Competition Economics
More than ever Competition Authorities and Courts are relying on economic analysis in their investigations and decision making. Working alongside companies and legal counsels we develop sophisticated economic analysis to explain how competition works in different markets.
Our competition economics practice helps clients establish their case with competition authorities in a clear, constructive, evidence-rich and decisive way. That is, we provide specialist analytical support grounded in data, rigorous evidence and clear economic reasoning. We help clients navigate potential competition concerns across a broad range of sectors.
We have represented clients on competition issues in front of:
The Competition and Markets Authority (CMA);
The European Commission;
The UK Competition Appeal Tribunal (CAT);
The UK High Court;
Several UK sectoral regulators such as the FCA, PSR, Ofcom, Ofgem, ORR, Ofwat and NHS Improvement (formerly Monitor);
Several national competition authorities and courts around the world (e.g. Ireland, Italy, Germany, the Netherlands, Belgium, South Africa, Australia).
"As one of the premier economic consultancies in the world, it’s no surprise that PwC’s competition economists have worked on an impressive array of big ticket domestic and international matters... PwC’s varied roster comprises state aid, merger, cartel and regulatory work, as well as providing market definition and damages assessment advice."
Key questions we can help clients to answer
- Merger Control
- Market Investigations
- Subsidy Control, State aid and FSR
- Regulatory disputes
- Abuse of Dominance
- Cartels and Information Exchange
- Competition Litigation and Damages
Merger Control
Innovative and compelling economic evidence can make the difference between a merger or joint venture being approved, remedied or blocked. Identifying what a competition authority is likely to conclude can have numerous important uses at the pre-deal stage for a client.
We can provide clients with merger red-flag reviews and full merger filings including analysis of market definition and competitive effects; advising on competition and regulatory risk embedded in due diligence; and strategic advice on navigating merger control and other regulatory hurdles.
We can help clients answer important questions such as:
What kind of merger attracts a competition authority’s attention?
Is a deal worthwhile given competition concerns? Can the deal be restructured to reduce or remove potential competition concerns?
What future competition hurdles will companies have to overcome if they proceed with a deal?
How to define the relevant market for the merging products?
How to quantify the efficiencies from the merger?
Are there any local overlaps where competition concerns may arise?
How to assess the risk of foreclosure?
We have worked on high-profile Phase 1 and Phase 2 merger cases. These have been in front of the UK CMA, European Commission, and other national regulators (including the Dutch ACM).
Market Investigations
Market studies and market investigations in the UK can be initiated by the CMA and sectoral regulators (e.g. FCA, Ofcom, Ofgem, ORR, CAA, Ofwat).
When a market is under the microscope, we use robust economics to break through the market noise in order to get to the key structures and dynamics of competition to inform the authority’s view from the early phases of an investigation.
We can help clients answer important questions such as:
Are the markets they operate in susceptible to market investigation?
How to assess a company’s economic profitability?
How to engage with authorities during market studies and investigations?
How to appeal decisions to the CAT?
We have advised companies at the OFT, CC, CMA and other sectoral regulators (e.g. FCA, PSR, Ofcom, NHS Improvement, Ofgem, ORR and Ofwat) in many of the most high profile investigations in the UK.
Subsidy Control, State aid and FSR
Analysing UK Subsidy Control, EU State aid and EU Foreign Subsidy Regulation requires a broad set of economic, financial, and accounting skills. It is also crucial to have an understanding of how the CMA and European Commission’s regulations and processes work in order to maximise influence. Our team has supported a number of high profile cases navigate this complex area.
We can help clients answer important questions such as:
How to evidence a Commercial Market Operator (CMO) or Market Economy Investor Principle (MEIP) report to raise a case for public funding?
If the CMO/MEIP test is not satisfied, is it possible to demonstrate that the subsidy would be permitted?
How do I prepare a restructuring plan?
How to apply for grants and subsidies (e.g. regional and R&D investment aid)?
What are the processes to consider when applying for subsidies and State aid?
If funding has been considered a subsidy after it has been awarded, what are any damages to the company’s customers?
We have substantial experience in advising clients in both private and public sector on subsidy and State aid matters.
