blonde poker forum

Why would it be blocked?

Surely market forces would prevail and if the public were disadvantaged they could just vote with their feet and shop at Tesco/Morrisons/Co-op/Lidl/Aldi ect.

It's not as if they have a monopoly is it?

Why is this different than any other merger?

It's what happens when the Government - in this case via the CMA - meddle in business.

And it's also exactly why our rail system is such a mess. If you look at how the private & nationalised parts of the railway interact it's a complete & utter clusterfuck.

Surely though, if the CMA are going to mess about with the business decisions of huge companies they have to prove that they have an airtight reason for doing so?

Well they have a remit to prevent "anti-competitive" behaviour (aka monopolys).

This will make your eyes glaze over, but here's how the Government justify it;


https://www.gov.uk/government/collections/how-the-cma-investigates-competition-and-consumer-issues

According to this:
https://www.kantarworldpanel.com/en/grocery-market-share/great-britain

combined they will have a 31.2% share of the UK grocery business. Seems reasonable to stick your nose into if you were me.

Where I live, my two biggest nearest supermarkets are a Sainsbury and an Asda, so if you gave me the choice I'd rather they stayed separate. But I'm not really that bothered.

Because they will have a third of the market, and tesco will have another third, so between them they can act as a duoploy; they can certainly behave like a monopoly in some areas.  You may be able to choose but some old biddy in a small town without a car may not.  You can see what happens with local monopolies by observing petrol prices that Morrisons charge in different locations.

It is clearly nothing like the way the railways are run which has several local monopoloies, hence you can't choose between scotrail and southeastern.

This is what the problem is - in many localities they will have a monopoly.

The monopolies aren't a problem. I can't think of an example where companies start exploiting their customers. When a supermarket sends independent retailers under its because they offer more choices e and lower prices. When the independents go under we don't see supermarkets scaling back choice and ramping up prices

And where their monopoly does see them stagnate we see innovative alternatives like Aldi move in and hoover up market share.

Government should stay the hell out of this


A lot of the more complicated monopoly cases often take years and by the time they are close to ending the so called collosous has been out flanked by more nimble competition.

Think of the strangle hold that the likes of dell, nokia, EMI etc had over their respective industries before being blind sided by things like MP3 players and smart phones

https://www.google.co.uk/search?q=predatory+pricing+uk+supermarket

Seems to be a few examples of exactly those behaviours.

It’s not just customers who can be exploited by this situation. Suppliers will also be squeezed on price and payment terms.

Customers being exploited by 40% discounts and more choice, staff being exploited with higher pay and career progression.

The suppliers are squeezed down to where their price is close to the marginal cost. But consumers benefit from this.

And whilst this giant monolithic entity was squeezing out all competition in 2004 by 2014 it had lost a significant market share to Aldi and Lidl who set up their own supply chains and out manouvered the supposedly unstoppable monopoly, all without  government intervention.

As long as it keeps the riffraff out of Waitrose they can merge all the like.

lol

Poor business and lack of foresight by Asda/Sainsbury imo.
It was pretty obv when the proposed merger was first published that the Govt/monopolies commission were going to be all over it. They must know the rules around it.

Terry Leahy's love child?

It's the 2nd biggest and 3rd biggest merging, as soon as I saw the proposal my first thought was, 'how can they let that happen?'.

These threads always interest and educate me, and sometimes they change my thinking too.

Initially I though the Government should just keep their nose out of business and let market forces do their thing. Now I'm teetering on the fence and could come down on either side.

I think debate threads are great, except for the contributions that of people who's arguments are so weak they have to resort to name calling.

Silly bastards.

It is probably a mistake to assume a correlation between weak arguments and a weakness for insulting the intentionally and deliberately ignorant.

pokerstars is one example

It's not just customers that can be exploited, there's a huge supply chain out there that would get shafted left, right and centre if their already short list of buyers reduced even further.

Sainsbury's/Asda would market it as improved buying power leading to better prices for our customers. What they really mean is that they can now pay less for their chickens and also make the chicken farmer wait 120 days for his money instead of the previous 90.

buffyslayer1

Well stars are not a monopoly by any means. they acquired a huge market share by out competing bigger rivals on price, spread of games and customer service. they may be currently be exploiting their customers but there are sites like party poker and new start ups like RIO poker that are seeking to innovate and take back their market share.

years ago planet poker or party were the monoliths.


government should be staying out of mergers altogether.


if there ever is a case where companies can simply exploit customers by increasing profits without increasing output then very quickly they will attract rivals. and competition does not usually come from imitation, big companies are blindsided by innovation.

