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View translated passages only
Oxford Law Citator
Contents
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Economics for Competition Lawyers, 2nd Edition by Niels, Gunnar; Jenkins, Helen; Kavanagh, James (24th March 2016)
Preliminary Material
Foreword
Acknowledgements
Table of Contents
List of Figures
List of Tables
Table of Cases
UK Cases
US Cases
Other National Cases
Australia
Austria
Belgium
Canada
Denmark
France
Germany
Greece
Italy
Mexico
Netherlands
New Zealand
South Africa
Spain
EU Cases
European courts (arranged by case number)
European Commission
Table of Legislation
National Statutes
Austria
Canada
Germany
Hungary
Italy
Mexico
New Zealand
Netherlands
South Africa
United Kingdom
United States
Statutory Instruments
Australia
New Zealand
United Kingdom
United States
EU Instruments
Treaties and Conventions
Directives (in chronological order)
Regulations (in chronological order)
Communications, Guidelines, and Other Non-binding Instruments
International Instruments
List of Abbreviations
Main Text
1 Introduction: Starting From First Principles
Preliminary Material
1.1 Competition Economics and You
1.01
1.02
1.03
1.04
1.05
1.2 What Does Economics Contribute to Competition Law?
1.06
1.2.1 Economic origins of competition law
1.07
1.08
1.2.2 Understanding the effects of business practices
1.09
1.10
1.11
1.12
1.2.3 Different strands of economics: Industrial organization, finance, and behavioural economics
1.13
1.14
1.15
1.16
1.2.4 Different strands of economics: Econometrics
1.17
1.18
1.3 The Book’s Approach to Explaining Competition Economics
1.19
1.20
1.21
1.22
1.4 Explaining Some Basic Principles the Economic Naturalist’s Way
1.4.1 Demand curves, with no chart
1.23
1.24
1.25
1.26
1.4.2 The level of demand, and interaction with other products
1.27
1.28
1.4.3 Supply curves, still with no chart
1.29
1.30
1.4.4 Where demand and supply meet
1.31
1.4.5 When supply curves are upward-sloping
1.32
1.4.6 The level of demand, economies of scale, and the number of suppliers for which there is room in the market
1.33
1.34
1.35
1.36
1.4.7 Competition ‘good’
1.37
1.38
1.4.8 Monopoly ‘bad’
1.39
1.40
1.41
1.42
1.43
1.44
1.4.9 Monopoly profit as a fundamental market signal
1.45
1.46
1.4.10 A recap of the concepts used so far
1.47
1.5 Some Health Warnings on Competition, Competition Policy, and Competition Economists
1.5.1 Health warnings on competition
1.48
1.49
1.50
1.51
1.5.2 Health warnings on competition policy
1.52
1.5.3 Over- and under-enforcement
1.53
1.54
1.5.4 Different objectives of competition law
1.55
1.56
1.5.5 Health warnings on competition economists
1.57
1.58
1.6 The Remainder of the Book, and What’s New in this Second Edition
1.6.1 The chapters
1.59
1.60
1.6.2 What’s new?
1.61
1.62
1.63
1.64
2 Market Definition
Preliminary Material
2.1 Why Market Definition?
2.1.1 An intermediate step
2.01
2.02
2.1.2 What market definition tries to do
2.03
2.1.3 Avoiding the submarket trap
2.04
2.05
2.1.4 Avoiding the product characteristics trap
2.06
2.1.5 Beware the product differentiation trap
2.07
2.08
2.09
2.1.6 The remainder of this chapter
2.10
2.2 Dimensions of the Relevant Market
2.2.1 The product and geographic dimensions
2.11
2.2.2 Time of purchase or consumption
2.12
2.2.3 Period of investigation
2.13
2.2.4 Different customer groups
2.14
2.2.5 Different distribution channels
2.15
2.2.6 The vertical layer in the supply chain
2.16
2.2.7 The seven dimensions
2.17
2.3 The Demand Side: Substitution and Elasticities
2.18
2.3.1 The demand curve, with chart
2.19
2.3.2 Shifts in the demand curve due to interaction with other products
2.20
2.21
2.22
2.3.3 Responsiveness of demand to price
2.23
2.24
2.3.4 Own-price elasticity of demand
2.25
2.3.5 Cross-price elasticity of demand
2.26
2.3.6 Own-price elasticities and market definition
2.27
2.3.7 A health warning on elasticities: They change as you move along the demand curve
2.28
2.29
2.30
2.4 The Hypothetical Monopolist Test
2.4.1 Drawing the line: Hypothetical cartels and monopolists
2.31
2.32
2.33
2.4.2 The orthodox formulation of the hypothetical monopolist test
2.34
2.35
2.4.3 The hypothetical cartel once more
2.36
2.37
2.4.4 What the hypothetical monopolist would do: Maximize profits
2.38
2.39
2.40
2.41
2.4.5 Profit-maximization and the SSNIP
2.42
2.4.6 Why the ‘SS’ in SSNIP?
2.43
