Competition law and learning from the Tuffins Case

Edward Parker

Secretary & Head of Governance

The Midcounties Co-operative

7 November 2014

Tuffins

“The OFT also notes the parties’

submission that the one-stop

store has a wide and eclectic

product offering including both

food and non-food items (such

as gardening products and

parrots).”

Some OFT jargon

• Substantial lessening of competition

• Substantial part of the UK

• Turnover test

• Share of supply test

• Jurisdiction

The OFT is . . . .

• cautious

• “On a cautious basis the OFT considers it appropriate to . . . .

• “The OFT has also, on a cautious basis . . . .

• “The OFT’s estimates reflect an approach that is more cautious . . . .

• “The OFT considered it appropriate on a cautious basis . . . .

The OFT needs . . . .

• evidence

• “As the OFT has not received compelling evidence in this case . . . .

• “In the absence of sufficient evidence to suggest . . . .

• “The OFT considered the evidence available to it . . . .

• “There was insufficient evidence to conclude . . . .

The OFT likes . . . .

• process

• Stage 1

• “identifying local overlap areas and conducting an initial filtering exercise”

• Stage 2

• “estimating diversion ratios and asymmetric illustrative price rises”

• Stage 3

• “assessment of other factors”

. . . . so it all gets very complicated

• “Please provide alternative linear and isoelastic IPR estimates using both Mb and Dba estimates from the (b) store which has the highest Dba to the focal (a) store (we would expect this to be the (b) store closest to the focal store), all respondents included but excluding ‘would not have purchased the items’ responses.

OFT to Midcounties

• “We have to consider the ‘counterfactual’ – i.e. what would have happened if what has happened hadn’t happened . . . . !!”

Midcounties Secretary to Midcounties CEO

. . . . even more so because of the ‘c’ word

Competition law and Co-operatives

Co-operatives confuse regulators . . . .

. . . . . which causes contradictions

• Do societies compete?

• OFT decisions:

• United Yes

• Somerfield No

• Lothian & Borders Yes . . . . and . . . . . No

In the case of Midcounties and Tuffins . . . .

“The OFT considers that the parties

have provided evidence

that the level of rivalry that exists between

Midcounties and CGL is likely to be higher

than at the time of the CGL/Somerfield

assessment in 2008.”

What evidence?

Oxera OFT

Different prices, different ranges, different opening hours, different local sourcing, different formats, different cost base, different member programme, different dividend rate, different Board, different management

Similar prices, similar ranges, same buying terms, same promotions, influence at CGL, influence at CRTG

Putting it all together

• Complex, expensive, time consuming

• Evidence required

• Disposal of 4 stores

• Partially effective competitors

The final word . . . . .

“The OFT clarifies that whilst

there is a parrot at the

Churchstoke store, the store

does not sell parrots.”