The dangerously distorted incentives created by the CMA’s performance target

August 5, 2016

(by Bruce Lyons)[1]  The CMA has recently published its annual report and associated impact assessment.  Its performance management framework commits the CMA “to achieving direct financial benefit to consumers of at least ten times our cost to the taxpayer.” [Annual Report 2015-16, p.66].  Target setting and performance measurement are an important part of performance management.  However, the precise way that the government requires the CMA to justify its funding is dangerously distortionary. Read the rest of this entry »


Will much change in Antitrust post Brexit?

July 8, 2016

(by Andreas Stephan) The UK’s decision to leave the European Union has come as a shock to markets, politicians and indeed to many ‘Brexiteers’. Although protests demanding a reversal of the outcome and legal wrangling over Art 50  (the process for leaving the EU) continue, mainstream politicians have almost universally accepted the result (the obvious exception being in Scotland) and there is little evidence of public perceptions having shifted towards ‘Remain’ since the vote, despite accusations of a dishonest and misleading campaign by the ‘Leave’ camp. It is therefore almost certain that the UK will cease to be a full member of the EU. Bruce Lyons wrote about the (limited) advantages and (greater) disadvantages of Brexit for competition policy in an earlier blog, but here I suggest that much may remain the same regardless of what the UK’s new relationship with the EU ends up being. Read the rest of this entry »


Other web browsers are available: The EC case against Google

April 26, 2016

(by Richard Cadman) On 20th April 2016, the European Commission (EC) sent a Statement of Objections to Google outlining its view that Google had breached EU antitrust rules by imposing restrictions on Android device manufacturers and mobile network operators (MNOs). This post briefly discusses the economics of this case and draws a parallel with the EC case against Microsoft (Case COMP/C-3/37.792), but also identifies two key differences. Read the rest of this entry »


The Economics of Pay To Delay Deals

February 15, 2016

(by Farasat Bokhari) On Friday 12 Februrary 2016, the UK’s Competition and Markets Authority (CMA) issued drug manufacturer GlaxoSmithKline (GSK) a £37.6 million fine with an additional £7.4 million imposed on partner drug manufacturers for engaging in a so-called ‘pay for delay’ or ‘pay to delay’ deal that lasted from 2001 to 2004 for its antidepressant drug Seroxat. As discussed in a recent blog by my colleague, Sven Gallasch, GSK have not admitted wrongdoing and may challenge the findings by arguing the arrangement was pro-competitive. Between 2000 and 2010 there were 57 pay to delay deals in the EU, and 66 just between 2008 and 2010 in the US. The US Federal Trade Commission (FTC) says these deals cost US consumers $3.5 billion a year, but have attempted to challenge them with mixed results.[i] Pay to delay cases are relatively new in Europe and the GSK case is the first fine for the practice to be imposed by the CMA.

This blog discusses some of the key issues and incentives surrounding pay to delay deals and is aimed at stimulating further discussion. Read the rest of this entry »


The CMA’s first strike against pay for delay settlements in the United Kingdom

February 12, 2016

(By Sven Gallasch) On 12 February 2016 the Competition and Markets Authority (CMA) issued its first infringement decision concerning so-called pay for delay settlements in the UK pharmaceutical market, imposing a fine of £ 44.99 million on the branded pharmaceutical company GlaxoSmithKline plc (GSK) and a number of generic pharmaceutical companies including Generics (UK) limited and Alpharma Limited. This blog post considers whether drug companies’ claims that this practice is actually beneficial to customers have any merit. Read the rest of this entry »


Unfair purchasing practices and the Groceries Code of Conduct: the Tesco investigation

February 1, 2016

By Ignacio Herrera Anchustegui (University of Bergen). On 26 January 2016 the Groceries Code Adjudicator made public its investigation into Tesco plc concerning the possible breaches of the UK Groceries Code of Conduct. After an almost yearlong investigation the Adjudicator determined that Tesco had engaged in unfair purchasing practices prohibited by the Groceries Code of Conduct (“the Code”) by delaying payments that were due to its suppliers. Although the Adjudicator did not impose any financial fine on Tesco, it did issue five recommendations to be followed by the supermarket retail chain in order to prevent payment delays in the future. This blog discusses the Tesco case and its implications for future investigations. Read the rest of this entry »


The Economics of a $750 Pill

September 23, 2015

(by Farasat Bokhari) On Monday morning, the New York Times broke the story about a price hike in the USA from $13.50 to $750 per pill for Turing Pharmaceuticals’ drug Daraprim. Hillary Clinton tweeted, “Price gouging like this in the specialty drug market is outrageous. Tomorrow I’ll lay out a plan to take it on. –H”. Since Clinton’s plan is likely to include negotiated prices between pharma and Medicare, this in turn sent the Nasdaq Biotechnology Index down by 4.7% within the next two hours (see the Bloomberg graph below). Beyond the political repercussions, how can it suddenly be profitable to impose such an enormous price rise for an out-of-patent drug? Read the rest of this entry »


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