Monopoly in the UK:what determines whether the MMC finds against the investigated firms?

This paper draws on data from 73 UK Monopolies and Mergers Commission reports on monopoly between 1973 and 1995. It shows that there is a roughly two in three chance that the Commission will come to an adverse conclusion against the investigated firms in a given case. 75–80% of decisions can be explained purely in terms of the market share of the leading firm and knowledge of the broad nature of the alleged anti-competitive practice. An adverse finding is most likely in cases involving exclusive dealing, and least likely where other vertical restraints are involved.

The impact of organizational change on the perceptions of UK managers change

Redundancy, delayering, downsizing, and various other forms of organizational change have become increasingly prevalent. This article focuses on the impact of different forms of organizational change on managers' perceptions of the organizations they work within and the comparison between changes that involve redundancy and/or delayering and those that do not involve such changes. The literature has many accounts of the negative effects associated with redundancy and delayering, but are these effects unique to these types of change or are they a consequence of negative experiences of a range of organizational changes? Hypotheses were tested to assess, first, whether there are differences between different levels of management, notably between directors and nondirectors in the way they perceive organizational change, second, to assess how change has affected managers' perceptions of their organizations and their working lives, and third, to explore if different forms of change are associated with differences in managers' perceptions of their organizations “as a place to work”. Hypotheses were tested with data from a cross-sectional survey with 830 managers from the UK. Organizational changes include cost reduction and culture change programmes, delayering, mergers/demergers, outsourcing, redundancy programmes, and contract/ temporary workers. The analyses reported here indicate clearly that specific forms of change are associated with managers' reports of their experiences at work; some forms of change (notably redundancy and delayering) seem to have particularly damaging implications for managers' experiences in the workplace. The analyses also show that there is a difference in the way directors and nondirectors perceive the changes. Finally, the article considers strategies for ameliorating the effects of change including the role of HR.

Working under a black cloud:how to sustain organizational identification after a merger

This article argues against the merger folklore that maintains that a merger negatively affects well-being and work attitudes primarily through the threat of job insecurity. We hold that the workplace is not only a resource for fulfilling a person's financial needs, but that it is an important component of the self-concept in terms of identification with the organization, as explained by social identity theory. We unravel the key concepts of the social identity approach relevant to the analysis of mergers and review evidence from previous studies. Then, we present a study conducted during a merger to substantiate our ideas about the effects of post-merger organizational identification above and beyond the effects of perceived job insecurity. We recommend that managers should account for these psychological effects through the provision of continuity and specific types of communication. © 2006 British Academy of Management.

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

This study employs stochastic frontier analysis to analyze Malaysian commercial banks during 1996-2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in costs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68 percent, with the latter driven primarily by technical change, which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. However, our productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with rapid technical change, although this is not the case for conventional banks operating Islamic windows. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had a short-term cost-reducing effect in 1998, the crisis triggered a more lasting negative impact by increasing the volume of non-performing loans.

Retail competition and consumer choice:contextualising the “food deserts” debate

The “food deserts” debate can be enriched by setting the particular circumstances of food deserts – areas of very limited consumer choice – within a wider context of changing retail provision in other areas. This paper’s combined focus on retail competition and consumer choice shifts the emphasis from changing patterns of retail provision towards a more qualitative understanding of how “choice” is actually experienced by consumers at the local level “on the ground”. This argument has critical implications for current policy debates where the emphasis on monopolies and mergers at the national level needs to be brought together with the planning and regulation of retail provision at the local, neighbourhood level.

Tacit collusion, firm asymmetries and numbers:evidence from EC merger cases

This paper estimates the implicit model, especially the roles of size asymmetries and firm numbers, used by the European Commission to identify mergers with coordinated effects. This subset of cases offers an opportunity to shed empirical light on the conditions where a Competition Authority believes tacit collusion is most likely to arise. We find that, for the Commission, tacit collusion is a rare phenomenon, largely confined to markets of two, more or less symmetric, players. This is consistent with recent experimental literature, but contrasts with the facts on ‘hard-core’ collusion in which firm numbers and asymmetries are often much larger.

Assessing the efficacy of structural merger remedies:choosing between theories of harm?

