Nicola Mazzarotto grew up in Italy where he studied statistics and economics. He moved to the UK where he completed his postgraduate studies at the LSE and the University of East Anglia. He worked at the predecessor bodies to the CMA (UK), DG Comp and the OECD’s competition division. At KPMG he advises clients in the public and private sectors in all areas of competition and has worked across jurisdictions in Europe and North America.
WHAT INSPIRED YOU TO PURSUE A CAREER AS A COMPETITION ECONOMIST?
I got interested in economics pretty early in my studies as a lot of the big issues that I studied in history books, or read about in newspapers seemed to boil down to economics (how come some people end up with more money than others, where can we find resources for healthcare, and so on). The interest for competition economics came later. I got more interested in economic theory and was fascinated by understanding the basic principles: how do individuals choose, what are firms and why do they behave in the way they do, etc. These are the building blocks of the economics that is used in competition cases to understand how a business practice, a merger or a type of contract, might impact on competition. Also Italy introduced competition rules for the first time just as I was studying economics at university and I started realising then that competition law would be the perfect context to apply those skills I was acquiring and enjoying so much.
HOW HAS THE MARKET CHANGED SINCE YOU STARTED YOUR CAREER?
It has gotten bigger, for one thing. The number of competition authorities has increased dramatically around the world, and their use of economics is also ever increasing. The toolbox that economists use has also adapted – improved one would hope, compared to what it was like in the 1990s. However, the pace of change in markets is now increasing and that pushes for further changes and improvements in the way economists work. There is a lot more data available for analysis than there ever was before, and in many markets, innovation is becoming more and more prominent. You can see the authorities looking to adapt in the way they use economics (for example the EC on Dow/Dupont and other cases), but also in the analytical toolkit (for example, the CMA in the UK now has a data scientist reporting to the chief economist). So I think we will see more change.
WHAT OTHER DISCIPLINES CAN COMPETITION ECONOMISTS PARTNER WITH TO IMPROVE THEIR ANALYSES OF MARKETS?
This pretty much follows from my answer to your previous question. I think the trends mean it is increasingly hard to do economics without a very strong grounding in data science. As far as I know our team was the first to bring in data scientists (as well as our own hardware and software) in a competition data room. That was during the CMA’s investigation into the private healthcare market, and our ability to use those skills made a big difference to the quality of the evidence we put forward. I can see this combination becoming ever more relevant in the full range of competition cases. Another aspect is that a detailed knowledge of the sector is increasingly important. At KPMG we rarely work on a case without an industry expert in the team that we can go to with all sorts of questions on firms’ strategy, data sources etc. It saves time and helps us avoid a lot of analytical dead ends.
WHICH INDUSTRIES ARE CURRENTLY RECEIVING THE MOST ATTENTION FROM COMPETITION AUTHORITIES, AND WHY?
There is no doubt that platform businesses are under the spotlight. And that’s not just Google but a range of others firms, even quite small ones in absolute terms that perhaps are successful in a relatively niche market. There is a narrative that companies’ ability to use data effectively and to use business models that are powered by strong “network effects” perhaps has taken regulators by surprise. This has led to increased scrutiny, particularly in Europe. It is going to be interesting to see whether authorities will manage to strike a balance between addressing these concerns and not being seen as too interventionist, paternalistic and ultimately discouraging investment.
HOW DOES KPMG DISTINGUISH ITSELF FROM COMPETITORS?
I touched on a couple of points already. Our approach is to have top-quality economics first and foremost. However on top of that, we have quite a lot of differentiators. I think our ability to handle data is probably greater than boutique firms due to a very extensive infrastructure and deep skillsets in the firm. Also, we can be very flexible and bespoke in how we build our teams. Depending on the case we almost always have an industry expert, and often someone with skills that make a difference to our case. It could be valuations in one case, an actuarial expert in another, and you may be aware we have quite a few auditors in the business who are some of the best in the market and that can be very helpful in looking at issues of profitability, cost separation etc. which come up in many cases. Having experts in financial economics in our team definitely enables us to benefit from this close connection.
