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Behavioural the CMA Chris Walters* Director of Economics, Enforcement *The usual disclaimer applies 1.

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Presentation on theme: "Behavioural the CMA Chris Walters* Director of Economics, Enforcement *The usual disclaimer applies 1."— Presentation transcript:

1 Behavioural the CMA Chris Walters* Director of Economics, Enforcement *The usual disclaimer applies 1

2 Overview 2 ●About the CMA -Making markets work well ●Putting behavioural economics into practice at the CMA -Enforcing consumer law -Looking at markets ●Some future priorities -The interaction of competition and behavioural economic effects, especially online -The behavioural economics of personal data as currency -The behavioural economics of businesses, not consumers

3 ABOUT THE CMA Behavioural the CMA 3

4 Tools for making markets work well 4 COMPETITION TOOLS CONSUMER TOOLS Calls for information Market studies Super-complaints MIRs Unfair contract terms Unfair commercial practices Anti-competitive agreements Abuse of dominance Merger control Competition advocacy Business guidance SOFT TOOLS Impact Strategic Significance Resource Risk Sector regulation

5 When don’t markets work well? 5 Market concentration Barriers to entry Supplier behaviour Accessing information Acting on information Assessing information Demand side blockages Supply side blockages

6 PUTTING BEHAVIOURAL ECONOMICS INTO PRACTICE Behavioural the CMA 6

7 BE and demand-side blockages 7 Accessing information Acting on information Assessing information Narrow choice sets Bounded rationality Bounded self control Bounded self interest Anchors and heuristics Habits and status quo Impulsive behaviour and procrast- ination Sacrifice and punishment

8 Business practices may exploit these 8 Accessing information Acting on information Assessing information ●Making information difficult to find ●Increasing search costs ●Obfuscating (e.g. partitioned or dripped pricing) ●Making choice difficult ●Surprise charges, automatic renewals and default charges ●Time limited offers (e.g. bait pricing)

9 ● Since mid-2010, c.45 investigations, increasing focus on BE theories of harm Some examples Pricing practices ● Drip pricing -Low cost airlines (2012) ● Other pricing practices -Supermarkets (2012) -Furniture and carpet retailing (2014) Other practices ● Gyms (2013) -Lengthy minimum membership periods -Penalties, not liquidated damages -Debt collection 9

10 Supermarket pricing: Deal or no deal 10

11 SOME FUTURE PRIORITIES Behavioural the CMA 11

12 What next for CMA? ●Online intermediation ●Data as currency ●BE of businesses 12

13 Thank you Chris Walters Director of Economics, Enforcement 13


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