Effective competition promotes low prices, enhances consumer choice, and facilitates innovation; however, public policy and regulation may restrict competition, reducing its benefits to consumers. Improving or eliminating excessive and unwarranted legislation, regulation, and other governmental barriers helps foster competition, thereby stimulating economic growth.
Many of our engagements involve the assessment of effective competition across a range of industries. We provide advanced theoretical and empirical analyses of market characteristics and competitive drivers. Our capabilities allow us to assess the impact of economic policy changes or decisions on competition. Where an anticompetitive impact is identified, we are able to assist regulatory authorities and private and public companies to streamline rules and regulations to ease or abolish this negative impact on the competitive process.
For PROMARCA (the National Brands Spanish Manufacturers’ Association), members of The Brattle Group evaluated the impact of private labels on the competitiveness of the Spanish food supply chain. Specifically, we analyzed the impact of market concentration and the expansion of private labels on final prices, quality, and innovation and provided empirical evidence that suggested the existence of dominant positions at the retail level. We concluded that the increased concentration of retailers, the tendency toward vertical integration, and the rise in the market share of private labels are already having a negative effect on price (and quality) competition, and on the incentives of manufacturers to invest in new products and innovate. We further highlighted that the discriminatory management of manufacturer and retailer brands adopted by dominant retailers may have exclusionary effects for the manufacturer brands that may ultimately reduce the consumer welfare.
Members of The Brattle Group assisted an incumbent generator in Belgium to develop measures that would improve competition and liquidity in the Belgian electricity market without requiring physical divestiture. The measures included reform of the balancing market, publishing more detailed market information, and ensuring coordinated timing among imports, virtual power plants, and the Belgian Power Exchange (BelPex) nomination process. Our recommendation included socializing the costs to encourage trading, and introducing “capacity competitions” to encourage new entry and the buy-out wished to serve them.
For an international energy company, members of The Brattle Group analyzed the competitiveness of the natural gas market in the United Kingdom. We focused on the prices that British Gas was allowed to charge under its price control formula. We concluded that the price control operated against the public interest by allowing British Gas to set excessive rates for transmission, thus discouraging efficient use of the pipeline system. This prevented the development of effective competition in gas supply and subsidized British Gas’ non-regulated activities. In a separate engagement, we provided evidence of British Gas’ market power in storage services. Our analyses of these issues and our recommendations to improve competition in these markets have been the subject of testimony to the Monopolies and Mergers Commission (now Competition Commission), and of formal comments to the regulator.
Brattle has experience assisting one of the six large UK energy companies throughout a phase II Competition and Markets Authority (CMA) investigation of competition in the UK energy markets. This has entailed analysis of: market structure and liquidity, unilateral market power, the potential for wholesale and customer foreclosure, profitability at the retail and wholesale level, retail pricing strategies and gains from switching, and competitive implications of regulatory rules and codes. Our support to the client includes assisting with responses to CMA working papers, helping prepare for CMA hearings, and evaluating and responding to CMA’s provisional findings.