The Emis Group proof of why UK GDP growth is slow
Now, whether Emis Group should be taken over by United Health isn’t an interesting point for us. We’re not sure what they actually do, either of them and care rather less. For our example here is not about the specific companies it’s about why economic growth in Britain is so damn slow. We’re even willing to run with the idea that the proposed takeover here should be denied - it isn’t being - and yet our criticism and explanation would still stand.
Here’s the story from the Stock Exchange announcement:
On 17 June 2022, the Boards of Bordeaux UK Holdings II Limited ("Bidco"), an affiliate of Optum Health Solutions (UK) Limited ("Optum UK") and a wholly-owned subsidiary of UnitedHealth Group Incorporated and EMIS Group plc ("EMIS") announced that they had reached agreement on the terms of a recommended all cash offer pursuant to which Bidco would acquire the entire issued and to be issued ordinary share capital of EMIS (the "Acquisition"). The Acquisition is being implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme").
On 9 August 2022, EMIS announced that at the Court Meeting to consider the Scheme and the General Meeting to consider the Special Resolution relating to the Acquisition, all resolutions were approved by the requisite majorities. EMIS further announced that a notification had been made and accepted under the NS&I Act and that the Secretary of State had confirmed that no further action will be taken in relation to the Acquisition.
On 31 March 2023, the United Kingdom's Competition and Markets Authority (the "CMA") announced that it had referred the Acquisition for a Phase 2 investigation. On 6 April 2023, EMIS and Bidco announced that they would be proceeding with the Phase 2 CMA investigation and would engage constructively and collaboratively with the CMA throughout the process.
The CMA has today published a summary of its provisional findings from its Phase 2 investigation into the Merger (the "Provisional Findings").
Bidco and EMIS are pleased to announce that the CMA has provisionally cleared the Acquisition. The CMA will now publicly consult on the Provisional Findings before reaching a final decision by 5 October 2023.
As we say, whether the bid should go through or not is not our point. That this started in June 2022 and won’t even get to the beginning of the end until Oct 2023 is.
The economy is the aggregate of our collective and individual actions. GDP is the measure of those actions but restricted to those monetised and measure at market prices. Changes in GDP are - therefore and obviously - changes in the amount we do and the things we do. The speed of GDP changes - the rate of economic growth - will be determined by both how quickly we work out how to do new things, plus old things in a new way and also the speed at which we are allowed to do new things and things differently.
If we’ve a bureaucracy placing a 16 month delay upon doing things differently then economic growth will be slower than in the absence of such a bureaucracy.
Therefore speed GDP growth by abolishing the Competition and Markets Authority.
It’s even possible that every decision made by the CMA is perfectly, rigorously and justifiably correct. But either they need to make decisions promptly - say, 5 working days - or they need to go. For we hold it to be self-evident that more wrong decisions would be better for economic growth than a 16 month delay on anyone doing anything at all.