Posts tagged #Financial Services

Assistance with a market inquiry in leasing in Kenya, on-going

Acacia Economics is part of a team assisting the Competition Authority of Kenya in carrying out a market inquiry in the leasing market in Kenya. The aim of the work is to understand the competitive dynamics in the sector and identify any impediments to competition which may be hindering the growth of the sector.

Competition assessment of telecoms markets including USSD in Uganda, 2017-2018

Simon Roberts, Ryan Hawthorne and Sha’ista Goga are carrying out an assessment of competition in two wholesale telecoms markets for the Uganda Communications Commission. This will include analysing the regulatory impact of existing regulations and proposing regulatory interventions to address any competition issues identified.

Economic analysis for an insurance merger for the Competition Commission of South Africa, 2016 - 2017

The Competition Commission briefed Acacia Economics to provide expert economic reports and testimony in relation to the Hollard, Regent and related mergers. Initially, the transaction was structured such that Hollard would acquire the underwriting business of Regent (owned by Imperial) which encompassed a number of products, including motor value-added products (VAPs) such as credit life and shortfall cover, warranties and scratch and dent cover. In addition, Motovantage, a jointly owned subsidiary of Hollard and FirstRand/Wesbank, would acquire the VAPs marketing, administration and retail businesses of Imperial. The Competition Commission prohibited the transaction based on its concerns around the parties' overlapping activities in the underwriting of VAPs as well as in downstream VAPS markets. The Commission also had concerns around the distribution arrangements through Imperial dealerships and the ability of Wesbank to influence Finance and Insurance Personnel ("F&Is") to direct customers to finance vehicles and VAPs through Wesbank at Imperial dealerships. Acacia Economics prepared an expert economic report for the Competition Commission which found that the merger could lead to a significant lessening of competition in the market for financial and mechanical VAPs. The merging parties put forward a remedy to the concerns raised which excluded MotoVantage and Wesbank from the transaction and instead meant that Imperial retained its VAPs businesses. The commitments made were sufficient to satisfy the Commission and Tribunal that the transaction would not substantially lessen competition and the revised transaction was subsequently approved by the Tribunal with conditions.

Analysis of competition in traditional and digital banking services for the Kenya Banking Inquiry Phase II, 2015 - 2017

Sha’ista Goga and Ryan Hawthorne carried out phase II of a market inquiry into the banking sector for the Competition Authority of Kenya (CAK). This was focused on identifying and understanding factors that impact on competition dynamics in both traditional and digital banking services from a demand side or customer perspective. A key focus was understanding the ability of customers to impose competitive discipline on banks.  This involved  assessing facets such as price transparency and switching. The study assessed the extent to which banks provided adequate disclosure, the extent to which customers were able to meaningfully engage with information provided, and the ease,  ability and incentive for consumers to switch. Furthermore, the study looked at whether a lack of consumer engagement and barriers to switching undermined incentives for banks to compete in parameters such as price, quality of service and innovation. The study used  a combination of qualitative, quantitative and experimental methods. Behavioural economics experiments were  engaged in to understand barriers to switching and to determine whether prompts could be use to enhance competitive behaviour. 

Review of the Competition Commission Banking Enquiry for the Competition Commission of South Africa, 2014

Sha’ista Goga, and Ryan Hawthorne conducted a review of the Competition Commission's banking inquiry for the Competition Commission, including a review of interchange. The Competition Commission launched the Banking Enquiry in August 2006 and published its findings and recommendations in June 2008. These recommendations included a range of measures to stimulate greater competition in retail banking and protect consumers, including: a cap on fees for rejected debit orders, a move to direct charging by ATM providers, a change to the determination of interchange in payment card and other relevant payment streams, the removal of restrictions on cash-back at point of sale, rule changes to allow non-bank providers of payment services to participate in clearing and settlement, changes to the rules of the Payments Association of South Africa (PASA), changes to the code of banking practice and measures to assist with the comparison of different products by customers and facilitate switching. The review conducted by Acacia Economics considered the extent to which these recommendations have been implemented, and the impact that they have had on competition in the sector. The review found that some positive changes have been observed in the industry, particularly in relation to the transparency of ATM charges and pro-consumer commitments in the Code of Banking Practice. However, several recommendations had not been implemented such as those seeking to improve comparability across bank products and to move from interchange pricing on ATMs to direct charging. Although some smaller new entrant banks had grown since the Enquiry, it was found that there is a need for greater consideration of competition issues in the regulation of the sector as well as measures to facilitate switching, greater independencs of PASA and a risk-based prudential regulatory framework for current non-banks.