Brexit uncertainty: fewer mergers, big business winners

June 5, 2017

(by Peter Ormosi)[1] While it is widely recognised that last year’s EU referendum caused significant uncertainty for markets, some early indications were that it had not reduced the level of business confidence. Almost a year on, our research – based on a careful study design of a treatment and control group and using data from S&P’s Capital IQ  – finds that the uncertainty surrounding the referendum has in fact led to a significant drop in merger numbers and the numbers have failed to recover to earlier levels.[2] Apart from establishing a causal relationship, the study suggests that the post-referendum policy uncertainty is helping the largest M&A transactions, while hindering the smaller ones, with possible negative consequences.

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Competition law is an appropriate tool to prevent exploitative price hikes in Pharma

May 26, 2017

(by Sven Gallasch) On 15 May the European Commission formally opened an investigation into Aspen Pharma’s pricing practices concerning five life-saving cancer drugs. This European investigation represents the latest enforcement effort in a string of cases emerging across Europe, including in the United Kingdom and Italy. All investigations are focussed on pharmaceutical pricing practices and allege that their pricing strategies may be exploitative[1] and amount to an abuse of a dominant position.  The surge in these previously rare exploitative pricing cases, has set off alarm bells in the pharmaceutical sector, among legal counsel of big pharma and some academic commentators. Read the rest of this entry »


An energy price cap could kill competition – here’s a better idea

May 3, 2017

(by Catherine Waddams) The Conservatives have announced that their manifesto will include a pledge to cap the price of energy bills. This comes just two years after Labour campaigned to freeze household energy prices. The Tories are yet to flesh out the details of their plan, but it has already drawn strong reactions both for and against. The price of energy stirs deep emotions in part because it is a necessity, one which absorbs a much higher proportion[1] of the income of those in poverty and “just about managing” than of richer households.

But there are two other important features: Read the rest of this entry »


European Commission launches new anonymous whistleblower tool, but who would use it?

March 21, 2017

(by Andreas Stephan) On 16 March 2017, the European Commission announced the launch of a new online tool to make it easier for individuals to alert it to secret cartels and other violations of competition law. What makes this tool innovative, is that it allows potential whistleblowers to maintain their anonymity via an encrypted messaging system, with two-way communication, giving them the confidence to report cartels. The tailor-made system is maintained by an external intermediary and is designed to be entirely secure. Read the rest of this entry »


Can care homes survive with privately funded residents cross-subsidising those who are state funded?

February 2, 2017

(by Morten Hviid) Care homes often take a mix of privately funded and state funded residents. Recent research by a leading provider of market information about the care home sector, LaingBuisson, assesses that the average fee per resident with a local authority (LA) assisted place fell short of what it costs care homes to provide the care by £104 p.w.. They also argue that the shortfall is picked up by private fee payers who are thereby providing a cross-subsidy. They refer to this as a hidden “care tax”.  The existence of this cross-subsidy is nothing new. The predecessor of the Competition and Markets Authority, the OFT, found the same in a report from 2005.  However, the size of the cross-subsidy is notable.  Even without assessing the strength of the new research, which is not publicly available, several aspects of this news story are worth pondering further.  Should LAs use any buyer power they might have when negotiating prices?  What are the consequences for the care market from the cross-subsidy?  Why are care homes willing to accept below cost prices?  These questions have added current importance because the CMA is undertaking a Market Study into the care home market. Read the rest of this entry »


Flight Centre: Australian High Court finds agent competed with principal and breached cartel laws

January 9, 2017

(by Julie Clarke[1]) On 14 December 2016, Australia’s highest court (the High Court) determined, by majority, that Flight Centre, a travel agent, competed with airlines for the supply of airline tickets and that, as a result, its attempts to induce the airlines to lower their direct-to-public ticket sales constituted unlawful price fixing. Flight Centre markets itself as offering a ‘Lowest Airfare Guarantee’. In attempting to induce the airlines not to discount tickets sold direct to the public, it was found to be in competition with the airlines and therefore subject to a per se prohibition rather than a full effects analysis. The treatment of travel agents and other similar arrangements falls into somewhat of a grey area in Competition Law.  Are the agents competing horizontally with their suppliers in selling to consumers, or are they better seen as vertically related retailers, or even as de facto employees?  This is important because horizontal cartels are almost universally per se illegal, often with criminal sanctions, vertical price fixing (e.g. RPM) has a much more mixed and nuanced legal position, and employees are completely exempt (a firm is free to set prices that all its salesforce must implement). In Europe, genuine ‘agency agreements’ fall outside the scope of Article 101 TFEU, even though they may contain clauses that can produce anticompetitive effects, such as minimum pricing.[2] This blog analyses the significance of recent developments under Australian Competition Law. Read the rest of this entry »


Leniency in the Civil Aviation Authority’s Price Fixing Case: Will a Ringleader Ever Be Refused Immunity?

December 22, 2016

(by Andreas Stephan) On 20 December 2016, the UK’s Civil Aviation Authority (CCA) found that East Midlands International Airport Ltd (EMIA) and Prestige Parking had breached competition law, by agreeing that Prestige would not sell its car parking services at below a minimum price that was linked to the price of EMIA’s own parking services. No fine was imposed in the case because Prestige Parking is no longer trading and EMIA received immunity in return for revealing the arrangement to the Competition and Markets Authority (CMA), under its leniency programme. We do not yet have the full decision, but the Press Release states, in relation to the minimum pricing that, “EMIA imposed this requirement as a condition of allowing Prestige to access facilities at the airport…”. This appears to suggest EMIA was awarded immunity despite instigating the arrangement. Read the rest of this entry »