EMI buys virgin and is blind sided by the ipod.

Nokia completely owns the mobile market and doesnt see the iphone.

Microsoft is famously run through the courts for bundling internet explorer and exploiting  monopoly power and at the same time open source projects like firefox overtake them. they are also out manoeuvred by apple and google. they lose market share not to other PC operating systems but people using tablets, televisions and phones to access the internet and perform computing tasks. They could not have seen these changes coming.

IBM's monoploy case lasts about 15 years, by the time it came to an end it was a bit part player as the home computer had become ubiquitous and its mainframe monopoly wasn't worth a carrot.

we didnt need governments to break up these so called monopolies. its worth noting that none of those companies attempted to reduce output when they had so called monopoly power.

you may get some short term protection for some consumers but in the long term breaking up companies, preventing them from merging, and not allowing signals to be sent to markets makes us all worse off.

re suppliers.


Suppliers prices may well be squeezed. but they cant be forced below the marginal cost, otherwise they would be better off not selling at all.

an equilibrium will be found and the although a small sector will see reduced profits the benefits are accrued by consumers.

This periodically already happens at the moment with the supermarkets for things like milk - so saying it 'can't be' is already wrong.

What about bank mergers? Should they stay out of that and just let them get as big they like?

Not only that, they should let them fail too.

I'm not saying you're wrong, I'm just trying to get my head around this.

Why allow supermarkets at all, why not just limit everyone to a corner shop?

Not only a corner shop. But when there is only one corner shop in an area they should break it up.

What they shouldn't do is allow a bigger shop to offer more choice and lower prices to the poor consumer....

The free market is good - you should never interfere with the free market.

If there are say 4 or 5 corner shops and one does better than the others - it gets more customers and it can grow.

If it grows it can benefit from economies of scale and offer lower prices to it's customers and carry on growing.

If it just keeps the benefits of economies of scale for itself to increase profits, one or more of the others could catch up with it and grow itself.

The system is self correcting and self policing - if one company tries to exploit it's customers the others will benefit from it.

You should never interfere with the free market.


The problem is that the free market doesn't mean never doing anything.

Pokerstars could probably be used as a text book case study.
It acquired a strong market share by basically providing the best service - it then took over Full Tilt to have an overwhelmingly dominant market share.

As soon as it was sold to corporate investors they parlayed every trick in the book to exploit the customer base for as much as they can get away with - this isn't the free market.

They could only do that because it has an anti-competitive share of the market.

(this segues into oligopolies quite quickly but there's no need to get too complicated too quickly :) )



Short version:  the free market is fine - but when companies get too much market share you no longer have a free market; government's should only interfere when they 'have' to do so to ensure the continuing function of a free market.

stars are still playing in an open market and there's nothing to say that their new strategy will be able to hold onto its market share. plenty of other sites have been dominant in the online poker scene and faded to obscurity.  when and if stars do lose its customer base it may well be to something to something other than an online poker site: fantasy sports for example. i hope you wouldnt advocate governments getting involved in setting the rake.

the point is government has no place interfering even if there is only one player in a market. capital is fast and if a company is able to increase profits whilst reducing output, quality of service and quality of products then very quickly capital will flow to compete for those profits.

and it often leads to huge innovation.


look at the tesco article posted above. at one point one in every six pounds spent in retail was spent in tesco. if there is ever a barrier to entry, supermarkets where surely it. yet aldi and lidl where able to better serve customers and took a huge market share of the unassailable.

the music publishing industry was dominated by just a few big players, yet apple and spotify has put them all out of business by offering an alternative way to consume music.

we dont need government to prevent monopoly. their involvement may ensure some small short term gain, but it prevents progress and innovation long term.

The suggestion that monopolies (and by implication collusive practices) should be allowed, is ludicrous.

If asda and sainsburys agreed together to refuse to pay suppliers more than a certain amount for various products and agreed not to price cut on these products, they would be be charged with a criminal offence.  

The test of whether a merger should go ahead would be whether the price fixing scheme described above would be successful - ie no competitor could profitably undercut the colluders' retail prices due to the colluders' control of supplier prices.  It clearly would be successful at some level of market share and competitors can't ever "out compete" (they can only agree to similarly collude).

Once you accept that market dominance has exactly the same effect as price fixing collusion, it is clear that government intervention is the only solution.

A question about competition:

Who thinks that price match guarantees are competitive and who thinks they are anti-competitive?

