Merging the merger authorities

No two countries are the same when it comes to the institutional design of their regulatory and competition authorities. The UK government is considering merging its two highly rated competition bodies, the Office of Fair Trading and the Competition Commission. Oxera’s response to the government’s consultation on the matter is provided below.

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Who is really regulating us?

Introducing competition into regulated parts of the economy, or, where this is not possible, trying to mimic the competitive outcome, has been the dominant policy for utilities and infrastructure over the past 40 years. Fod Barnes and Mike Toms argue, however, that recognising when we have reached the end of this road towards more competition may be the key to getting the future of utilities and infrastructure right.

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The electricity White Paper: towards a stable investment environment?

The electricity White Paper provides further thinking from the UK Department of Energy and Climate Change (DECC) on how it aims to introduce a system of long-term contracts to promote low-carbon investment and provide security of supply. This article considers the major developments in DECC’s thinking, and highlights some of the risks and further details that are still to be determined.

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The cost of supporting banks: lower than expected?

Financial services regulation is undergoing a major overhaul, with specific focus on banks that are perceived to be ‘too big’ or ‘too systemically important’ to fail. The argument is that such institutions have benefited from implicit state support, which in turn is seen to have created incentives for excessive risk-taking and distortions of competition. Nevertheless, quantification of the scale of the underlying problem and the effectiveness of related policy proposals remains limited to date.

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No-fly zone? A curious case of alleged predation by a new entrant

Following the entry of UK airline, Flybe, onto a domestic air route that put it in competition with Air Southwest (ASW), the UK Office of Fair Trading (OFT) launched an investigation into whether the entry represented an abuse of a dominant position by Flybe. The OFT’s theory of harm was that Flybe might be attempting to eliminate ASW from all routes, thus benefiting Flybe’s other routes operating from a nearby regional airport. After a 17-month investigation, the OFT concluded that Flybe had not breached competition law.

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