Belfast Telegraph

Banks and energy firms tipped to expect more state involvement in 2017

Banks and energy companies should ready themselves for greater scrutiny from the UK Government this year, with the Prime Minister expected to tap into rising populism, a new report claims.

While the rise of conservative leaders like Mrs May and US President-elect Donald Trump are expected to lead to less market intervention overall, a report by law firm Freshfields Bruckhaus Deringer says governments are likely to face competition issues head-on.

This year, governments are expected to take a "more direct role in antitrust enforcement and public interest review in certain sectors, particularly those with signs of consumer dissatisfaction about price, service levels or responsible corporate behaviour.

"In response to increasing populism, Prime Minister May and President-elect Trump have each highlighted the role governments should play in controlling the behaviour of large business to ensure markets are delivering fair outcomes for consumers and employees," the Global Antitrust report said.

During his campaign, Mr Trump singled out media and high-tech industries, and suggested he wanted to block the AT&T's 85.4 billion US dollar (£70.3 billion) bid for Time Warner.

Meanwhile, Mrs May tapped into "an apparent seam of dissatisfaction" by identifying retail banks and utilities as sectors subject to heightened scrutiny if they are "suspected of abusing their roles," Freshfields said.

However, the the UK's Competition and Markets Authority (CMA) may find itself burdened by extra work if there is a full separation between EU and British regulators.

If the CMA is forced to strike out on its own as a result of Brexit, the regulator will likely have to take on a number of new large-scale cases that would have otherwise been dealt with by EU authorities, but without an increase to its budget.

This could lead to a narrower range of companies being hit by anti-trust investigations.

"In a resource-constrained environment, there may be a tendency for agencies to target high-profile companies in key sectors with quick wins designed to satisfy political and consumer demand for visible results," Freshfields warned.

The move would also see businesses lose the benefit of the EU's "one-stop shop for deals", potentially hiking costs and uncertainty for firms trading or striking deals in the EU and UK, the report warned.

It said companies should prepare to adapt antitrust strategies so that they can "respond quickly" to any regulatory changes.

The year could be marked by a shift towards protectionism and foreign investment controls, Freshfields added.

It highlighted UK proposals to reform laws that would allow the Government to intervene in future foreign investments in "critical infrastructure", and said the "public interest factors" related to merger scrutiny could expand beyond national security, competition and diversity in media and financial stability.

Freshfields said it is "crucial" for businesses to anticipate and prepare for potential changes to regulations and antitrust laws this year, particularly if they want to carry out international deals in strategic or sensitive sectors.

This should help firms limit the risk of potential investigations for suspected anti-competitive behaviour, the report said.