(by Sebastian Peyer) Cartels are rightly punished for breaking the law. However, the headline fines, and even criminal penalties, neither compensate buyers nor relate very directly to the economic harm done. Damages claims should be able to address compensation, but they are incredibly difficult to get through the courts for at least two reasons: buyers are often small and dispersed; and immediate buyers can sometimes pass on the costs to downstream buyers known as ‘indirect purchasers’. A recent court decision highlights the need for legislation to get around these problems. Read the rest of this entry »
(by Grischa Perino) The recent move of the coalition government to abolish, merge and review quangos “quasi-autonomous non-governmental organisations” is being sold as a long needed return to accountability in key policy areas and as an opportunity to realize substantial efficiency gains (see also Catherine Waddams’s recent contribution). I will focus on the accountability aspect, in particular the tendency of politicians to cater to short-run rather than long-run interests which famously are not always perfectly aligned. Read the rest of this entry »
(by Bruce Lyons) Thank goodness for competition between regulators! Back in July, I wrote about how absurd it was that Ryanair had been allowed to retain a 29.8% stake in Aer Lingus, its rival duopolist out of Dublin airport. The European Commission claimed the its Merger Regulation gives it no jursidiction over minority shareholdings and this was confirmed by the Court. Enter the OFT, which announced on Friday that it was considering its own jurisdiction on the issue and is opening a phase I investigation. In order to refer the case to the UK Competition Commission, it only needs to find that there is a ‘realistic prospect’ of an influence that would significantly lessen competition. In the light of UK precedent from BSkyB and ITV, it seems likely that this threshold will be met. A second phase investigation by the CC would have to consider the detailed mechanics of how a 30% share might wield material influence. Needless to say, Ryanair boss Michael O’Leary is typically forthright in his condemnation of the OFT move.