What's the point of the Competitions and Markets Authority ?

[yorksrob]

Time was when we had the Monopolies and Mergers Commission which used to check that mergers of companies weren't detrimental to the general public. This has since morphed into the Competitions and Markets Authority which seems to be about as much use as a wet sock when it comes to protecting the public.

As an example, I see that a merger between 02 and Virgin media has been waved through. This isn't entirely surprising because whilst Virgin Media have always struck me as being good at taking ones money, but not very good at providing the service. I wouldn't recommend them to anyone.

O2 on the otherhand have generally been pretty good over the past few years, although in the past month or so, I've noticed a rapid deterioration in the quality of connectivity and service in the area.

Could it be that the "supercharging" of the network promised from this merger is in fact a round of equipment rationalisation and cost cutting ?

Is it about time the toothless and pointless competitions and markets authority was dispanded and replaced by a new monopolies and mergers commission ?

 

[GusB]

O2 on the otherhand have generally been pretty good over the past few years, although in the past month or so, I've noticed a rapid deterioration in the quality of connectivity and service in the area.

Could it be that the "supercharging" of the network promised from this merger is in fact a round of equipment rationalisation and cost cutting ?

Any new customers to Virgin Mobile will now be using the O2 network, where previously they would have used EE - essentially a hangover from Virgin's original agreement with one2one (subsequently T-Mobile). The ultimate aim will be to migrate all Virgin Mobile customers across to O2, so in effect there will be more subscribers using the same equipment. It's not quite a rationalisation of equipment, but it will have a similar effect, and as they will no longer have an agreement with EE, costs will certainly be cut.

 

[yorksrob]

Any new customers to Virgin Mobile will now be using the O2 network, where previously they would have used EE - essentially a hangover from Virgin's original agreement with one2one (subsequently T-Mobile). The ultimate aim will be to migrate all Virgin Mobile customers across to O2, so in effect there will be more subscribers using the same equipment. It's not quite a rationalisation of equipment, but it will have a similar effect, and as they will no longer have an agreement with EE, costs will certainly be cut.

Indeed. There's no accountability for these companies.

 

[Bletchleyite]

Indeed. There's no accountability for these companies.

I can't see any reason for a problem with this specific case. There's plenty of competition in the mobile network (physical and virtual) - four physical networks (O2, Voda, EE and Three) and an absolute ton of virtual operators e.g. Lebara. It's not their responsibility to deal with one operation disappearing, only if there is a threat of a genuine monopoly or lack of competition in a particular part of industry, which there isn't.

 

[yorksrob]

I can't see any reason for a problem with this specific case. There's plenty of competition in the mobile network (physical and virtual) - four physical networks (O2, Voda, EE and Three) and an absolute ton of virtual operators e.g. Lebara.

Four doesn't seem like a vast range of options to me. And this will only lead to a sweating of the assets for customers.

This deal was for the benefit of big business alone.

 

[JamesT]

I can't see any reason for a problem with this specific case. There's plenty of competition in the mobile network (physical and virtual) - four physical networks (O2, Voda, EE and Three) and an absolute ton of virtual operators e.g. Lebara.

Though the physical operators may drop if the Vodafone/Three merger goes through. But given the expense of rolling out improved mobile infrastructure, fewer operators may make a better job of providing wider coverage.
As you note, the MVNOs seem to show there is plenty of scope for competition.

 

[DarloRich]

What is the objection to the merger of 2 telecoms companies?

Does it prevent you switching to 3 or BT?

 

[Bletchleyite]

Four doesn't seem like a vast range of options to me.

It's only a problem if you end up with one, or one with disproportionate influence in a market of smaller ones. Neither of those is the case.

And this will only lead to a sweating of the assets for customers.

Bringing prices down.

This deal was for the benefit of big business alone.

It's not in the CMA's gift to decide that sort of thing. Companies merge/take each other over, and new ones emerge, all the time. That's how a market works.

== Doublepost prevention - post automatically merged: 14 Oct 2022 ==

Though the physical operators may drop if the Vodafone/Three merger goes through. But given the expense of rolling out improved mobile infrastructure, fewer operators may make a better job of providing wider coverage.

That's certainly one benefit of EE - they have long had by far the best overall coverage due to having both Orange and T-Mobile's former sites, though they have been rationalised a bit they still seem by far the best (and Three by far the worst) to me.