Previous empirical assessments of the effectiveness of structural merger remedies have focused mainly on the subsequent viability of the divested assets. Here, we take a different approach by examining how competitive are the market structures which result from the divestments. We employ a tightly specified sample of markets in which the European Commission (EC) has imposed structural merger remedies. It has two key features: (i) it includes all mergers in which the EC appears to have seriously considered, simultaneously, the possibility of collective dominance, as well as single dominance; (ii) in a previous paper, for the same sample, we estimated a model which proved very successful in predicting the Commission’s merger decisions, in terms of the market shares of the leading firms. The former allows us to explore the choices between alternative theories of harm, and the latter provides a yardstick for evaluating whether markets are competitive or not – at least in the eyes of the Commission. Running the hypothetical post-remedy market shares through the model, we can predict whether the EC would have judged the markets concerned to be competitive, had they been the result of a merger rather than a remedy. We find that a significant proportion were not competitive in this sense. One explanation is that the EC has simply been inconsistent – using different criteria for assessing remedies from those for assessing the mergers in the first place. However, a more sympathetic – and in our opinion, more likely – explanation is that the Commission is severely constrained by the pre-merger market structures in many markets. We show that, typically, divestment remedies return the market to the same structure as existed before the proposed merger. Indeed, one can argue that any competition authority should never do more than this. Crucially, however, we find that this pre-merger structure is often itself not competitive. We also observe an analogous picture in a number of markets where the Commission chose not to intervene: while the post-merger structure was not competitive, nor was the pre-merger structure. In those cases, however, the Commission preferred the former to the latter. In effect, in both scenarios, the EC was faced with a no-win decision. This immediately raises a follow-up question: why did the EC intervene for some, but not for others – given that in all these cases, some sort of anticompetitive structure would prevail? We show that, in this sample at least, the answer is often tied to the prospective rank of the merged firm post-merger. In particular, in those markets where the merged firm would not be the largest post-merger, we find a reluctance to intervene even where the resulting market structure is likely to be conducive to collective dominance. We explain this by a willingness to tolerate an outcome which may be conducive to tacit collusion if the alternative is the possibility of an enhanced position of single dominance by the market leader. Finally, because the sample is confined to cases brought under the ‘old’ EC Merger Regulation, we go on to consider how, if at all, these conclusions require qualification following the 2004 revisions, which, amongst other things, made interventions for non-coordinated behaviour possible without requiring that the merged firm be a dominant market leader. Our main conclusions here are that the Commission appears to have been less inclined to intervene in general, but particularly for Collective Dominance (or ‘coordinated effects’ as it is now known in Europe as well as the US.) Moreover, perhaps contrary to expectation, where the merged firm is #2, the Commission has to date rarely made a unilateral effects decision and never made a coordinated effects decision.

Tacit collusion, firm asymmetries and numbers:evidence from EC merger cases

The purpose of this paper is to identify empirically the implicit structural model, especially the roles of size asymmetries and concentration, used by the European Commission to identify mergers with coordinated effects (i.e. collective dominance). Apart from its obvious policy-relevance, the paper is designed to shed empirical light on the conditions under which tacit collusion is most likely. We construct a database relating to 62 candidate mergers and find that, in the eyes of the Commission, tacit collusion in this context virtually never involves more than two firms and requires close symmetry in the market shares of the two firms.

Scale and scope economies and the efficient vertical and horizontal configuration of the water industry:a survey of the literature

This paper surveys the literature on scale and scope economies in the water and sewerage industry. The magnitude of scale and scope economies determines the cost efficient configuration of any industry. In the case of a regulated sector, reliable estimates of these economies are relevant to inform reform proposals that promote vertical (un)bundling and mergers. The empirical evidence allows some general conclusions. First, there is considerable evidence for the existence of vertical scope economies between upstream water production and distribution. Second, there is only mixed evidence on the existence of (dis)economies of scope between water and sewerage activities. Third, economies of scale exist up to certain output level, and diseconomies of scale arise if the company increases its size beyond this level. However, the optimal scale of utilities also appears to vary considerably between countries. Finally, we briefly consider the implications of our findings for water pricing and point to several directions for necessary future empirical research on the measurement of these economies, and explaining their cross country variation.

