Public Policy and Regulation

Overview

When considering public policy intervention or market reform, governments and regulatory agencies need to carefully analyze the markets concerned to determine whether intervention is appropriate (for example, if there is a form of market failure) and to consider the likely impact of different forms of proposed intervention.

Our expert economists assist government agencies and regulators and companies that are affected by the proposed regulations to rigorously analyze the markets and evaluate the likely effects of intervention. We apply similar market analysis and econometric techniques to our antitrust work, ensuring that governments and agencies have the necessary information to make robust evidence-based decisions. We also assist parties with appeals of decisions to the courts, providing expert economic evidence and testimony.

We have particularly extensive experience and expertise in the areas of telecommunications, media, energy, healthcare, transportation, and infrastructure.

NOTABLE CASE OUTCOMES

O2 (formerly Telefonica UK)

Mobile operators in the UK had developed a new form of retail offering in which customers entered into two separate linked contracts, one in which they purchase an airtime tariff and another in which they finance the cost of a mobile handset through a consumer credit agreement. Ofcom, the UK communications regulator, was concerned that the form of the offering deterred customers from switching, preventing them from obtaining the best airtime deal, and proposed to restrict the linked contracts that mobile operators could offer.

Acting on behalf of O2, we showed that Ofcom’s concerns were not plausible because its theory of harm did not consider appropriately how operators compete or how consumers behave. We also explained how Ofcom’s proposed form of intervention would lead to harm to consumers. In its final decision, Ofcom changed the proposed regulation, removing the specific restrictions that it had proposed.

NOTABLE CASE OUTCOMES

Heathrow Airport

AlixPartners was commissioned by Heathrow Airport Limited to act as economic advisors in relation to the Civil Aviation Authority (CAA)’s market power assessment (MPA) of the airport. This exercise involved a wide range of economic issues, from defining the market at the product market level (taking account of the range of services provided by airports to passengers as well as airlines); as well as the geographic market level (taking account of both catchment area analysis for departing passengers as well as the broader market for transfer passengers across international hubs). The AlixPartners team examined research, passenger data, and analysis carried out by the CAA in the context of its MPA. We submitted evidence on behalf of Heathrow Airport which highlighted the crucial ways in which airport hubs compete with one another to attract transfer passengers.

NOTABLE CASE OUTCOMES

British Telecommunications (BT) v Ofcom – Appeal of Cost Orientation Regulations concerning Ethernet Charges (UK)

We were retained as an economic expert for Vodafone, Verizon UK, and Virgin Media in support of their intervention in BT’s appeal to the Competition Appeal Tribunal of an Ofcom decision concerning breach of cost orientation rules. Ofcom regulates access to BT’s infrastructure by third parties involved in voice and broadband retail markets. The appeal related to Ofcom’s determination of various disputes between communications providers and BT in relation to wholesale charges for Ethernet services. Ofcom considered that BT had breached its cost orientation obligation in relation to certain connections and rentals charges for Ethernet services and required BT to repay the overcharges.

Our expert adopted a framework for analyzing whether the overcharge may have had an impact, including an assessment of implications for allocative efficiency, incentives, and effects on competition, and further identified a number of reasons why the Ofcom approach to assessing cost orientation in relation to connections and rentals charges should be retained. The CAT upheld Ofcom’s determination.

NOTABLE CASE OUTCOMES

British Telecommunications (BT)

Ofcom analyzed wholesale business connectivity telecommunications markets in the UK and determined to impose access and price regulations. Ofcom’s decisions on market analysis and access remedies were appealed to the Competition Appeal Tribunal by telecoms operators that purchase those products and BT, the main supplier of those products, intervened on behalf of Ofcom. Our expert testified on the implications for the analysis of the wholesale business connectivity markets of other forms of infrastructure access that had already been imposed on BT. The Tribunal found our expert’s answers helpful and objective and accepted Ofcom’s market analysis.