 

[dosxuk]

Having more than four physical operators would bring about difficulties with the number of sites needed and the amount of radio spectrum available. If anything, fewer physical operators would probably be better overall for a country the size of the UK - you could even argue that the physical infrastructure could be a natural monopoly and have a single operator, with consumer competition provided at the virtual operator level.

Introducing additional physical operators would just spread the same amount of cash amongst a larger number of physical installations, inevitably resulting in poorer coverage for all operators.

 

[najaB]

Four doesn't seem like a vast range of options to me. And this will only lead to a sweating of the assets for customers.

There is a limited amount of radio spectrum. The more ways it has to be divided up, the poorer overall coverage will be.

 

[gswindale]

And remember that in some sites, some of the physical operators actually share masts (O2 and EE do/did in some locations I know of).

Let's compare mobile networks to landlines - how much choice is there in the Landline network? Off the top of my head, I can think of Virgin Media (in some, but not all locations) and Openreach in the vast majority of others (Kingston Telecom being the exception). You can get your landline package through BT/Talk Talk/Sky etc., but they're all effectively virtual networks like Giff Gaff/Lebara are on the mobile front.

The choice is not for infrastructure, but for what you get with your package...

 

[pdeaves]

The point of the Competitions and Markets Authority is to ensure there remains competition [1]. In this case, it is evidently happy that sufficient competition remains.

[1] Sometimes, it seems, it insists on 'competition' to the detriment of the customer, in cases where the customer just wants a single, simple transaction. E.g. a single travel fare valid across multiple operators may not be available because 'competition' prevents it. I suppose such is inevitable if that's the CMA's terms of reference to which they have to work, but maybe that's a subject for a different thread.

 

[najaB]

Sometimes, it seems, it insists on 'competition' to the detriment of the customer, in cases where the customer just wants a single, simple transaction. E.g. a single travel fare valid across multiple operators may not be available because 'competition' prevents it.

Because there's a fine line between co-operation between companies and establishing a cartel.

 

[Bletchleyite]

The point of the Competitions and Markets Authority is to ensure there remains competition [1]. In this case, it is evidently happy that sufficient competition remains.

[1] Sometimes, it seems, it insists on 'competition' to the detriment of the customer, in cases where the customer just wants a single, simple transaction. E.g. a single travel fare valid across multiple operators may not be available because 'competition' prevents it. I suppose such is inevitable if that's the CMA's terms of reference to which they have to work, but maybe that's a subject for a different thread.

There are certainly some areas of business where a cartel is actually in the customer's interest (that, not legislation, is how Germany's Verkehrsverbuende came into being), but yes, it does tend to act even then.

In the case of buses, the cost of running a car and/or taking a taxi keeps fares largely in check, so competition is usually not of benefit - common ticketing is far more so.

 

[coppercapped]

Four doesn't seem like a vast range of options to me. And this will only lead to a sweating of the assets for customers.

This deal was for the benefit of big business alone.

There only ever have been four (arguably five) physical networks:

• Vodafone and Cellnet (now O2 UK) originally used the AMPS analogue technology but were the first to use digital GSM in the 900MHz frequency bands and
• Orange and Mercury one2one using the 1.8GHz band. These two merged in 2010 to form EE.

Three was started (in 2003?) by staff who had left Orange, it also used the 1.8GHz band but only the 3G version of GSM from the start. In the meantime, with the evolution of technology and markets many other frequencies are used by the national operators.

The mobile phone business has always been in a state of flux - why are you getting hot under the collar now?

 

[Busaholic]

Why is there only one Competitions and Markets Authority?

 

[GusB]

Four doesn't seem like a vast range of options to me. And this will only lead to a sweating of the assets for customers.

This deal was for the benefit of big business alone.

Let's not forget that there were only two physical networks to begin with - Cellnet and Vodafone. At the time they were purely network operators with the billing and customer service being provided by separate service providers, so there was still an element of competition between them. It was only when Orange and one2one came along that the two incumbent network operators were permitted to act as service providers as well. Even then, there were still a number of "independent" service providers in existence for some time afterwards. Singlepoint4u is one that springs to mind, as they had customers on both Vodafone and O2 networks - slightly problematic when the company was acquired by Vodafone...

Now we've got four network operators and a multitude of Mobile Virtual Network Operators (MVNO), so competition in the market has probably never been better.

 

[Yew]

I can't see any reason for a problem with this specific case. There's plenty of competition in the mobile network (physical and virtual) - four physical networks (O2, Voda, EE and Three) and an absolute ton of virtual operators e.g. Lebara. It's not their responsibility to deal with one operation disappearing, only if there is a threat of a genuine monopoly or lack of competition in a particular part of industry, which there isn't.

