Category: Essentials of Economics: Ch 08

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Holy Mackerel! Soaring fish prices


The prices of many species of fish have risen in recent months. Coastal pelagic fish, such as mackerel, herring and sardines have risen especially rapidly. Mackerel, once seen as a cheap source of protein, is no longer quite such a ‘bargain’.

From January 2023 to May 2026, the international price index of pelagic fish rose by 69%. In 2025, UK supermarket fresh, chilled smoked and tinned mackerel prices rose by an average of 25%; and over the first part of 2026, some tinned mackerel product lines have increased by as much 55%. In February 2026, Waitrose announced that it would suspend sales of fresh and chilled mackerel and tinned mackerel once current stocks had been cleared. It cited overfishing and sustainability concerns.

Supply and demand

But why have mackerel prices risen so much? The price of fish is determined by demand and supply. So what has changed? The main changes have been on the supply side.

Supply.  Most of the world’s supply of mackerel comes from the Northeast Atlantic. These waters have been overfished for many years, thereby depleting the stock of the fish and reducing the amount of mackerel caught.

To arrest the decline and allow stocks to rebuild, the International Council for the Exploration of the Sea (ICES) recommended a quota of 174,357 tonnes for 2026. This would represent a 70% cut from 2025. The main fishing countries – Norway, the UK, the Faroe Islands and Iceland – eventually agreed to a quota of 299,010 tonnes: a cut of 48%. After a series of bilateral agreements between the four countries over access to each other’s waters, this resulted in the following quota shares: UK 30.55%, Norway 26.4%, Faroes 12% and Iceland 10.5%. The remaining 20.55% would be for the EU, Greenland and Russia.

Despite these other countries not being part of the deal, in May 2026 the EU agreed to reduce its catch by 48% too. Russia, however, set its own quota of 67,548 tonnes, which is 22.6% of the total 299,010 quota, above the 20.55% set aside for the EU, Russia and Greenland combined and almost almost five times Russia’s historic quota share! The UK, EU and Iceland responded by agreeing to bar Russian vessels carrying mackerel from entering their ports.

The quotas have added to the decline in supply, even though the aim is to increase supply in the future as stocks are rebuilt. In May this year, the Norwegian catch was down nearly 85% – well below the 48% reduction in the quota.

Demand.  Despite higher prices, demand has remained strong. Part of the reason is that demand is relatively inelastic. This is because, despite its increase in price, mackerel remains a relatively cheap fish and thus there is little option to switch to cheaper alternative fish. Indeed, with other fish going up in price, and meat too, some people may even switch to mackerel.

Another reason for strong demand is the growing market outside Europe, especially in southeast Asia, China, South Korea and Japan. In some of these countries, mackerel is seen as a luxury fish and people are prepared to pay higher prices, making demand relatively inelastic but at the other end of the market. In 2025, imports of frozen whole mackerel into the region rose by nearly 9%, despite rising prices.

However, Norwegian exports to the region have been falling, reflecting lower quotas in 2025 and lower still in 2026. This has further exacerbated the rise in price and intensified competition between Asian importers. For example, in July 2026, Korea sent a ‘mackerel envoy’ to Norway and other major exporters to seek to secure additional supplies.

The future

With supply restricted by declining stocks and tighter quotas, and with a price inelastic and growing demand, the high prices of mackerel in all forms look set to last – at least until stocks rebuild and quotas can be relaxed. But, with total quotas well above the level suggested by the ICES, rebuilding could take a long time.

Articles

Data

  • Dashboards

    • European Market Observatory for Fisheries and Aquaculture Products (EUMOFA)

Questions

  1. Draw a supply and demand diagram to illustrate what has happened to mackerel prices.
  2. What is the effective price elasticity of supply of mackerel?
  3. Why is demand for mackerel relatively price inelastic in the UK, except when prices rise above a certain level?
  4. Why is demand for mackerel relatively price inelastic in certain Asian countries, such as Japan and South Korea?
  5. In which country is demand for mackerel likely to be more income elastic: the UK or Japan?
  6. Under what circumstances might the price of mackerel in five years’ time be (a) higher than now; (b) lower than now? What will determine which is more likely?
  7. Should other supermarkets follow Waitrose’s lead in stopping the sale of mackerel?
  8. What is the ‘tragedy of the commons’? Why is a common resource such as fish in the open seas likely to result in the tragedy?
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Manchesterism: will greater devolution boost economic growth and help tackle inequality?


