COMPETITION
COMMISSION News Release (13/09) issued by COI News Distribution
Service on 27 March 2009
The Competition
Commission (CC) and Office of Fair Trading (OFT) have published an
independent study of their decisions in past merger cases.
Deloitte & Touche, supported by Professor Stephen Davies of
the University of East Anglia, was commissioned by the CC and the
OFT, along with the Department for Business, Enterprise and
Regulatory Reform (BERR), to assess the analysis and
decision-making in eight merger cases between 2004 and 2006. The
study titled Review of Merger Decisions under the Enterprise Act
2002 is available on the CC and OFT websites: http://www.competition-commission.org.uk
or http://www.oft.gov.uk.
Of the eight cases chosen, three were resolved at the OFT stage1
and five were referred to the CC.2 The cases were chosen to
include a mixture of unconditional clearances, conditional
clearances and prohibitions and to represent a range of analytical
issues and markets.
The study aimed to review these decisions in the light of
subsequent market developments, and to comment on the approaches
taken by the OFT and the CC. The focus was to examine the two
bodies' assessment of the mergers' likely effect on
competition but not to examine the effectiveness of any subsequent
remedies.3 This assessment was carried out through interviews
with relevant market participants, questionnaires to main and
related parties and research of publicly available information.
The study concludes that, in the majority of cases, subsequent
market developments did not raise any substantial doubts about the
soundness of the decisions. In some cases, the study suggests that
subsequent events raised questions over whether factors such as
barriers to entry and expansion and self-supply were correctly
evaluated. It also suggests that greater explanation of the
'intervention threshold' applied by the OFT and CC in a
particular local market would be helpful.
Peter Freeman, Chairman of the CC, said:
Evaluation is key to our work. Without evaluation of what we have
done, there can be no improvement. Whether it is the CC or the OFT
carrying out the work, assessing a merger means making a judgement
based on analysing the likely future evolution of the market in
question. It is therefore a valuable exercise to look back at past
decisions in order to learn any lessons which will help us in
assessing future cases. This study has been very helpful in
achieving that and in informing our joint review of merger
assessment guidelines, which will be published shortly.
John Fingleton, Chief Executive of the OFT, said:
Assessing the impact of a merger on competition requires agencies
to make predictive judgments on likely future market dynamics.
Independent ex post evaluation of those decisions in the light of
subsequent market developments is a key ingredient to improving
the quality of our decision-making.
Although the CC and the OFT have commissioned external and
internal reviews of their past merger decisions before, this is
the first such review of cases carried out under the Enterprise
Act 2002, which substantially reformed the process of merger
assessment, notably by making the competition authorities
determinative rather than merely advisory to the Government.
The CC and OFT will soon be issuing new Merger Assessment
Guidelines. (See news release: http://www.competition-commission.org.uk/press_rel/2008/apr/pdf/11-08.pdf.)
Notes for editors
1. The CC is an independent public body which carries out
investigations into mergers, markets and the regulated industries.
2. The Enterprise Act 2002 empowers the OFT to refer to the CC
completed or proposed mergers for investigation and report which
create or enhance a 25 per cent share of supply in the UK (or a
substantial part thereof) or where the UK turnover associated with
the enterprise being acquired is over £70 million.
3. Further information on the CC and its procedures, including
its policy on the provision of information and the disclosure of
evidence, can be obtained from its website at: http://www.competition-commission.org.uk.
4. Enquiries should be directed to Rory Taylor on 020 7271 0242
1Impress/Alcan; Boots/Alliance UniChem; and William
Hill/Stanley.
2Heinz/HP; Cott/Macaw; EWS/Marcroft;
Knauf/Superglass; and DS Smith/Linpac.
3The CC published an
updated review of past merger remedies in August 2008:
http://www.competition-commission.org.uk/our_role/analysis/understanding_past_merger_remedies.pdf