An oligopoly of a few companies can be almost as bad as a complete monopoly

 

[najaB]

An oligopoly of a few companies can be almost as bad as a complete monopoly

Yes, they can be. But when you are dealing with a limited and mutually exclusive resource (e.g. radio spectrum) there is a natural limit to the number of operators that can make use of it.

 

[mikeg]

The real question is, if competition is the be all and end all of economic regulation, why is there only one competition commission ... okay I may have nicked that one from Screaming Lord Sutch.

Three equally sized competitors should provide adequate competition subject to certain safeguards, there are plenty of other industries where there are fewer major players or fewer plyaers altogether. The Intel/AMD PC CPU duopoly did pretty well, as the competition was pretty darn head to head, for example. Now Windows and certain other OSs run on ARM there's a third entrant but still... Sometimes with a finite resource perfect competition is not possible. There also exist natural monopolies, such as electrical distribution network operators. Fancy having new wires hooked up when you change power supplier? Having the street dug up all the time and twice as many cables (which somebody pays for)? Nope, didn't think so. So in this case cost and performance oriented price controls, along with performance targets are used.

The results aren't always worse than competition, especially with anything with network effects. Do we really want more competition with buses? I find areas in which one operator runs most services are often better, and at least I don't pay a premium for multi operator journeys. Of course, if the bus monopoly was recognised and regulated, it might be more affordable, as the monopoly rent would be restricted or ploughed into creating more of a network. So yes while it works well for groceries, clothes shops and the like, I'm not convinced of the merits of competition for most public services or where entry to market is extremely finite.

 

[coppercapped]

The real question is, if competition is the be all and end all of economic regulation, why is there only one competition commission ... okay I may have nicked that one from Screaming Lord Sutch.

Three equally sized competitors should provide adequate competition subject to certain safeguards, there are plenty of other industries where there are fewer major players or fewer plyaers altogether.

Going off at a slight tangent, the semiconductor industry gives an example of an area where there is only one company active in certain fields. Although TSMC - Taiwan Semiconductor Manufacturing Company - produces chips for most of the worlds advanced computers and other products it is not the only chip manufacturer. However there is only one company in the world which produces the lithography equipment for the most modern chips, and that is ASML of the Netherlands, see its website at https://www.asml.com/en/

And the mirrors used in ASML's equipment come exclusively from Zeiss in Germany, see https://www.zeiss.com/semiconductor-manufacturing-technology/home.html

Germany is also home to the company, Siltronic AG (which was spun out of Wacker Chemie AG), which produces a high proportion of the hyper-pure single crystal silicon ingots used in high end chip making.

The barriers to entry in these businesses are enormously high - it has been reckoned that China will need a decade to reach the level of ASML's technology and the kit is breathtakingly expensive.

Even though these three companies could be thought to have a stranglehold on the computer and electronic communications businesses, in practice they work together to expand the market.

The Intel/AMD PC CPU duopoly did pretty well, as the competition was pretty darn head to head, for example. Now Windows and certain other OSs run on ARM there's a third entrant but still... Sometimes with a finite resource perfect competition is not possible. There also exist natural monopolies, such as electrical distribution network operators. Fancy having new wires hooked up when you change power supplier? Having the street dug up all the time and twice as many cables (which somebody pays for)? Nope, didn't think so. So in this case cost and performance oriented price controls, along with performance targets are used.

The results aren't always worse than competition, especially with anything with network effects. Do we really want more competition with buses? I find areas in which one operator runs most services are often better, and at least I don't pay a premium for multi operator journeys. Of course, if the bus monopoly was recognised and regulated, it might be more affordable, as the monopoly rent would be restricted or ploughed into creating more of a network. So yes while it works well for groceries, clothes shops and the like, I'm not convinced of the merits of competition for most public services or where entry to market is extremely finite.

Agreed. (Or not, depending if competition for the conclusion is needed...!!)

 

[Yew]

In general, I feel that some industries suit a competitive market, and some dont. Typically those that require a lot of infrastructure.

But there is certainly a case for a more joined up plan to allow good cross subsidisation - equally that sometimes causes issues where sensible services aren’t ran as local authority lines get in the way.

 

[317 forever]

The CMA effectively scuppered the merger of National Express and Stagecoach, more likely by cock-up rather than conspiracy.

 

[Hadders]

All this talk of mobile phone networks makes me smile, as I wonder how many people think there should be one nationalised operator....