Andy Burnham is set to become UK Prime Minister on 20 July if no-one else stands to replace Keir Starmer. In a speech on 29 June, he outlined his economic vision. Central to this is devolution, where a greater number of economic decisions would be taken locally rather than by central government. This approach has been dubbed ‘Manchesterism’, in reference to his time as Mayor of Greater Manchester from 2017 to earlier this year. Under his mayoralty, Greater Manchester (GM) achieved faster economic growth than other regions or cities in the UK. From 2017 to 2023, GM’s gross value added grew by an average of 6.6% per annum and the city of Manchester’s by 8.4% – the highest of any city in the UK. The UK average was 4.9% and London’s was 4.6%.

The UK, especially England, is one of the least devolved of the OECD countries. One aspect of this is taxation. The chart shows local taxes and, in the case of federal countries, state/regional/provincial taxes too. (Click here for a PowerPoint.)

Only 4.9% of UK tax revenue is in the form of local taxes (council tax and 50% of business rates) and the amount that can be raised in council tax is capped by the central government. The remainder of UK tax revenue goes to central government in the form of income taxes, social security taxes (national insurance), VAT, excise duties, etc. This compares with an average of 7.1% local taxes and 24.5% local plus regional taxes across the 17 OECD countries shown in the chart.

Andy Burnham plans to shift some of the spending and tax-raising powers from Whitehall to metro mayors and local councils. The aim is to stimulate productivity and economic growth at a regional and local level by tailoring support and incentives to local needs and strengths. Local leaders will be best positioned to understand these needs and strengths and will be able to customise spending and support appropriately.

Examples of the types of greater autonomy over decision making would include:

  • Control over adult education budgets to allow them to be tailored to provide training and apprenticeships to meet the skills requirements of existing and emerging industries in the area;
  • Forming partnerships with local universities to support research and development that complements regional economic growth;
  • Providing greater funding for and control over local transport infrastructure, including roads, buses, trams, trains, etc., with local consultation to make them fit for the local population and businesses;
  • Tailoring business incentives to local needs and to the needs of the businesses themselves so as to attract an increase in investment;
  • Greatly expanding council house building, which has virtually dried up in recent years, with mayors and/or local authorities empowered to develop local housing strategies, including affordable housing programmes, and to direct housing investment funding to particular housing developments in areas of greatest need.

Andy Burnham has pledged to stick to the government’s two existing fiscal rules:
a) The Stability Rule (Fiscal Mandate): the current (day-to-day) budget must be in balance or surplus. In other words the provision of salaries, public services, state pensions, welfare, etc. must be covered by government revenues (largely taxation). The government should borrow only to fund long-term investment.
b) The Debt Rule (Stock Mandate): each year, public-sector net financial liabilities (PSNFL) must be forecast by the OBR to be falling as a share of GDP compared to the previous year in three years’ time. This acts as a break on the amount of borrowing for long-term investment.

It is likely, therefore, that there will be little extra government money for investment. Rather, the policy involves a redistribution of public-sector investment from central government to mayoral/local authorities.

In theory, such a policy of devolution need not see a redistribution from richer to poorer regions, but that might be part of the policy when the details are published. The UK has a bigger gap in productivity (GDP per worker) between its capital city and other large cities than in do other countries. Birmingham, Sheffield, Leeds, Newcastle, etc., as well as Cardiff, Glasgow, Edinburgh and Belfast, lag further behind London in output per head and economic growth than do other European countries lag behind their capital city. Thus the gap between Paris and Lyon, Toulouse and Marseille is narrower; as is that between Belin and Munich, Hamburg and Frankfurt. It is a similar picture in Spain and Italy. In the USA, some cities, such as San Francisco, outperform Washington DC and New York. A redistribution of government funding from London to the regions could see their incomes rise faster without having too much impact on London, which would still continue to attract large amounts of private investment.

