Mercer questions ‘flawed’ CMA findings

Written by Theo Andrew

The credibility of the Competition and Market Authority’s (CMA) provisional decision report has been called into question over errors in the data analysis used to deliver its findings.

The issue came to light after Mercer UK CEO Fiona Dunsire wrote to the investment consultancy market investigation chair, John Wotton, claiming that the CMA’s findings were based upon “incorrect data, errors in the CMA’s analytical code and reliance on unrepresentative samples”.

The letter, dated 21 September 2018, claimed that the report’s provisional conclusion that there was an “adverse effect on competition” in the investment consultancy and fiduciary management markets, was underpinned by "flawed" data.

Dunsire wrote: “I write further to our response to the CMA's provisional decision report and the related calls and correspondence over the last month between our legal advisers and the case team.

"Those communications concerned errors we uncovered with the data analysis used by the CMA which we consider material and which cast doubt on the credibility of key aspects of the PDR. Given the significance of this issue, I am bringing this to your personal attention.

“This finding is important because the CMA relies on it to demonstrate a detriment to customers and it has been used to support a conclusion that competition issues in these markets need to be addressed through the imposition of remedies.

“Given this, as it stands, there is not an adequate evidential basis for the imposition of remedies in these markets,” Dunsire added.

Mercer have called upon the CMA to correct the data analysis in order for all parties involved to “understand and have confidence” in the findings.

Published in July, the CMA proposed that pension funds will be required to run a competitive tender when choosing their first fiduciary manager to increase competition within the market.

Despite this, it added that the break-up of some investment consultant and fiduciary management providers would have “adverse consequences” for both trustees and schemes members.

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