Competition Policy 2020-

UK society and its economy faced three serious challenges as the 2020s developed:   Climate Change,  Brexit and the COVID-19 virus.   This web page describes how competition policy developed in response. to those challenges, and in other ways.

COVID-19

The CMA responded quickly to the issues raised by the arrival of COVID-19, threatening action in response to price gouging, and announcing that no enforcement action would be taken against businesses cooperating so as to reduce damage to consumers and others.  Further detail is in a note by Tasneem Azad.

But the CMA's bid for 'temporary new laws' met a cool reception in Whitehall.

The CMA also - very unusually - allowed an otherwise anti-competitive merger to take place on the grounds that one of the companies would fail in the absence of a cash injection, and no other source of funds, nor any other likely purchaser, was available.  The acquiring company was Amazon. The target was Deliveroo.  And the special circumstances were (of course) the COVID-19 pandemic and associated recession.

(Deliveroo's argument is known as the failing firm defence - or - as cynical competition experts call it - the flailing firm defence.   Competition authorities generally conclude that someone will acquire a flailing company, and so maintain competition, if the price is low enough.)

Resignation of Andrew Tyrie

The CMA's Chair, Lord Tyrie, announced his resignation in June 2020, after only around two years in the job.  He made it clear that he was frustrated by the legal limits on the CMA's powers and by the Government's (so far) unenthusiastic response to his request that he be given new powers.  These issues are discussed in my webpage summarising developments at the CMA and elsewhere before 2020

 In short, though, he had bid for powers to intervene decisively on behalf of the consumer - but without first carrying out a detailed investigation - which one commentator described as 'untrammeled'.  It is not surprising that he hit obstacles which he found frustrating. 

He had, however, suggested some interesting ways in which the CMA might more effectively regulate the digital economy and it will not be surprising if these are taken forward by the Government.

The resignation of a Chair of such a prominent and important regulator was undoubtedly unusual and striking, and became all the more so when it transpired that he had in fact been forced out by 'a rebellion' by the CMA's senior executives - presumably supported by the non-execs on the CMA's Board. The 'rebellion' included an approach to the Business Department who must have sided with the execs.  There had clearly been a pretty serious personality clash between the serious-minded and 'political' Chairman and the equally serious-minded economist Chief Exec.  Different characters might have found some room for compromise.

 

 

Martin Stanley

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