Overall, there would be little increase in government funding. ‘Manchesterism’ is not, therefore, a demand-side policy. It is a supply-side policy – directing funds to areas where, combined with local incentives and local knowledge, the funding could yield greater returns and thereby increase potential GDP.

But this is not to say that there is no effect on aggregate demand. The hope is that devolution along the lines outlined by Andy Burnham will attract increased private investment, thereby increasing actual GDP as well as further increasing potential GDP.

We wait to see the details over the coming weeks.

Articles

Videos

Data

Questions

  1. Use an aggregate demand and supply diagram (simple or dynamic) to illustrate the effects on real GDP of a successful devolution strategy.
  2. Find out the details of the last Conservative government’s ‘levelling up’ policy. Was it similar in aims to that of ‘Manchesterism’?
  3. How could a policy of devolution as outlined by Andy Burnham affect income distribution within regions?
  4. Find out about the approach to regional policy in the EU. Is it similar to that being advocated by Andy Burnham?
  5. What is meant by ‘regional multipliers’? Why might they differ from the national multiplier?
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When suppliers become the captains: Is Red Bull clipping rivals’ wiiings?

When we think about suppliers and retailers working together, we usually imagine negotiations over things like the price a retailer pays for products, the quantities ordered, or delivery schedules. However, some suppliers do much more than simply supplying products. In fact, suppliers to many supermarkets also advise them on which brands to stock, how much shelf space each brand should get, and which products to promote. In this role, known as a ‘category captain’, a supplier can influence not only its own products but also those of its competitors within a specific category of products.

For example, if Red Bull were acting as a category captain in the energy drinks category for a supermarket like Tesco, it could also advise on where its competitor, Monster Energy, appears on the shelves, or even whether it appears at all!

Sounds problematic? Arrangements like these are an example of vertical relationships between suppliers and retailers, something economists often study. Like other vertical arrangements, such as exclusive dealing, they can have both benefits and drawbacks. For example, while a category captain can result in efficiency gains, allow for a more organised category of products and improve consumer choice, it also raises questions when the supplier giving the advice also competes with the products it is advising on.

That is exactly what the European Commission (EC), the EU’s competition authority, began examining in November 2025, when it opened an investigation into potential anticompetitive conduct by Red Bull.

One of the key concerns is whether Red Bull used its role as a category captain to disadvantage competing energy drink brands.

Category management is common … but novel for enforcement

The practice of appointing a category captain is not new. Many large supermarkets appoint category captains from major consumer goods suppliers. For example, firms such as Kraft Foods and Procter & Gamble have long taken on category management roles in a range of consumer-packaged goods categories.

However, despite how common these arrangements are in retail, this is the first time the EC has formally investigated whether a supplier has misused its category management role to limit or disadvantage competing products, and it has said it will treat the case as a priority.

How Red Bull could be disadvantaging competitors

According to the Commission, Red Bull appears to hold a dominant position in the wholesale supply of branded energy drinks, at least in The Netherlands. In competition policy, a firm which holds a dominant position has a special responsibility to ensure that its actions do not unfairly restrict competition. Regulators are investigating whether the company abused this position by offering financial or non-financial incentives and/or leveraging its role as a category captain to disadvantage competing energy drinks sold in larger can sizes.

At an extreme, a category captain could advise a supermarket to stop selling a competitor’s product entirely, effectively excluding the brand from the shelves and potentially reducing consumer choice.

But there are also more subtle ways Red Bull could disadvantage its competitors. Insights from behavioural economics suggest that the placement of products on shelves can strongly influence what consumers notice and buy. By reducing the visibility of rival energy drinks, for example, products in less prominent locations are less likely to be purchased and are therefore disadvantaged.

These practices matter for consumers as well as competitors. By limiting which products are stocked or how prominently they are displayed, dominant suppliers could reduce choice and potentially keep prices higher.

Growing scrutiny of category management?

