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tutor2u.net5 February 2023
Examples of mergers that have been blocked by the CMA
80
Usefulness score
High score due to strong UK focus on CMA interventions and use of highly recognisable UK firms (Sainsbury's, Asda, Sky, ITV, Ryanair) as concrete examples, directly relevant to competition policy.
Summary
This article provides examples of mergers blocked by the UK's Competition and Markets Authority (CMA) and the EU competition authorities, highlighting reasons such as reduced competition and potential harm to consumers. It specifically details the CMA's decision to block the Sainsbury's and Asda merger in 2019.
Application
How to use this in an exam answer.
In 2019, the UK's Competition and Markets Authority (CMA) blocked the proposed merger between Sainsbury's and Asda, citing concerns that it would lead to a substantial lessening of competition in the grocery market, both nationally and locally. This regulatory intervention aimed to prevent higher prices for consumers and protect the negotiating power of suppliers, demonstrating the role of competition policy in safeguarding consumer welfare.
Evaluation
How to critically assess it.
However, blocking a merger might prevent potential economies of scale and scope that could arise from the combined entity, which could have led to lower average costs and potentially lower prices for consumers in the long run. Additionally, the CMA's assessment of 'substantial lessening of competition' is inherently subjective and may not fully account for dynamic market changes or the potential for new entrants to disrupt the market structure.