Efficiency and total factor productivity changes of Malaysian commercial banks

This paper analyses the efficiency of Malaysian commercial banks between 1996 and 2002 and finds that while the East Asian financial crisis caused a short-term increase in efficiency in 1998 primarily due to cost-cutting, increases in non-performing loans after the crisis caused a more sustained decline in bank efficiency. It is also found that mergers, fully Islamic banks, and conventional banks operating Islamic banking windows are all associated with lower efficiency. The paper estimates suggest mild decreasing returns to scale, and an average productivity change of 2.37% that is primarily attributable to technical change, which has nonetheless declined over time. Finally, while Islamic banks have been moderately successful in developing new products and technologies, the results suggest that the potential for Islamic banks to overcome their relative inefficiency is limited.

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

This study employs Stochastic Frontier Analysis (SFA) to analyse Malaysian commercial banks during 1996–2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in costs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalized Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68%, with the latter driven primarily by Technical Change (TC), which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. However, our productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with rapid TC, although this is not the case for conventional banks operating Islamic windows. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had a short-term costreducing effect in 1998, the crisis triggered a long-lasting negative impact by increasing the volume of nonperforming loans.

The efficiency and productivity of Malaysian banks:an output distance function approach

This study employs stochastic frontier analysis to analyze Malaysian commercial banks during 1996-2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in outputs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience mild decreasing return to scale and annual productivity change of 2.37 percent, with the latter driven primarily by technical change, which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. In addition, our productivity estimates indicate that the potential for full-fledged Islamic banks and conventional banks with Islamic banking operations to overcome the output disadvantages associated with Islamic banking are relatively limited. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had an interim output-increasing effect in 1998, the crisis prompted a continuing negative impact on the output performance by increasing the volume of non-performing loans.

Changing policies for the automotive industry in an 'old' industrial region:an open innovation model for the UK West Midlands?

Automobile manufacture in the UK West Midlands peaked during the 1950s and early 1960s but, with overseas competition, declined thereafter. Successive policies, such as government supported mergers to form the British Motor Corporation in the 1950s, green-field development away from the region in the 1960s, nationalisation of the (then) British Leyland in the 1970s, Japanese FDI in the 1980s and the Rover-centric Accelerate Project in the 1990s have failed to halt the decline. Since early 2000, regional policy has been the responsibility of the Regional Development Agency, Advantage West Midlands. The RDA has moved away from traditional support based on the needs of big companies or ‘champions’ and adopted an approach centred on a mix of small and large businesses and high level research, and – arguably – an ‘open innovation’ model. Here, we examine these new policies and their potential to create an innovative and competitive regional environment.

The evolution of logistics service providers and the role of Internet-based applications in facilitating global operations

The need for global logistics services has increased dramatically and become extremely complex and dynamic as a result of a number of changes in manufacturing and in industrial production. In response, the logistics industry is changing in a variety of ways, including mergers to form integrated transportation service providers, outsourcing and increased use of information technology. The aim of this chapter is to provide an overview of the evolution and the most important trends in the logistics services provider (LSP) industry. Specific emphasis will be given to the role of Internet-based applications. Within this context, the chapter will also present the role of logistics e-marketplaces. In particular, based on the secondary research of currently existing logistics on-line marketplaces, an analysis and classification of them is provided with the aim of identifying service gaps. The analysis reveals that logistics electronic marketplaces, despite the increased range of services currently offered, still face limitations with reference to integrated customs links or translation services, which both reduce the efficiency of global operations.

A new inverse DEA method for merging banks

This study suggests a novel application of Inverse Data Envelopment Analysis (InvDEA) in strategic decision making about mergers and acquisitions in banking. The conventional DEA assesses the efficiency of banks based on the information gathered about the quantities of inputs used to realize the observed level of outputs produced. The decision maker of a banking unit willing to merge/acquire another banking unit needs to decide about the inputs and/or outputs level if an efficiency target for the new banking unit is set. In this paper, a new InvDEA-based approach is developed to suggest the required level of the inputs and outputs for the merged bank to reach a predetermined efficiency target. This study illustrates the novelty of the proposed approach through the case of a bank considering merging with or acquiring one of its competitors to synergize and realize higher level of efficiency. A real data set of 42 banking units in Gulf Corporation Council countries is used to show the practicality of the proposed approach.