OFT's claimed consumer savings from merger control

OFT report (39 pages, PDF) on the use of merger simulation tool in order to estimate the impact (in terms of consumer savings) of OFT's decisions to refer mergers to the Competition Commission. This produces "best guess" estimates of "total consumer savings resulting from OFT intervention" which range from 7 per cent to 40 per cent of the annual turnover in the market concerned. This is much higher than the 1 per cent of annual turnover which underpinned the £128 million annual impact figure (£640 million over five years) in the OFT's 2005 report. There is no aggregate estimate in today's report.

This work is purely for the purpose of estimating the impact of the OFT's work (as was recommended by the NAO in 2005). It does not contribute to the delivery of the OFT's merger control duties:

4.11 The use of merger simulation for impact estimation after a potential SLC decision has been made should not be taken as the expression of an opinion, in any way, on the suitability or validity of the use of merger simulation in the Office's substantive decision making process.

For further information or advice please contact Franck Latrémolière.

Filed under Impact assessment, OFT, Regulators.

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