2.44
2.45
2.46
2.4.7 Why the ‘N’ in SSNIP?
2.47
2.48
2.49
2.50
2.4.8 An iterative process: From the focal product to the smallest market
2.51
2.52
2.4.9 Picking the right focal product and area
2.53
2.54
2.4.10 Multiple focal products
2.55
2.56
2.4.11 Asymmetric markets
2.57
2.58
2.59
2.4.12 Getting to the smallest market
2.60
2.61
2.4.13 Ranking substitutes: Diversion ratios and cross-price elasticity
2.62
2.63
2.64
2.65
2.4.14 The second iteration onwards: Which of the monopolist’s products does the SSNIP question apply to?
2.66
2.67
2.4.15 Purity of the SSNIP test, with some pragmatism
2.68
2.69
2.5 Critical Loss Analysis
2.5.1 Would or could: Two different hypothetical monopolists
2.70
2.71
2.5.2 Would or could: Does it matter?
2.72
2.73
2.74
2.5.3 The concept of critical loss
2.75
2.76
2.5.4 The critical loss formula
2.77
2.5.5 Critical loss illustrated
2.78
2.79
2.5.6 A numerical example of critical loss
2.80
2.5.7 The marginal customer matters
2.81
2.5.8 Case study: Critical loss analysis in a holiday parks merger
2.82
2.83
2.84
2.85
2.86
2.87
2.5.9 Critical loss in markets with differentiated products
2.88
2.89
2.90
2.6 The Cellophane Fallacy
2.6.1 Back to the 1950s
2.91
2.92
2.93
2.6.2 Is the fallacy a problem?
2.94
2.95
2.6.3 Start from the competitive price level?
2.96
2.7 Supply-side Substitution and Market Aggregation
2.7.1 What if the hypothetical monopolist is not ‘the only future supplier’?
2.97
2.98
2.7.2 Classic examples: Paper and bus services
2.99
2.100
2.7.3 Three criteria for supply-side substitution: No sunk costs, swiftness, and scale
2.101
2.102
2.103
2.104
2.105
2.7.4 The risk of overstating competitive pressure from supply-side substitution
2.106
2.107
2.7.5 The risk of getting supply-side substitution in the wrong direction
2.108
2.109
2.7.6 Keeping an eye on the focal product
2.110
2.111
2.7.7 Market aggregation
2.112
2.8 Price Discrimination Markets
2.8.1 Comparing apples with bananas
2.113
2.114
2.8.2 Captive customers and price discrimination
2.115
2.116
2.117
2.8.3 Are absolute price differences relevant?
2.118
2.9 Chains of Substitution
2.9.1 Examples of chains: Holiday parks and broadband internet
2.119
2.120
2.121
2.9.2 Breaking the chain
2.122
2.123
2.10 Other Aspects of Geographic Market Definition
2.10.1 Transport costs as a basis for geographic market definition
2.124
2.125
2.126
2.127
2.10.2 Trade and travel patterns as a basis for geographic market definition
2.128
2.129
2.10.3 Attack of the isochrones
2.130
2.131
2.132
2.133
2.10.4 The curious case of the geographic dimension of transport markets
2.134
2.135
2.136
2.137
2.138
2.11 Market Definition for Complements and Bundles
2.11.1 Substitutes, complements, and bundles
2.139
2.11.2 Selecting the right starting point
2.140
2.11.3 Markets for bundles
2.141
2.11.4 Market definition for aftermarkets
2.142
2.143
2.11.5 A systems market or separate markets?
2.144
2.145
2.11.6 Market definition in two-sided platform markets
2.146
2.147
2.148
2.11.7 A numerical example of critical loss analysis in two-sided markets
2.149
2.150
2.151
2.12 Markets Along the Vertical Supply Chain
2.12.1 The vertical dimension of the market
2.152
2.12.2 Markets in different vertical layers and their interaction
2.153
2.154
2.155
2.12.3 Derived demand and market definition: The air cargo example
2.156
2.157
2.158
2.159
2.12.4 Turning the supply chain upside down for market definition
2.160
2.12.5 Self-supply by vertically integrated companies
2.161
2.162
2.12.6 Do end-consumers always matter most?
2.163
2.164
2.13 Product Substitution Versus Product Migration
2.165
2.166
2.167
2.14 Market Definition for Features Other than Price
2.14.1 It’s not just the price that matters
2.168
2.14.2 The example of football pools
2.169
2.170
2.14.3 Time elasticities in geographic market definition
2.171
2.172
2.14.4 Market definition in innovation markets
2.173
2.174
2.15 Quantitative Tools for Market Definition
2.175
2.15.1 Using regression analysis to estimate demand elasticities
2.176
2.177
2.15.2 Specification of the demand function
2.178
2.179
2.15.3 A fishy example of regression analysis
2.180
2.15.4 Questions you can ask when presented with regression analysis
2.181
2.182
2.183
2.184
2.185
2.15.5 Price-correlation analysis
2.186
2.187
2.188
2.16 Conclusion: Why Market Definition?
2.189
2.190
3 Market Power
Preliminary Material