Regulatory disputes
Competition regulatory disputes arise from investigations by authorities (e.g. CMA, European Commission, or sector regulators like FCA or PSR) into suspected breaches of competition law. In addition, companies may have regulation discussions at regular intervals where authorities are considering regulating or changing the current regulations in an industry. We support clients through every stage of the regulatory process, delivering rigorous economic and financial analysis to engage with regulators, manage risk and respond effectively in complex UK and cross-border cases.
We can help clients answer important questions such as:
What is the appropriate level of the cost of capital?
How to calibrate risk and mitigate risk for price control discussions so that returns, incentives, or penalties appropriately reflect the level and type of risk faced by the regulated company?
What would be the appropriate regulatory asset base to include?
What would be considered the appropriate market return?
We have experience helping clients successfully navigate and influence regulatory processes.
Abuse of Dominance
Economic analysis is a fundamental component in the assessment of abuse of dominance cases. A variety of practices such as loyalty rebates and discounts, bundling, or refusal to supply might be dictated by efficiency reasons and not necessarily result in harm to consumers.
Others, such as predation, margin squeeze or foreclosure could only harm consumers if certain conditions are met. This has driven the need for sophisticated economic analysis to distinguish between pro-competitive and anti-competitive effects, and any impact on final consumers.
We can help clients answer important questions such as:
How to assess a firm’s market power?
How to identify the relevant theories of harm?
How assess the impact of anti-competitive behaviour on consumers?
How to conduct price-based testing for harm such as predation or margin squeeze?
How to assess foreclosures harms such as exclusive dealing or refusal to supply?
We have worked on prominent abuse of dominance cases including UK court cases in technology, UK class actions, UK excessive pricing in pharma, European Commission’s investigations in margin squeeze in telecoms, loyalty rebates in air transport, predation, and foreclosure of online markets.
Cartels and Information Exchange
Cartels are being pursued aggressively across the world. We use economic analysis to assess whether there is any evidence of cartel effects, to quantify the impact of any anti-competitive practices as part of a mitigation strategy for fines, and/or for use as evidence in any subsequent appeals and/or damages litigation.
We can help clients answer important questions such as:
- How to respond to allegations of collusion?
How to respond to allegations of price fixing?
- How to respond to investigations into bid rigging?
How to quantify the damages resulting from harm?
We have experience of providing expert testimony in cases involving alleged anti competitive collusion and can be supported by forensic technology specialists who can quickly interrogate vast email and voice correspondence archives to determine whether existing evidence can corroborate a suspicion that a breach of competition law has taken place.
Competition Litigation and Damages
Competition litigation and damages arise from infringements of UK and EU competition law, including cartels and abuse of dominance. We provide economic support that can be further supported by financial and forensic expertise to assist clients in complex competition disputes. This may range from regulatory investigations to high-value damages claims.
We can help clients answer important questions such as:
What is the relevant (product and geographic) market definition?
Has there been a position of market power, and if so has there been abuse of dominance?
What are the relevant counterfactuals (absent the alleged anti-competitive behaviour) to consider to understand the impact of anti-competitive behaviour?
How to best estimate the counterfactual price or volumes and hence the total harm?
What percentage (if any) of the harm has been passed on (e.g. by means of higher prices) down the supply chain?
How do proceedings in courts and tribunals work?
We have provided expert witness testimony on damages litigation in various territories including UK High Court and European Commission.
E-commerce Competition Policy in ASEAN
PwC worked with the Competition Commission of Singapore to prepare a competition handbook on E-commerce policy in ASEAN. The handbook explained how E-Commerce impacts traditional competition dynamics, and outlines policy considerations and advocacy strategies to address the challenges of enforcing competition policy in this dynamic sector.
Assessing an alleged cartel in a series of private procurement tenders
We assisted a client in a major investigation by an antitrust authority relating to alleged cartel agreements in a series of private tenders in an audio-visual rights market. Specifically, we conducted independent economic analysis to estimate the price of the rights in the counterfactual i.e. absent the alleged anti-competitive agreements and assessed whether this was different in any way to actual observed price.
Merger clearance support for an incumbent European telecoms operator
We assisted an incumbent fixed and mobile operator in a merger that would change the market structure from three to two mobile operators. Our work included defining the economic markets relevant to the transaction, from both a product and geographical perspective. We also undertook an assessment of the impact of the transaction on the market, an efficiency assessment and financial analysis. Additionally, we supported the client team in wider discussion regarding the merger and associated efficiencies.
Meet the team
Mihir Baxi
