Economics Report: A Detailed Study on Factors Affecting Global Economy

This economics report provides a comparative analysis of two case studies related to market competition. The first case study examines the role of the Competition and Markets Authority (CMA) in the United Kingdom in addressing anti-competitive practices through the 21st Century Fox/Sky Merger inquiry. The second case study focuses on the merger between BT and EE, which was also referred to the CMA for review. The report details the similarities and differences between the two cases, including the industries involved (media vs. telecommunications), the nature of the mergers (horizontal), and the potential impacts on competition and consumer interests. It discusses the CMA's methodologies, findings, and recommendations in each case, highlighting the importance of maintaining media plurality and ensuring fair competition in the telecommunications market. The report concludes that the second assignment provides a more in-depth analysis of the subject matter.

economics assignment

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Factors affecting the Global economic cycle
Prepared By
Student’s Name:
Date: 28th February, 2019

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Abstract
Our report is intended to make a comparative analysis between academic assignments, the first
being the case study of the role of the Competition and Markets Authority of the United
Kingdom to check the anti-competitive practices through the 21st century Fox/Sky Merger
enquiry and the second being the merger between the BT and EE group, which was referred to
the Competition and Market authority so as to obtain a detailed viewpoint on the same. In the
following section a detailed competitive analysis of both reports has been made.

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Contents
Abstract.......................................................................................................................................................2
Comparative analysis of the two reports.....................................................................................................3
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8

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Comparative analysis of the two reports
The first case study of merger is basically intended to check anti-competitive practices, but the
second one is being checked if it causes any threat to the competition. The industry to which the
first merger belongs to is the media one, whereas in the second it is the telecommunication. But
the nature of both of the mergers is horizontal in nature. A detailed comparison of the two is
provided in the following section.
In the first assignment the role of the CMA in strengthening the fair competition and reducing
the anti-competitive practices through various regulatory measures along with its major
responsibilities for achieving its objectives have been explained. But it is mainly focused on the
role of the CMA played in making an investigation into the merger of Fox/Sky that was referred
to it by the Secretary of State for digital, culture, Media and Support and this report primarily
talks about the type of merger that was actually horizontal one as both of the companies
belonged to the Media sector along with the positive and negative effects of the same merger(Oh,
et al., 2019). The main reason as it is suggested in the given case for considering this horizontal
merger as against the public interest was that both of the media houses were under the control
and ownership of the same Murdoch family trust that might cause the loss of the media plurality
and might put the merged firm into a monopolistic state due to which the it may be difficult for
the new firms to enter the same market and finally it may cause loss for the consumers in the
sense that the merged entity may charge the high price for the news published by it and
consumers may be in a position when they don’t have the option available to think of the
alternate media houses. At the same time the fear was also expressed that it might cause a
compromise of the broadcasting standards by the merged entity (Kweon, 2018).
But the report of the CMA also points out the positive aspects of the merger in the sense it says
that having gone through the history of both media houses, i.e., it can be concluded that both
were found highly committed towards the maintaining of such standards. Another argument in
favor of this merger is given that, as this should be the transfer of available resources from the
less efficient firm to the more efficient firm consequently resulting into the efficiency gains in
terms of economies of scale and finally consumers shall be benefitted by way of reduction in
price due to the significant cost reductions achieved by the firm.
It further talks about the methodology adopted by the CMA for carrying out its investigation into
the fact of media plurality along with the commitment toward the broadcasting standards. In this
case the CMA has adopted the OFCOM measurement framework that focusses on both
qualitative as well as the quantitative factors. But finally, the actual use of this framework could
not be found justified because of the limitations associated with it because of which it is
suggested to not to make the future use of this methodology. At the same time, it was found that