3.1 A Central Concern in Competition Law
3.1.1 A long-standing concern
3.01
3.02
3.1.2 A central concern, but not tackled directly
3.03
3.04
3.1.3 Market power is a matter of degree
3.05
3.06
3.1.4 Monopolistic competition
3.07
3.08
3.1.5 Market power: A stockpile that can be exhausted
3.09
3.10
3.1.6 Degrees of market power that worry competition authorities
3.11
3.1.7 Dominance
3.12
3.13
3.1.8 Super-dominance and monopoly
3.14
3.15
3.16
3.1.9 The remainder of this chapter
3.17
3.2 Market Shares and Concentration Measures
3.2.1 Market shares and market power
3.18
3.19
3.20
3.2.2 Measuring market shares: Not as easy as it might seem
3.21
3.2.3 Market shares by value and volume
3.22
3.23
3.2.4 Capacity market shares
3.24
3.25
3.26
3.27
3.2.5 Market shares over time
3.28
3.29
3.30
3.2.6 Concentration measures
3.31
3.32
3.33
3.2.7 The Herfindahl–Hirschman Index
3.34
3.35
3.2.8 When is a market too concentrated?
3.36
3.2.9 The Lerner index
3.37
3.38
3.39
3.40
3.3 Entry and Exit Barriers
3.3.1 Definition of entry barrier
3.41
3.42
3.43
3.44
3.45
3.3.2 Absolute entry barriers
3.46
3.3.3 Strategic entry barriers
3.47
3.3.4 Informational entry barriers
3.48
3.49
3.3.5 Economies of scale and scope
3.50
3.51
3.3.6 Sunk costs
3.52
3.53
3.3.7 Contestable markets
3.54
3.55
3.56
3.57
3.58
3.3.8 Network effects as an entry barrier
3.59
3.60
3.61
3.62
3.3.9 Do network effects mean the end of all competition?
3.63
3.64
3.3.10 Two-sided markets with network effects
3.65
3.66
3.67
3.4 Profitability as a Measure of Market Power
3.4.1 Profitability captures the essence of market power
3.68
3.69
3.4.2 Who uses profitability analysis?
3.70
3.71
3.4.3 Measures of economic profitability: NPV and IRR
3.72
3.73
3.74
3.75
3.4.4 Truncating the period of analysis
3.76
3.77
3.78
3.4.5 Accounting versus economic measures of profitability
3.79
3.80
3.4.6 Margins and return on sales
3.81
3.82
3.83
3.4.7 Asset valuation
3.84
3.85
3.86
3.4.8 Valuing intangible assets
3.87
3.88
3.4.9 Cost allocation issues
3.89
3.90
3.91
3.4.10 What is the competitive benchmark?
3.92
3.93
3.94
3.95
3.96
3.4.11 Case study: Sky-high profits in the pay-TV market
3.97
3.98
3.99
3.100
3.101
3.4.12 Interpretation of the results of profitability analysis
3.102
3.103
3.104
3.105
3.106
3.107
3.4.13 Is profitability analysis ‘too difficult’?
3.108
3.5 Buyer Power and Bidding Markets
3.5.1 What happens when buyers have the power?
3.109
3.110
3.111
3.5.2 Theories of harm from buyer power: Squeezing suppliers
3.112
3.113
3.5.3 Case study: Cable consolidation and buyer power
3.114
3.115
3.116
3.117
3.5.4 Theories of harm from buyer power: The waterbed effect
3.118
3.119
3.5.5 Countervailing buyer power in bidding markets
3.120
3.121
3.5.6 Criteria for bidding markets
3.122
3.123
3.124
3.125
3.5.7 Examples of the bidding market defence: Soft drinks and fresh eggs
3.126
3.127
3.6 Behavioural Economics and Market Power
3.6.1 Understanding the consumer
3.128
3.129
3.130
3.6.2 How consumers form preferences and make choices
3.131
3.132
3.133
3.134
3.6.3 Types of consumer bias: Context-dependent preferences
3.135
3.136
3.6.4 Types of consumer bias: Heuristics and time-inconsistency in decision-making
3.137
3.138
3.139
3.6.5 How biases influence the interaction between demand and supply
3.140
3.141
3.142
3.6.6 Market power and disciplining by consumers
3.143
3.144
3.145
3.146
3.6.7 Market power and disciplining by competitors
3.147
3.148
3.149
3.6.8 Add-ons, partitioned pricing, and drip pricing: Creating market power in narrow markets?
3.150
3.151
3.152
3.6.9 Case study on market power in narrow markets: Payment protection insurance
3.153
3.154
3.155
3.156
3.157
3.6.10 How can you use behavioural economics in assessing market power?
3.158
3.159
3.7 Market Power, Investment, and Innovation
3.7.1 A difficult trade-off
3.160
3.161
3.7.2 Dynamic rivalry: Lessons from past interventions
3.162
3.163
3.164
3.165
3.166
4 Abuse of Dominance
Preliminary Material
4.1 Successful Competitor or Bull in a China Shop?
4.1.1 A matter of philosophy and policy judgement
4.01
4.02
4.03
4.1.2 Form versus effect
4.04
4.05
4.06
4.07
4.08
4.09
4.10
4.11
4.1.3 The remainder of this chapter
4.12
4.2 General Principles for Assessing Exclusionary Conduct
4.2.1 Why the effects-based approach is different
4.13
4.14
4.15
4.16
4.17
4.18
4.2.2 Relevance of the degree of market power
