Intervention to control mergers

• Forms of consumer exploitation

  • Higher prices
  • Less choice
  • Poor quality products
• Key aims for competition policy

  • Technological innovation which promotes dynamic efficiency in different markets
  • Effective price competition between suppliers
  • Safeguard and promote the interests of consumers through more choice and lower prices
• Who are the CMA?

  Competition and Markets Authority
• What is the CMA?

  a government regulator that is tasked with ensuring that the creation of monopoly power is avoided & that consumers are not exploited in markets
• What market share is required for the CMA to investigate?

  Around 25% or more in order to prevent uncompetitive outcomes in market.
• What regulators are similar to the CMA?

  In Europe there is the European Competition Commission

  In the USA there is the Antitrust Commission
• What are the main pillars of Uk Competition Policy:

  • Anti-trust and cartels (eliminating agreements that restrict competition including price fixing)
  • Market liberalisation (introducing competition in previously monopoly sectors)
  • Merger control
• Controlling mergers:

  The CMA is the body given the power to investigate mergers and takeovers in the UK and consider whether they should go ahead.
• When does CMA have authority to examine mergers?

  If the merged entity controls 25%, or has a turnover of £70m or more, of its market
• When can CMA block an acquisition?

  If they find that the integration of two businesses will lead to a "significant competition" in one or more markets at local, regional or national level.
• What is the aim of the CMA?

  to ensure that mergers do not lead to worse outcomes for consumers, for example, higher prices, lower quality or reduced choice
• What power does the CMA have?

  They have the power to give a merger the go-ahead providing certain conditions are met - for example, the CMA require the acquiring company to sell off part of its operations to reduce its market power.

  For example, the Cineworld/ PictureHouse Merger (2013) was eventually cleared by the CMA after Cineworld sold three cinemas to the Light cinema chain