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CMA adopted a very unbiased approached while submitting its viewpoint on the specified
merger(Cayon, et al., 2017).
At the same time independent third parties also carried out their study to make their comment on
the same and they too found out the limitations associated with the study.
Similarly, the commitment towards broadcasting standards were also measured with the help of
the qualitative data mostly taken from the OFCOM along with the third-party submissions made
in this regard.
CMA provided its report in two phases and its recommendation was finally accepted by the
Secretary of the state for digital, media, culture and support. In its submission CMA agreed with
the fact that this merger was not in public interest as it hampered the concept of media plurality,
but it cannot be denied that the broadcasting standards were not followed in the given case. The
most noticing factor under this report is that it has primarily focused on the recommendation and
completely avoided the possibility of reaching any conclusion based on the investigation. For
providing the justification the required graphical presentations have been added in the
assignment to make it more effective(Boghossian, 2017).
The Second report is based on the independent report provided by the CMA in case of the
merger between the BT and the EE covering the major areas like the reason behind referring this
case to the CMA, how this merger is seen as a threat to the competition and the approaches
adopted by the CMA while deciding about the methodology followed by it to provide its
independent report. Actually it is the best example of a horizontal merger along with the
elements of the vertical merger being present in the case.BT and EE both operated in the
telecommunication market, but the major reason behind referring this case to the CMA was that
it was a regulatory authority to give a check whether such merger has negatively impacted the
level of healthy competition as well as the interest of the consumers(White, et al., 2018).
Now we are going to discuss the pros and cons associated with the merger. In terms of positive
impact, it was argued that it shall help the merged entity to ensure the post-merger synergy
benefits by boosting up its market share and amount of profit. But at the same time as the merged
entity shall keep in mind to not to sell its network to the small market players, hence the level of
healthy competition shall be lost.
In terms of the positive effect on consumers it was argued that,in the long run the merged entity
shall reduce the prices being charged from the consumers due to the synergy benefits achieved.
But it shall also bring down the consumers surplus in the hands of the consumers in the short run
because during the merged entity shall acquire the monopolistic power that shall cause them to
charge the higher prices. It further says that why there should be a control over the merger
because if such merger provided the monopolistic power then it becomes a threat to the healthy

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competition(Berg, et al., 2019). To evaluate the impact of the loss it suggests the application or
use of the theories of the harm. The first being the unilateral horizontal theories of firm and non-
horizontal theories of harm. In terms of the individual consumers effect it is seen that the merged
entity can charge the higher price without bringing down any reduction in its current level of
sales as there is no threat for the new entrants. Further it shall bring a reduction in the level of
consumption from the consumers as they won’t have much options available in terms of the
service providing firms. As the level of competition would be less hence it shall cause a
reduction in the level of efficiency too by providing the poor quality of service and less amount
of innovations can be well evident because of such merger. To know the size of the merged
entity in the given case HHI has been used.
In terms of the non- horizontal theories of the harm it is being argued that when in case of
merged entity one firm supplies the input to the other then in that case also it hampers the level
of competition in the market and the same was clear in the merger between the BT and EE.
In this case the success of the merger is also being argued that though all the above concerns are
present, but it is not going to impact the consumers interest in any way. In this assignment a
conclusion is finally provided by the CMA that the proposed merger is not going to negatively
affect the healthy level of competition. They also explained the methodology adopted by the
CMA to reach its conclusion(Dosi, et al., 2019). That is, they considered the theories of the harm
along with the parallel assessment of the assessment of the other industries of the firm. For
which they have considered the third-party submissions and for reaching to the conclusion both
qualitative and quantitative methods or approaches have been resorted to by them. It uses the
concepts of porter’s forces including the power of the buyers and suppliers etc. So far as the
theories of the farm are considered it used eight theories out of the ten theories available in the
case. Further CMA acknowledged the need of having the group feedback in the given case to
ascertain whether its findings are justified or not and at the same time emphasized the need to
further examine the third-party views in this regard(Awasthi, et al., 2018).
Conclusion
From the above it is quite clear that the second assignment is providing much deep-rooted
analysis on the given subject.

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References
Awasthi, A., Omrani, H. & Gerber, P., 2018. Investigating ideal-solution based multicriteria decision
making techniques for sustainability evaluation of urban mobility projects. Transportation Research Part
A: Policy and Practice, 116(2), pp. 247-259.
Berg, J., Lundh, L.-G. & Falkenström, F., 2019. Countertransference in Swedish psychotherapists: testing
the factor structure of the Therapist Response Questionnaire. Research in Psychotherapy:
Psychopathology, Process and Outcome., 2(1), pp. 1-22.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic responsibility. Educational
Philosophy and Theory, 50(3), pp. 244-253.
Cayon, E., Thorp, S. & Wu, E., 2017. Immunity and infection: Emerging and developed market sovereign
spreads over the Global Financial Crisis. Emerging Markets Review, 2(4), pp. 121-134.
Dosi, G., Roventini, A. & Russo, E., 2019. Endogenous growth and global divergence in a multi-country
agent-based model. Journal of Economic Dynamics and Control, 101(2), pp. 101-129.
Kweon, Y., 2018. Economic Competitiveness and Social Policy in Open Economies. International
Interactions , 44(3), pp. 537-55.
Oh, C., Kim, M. & Shin, J., 2019. Paths and geographic scope of international expansion across industries.
International Business Review, 2(3), pp. 21-35.
White, B. et al., 2018. The effect of the global financial crisis on preventable hospitalizations among the
homeless in New York State. Journal of health services research & Policy, 7(3), pp. 121-134.

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