4.19
4.20
4.21
4.2.3 Assessing effects: The welfare, profit-sacrifice, and no-economic-sense tests
4.22
4.23
4.24
4.2.4 Assessing effects: The as-efficient competitor test
4.25
4.26
4.27
4.28
4.2.5 Abuse of collective dominance
4.29
4.30
4.2.6 Dominance and abuse in related markets
4.31
4.32
4.3 Cost Benchmarks for Exclusionary Conduct
4.3.1 The logic of cost benchmarks
4.33
4.34
4.3.2 Marginal cost
4.35
4.36
4.37
4.3.3 Average variable cost
4.38
4.39
4.3.4 Average avoidable cost
4.40
4.41
4.42
4.3.5 Long-run average incremental cost
4.43
4.44
4.45
4.46
4.47
4.3.6 Average total cost
4.48
4.49
4.3.7 Profitability tests for below-cost pricing
4.50
4.4 Predation
4.4.1 What is predation, from an economic perspective?
4.51
4.52
4.53
4.54
4.4.2 Legitimate reasons for below-cost pricing
4.55
4.56
4.57
4.4.3 Recoupment, and the feasibility of predation
4.58
4.59
4.60
4.61
4.4.4 Determinants of the feasibility of predation
4.62
4.63
4.64
4.4.5 Reputation effects: Achieving recoupment by deterring future entrants
4.65
4.66
4.67
4.68
4.69
4.70
4.4.6 The (limited) relevance of intent
4.71
4.72
4.73
4.4.7 Newspaper wars: The predation principles illustrated
4.74
4.75
4.76
4.77
4.78
4.79
4.5 Price Discrimination
4.5.1 What is price discrimination?
4.80
4.81
4.82
4.83
4.5.2 What are the benefits of price discrimination?
4.84
4.85
4.86
4.87
4.88
4.89
4.5.3 So what are the concerns about price discrimination?
4.90
4.91
4.92
4.93
4.94
4.5.4 Price discrimination and parallel trade
4.95
4.96
4.97
4.98
4.99
4.5.5 Parallel trade and competition law: The GSK Greece case
4.100
4.101
4.102
4.103
4.6 Quantity, Loyalty, and Exclusivity Rebates
4.6.1 Different types of rebate: Form versus effect
4.104
4.105
4.106
4.107
4.108
4.109
4.110
4.6.2 Foreclosure and ‘suction’ effects of loyalty rebates
4.111
4.112
4.113
4.114
4.115
4.116
4.6.3 Unavoidable trading partners and the contestable share of the market
4.117
4.118
4.119
4.120
4.121
4.122
4.123
4.124
4.6.4 Quantity rebates
4.125
4.126
4.127
4.6.5 More examples of rebate cases: From boat engines to chocolate bars
4.128
4.129
4.130
4.131
4.132
4.133
4.7 Margin Squeeze
4.7.1 What is margin squeeze, and why is it of concern?
4.134
4.135
4.136
4.137
4.7.2 Assessing margin squeeze under competition law
4.138
4.139
4.7.3 Whose costs should be used? As-efficient versus reasonably efficient competitors
4.140
4.141
4.142
4.143
4.144
4.8 Bundling and Tying
4.8.1 Some definitions first
4.145
4.146
4.147
4.148
4.8.2 Supply-side efficiencies of bundling and tying
4.149
4.150
4.151
4.152
4.8.3 Demand-side efficiencies of bundling and tying
4.153
4.154
4.155
4.8.4 An illustration of welfare and foreclosure effects of bundling
4.156
4.157
4.158
4.8.5 Bundling and tying to leverage market power: The Chicago critique and responses to it
4.159
4.160
4.161
4.162
4.8.6 Bundling and tying to protect an existing market position
4.163
4.164
4.165
4.8.7 The as-efficient competitor and attribution tests for bundling
4.166
4.167
4.168
4.169
4.170
4.9 Refusal to Supply and Essential Facilities
4.9.1 A difficult trade-off
4.171
4.172
4.173
4.174
4.9.2 The concept of essential facility
4.175
4.176
4.177
4.178
4.9.3 The IMS Health case: The tension between competition law and IP rights
4.179
4.180
4.181
4.182
4.183
4.184
4.9.4 Effects on downstream competition: The airport bus and parking cases
4.185
4.186
4.187
4.188
4.189
4.10 Excessive Pricing
4.10.1 Should excessive prices be controlled, and is competition law the right tool?
4.190
4.191
4.192
4.193
4.10.2 Relying on the market instead of intervening: From tampons to condoms
4.194
4.195
4.196
4.10.3 Comparisons with other prices: Bananas, funeral services, and morphine
4.197
4.198
4.199
4.10.4 Excessive pricing based on excessive profits: Debit cards in the Netherlands
4.200
4.201
4.202
4.10.5 Economic value to downstream purchasers: Ports and horseracing data
4.203
4.204
4.205
4.206
4.10.6 Economic value through free interaction of demand and supply: Steel in South Africa
4.207
4.208
4.10.7 Common misperceptions: What economics can and cannot say about excessive pricing
4.209
4.210
4.211
4.212
4.213
5 Cartels and Other Horizontal Agreements
Preliminary Material
5.1 Are All Cartels Bad?
5.1.1 A long-standing concern
5.01
5.02
5.03
5.04
5.05
5.06
5.1.2 ‘Hardcore’ cartels and ‘naked’ restrictions versus other horizontal agreements
