new energy regulator with power to set retail prices.

It’s not hard to see some tension between these two proposals. Suppose that in 2018 the OBR were to issue a negative verdict on the economic plans of a future Labour government. Would we see calls to abolish the OBR and replace it with another authority capable of adopting a broader view? That’s unlikely: the whole value of the OBR depends on it operating without regard to interference like this. Read the rest of this entry »

Price Regulation is Not the Solution to Unaffordable Energy Prices

September 25, 2013

(by Catherine Waddams)  At the Labour party conference, Ed Miliband said he would freeze energy prices until 2017.  Miliband’s frozen energy prices might lead to frozen homes as well.  Interventions in energy markets do not have a happy history, either in California or the UK, and those who remember the public sector price freezes of the Wilson and Heath governments in the nineteen sixties and seventies may also recall the subsequent underinvestment, poor quality and shortages. Privatisation and independent regulation were seen as a solution to those problems, but energy markets in particular have proved very controversial. This isn’t the first political intervention. Read the rest of this entry »

Chinese Milk Powder Case: How Should We Interpret a Price Cut on the Announcement of an Antitrust Investigation?

July 16, 2013

(by Andreas Stephan) Earlier this month, China’s National Development and Reform Commission (NDRC) announced an investigation into foreign manufacturers of infant milk formula. The very next day, two of the firms in question did something that would be unthinkable in Europe or the US – they announced they would lower their prices and other firms have since followed. Is this the behaviour of remorseful cartelists?  Or is antitrust being used by the Chinese government in the pursuit of non-competition goals?   Read the rest of this entry »

The UK’s New Cartel Offence: It Could Be Alright on the Day

July 9, 2013

(by Andreas  Stephan) The Enterprise and Regulatory Reform Act 2013 drops the requirement of dishonesty and excludes cartel agreements made openly. At a late stage three additional defences were introduced (s.47 ERRA). The defendant can show they did not intend that the nature of the arrangements be hidden from either their customers or the competition authority. It will also be a defence to show that a defendant took reasonable steps to disclose the nature of the agreement to lawyers, in order to get advice, prior to its making or implementation. Writing on this blog a couple of months ago, my colleague Peter Whelan expressed concern that this defence could pose a devastating blow to the cartel offence. Here I reflect on how this defence could pan out. Read the rest of this entry »

Is the New EU Private Enforcement Draft Directive Too Little Too Late?

June 15, 2013

(by Sebastian Peyer) After a decade of debate, consultation and guidance papers, DG Competition has finally released its draft Directive on actions for damages. It has been driven by the Commission’s desire to encourage private antitrust enforcement, currently deemed too low and mainly restricted to a small number of Member States, and the need to ‘optimise the interaction between public and private enforcement’. This second objective seeks to maintain the incentives for private firms to reveal cartels in return for leniency and engage in settlement procedures. A particular threat is posed by disclosure of leniency documents to third parties (e.g. Pfleiderer and National Grid). However, with rapidly developing litigation on the national level, there is a danger that aspects of the draft Directive are already behind the times. Read the rest of this entry »

The Court of Justice’s Expedia ruling undermines the economic approach by eliminating the ‘de mimimis’ defence in object agreements

June 4, 2013

[by Pinar Akman] One of the most important holdings of the Court of Justice in recent times is buried in paragraph 37 of the 8-page long Expedia judgment, which surprisingly has had few competition lawyers shouting from the rooftops.[1] In essence, the Court has declared that any object agreement[2] which has an effect on trade between Member States has an appreciable effect on competition. In other words, object agreements (with an effect on trade between Member States) can no longer make use of the de minimis doctrine. This represents an important change in the jurisprudence of the Court and, unfortunately, not an ideal one. Read the rest of this entry »


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