From Barclays to Sainsbury, Tyrie Makes His Mark at the CMA

(Bloomberg) -- Andrew Tyrie, the scourge of the U.K.’s banks, is making his mark in his new job.

The 62-year-old was appointed to lead the Competition and Markets Authority 12 months ago -- a moment that many inside the regulator were relishing as an opportunity to toughen its stance on deals and cartels. In a post-Brexit world, the regulator would get to stand apart. And on top of that was the chance to review one of the most high-profile merger cases in years -- J Sainsbury Plc’s deal to buy Walmart Inc.’s Asda.

On Thursday, the British antitrust authority chose to double down on its criticisms of the deal, going further than even its initial findings. It said no remedy could fix the damage to competition the 7.3 billion-pound ($9.4 billion) merger would bring -- a departure from prior reviews where offers from companies were typically accepted.

From Barclays to Sainsbury, Tyrie Makes His Mark at the CMA

"It is remarkable that the CMA has completely shut the door on any remedies," said Nelson Jung, a former director of mergers at the CMA, and now a partner at Clifford Chance in London.

As a former lawmaker and head of a panel that scrutinizes financial regulators, Tyrie made a name for himself by grilling bankers after the credit crisis of 2008 and Libor-rigging scandal. His tenure was marked by often testy exchanges with finance ministry and central bank officials at committee hearings. He grilled Barclays Plc Chief Executive Officer Robert Diamond after the bank paid a then record fine related to manipulating Libor.

Alongside both Oxford and Cambridge universities, Tyrie studied at the College of Europe in Bruges, before standing for election in 1997. He joined the House of Lords last year after leaving Parliament.

Early Problems

Tyrie walked into the CMA just weeks after the grocers announced their plan to create the country’s biggest supermarket chain. But even before then, there were signs that the regulator intended to take a strong position on the deal when it took the rare step of issuing an early statement laying out how it would handle the merger review.

Also highly unusual was the letter that the business secretary Greg Clark sent to CMA Chief Executive Officer Andrea Coscelli, urging him to examine the deal and listen to the concerns of suppliers worried about being squeezed by the newly-enlarged company.

Advisers working on the Sainsbury deal said it was clear the CMA had problems with the transaction from the start. The tension only grew and culminated when Sainsbury openly challenged the regulator’s deadlines in court, an unprecedented maneuver that bought the companies a bit of breathing space when a judge agreed that the CMA’s demands were excessively burdensome.

In an in-depth probe, the CMA’s top officials have no formal role and the influence of a chairman on a specific merger review would be solely around the edges, said Ioannis Kokkoris, a law professor at the Queen Mary University of London.

“I would expect a chairman to play a role setting the strategy or framework," he said.

Still, Tyrie has swiftly become the public face of the regulator, responding to calls to break up the Big Four accounting firms and fronting demands for new powers as well as less scrutiny from a specialist judicial panel. "There’s a new CMA now," Kokkoris said.

The regulator has also been preparing for the moment when the U.K. leaves the European Union, when it will have the chance to review mergers that were previously under the oversight of the European Commission.

Online Mergers

The CMA’s report into Sainsbury’s plans throws up a series of challenges to online mergers, saying that competition would be hurt at a national level as shoppers would pay more for goods as well as delivery.

Officials at the authority have repeatedly signaled that in a post-Brexit world, they’re determined to step up scrutiny of the online space. In speeches and seminars, Coscelli and other directors went back to previous deals such as Facebook Inc.’s purchase of Instagram in 2012, and said approval was a mistake.

“Authorities including the CMA are less scared about blocking transactions than they used to be," said Pablo Ibanez Colomo, associate professor of law at the London School of Economics. “Perhaps they were saying ‘We weren’t blocking enough.”’

©2019 Bloomberg L.P.

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