5.07
5.08
5.09
5.10
5.1.3 Object versus effect: A clear dichotomy?
5.11
5.12
5.13
5.1.4 Object versus effect: A moving boundary
5.14
5.15
5.16
5.17
5.1.5 The remainder of this chapter
5.18
5.19
5.2 Economic Characteristics of Hardcore Cartels
5.2.1 What makes cartels tick?
5.20
5.21
5.22
5.2.2 Where do we find cartels?
5.23
5.24
5.25
5.26
5.27
5.3 Concerted Practices and Information Sharing
5.3.1 The economics of information sharing
5.28
5.29
5.30
5.31
5.32
5.3.2 Defining harmful information exchange
5.33
5.34
5.35
5.3.3 Communicating with customers: Price announcements
5.36
5.37
5.38
5.3.4 Communicating via customers or suppliers: Hub-and-spoke arrangements
5.39
5.40
5.41
5.3.5 The UK tobacco hub-and-spoke case
5.42
5.43
5.44
5.4 Co-operation Among Competitors: Joint Purchasing, Joint Selling, and Other Forms of Collaboration
5.4.1 Joint purchasing and selling
5.45
5.46
5.47
5.48
5.49
5.4.2 Joint selling of sports rights
5.50
5.51
5.52
5.53
5.54
5.4.3 Co-operation among banks in payment card schemes: The interchange fee cases
5.55
5.56
5.57
5.58
5.59
5.60
5.61
5.4.4 Multilateral interchange fees: Counterfactual analysis
5.62
5.63
5.64
5.65
5.66
5.67
5.68
5.5 Technology and Intellectual Property Agreements: Beneficial or Anti-competitive?
5.5.1 R&D agreements
5.69
5.70
5.71
5.5.2 Technology licensing agreements and the block exemption
5.72
5.73
5.74
5.75
5.5.3 Technology licensing agreements: Patent pools and standards
5.76
5.77
5.5.4 Pay for delay: Reverse settlement agreements between branded and generic pharmaceutical companies
5.78
5.79
5.5.5 Pay for delay: Counterfactual analysis
5.80
5.81
5.82
5.83
5.84
5.85
5.86
5.87
5.6 Finding Cartels: Can Economics Help?
5.6.1 Leniency: Incentive theory at work
5.88
5.89
5.90
5.91
5.6.2 Experimental economics: Leniency and cartel stability
5.92
5.93
5.6.3 Economists as detectives?
5.94
5.95
5.96
5.97
5.98
5.99
5.100
6 Vertical Restraints
Preliminary Material
6.1 Business Practices, the Law, and the Economics
6.1.1 It’s verticals, not cartels
6.01
6.02
6.03
6.04
6.1.2 Efficiencies and competition concerns
6.05
6.06
6.07
6.08
6.09
6.1.3 The remainder of this chapter
6.10
6.2 Economic Rationales for Vertical Restraints
6.2.1 The problem of double marginalization
6.11
6.12
6.13
6.14
6.2.2 Free-rider problems: Other manufacturers
6.15
6.16
6.2.3 Free-rider problems: Other distributors
6.17
6.18
6.19
6.20
6.2.4 The hold-up problem: Relationship-specific investments
6.21
6.22
6.23
6.2.5 The hold-up problem: Required contract duration
6.24
6.25
6.26
6.2.6 Other distribution efficiencies achieved through vertical restraints
6.27
6.28
6.29
6.2.7 Vertical restraints as a bargaining outcome: Sharing the pie, and ‘jilted distributors’
6.30
6.31
6.32
6.33
6.34
6.3 Is a Restraint a Restriction? Counterfactual Analysis under Article 101(1)
6.35
6.36
6.37
6.38
6.39
6.4 Foreclosure Effects of Vertical Restraints
6.4.1 Vertical restraint or abuse of dominance?
6.40
6.41
6.42
6.43
6.4.2 Networks of agreements: The beer cases
6.44
6.45
6.46
6.5 ‘Hardcore Vertical Restraints’: Resale Price Maintenance and Exclusive Territories