WHAT CHALLENGES DID YOU ENCOUNTER WHEN CREATING THE COMPETITION ECONOMICS TEAM AT KPMG?
When I started I had a strong view on why other large accountancy firms had been unsuccessful in establishing a competition economics practice. My feeling was that they had all made a key mistake in deciding to lead from their existing strengths (knowledge of the sector, brand, etc). We purposefully did not do that and from the start sought to establish a level of economic capabilities that was at least on a par with the best in the market. That was very hard to do, but through establishing early connections with academics, a lot of effort on recruitment and training, and a lot of hard work on the delivery side along the way we are now in what I think is a very good position. In particular, the combination of the KPMG Economics business with MAPP puts us in a very strong position across the EU in terms of the size and quality of our team. Which is also now reflected in the number of our listings in your publication.
HOW DO YOU SEE YOUR PRACTICE DEVELOPING OVER THE NEXT FIVE YEARS?
The plan is to consolidate our presence in Europe, build on our successes and establish ourselves in the market as one of the top competition economics outfits. We plan to be doing more work in Brussels as is reflected by our presence there, and will continue to expand there as well as in all of the national jurisdictions where we already have a strong presence, namely: France, Spain and the UK. We are also expanding globally and continue to grow our competition capabilities in other continents and particularly in Asia and the Americas.
WHAT ADVICE WOULD YOU GIVE TO SOMEONE STARTING OUT IN THE COMPETITION FIELD?
I think there is a boring way to do this job and an exciting and enriching one. The boring one is to just “open the toolbox” and apply the methodologies that have been used before (whether it’s econometrics or some type of modelling). Now, while knowing the toolbox well is incredibly important, the really important (and fun) part is to treat every issue as different, because every market and issue is different. So what I would say is: question assumptions and techniques. Don’t take established approaches as given. Markets are evolving fast; we need people who think from first principles to steer the course.
Nicola Mazzarotto is an “absolutely excellent economist” extol peers who applaud his “wealth of experience in the field”.
Dr Nicola Mazzarotto is a partner at KPMG Economics, based in London, and heads KPMG Economics’ international network. With teams of competition economists in the UK, France, Spain and Belgium, KPMG Economics is one of Europe's leading economics consulting firms.
Nicola has over 15 years’ experience working on competition cases at UK and EU competition authorities and advising private sector clients.
The team in London comprises over 25 economics specialists and works across all types of competition cases. KPMG Economics conducts innovative work, particularly in the use of advanced data techniques in competition cases, drawing on KPMG’s data analytics expertise.
Since joining KPMG in 2011, Nicola has advised clients from various sectors on a wide range of competition matters. Nicola advised a number of large companies in the course of merger inquiries in the UK and EU, competition enforcement cases, follow-on damages litigation, state aid matters and market investigations. For example, Nicola supported the Hospital Corporation of America through the Competition and Markets Authority’s investigation into private healthcare, subsequent appeal and remittal inquiry, helping overturn a divestment decision against HCA. He also leads KPMG’s work acting as expert advisors to the European Commission, in monitoring and assessing Google’s compliance with the remedies imposed by the European Commission’s Shopping decision.
Nicola has testified as an expert witness in litigation and arbitration proceedings in the UK and internationally. This includes acting as the expert for a defendant in follow-on damages litigation in the automotive bearings market before the UK Competition Appeals Tribunal (CAT), as well as providing expert witness testimony in the context of commercial litigation in North America.
Prior to joining KPMG, Nicola was head of policy analysis at the UK Competition Commission (CC), now part of the Competition and Markets Authority (CMA). At the CC Nicola led the economic analysis in a number of high-profile inquiries, as well as the economic analysis underpinning the CMA’s current UK Merger Guidelines. Nicola has also worked at the UK Office of Fair Trading (OFT), at the competition division of the Organisation for Economic Co-operation and Development (OECD) and at the Directorate-General for Competition (European Commission).
Nicola has a PhD in economics from the University of East Anglia, home to the Centre for Competition Policy, a global centre for competition policy research. He is also a regular speaker at UK and international competition conferences.