This document contains notes from a tutorial on the global context of modern business. It discusses several topics:
- An activity where students debate whether Turkey should be allowed accession to the European Union.
- Why low-cost airlines have grown in the EU and why state aid is a particular problem for the European airline industry.
- Issues around mergers and acquisitions in the music industry, including a proposed merger between EMI and Universal that raised antitrust concerns but was eventually cleared by EU and US regulators with certain commitments made to divest assets.
2. Turkey
Activity 1
• Read Mini-case 13.1 ‘Turkey and the EU’
p349
• Groups of 5/6
• A brief debate within the group
• Half of the group argues for and the
other half of the group argues against
accession
23/01/2014
3. Industry and Competition Policy
and the European Airlines
Activity 2
• Why have low cost airlines grown in
significance within the EU?
• Why is state aid a particular problem in
the context of the European airline
industry?
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4. Industry and Competition Policy
and the European Airlines
•
•
•
•
•
Move from regulation to competition
Struggle by incumbents
Required by the economic growth
Major airports are dominated by flag carriers
Local authorities are under pressure to grant
aid
• Local development and employment
• National politics (Alitalia)
• 300 million-euro capital hike and credit
lines worth 200 million euros (Economist)
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5. Industry and Competition Policy
and the European Airlines
•
National politics (Alitalia)
•
300 million-euro capital hike and credit
lines worth 200 million euros
(Economist)
•
Competition between the big and low-cost
•
Mergers and acquisitions
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6. EMI/Universal
•
•
•
Large number of retailers offering online music
CDs <----- > online, almost equal share
Competition problems in the EU by the merger of
two
• Higher prices
• Licensing restrictions
• Concerns raised by the large retailers
• Small retailers will not be able to compete
• Impact on consumers
• Entry problems for new entrants
• Expansion problems faces by existing firms
• Reduced consumer choice
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7. EMI/Universal
•
Commitments to divest catalogues and assets
•
Lower level of maintained control and power
•
Divestment on EMI
•
Divestment of classical music labels
• Now music
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8. EMI/Universal
•
•
•
Gives consumer more choice to buy from
Competitiveness
Greater control and influence as consequence
of part-sale of EMI to new or existing business
• Based on the above measures, merger will
have lesser impact on consumer choice and
new entrants
• EMI-Universal deal cleared by EU and US
regulators
• £1.2bn ($1.9bn)
23/01/2014