6.5.1 Resale price maintenance
6.47
6.48
6.49
6.5.2 Maximum, recommended, and communicated retail prices
6.50
6.51
6.52
6.5.3 Exclusive territories in the EU
6.53
6.54
6.55
6.6 Vertical Restraints in Online and Digital Markets
6.56
6.6.1 Selective distribution: Cosmetics (not) online
6.57
6.58
6.59
6.6.2 Most-favoured-nation clauses: The online hotel bookings cases illustrating the principles
6.60
6.61
6.62
6.63
6.64
6.65
6.6.3 Balancing the effects of most-favoured-nation clauses
6.66
6.67
6.68
6.69
6.6.4 The most favoured one: The Apple e-books case
6.70
6.71
6.72
6.73
6.74
6.75
6.76
7 Mergers
Preliminary Material
7.1 Mergers Under Scrutiny
7.1.1 What’s the competition concern?
7.01
7.02
7.03
7.1.2 Other policy questions
7.04
7.05
7.06
7.07
7.1.3 The remainder of this chapter
7.08
7.2 The Substantive Test: SLC, SIEC, and Other Variants
7.2.1 Dominance, and unilateral and co-ordinated effects
7.09
7.10
7.11
7.2.2 Consumer or total welfare?
7.12
7.13
7.14
7.3 The Counterfactual: Current Market, Entry, or Failing Firm?
7.3.1 What would happen without the merger?
7.15
7.16
7.17
7.3.2 Entry in the absence of the merger: Anti-viral drugs, steel drums, and concert tickets
7.18
7.19
7.20
7.21
7.3.3 The failing-firm defence
7.22
7.23
7.24
7.25
7.26
7.3.4 Failing-firm examples: From solvents to Greek airlines
7.27
7.28
7.29
7.30
7.31
7.4 Unilateral Effects: Assessing Closeness of Competition
7.4.1 Homogeneous versus differentiated products
7.32
7.33
7.34
7.35
7.36
7.4.2 Diversion ratios as a measure of closeness of competition
7.37
7.38
7.39
7.40
7.41
7.4.3 Which diversion ratio?
7.42
7.43
7.4.4 Consumer surveys to estimate demand responsiveness and diversion ratios
7.44
7.45
7.46
7.47
7.48
7.49
7.4.5 Good practice in consumer survey design
7.50
7.51
7.52
7.53
7.54
7.4.6 Conjoint analysis
7.55
7.56
7.57
7.4.7 Other evidence on closeness of competition
7.58
7.59
7.60
7.5 Unilateral Effects: Simulating Price Rises
7.5.1 From simple to complex merger simulation
7.61
7.62
7.5.2 Illustrative price rise analysis
7.63
7.64
7.65
7.66
7.5.3 Illustrative price rises with efficiencies and asymmetric diversion
7.67
7.68
7.69
7.5.4 UPP and GUPPI
7.70
7.71
7.72
7.73
7.5.5 GUPPI in practice: Petrol stations, cinemas, and channel crossings
7.74
7.75
7.76
7.77
7.5.6 Full merger simulation
7.78
7.79
7.80
7.81
7.82
7.83
7.5.7 Rivals’ reactions: Entry and repositioning
7.84
7.85
7.5.8 Price–concentration analysis to infer price effects
7.86
7.87
7.88
7.6 Co-ordinated Effects
7.6.1 The two dead Frenchmen and their models
7.89
7.90
7.91
7.92
7.93
7.94
7.6.2 Oligopolists and the prisoner’s dilemma
7.95
7.96
7.97
7.98
7.99
7.6.3 Tacit collusion to escape the prisoner’s dilemma
7.100
7.101
7.6.4 The Airtours conditions for co-ordinated effects
7.102
7.103
7.104
7.105
7.6.5 Cases of co-ordination: Platinum, package holidays, and recorded music
7.106
7.107
7.108
7.109
7.110
7.7 Non-horizontal Mergers
7.7.1 A different concern
7.111
7.112
7.113
7.114
7.7.2 Input foreclosure
7.115
7.116
7.117
7.7.3 Incentives to foreclose: The vertical arithmetic
7.118
7.119
7.120
7.7.4 Customer foreclosure
7.121
7.122
7.123
7.124
7.7.5 Diagonal mergers
7.125
7.126
7.127
7.7.6 Mergers with portfolio effects
7.128
7.129
7.8 Minority Shareholdings
7.8.1 Theories of harm from minority shareholdings
7.130
7.131
7.132
7.133
7.8.2 A minority saga: The Ryanair/Aer Lingus case
7.134
7.135
7.136
7.137
7.138
7.139
7.9 Merger Efficiencies
7.9.1 A balancing act
7.140
7.141
7.142
7.9.2 Sources of merger efficiencies
7.143
7.144
7.145
7.146
7.147
7.9.3 Measuring efficiencies: Data envelopment analysis
7.148
7.149
7.150
7.151
7.152
7.9.4 When do merger efficiencies benefit consumers?
7.153
7.154
7.155
7.156
7.9.5 The ‘efficiency offence’
7.157
7.158
7.159
8 Design of Remedies
Preliminary Material
8.1 After the Diagnosis, What’s the Cure?
8.1.1 Catchers versus cleaners
8.01
8.02
8.03
8.1.2 Structural versus behavioural remedies: Courts and competition authorities as regulators?
