The CMA as protector of leaseholders of houses?

July 14, 2021

(by Tola Amodu) The Competition and Markets Authority (CMA) has recently secured formal commitments to tackle the continuing problems experienced by leaseholders of houses. This could be heralded as a turning point in the ongoing debacle regarding the rights of leaseholders – those who while owning a property acquire only a time limited (leasehold) right to it. As the Law Commission explained in its 2020 report on the issue, ‘In England and Wales, properties can either be owned as freehold or as leasehold. Leasehold is a form of ownership where a person owns a property for a set number of years (typically, 99 or 125 years) on a lease from a landlord, who owns the freehold. Flats are almost always owned on a leasehold basis, but in recent years it has also increasingly been used for newly built houses. It is estimated that there are over 4 million leasehold homes in England alone’. The central problem is that in exchange for acquiring the leasehold interest, the leaseholder typically has to pay ground rent and certain service charges to owner of the freehold. Buyers may not fully understand that ground rents and service charges can increase exponentially over time, or that this can make the subsequent sale of the property economically unviable. This blog post explores the consequences of the CMA’s intervention and asks whether the commitments do enough to address this problem.

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Competing on sustainability

June 18, 2021

(by Peter Ormosi) Morrisons recently announced that all their food will be sourced from carbon neutral farms by 2030 (10 years before the 2040 net-zero commitment of the National Farmers’ Union). This has immediately triggered speculation as to whether, and how quickly, their rivals will follow suit. Although it may not be outright obvious, Morrisons’ move raises a number of interesting questions for competition policy, especially given that its announcement is not unique, and we are witnessing a growing number of markets where firms are increasingly competing not only on factors such as price, or quality, but on sustainability as well. As sustainability is gaining more central attention in competition policy, it is useful to ask how much of our conventional wisdom from competition economics we can use to understand the market incentives behind businesses’ sustainability investments. This thought experiment is useful for regulators to understand which are the industries where regulation may be necessary, and which are the ones where market forces and competition may be more effective in delivering more sustainable business behaviour.

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Do Plans for a European Super League Breach Competition Law?

April 20, 2021

(by Andreas Stephan) The world of European football was thrown into controversy this week by the announcement that 12 leading clubs have agreed to join a new European Super League (ESL). Unlike the Champions League, the ESL will consist of a permanent membership, with only 5 of its 20 slots open to qualification from other teams. The move has widely been condemned by sports fans and political leaders, and UEFA have said, ‘We will consider all measures available to us, at all levels, both judicial and sporting in order to prevent this happening. Football is based on open competitions and sporting merit it cannot be any other way.’ This blog takes a brief look at the possible competition law implications of the Super League.

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Merricks judgement marks a turning point for UK opt-out collective actions

January 20, 2021

(by Sebastian Peyer) In December 2020 the UK Supreme Court handed down its long-awaited decision in Merricks v MasterCard.[1] This is the first decision of the UK’s highest court on the relatively new opt-out collective action procedure introduced by the Consumer Rights Act 2015. The Court did not disappoint in confirming the claimant-friendly approach to class actions taken by the Court of Appeal. The latter had previously overturned the Competition Appeal Tribunal’s (CAT) decision refusing certification of the class. This decision is likely to mark a turning point for the collective action process in the UK. It will hopefully encourage more opt-out claims and overcome the disappointing track record of zero claims that have received certification so far.

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An indirect cost of record public debt: crowding out market competition?

October 27, 2020

[by Peter Ormosi] When Rishi Sunak announced the fourth Covid related support package in October 2020, UK government debt had already been at the unprecedented level of £2 trillion, exceeding 100% of the country’s GDP for the first time since the 1960s. But whereas the main worry on Sunak’s mind right now must be the likely interest rates on the national debt, the related risks, and to keep finances flowing, one should not dismiss the importance of how high government debt is likely to affect the real economy. This short blog considers some little-discussed side-effects that could have a long-term impact on competition. Read the rest of this entry »