What is the mechanism for preventing progress and innovation?  It just feels like this causes no barriers to innovation at all; the Government aren't stopping Aldi or Amazon by this merger.

Of course the Government should interfere in markets on some occasions, it is just a question of where we draw the line.   Good examples are health and housing.  Given the concentration of the World's wealth amongst a small number of billionaires, it is a bit easier to argue that Governments should have interfered more in the markets over the years.

I am a Sainsbury shareholder, and even in that situation I can see they have a point on this proposed merger.  

The point is we don't need government intervention to break up monopolies. And when companies approach effective monopoly power they tend not to reduce output. When they stagnate competition breaks them up anyway.

Governments create monopolies all the time through zoning, licencing, bowing to lobby groups etc. Rent seeking and cronyism is a much bigger problem and causes directly by government involvement.

Much better to keep them out of markets altogether.

You are factually just wrong here.

Pokerstars is effectively a monopoly especially in specific areas like sit and gos and sngs they have the overwhelming share of the market.

In fact I believe under UK terms a company only has to have around 25% of the market to be considered a monopoly. They have way way more than that with just .com/es alone not even including .es
Just because they became a monopoly by being the best supplier of games doesn't get away from the fact that they are one.
From the day they acquired ftp and amaya took over they have been exploiting their position.


Does this mean they will always be #1 by such a huge margin no. But that's not the point. You asked if any monoply had actually abused their position and there are countless examples I just happened to name one.

Which they almost certainly are at the moment and basically getting away with it.

and what will happen to them because of that?

would customers be served by stars being split into two or three smaller sites?

poker is a weird market in that it will tend to there being one big provider as people want to play where the guarantees, spread of games and traffic is best. the market isnt big enough for multiple sites with queues of people wanting to play 6 max SnGs

stars is the latest incumbent of that role. if they exploit their customers they might not be for very long. it might not be another poker site that takes their place either.

also its worth noting that although high volume professionals and people running bots have moved to sites like party that welcome that sort of customer, stars has made massive changes that appeal to recreational players - gamification of rewards and poker, high variance short stacked jackpot poker, etc etc. those players may not feel as exploited as players who are rake sensitive and rely on poker for a living.

would you argue for government involvement in stars?

It's a bit weird that you're arguing that monopolies exploiting their customers is ok because they might not be able to do it forever.

No I would not and nowhere mentioned that I even think government intervention is they way forward.

I really am struggling to work out what your point is.

You said you could not think of a single example of a monoply exploiting its customers. I simply provided one of which there are countless.

Hell, Argos who I was a senior buyer for got taken to court for price fixing in toys category which they had a monopoly on at the time. Exploiting their customers into paying higher prices and paid some huge fine. Though actually it was one the the manufactures doing it.

Nike and Addidas have been price fixing for 20 years between them to make consumers pay higher prices. The prices of their products to retailers are exactly the same to the penny and always have been (I used to buy sports equipment).

Their are so many examples of customers/suppliers being screwed over by firms with monoploy powers in a market. In general they are very anti competitive and make huge barriers to competition.

Eventually it seems the market corrects itself, I.e Tesco were abusing their power for years no longer dominant. Argos who I used to work for no longer dominant in toys. Stars I am sure will go the same way (hopefully).

It doesn't mean they are not damaging in the short to medium term though which was what I was stating.

but it is only short term. and monopolies are broken up by competition and innovation.

we don't need government involvement.

think of the time and money wasted in the court sytem for the microsoft  or ibm cases. they dragged on for years. and by the time the cases against them ended they were both somewhat peripheral players in markets that didnt even exist when the anti-trust / monopoly cases where being made against them.

that's an incredible amount of human capital and money being wasted by governments having a very static and narrow view of a dynamic world.

keep them out of it.

it wouldn't bother me in the slightest if there ended up being just one player in a particular market as capitalism is a destructive as well as creative force and very quickly the incentives and capital for innovation would flow into that sector and the benefits are accrued by consumers.

Does the monopoly position held by your local water company operate to any consumer advantage?

I dont think monopolies work to consumer advantage.

I simply don't believe that the economy is static enough for a company to reduce output and increase profits without attracting competition. That competition will not be by imitators, but innovators and that we benefit.

If the Tesco merger goes ahead they will not be able to stagnate and maintain profits. There's already too much competition and who knows in 15 years we might be printing our food on our homes 3d printer.

And we shouldn't have an expensive court case to prevent them merging.