8.04
8.05
8.06
8.1.3 The remainder of this chapter
8.07
8.2 Structural Remedies in Mergers
8.2.1 Divestment as the most direct means to restore competition
8.08
8.09
8.10
8.2.2 How much divestment, and to whom?
8.11
8.12
8.13
8.14
8.2.3 Completed mergers: Cleaning up the mess afterwards
8.15
8.16
8.17
8.18
8.3 Structural Remedies in Conduct Cases
8.3.1 The classics: Standard Oil and AT&T
8.19
8.20
8.21
8.22
8.23
8.3.2 More recent examples of structural remedies in conduct cases
8.24
8.25
8.26
8.27
8.3.3 Economic insights from network regulation: Vertical separation
8.28
8.29
8.30
8.31
8.32
8.4 Behavioural Remedies: Price and Access
8.4.1 Behavioural remedies in competition cases
8.33
8.34
8.35
8.4.2 Economic insights from network regulation: Price regulation
8.36
8.37
8.38
8.39
8.40
8.4.3 Economic insights from network regulation: Access regulation
8.41
8.42
8.43
8.44
8.45
8.46
8.4.4 Behavioural remedies with side effects: Online hotel bookings
8.47
8.48
8.49
8.5 Behavioural Remedies: FRAND
8.5.1 FRAND remedies in competition law
8.50
8.51
8.52
8.5.2 FRAND remedies: IP licensing and abuse of dominance
8.53
8.54
8.55
8.56
8.5.3 FRAND: Economic criteria
8.57
8.58
8.59
8.60
8.61
8.62
8.63
8.5.4 FRAND: A bargain?
8.64
8.65
8.66
8.67
8.68
8.6 Behavioural Remedies: Insights from Behavioural Economics
8.6.1 Nudges and liberal paternalism
8.69
8.70
8.71
8.72
8.73
8.6.2 More intrusive interventions to restore consumer sovereignty
8.74
8.75
8.76
8.6.3 The Microsoft remedies
8.77
8.78
8.79
8.80
8.81
8.82
8.6.4 The Google remedies
8.83
8.84
8.85
8.86
8.87
8.7 Setting Fines
8.7.1 Headlines and main principles
8.88
8.89
8.90
8.91
8.7.2 Fines and deterrence
8.92
8.93
8.94
8.95
8.96
8.7.3 The European Commission fining guidelines: Where is the economics?
8.97
8.98
8.99
8.100
8.7.4 Inability to pay fines
8.101
8.102
8.103
8.104
8.105
8.106
8.107
8.108
8.8 Measuring the Costs and Benefits of Remedies, and of Competition Law
8.8.1 Why measure costs and benefits?
8.109
8.110
8.8.2 A remedy in dispute: CBA in the grocery inquiry
8.111
8.112
8.113
8.114
8.8.3 What to measure: Identifying the counterfactual
8.115
8.116
8.8.4 How to measure: Categories of costs and benefits
8.117
8.118
8.8.5 When to stop measuring: Precision and priorities
8.119
8.120
8.121
8.122
8.123
9 Quantification of Damages
Preliminary Material
9.1 Damages Claims, Economics, and the Law
9.1.1 What is special about the economics in damages claims?
9.01
9.02
9.1.2 Policy principles behind damages claims
9.03
9.04
9.05
9.06
9.07
9.1.3 Searching for the right answer, within practical and legal bounds
9.08
9.09
9.10
9.11
9.12
9.1.4 The remainder of this chapter
9.13
9.2 Harm from Hardcore Cartels: Conceptual Framework
9.2.1 The main effects illustrated
9.14
9.15
9.2.2 The cartel overcharge harm
9.16
9.2.3 Volume effects
9.17
9.18
9.2.4 Dynamic cartel effects
9.19
9.20
9.2.5 Umbrella pricing and other ‘remote’ cartel effects
9.21
9.22
9.23
9.2.6 Presumptions on the existence of cartel overcharges
9.24
9.25
9.26
9.27
9.28
9.2.7 Empirical insights into the magnitude of cartel overcharges
9.29
9.30
9.31
9.32
9.3 Harm from Exclusionary Conduct: Conceptual Framework
9.3.1 Lost profit: Legal principles determining the relevant economic questions
9.33
9.34
9.3.2 Lost profit: Cases where courts have been cautious
9.35
9.36
9.37
9.3.3 The concept of lost profit: An economic framework
9.38
9.39
9.40
9.3.4 The effect of infringements that increase input prices
9.41
9.3.5 The counterfactual in exclusion cases: Competitive or barely legal conduct?
9.42
9.43
9.44
9.45
9.46
9.4 A Classification of Methods and Models for Quantifying Damages
9.4.1 The classification
9.47
9.48
9.49
9.50
9.4.2 Some notes on the use of models generally
9.51
9.52
9.4.3 What can economic models say about causation?
9.53
9.54
9.55
9.56
9.4.4 Choosing a single damages value
9.57
9.58
9.59
9.60
9.61
9.5 Comparator-based Approaches: Cross-sectional
