FCA publishes update on advice relating to Super Complaint

FCA publishes update on advice relating to Super Complaint

The Financial Conduct Authority (FCA) has issued a press release updating on its work following the Competition and Market Authority (CMA) response to a Super Complaint from Citizens Advice on loyalty penalties.  The CMA made certain recommendations relating to the cash savings, home insurance and mortgage markets in its response of December 2018.

The FCA plans to publish updates on its work relating to fair pricing in financial services and its consultation on guidance for firms on the fair treatment of vulnerable customers (GC19/3) later in 2020.

The FCA has a number of other workstreams including a consultation on new regulation which would require firms to pay customers single rates for access to cash savings and ISAs no later than 12 months after an account is opened.

Source: https://www.fca.org.uk/news/news-stories/citizens-advice-supercomplaint-cma-update

CMA cancels Illumina / Pacific Biosciences Phase 2 investigation and parties abandon deal

CMA cancels Illumina / Pacific Biosciences Phase 2 investigation and parties abandon deal
The Competition and Markets Authority (CMA) has withdrawn is second stage inquiry into the proposed acquisition by Illumina, Inc. of Pacific Biosciences of California, Inc.
The reference was made on 27 June 2019.  On 24 October the CMA provisionally found that the merger may be expected to give rise to a substantial lessening of competition in the market for the supply of next generation DNA sequencing in the UK.
The CMA invited views on possible remedies including divestment or licensing of IP.
The review period was extended to 5 February 2020 but the CMA reported on 3 January that the parties have abandoned their merger.  The CMA therefore cancelled its reference.
Meanwhile the US Federal Trade Commission (FTC) was investigating the transaction and in December 2019 proposed to block it.  The CMA confirmed that it was cooperating with the FTC in its investigation.
The parties have announced that they are disappointed not to have completed their deal. Sometimes the weight of regulatory scrutiny on both sides of the Atlantic cannot be overcome through remedies that would still keep intact the commercial rationale of a transaction.

CMA opens in-depth investigation into Amazon Deliveroo tie-up

The Competition and Markets Authority (CMA) has referred the anticipated acquisition by Amazon of a minority (16%) shareholding and certain rights in Deliveroo for an in-depth merger investigation.

The CMA raised competition concerns in early December finding the UK online restaurant delivery market to be “highly concentrated”, with only three large players in the UK: Deliveroo, Just Eat and UberEats.

The CMA said the deal could mean that customers, restaurants and grocers face higher prices and lower-quality service

The parties were unable to offer remedies that would address the CMA’s concerns, which prompted the opening of a Phase II probe.  The CMA has prohibited only one minority investment since 2004 when it blocked Ryanair’s attempt to buy a stake in the competitor Irish airline Aer Lingus.

The German Federal Cartel Office cleared Amazon’s investment deal unconditionally in July after a Phase I review.  Deliveroo had practically no activities in Germany and has since committed to exit the German market.



https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry

CMA interim report finds that Google and Facebook have marker power in their markets

CMA interim report finds that Google and Facebook have marker power in their markets

The Competition and Markets Authority (CMA) has issued its interim market study report on online platforms and digital advertising.

The CMA finds that both Google and Facebook have market power in their respective markets.  It also notes features of those markets, including economies of scale and a lack of transparency can lead to a strong entrenching effect.

The CMA found that profitability was well above any reasonable estimate of what it may expect in a competitive market.  On this basis and other findings in the report the CMA thinks there are reasonable suspicions that competition is not working as well as it should.  It believes that these findings support the development of a dedicated regulatory regime to regulate the activities of online platforms fuelled digital advertising.

Any remedy would be UK-only.  However, the CMA has echoed concerns of other regulators including the Australian Competition and Consumer Commission’s recommendations to address a lack of “significant reflection” on the effects of digital platforms.

The CMA deadline for responses to the interim findings is 12 February 2020. The deadline for the final report is 2 July 2020.

Court rewinds CMA director disqualification order

Court rewinds CMA director disqualification order

The High Court has allowed two individuals to continue to act as company directors after the Competition and Markets Authority (CMA) secured disqualification orders against them.

The CMA fined five refurbishment companies in a settlement where they admitted to rigging bids on tenders from a college and law firms. Stamatis and Davis were directors at the implicated Forefront Group which includes 360 Workplace, Area Sq., Sketch Studios and Cube Interior Solutions and they received disqualification orders for two years and nine months and 18 months respectively.

The Court found that the public protection in upholding the orders must be balanced against the needs of the companies concerned. It found that the disqualifications could lead to further redundancies and that Stamatis was essential to the organisations’ culture.  Overturning the bans, the Court was satisfied that the conduct was not likely to be repeated.

Stamatis and Davis v CMA [2019] EWHC 3318 (Ch)

Review of EU Notice on Market Definition

Review of EU Notice on Market Definition

EU Commissioner Vestager has announced that the Commission will review and revise its 1997 market definition notice to take account of market developments and the globalisation of competition.

The definition of the relevant market, while intuitively simple and anchored in economic theory and legal precedents, can present particular issues in relation to the newer markets that have emerged in recent years.

Digitisation has changed how consumers interact with social media including in ways other than payment of money, such as exchange of personal data. 

The application of the so-called “Hypothetical monopolist test”, conveniently labelled as the “SSNIP” test (Small, Significant Non-Transitory Increase in Price) can present challenges when applied to newer markets.  This test seeks to assess the reactions of consumers in response to a company increasing its prices by, say, 5 – 10% over a period of time of about a year.  In Google Android the Commission had to address the fact that the Android operating system is available for free so instead of a SSNIP test the Commission asked what would happen if Google reduced the quality of Android software.

The Commission will also look at the potential lock-in effect of digital ecosystems where companies provide a full range of services making it hard for consumers to switch.

European Commission opens new competition probes into Google and Facebook

European Commission opens new competition probes into Google and Facebook

The European Commission has launched separate antitrust investigations into Google and Facebook’s data practices.  The preliminary probes concern the way that data is collated, used and commercialised by the companies, including for advertising.

This latest investigation adds to the scrutiny that both companies are facing from national antitrust authorities and the Commission.

To date the Commission has issued three separate infringement decisions against Google under EU competition law (Google Shopping, Google Android and Google Adsense). The General Court will hear Google’s appeal in the Shopping case in February.

The Commission is also investigating the governance and membership structure of Facebook’s cryptocurrency, Libra.

Meanwhile, New York’s attorney general and other state attorneys general in the USA are investigating Facebook’s data collection practices and others have ongoing investigations into Google’s online search practices.  Google has publicly confirmed that it is the subject of an investigation by the US Department of Justice.