Competition authorities seem to be paying closer attention to how suppliers influence the management of product categories in retail stores. In April 2025, the Belgian Competition Authority fined three large pharmaceutical companies more than €11 million for co-ordinating the placement of over-the-counter medicines in pharmacies. The companies had created shelf layouts that favoured their own products, disadvantaged competing brands, and monitored whether pharmacies followed the plans.

Thus far there have not been many European cases related to category management.

Why the Red Bull case matters

The Red Bull investigation is the first EC case focusing specifically on the potential misuse of category management by a dominant supplier. There is currently little guidance on how these arrangements should be assessed under competition law, meaning the case could set an important precedent.

If the Commission concludes that category management was used strategically to disadvantage competitors, Red Bull could be found to have abused its dominant position under EU competition rules. Such a decision could reshape supplier–retailer relationships across Europe.

Articles

Questions

  1. Beyond prices, how might dominant suppliers influencing shelf space affect competition and consumer choice?
  2. How might category captain arrangements affect barriers to entry?
  3. What are the potential efficiencies of supplier-led category management, and what are the possible anti-competitive effects?
  4. What guidelines or safeguards could regulators provide to ensure category captains deliver the potential efficiencies without harming competition?
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Rival bids for Warner Bros. face competition scrutiny: a Postscript

A previous post detailed how Netflix and Paramount Skydance were competing to acquire part or all of Warner Bros. Discovery (WBD). In December 2025, Netflix announced that it had agreed a deal to buy WBD’s studio and streaming service business. However, Paramount has still pursued a hostile takeover of WBD.

In mid-February 2026, it emerged that WBD had reopened talks with Paramount. Paramount was given a week to make its final offer. Then, under the agreed deal, Netflix would have the right to adjust its bid. Things have developed quickly since then.

Paramount raised its offer price by $1 per share making the deal worth a total of $111bn. WBD stated that this was superior to Netflix’s offer and Netflix declined to increase its bid. Netflix executives stated that:

This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.1

Paramount will also pay Netflix the $2.8bn fee WBD owes Netflix for terminating the deal.

Whilst it appears Paramount has won the race to acquire WBD, the deal still needs regulatory clearance from competition authorities in the USA and Europe. Paramount CEO, David Ellison, stated that the proposal offered WBD shareholders ‘superior value, certainty and speed to closing.’2

Should the deal go through, the merged company would be in a powerful position as one of the few remaining Hollywood film and television studios.

References

  1. Paramount set for $111bn Warner Bros takeover after Netflix drops bid

    2. BBC News, Danielle Kaye and Nardine Saad (26/2/26)

  2. Ibid

Articles

Questions

  1. What are the similarities and differences between Netflix’ and YouTube’s business models? How close substitutes do you think they are?
  2. Do you think cinemas are a closer or more distant substitute to Netflix than YouTube?
  3. Which of the possible deals, do you think, raised the most competition concerns? What might be a possible remedy that could alleviate these concerns?
  4. Was WBD’s decision to accept the Paramount takeover purely determined by the size of Paramount’s bid?
  5. What is the significance of legacy assets to the acquisition of WBD?
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Rival bids for Warner Bros. face competition scrutiny

The television streaming market is currently attracting considerable attention from policy makers. This follows Warner Bros. accepting Netflix’s offer to buy part of the company for $72bn. To understand how this deal came about and why there is policy concern, we need to go back a few years.

The media and entertainment conglomerate Warner Bros. Discovery (WBD) was created in 2022 when AT&T sold Warner Bros to Discovery.1 However, in June 2025 the company announced that it would split the business into two parts. One would be (a) the studio for TV and movie production, where for example the Harry Potter franchises were made, and (b) the TV streaming business, home to for example the hit TV series Succession. The other, the more traditional and declining TV networks, including channels such as CNN, Discovery and TNT Sports, would form a new company called Discovery Global. David Zaslav, WBD President and Chief Executive stated that:

We are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape.2

Shortly afterwards, rival media and entertainment conglomerate, Paramount Skydance, made a series of bids to purchase the entire WBD business. But these were rejected by the WBD board. Despite this, in October 2025 WBD made public that it was open to a sale and had received unsolicited interest from several companies. It was believed that this included offers from Comcast and Netflix.