9.5.1 Choice of comparator
9.62
9.63
9.5.2 Comparison of averages
9.64
9.65
9.66
9.5.3 Cross-section regression analysis
9.67
9.68
9.6 Comparator-based Approaches: Time Series
9.6.1 Choice of comparator period
9.69
9.70
9.71
9.6.2 Simple time-series techniques: Averages and interpolation
9.72
9.73
9.6.3 More sophisticated time-series techniques: ARIMA, dummy regression, and forecasting
9.74
9.75
9.76
9.77
9.6.4 Time-series analysis to calculate the value of commerce
9.78
9.79
9.7 Comparator-based Approaches: Difference-in-Differences
9.80
9.81
9.82
9.8 Approaches Based on Financial Analysis
9.8.1 The role of financial analysis in determining the counterfactual
9.83
9.84
9.8.2 Financial performance of claimants
9.85
9.86
9.87
9.88
9.8.3 Financial performance of defendants
9.89
9.90
9.91
9.8.4 Bottom-up costing analysis to estimate the counterfactual price
9.92
9.93
9.9 Approaches Based on Market Structure and Industrial Organization Theory
9.9.1 What are market-structure-based approaches?
9.94
9.95
9.9.2 How close is the cartel outcome to monopoly, and how competitive is the counterfactual?
9.96
9.97
9.98
9.9.3 Use of IO models to determine or cross-check the counterfactual
9.99
9.100
9.9.4 Example of a market-structure-based approach to estimate lost profits: Bus fights in Cardiff
9.101
9.102
9.103
9.104
9.105
9.106
9.10 Pass-on of Overcharges
9.10.1 The policy debate about the passing-on defence
9.107
9.108
9.10.2 Pass-on in theory: The relationship between prices and costs in economic models
9.109
9.110
9.10.3 Pass-on in competitive markets: Industry-wide versus firm-specific cost increases
9.111
9.112
9.10.4 Pass-on in monopoly and other models of competition: An illustration
9.113
9.114
9.10.5 Pass-on in theory: Further insights
9.115
9.116
9.117
9.10.6 Small versus large cost increases
9.118
9.119
9.120
9.121
9.10.7 The effect of pricing practices and price friction
9.122
9.123
9.124
9.10.8 Empirical evidence on pass-on
9.125
9.126
9.127
9.128
9.10.9 Pass-on and volume effects
9.129
9.130
9.10.10 Passing the buck: Remaining policy and practical questions
9.131
9.132
9.133
9.134
9.11 Interest and Discounting
9.11.1 Relevance of interest and discounting
9.135
9.136
9.11.2 Principles of interest and discounting
9.137
9.138
9.11.3 Choice of interest or discount rate
9.139
9.140
9.141
9.11.4 Economics and law on interest: Reconciling them ought to be more ‘simple’
9.142
9.143
9.144
9.145
9.146
10 The Use of Economic Evidence in Competition Cases
Preliminary Material
10.1 Smokescreens and Mud-slingers?
10.01
10.02
10.03
10.2 Best Practice in Presenting Economic Evidence
10.04
10.05
10.06
10.07
10.3 Economists in Court: When Can You Rely on Them?
10.08
10.3.1 The Daubert principle
10.09
10.10
10.11
10.12
10.13
10.3.2 Duty to help the court
10.14
10.15
10.16
10.17
10.18
10.19
10.3.3 Hot tubs, court experts, and economists as judges
10.20
10.21
10.22
10.23
10.4 Economists in Court: Do They Get a Fair Hearing?
10.24
10.4.1 A triumph of theory over commercial reality?
10.25
10.26
10.4.2 Are economists guilty of ex post rationalization?
10.27
10.28
10.29
10.5 The Use of Economics in Competition Law: A Promising Future?
10.5.1 Tackling new issues with the existing framework
10.30
10.31
10.32
10.33
10.5.2 Other fields of application
10.34
10.35
10.36
10.37
10.5.3 Questioning the competition paradigm
10.38
10.39
10.40
10.41
10.42
10.5.4 Consumer behaviour: Are the competition rules suited to make markets work better?
10.43
10.44
10.45
10.46
10.5.5 The power of ideas
10.47
10.48
10.49
Further Material
Bibliography
Index
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List of Tables
From:
Economics for Competition Lawyers (2nd Edition)
Dr Gunnar Niels, Dr Helen Jenkins, James Kavanagh
Content type:
Book content
Product:
Oxford Competition Law [OCL]
Published in print:
24 March 2016
ISBN:
9780198717652
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