What is the Betting on the Proposed Merger Between the OFT and Competition Commission?

(by Bruce Lyons)  The UK government has announced a major review of the UK competition regime and is consulting on a long list of questions.  Question 2 is: “The Government seeks your views on the potential creation of a single Competition and Markets Authority (CMA)”.  In other words, should there be a merger of the competition role of the Office of Fair Trading (OFT) and the Competition Commission (CC)?   This is an important question because institutional design affects decision making.  Indeed, the answer is crucial to the success of competition policy in the UK.  So what are the odds against the merger going through?

‘Cover Pricing’: Object or Effect?

(by Andreas Stephan) Last week, the UK’s Competition Appeals Tribunal (CAT) cut fines on six construction firms by 90%.  The fines had been imposed by the Office of Fair Trading in 2009 for cover pricing. The CAT found the original penalties were excessive and reduced the fines totalling £42 million to just £5 million, reflecting their view that cover pricing is less serious than ‘traditional’ cartel conduct. They accepted the treatment of cover pricing as an ‘object’ agreement, but suggested that effects should be considered in calculating the fine.  This raises an interesting question: if cover pricing is different from bid-rigging – and should warrant such a significant reduction in fines – should it really be treated as an object agreement?