Recent developments

In December 2025, Netflix announced that it had agreed a deal with WBD to buy its studio and streaming service business, including its back catalogue of shows. The deal is planned to be put to WBD shareholders in the next few months.3 Netflix has over 300m subscribers across the globe and streams popular shows, such as Stranger Things and Squid Games.

Despite this accepted offer, Paramount has subsequently pursued a hostile takeover of WBD by going straight to its shareholders. In addition, Paramount launched a lawsuit to get further information on how Netflix was chosen as the buyer and to provide WBD shareholders with information on the value of the TV network business that WBD was selling. This, however, was quickly thrown out of the courts.

Over time, Netflix and Paramount have tinkered with their bids to make them more attractive to WBD. Whilst Paramount’s bid was all cash, originally Netflix was offering a mixture of cash and shares. However, in January, it switched this to an all-cash offer. In February, Paramount made clear that if WBD instead accepted its offer, it would pay the $2.8bn termination fee that would be owed to Netflix.4 Furthermore, from early 2027 Paramount would pay WBD shareholders payments of $650m per quarter, known as ticking fees, if combining WBD and Paramount faced regulatory delay.

In mid-February 2026, it emerged that, following a waiver from Netflix, WBD had reopened talks with Paramount. Paramount was given a week to make its offer. Then, under the agreed deal, Netflix would have the right to adjust its bid. This is an attempt by WBD to end the hostile bidding war Paramount is pursuing and to provide clarity for its shareholders. WBD has reiterated that it will:

continue to recommend and remain fully committed to our transaction with Netflix. [However], we welcome the opportunity to engage with you and expeditiously determine whether Paramount Skydance can deliver an actionable, binding proposal that provides superior value.5

The insertion of the ticking fees by Paramount is in response to the substantial attention competition authorities across the globe are paying to the acquisition of WBD. The deal is being investigated by the US Department of Justice and, in early February, Netflix was questioned by the US Senate Antitrust Sub-committee. During this hearing, one of the Senators expressed his anger with the country’s competition laws and raised concerns that the deal would result in Netflix getting:

more power over consumers and leaving fewer alternatives and streaming platforms.6

While Paramount did not attend this hearing, it is believed that it has raised concerns about the Netflix-WBD deal to regulators. Netflix co-CEO, Ted Sarandos, has also met with Donald Trump to discuss the deal. However, Trump subsequently stated that the deal ‘could be a problem’.7

The EU and UK markets

Furthermore, whilst all the companies involved are American, both the mergers with Netflix and Paramount are being investigated by the European Commission as markets in Europe would be affected.

In the UK, a group of politicians and former policymakers, have written to the Competition and Markets Authority urging it to conduct a full investigation of the Netflix-WBD merger. The letter argues that the merger could have:

damaging consequences for consumers, the UK’s world-leading creative industries and the UK cinema industry.

and that:

At a time when the British consumer can ill-afford more price increases, Netflix would possess an unprecedented ability to raise prices to access television and films.8

The letter comes at a time when pressure is being placed on the CMA to adopt a generally more business-friendly approach.

The impact of the merger on the UK market is particularly complicated since Warner Bros.’ streaming service, HBO Max, is only due to launch in the UK in March 2026. This is still the plan, with WBD’s head of global streaming, Jean-Briac Perette acknowledging that:

We are likely the last scaled global streamer to come to market. We’ve tried to learn from the rest. We’re a complementary and distinct service to the more volume-driven or basic cable-like streamers in the market. More is not better. Better is better.9

An alternative route to regulatory approval

An easier route to regulatory approval may well be instrumental in allowing Netflix or Paramount to win the battle for WBD. Netflix stresses that the deal will create economic growth and jobs. Netflix’s Sarandos highlighted that:

This is not a typical media merger where you end up with what’s called the Noah’s Ark problem — two of everything. We are buying a company that has assets that we do not, and we will keep investing in those.10

The problem of economic power

In contrast, critics argue that either of the deals would create a new company with too much power. However, given the nature of the firms involved, the competition issues will be fundamentally different between the two deals.

