“Facts” from thin air in the CMA Chairman’s letter requesting greater powers?

(by Bruce Lyons) I recently posted a blog commenting on the CMA’s proposals for reform. I was sympathetic with the aims of eliminating unfair pricing and inefficient decision processes. However, I was highly critical of the CMA’s direction of travel and the worrying side effects of their proposals. I suggested two alternative proposals that would directly address the aims without the harm. In this short blog, I pick up two “facts” used by Lord Tyrie, Chairman of the CMA, to motivate the need for reform. These are particularly important because they relate to exactly the type of statistical evidence relied on by the CMA in its daily competition analysis: concentration and margins.

Why the CMA is wrong in its proposals for reform and what should be done instead

(by Bruce Lyons) The Chairman of the CMA, Lord Tyrie, has written a 44-page letter (including annex) to the Secretary of State for Business, Greg Clark, setting out a long list of legislative proposals.[1] Two motivations are given: “First, the growth of new and rapidly-emerging forms of consumer detriment, caused in part by the increasing digitalisation of the economy, requires more rapid intervention, and probably new types of intervention… Second, there are increasing signs that the public doubt whether markets work for their benefit.” I agree with the spirit of these points and that they require action. However, I disagree with some of the CMA’s key proposals. Lord Tyrie appears particularly frustrated with the lengthy appeals system which limits his ability to act firmly and swiftly. Unfortunately, the overall package of proposals would reverse hard-won progress in competition policy over the last 20 years and lead to a paternalistic, arbitrary and unrestrained Consumer Interest Authority. In this blog, I briefly explain some of my concerns. I then set out two alternative proposals that would more directly and appropriately address public concerns over unfair pricing and result in better decisions without prolonged appeals.