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Competition authorities (CAs) such as the Office for Fair Trading (OFT) are obliged to evaluate how their activities have benefited consumers. On the basis of his prior research in this area, Stephen Davies was invited to produce a public evaluation of methods used by the OFT to estimate the direct consumer benefits resulting from its competition enforcement. This is an obligation to HM Treasury and influences the allocation of resources to, and within, OFT. His published report (2010) has led to changes in OFT's methodologies and has been influential on CAs internationally. It also feeds into how OFT conducts future interventions.
The underpinning research arose from an ESRC-funded project on the "Optimal Design of Decision and Enforcement Procedures for Competition Policy" by Professor David Ulph (St Andrews) and Professor Yannis Katsoulacos (AUEB). This influenced the penalty policies of competition authorities in two countries: the Office of Fair Trading (OFT) in the UK and the Autorite de la Concurrence (AdC) in France. For OFT it contributed to the formulation of revised penalty guidelines, specifically a proposed increase in baseline penalty from 10% to 30%. For AdC it impacted on the formulation of the first penalty guidelines they published. Thus our research had impact on the only two major Competition Authorities in the world who revised penalty policy in last 5 years.
Research in the Centre for Competition and Regulatory Policy (CCRP) at City University London has influenced extensively UK competition policy and continues to do so. The research has influenced directly the Department for Business, Innovation and Skills (BIS) in the development of the new Enterprise and Regulatory Reform Act 2013 (ERR Act). A process of engagement including two Round Tables chaired by Professor John Cubbin and a corresponding documentary submission, shaped the way in which the ERR Act gives enhanced powers to a unified competition authority, the Competition and Markets Authority (CMA). The research impacted on the eventual form of this new institution, especially in its independence in merger and market inquiries between Phase 1 (Could there be a problem?) and Phase 2 (What do we do about it?), which were previously carried out by the Office of Fair Trading and the Competition Commission respectively. The Centre's input into the Act has also been central in influencing how the CMA will retain and enhance the role of members of the panel of independent "external" experts.
Professor Michael Waterson demonstrated how two consumer activities — search and switching — are necessary if competition is to benefit consumers. He showed how search and switching costs inhibit the competitive process; highlighted how firms increase these costs in retail, banking, insurance and energy markets, and recommended government measures to empower consumers. Regulators around the world have used Waterson's research to enhance the consumer benefits from competition. Professor Gregory Crawford also analysed switching costs, estimating the costs of automatically renewable contracts in the UK telephone market. Based on this analysis, Ofcom banned rollover contracts for all residential and small business customers of voice telephone and broadband services, reducing households' and small businesses' switching costs by at least £340 million/year.