The Paramount deal would primarily reduce the number of studios in the market. This could provide the new merged studio with more bargaining power over distributors, advertisers and creators. Ultimately, this could negatively impact on the final product that consumers watch in the cinema and on television.

The Netflix deal on the other hand would impact directly on the streaming market. In the USA, 80% of consumers have both Netflix and HBO Max.11 After the merger, consumers would have less choice of competing services and Netflix-HBO Max combined may well have an incentive to raise its subscription prices.

In the UK, there are currently three leading streaming services: Netflix, Amazon Prime and Disney+, each with around 23% of the market.12 The merger with WBD could allow Netflix to become the clear market leader.

Concerns about YouTube

When examining streaming markets in all countries, an important factor will be whether to include YouTube in the market. Netflix certainly argues that it is a key competitor, at the hearing Sarandos stated that:

we are competing for the same content, we are competing for the same viewers, we are competing often for the same ad dollars. YouTube is not just cat videos anymore. YouTube is TV.13

If YouTube is included, in the USA it would be the market leader with 13%, ahead of Netflix on 9%. However, the competition authorities may conclude that YouTube’s product and business model is sufficiently different and so not include it in the streaming market.14

The issue of cinemas

A second concern in the Netflix deal will be the Warner Bros.’ studio content that Netflix would own. The merged business may have an incentive to discontinue, raise the price or reduce the quality of the studio output that it supplies to cinemas. Thus, the competition authorities’ investigations will also pay close attention to the impact on the cinema market.

In line with these arguments, the Hollywood screenwriters’ union, the Writers Guild of America, has indicated that the Netflix-WMD deal should be stopped and filmmakers are clearly concerned about Netflix prioritising streaming.15
 
 
The competition authorities may well consider imposing remedies before they are willing to allow either deal to go ahead. With this in mind, it is interesting that Netflix has already made clear that it will continue the 45-day exclusive window that Warner Bros. provides cinemas to show its films.

It will be fascinating to see how the competing bids play out and how the competition regulators view them.

*   *   *

This post has been updated in a Postscript, following a further bid from Paramount that was not matched by Netflix.

References

  1. AT&T agrees deal to combine WarnerMedia with Discovery

    2. The Guardian, Mark Sweney (16/5/21)

  2. HBO and CNN owner to split streaming and cable businesses

    3. BBC News, Adam Hancock (10/6/25)

  3. Netflix’s co-CEO went to an antitrust hearing and a culture war broke out

    4. NBC News, Saba Hamedy (3/2/26)

  4. Warner Bros gives Paramount seven days to make ‘best and final’ offer

    5. The Guardian, Mark Sweney (17/2/26)

  5. ibid.

  6. NBC News, op. cit.

  7. Trump says $72bn Netflix-Warner Bros deal ‘could be a problem’

    8. BBC News, Osmond Chia (8/12/25)

  8. UK politicians call for competition review of Netflix bid for Warner Bros

    9. Financial Times (26/1/26)

  9. Warner streaming boss defends HBO Max UK launch ahead of Netflix takeover

    10. Financial Times (9/2/26)

  10. NBC News, op. cit.

  11. Netflix and Warner Bros struggle to defend merger

    12. BBC News, Danielle Kaye (3/2/26)

  12. Netflix, Disney+, Prime: Streaming platform market share report UK 2025
    InsiderMedia, Jennifer O’Keeffe (2/12/25)

  13. BBC News, Danielle Kaye op. cit.

  14. Paramount sweetens Warner Bros bid with offer to pay Netflix break-up cost, other fees

    15. Reuters, Harshita Mary Varghese and Aditya Soni (11/2/26)

  15. In a takeover of Warner Bros., Netflix makes a play for 21st century Hollywood’s throne

    16. NBC News, Daniel Arkin (5/12/25)

Articles

Questions

  1. What are the similarities and differences between Netflix’ and YouTube’s business models? How close substitutes do you think they are?
  2. Do you think cinemas are a closer or more distant substitute to Netflix than YouTube?
  3. Which deal do you think raises the most competition concerns? What might be a possible remedy that could alleviate these concerns?