Merger Telefoongids Gouden Gids A merger to monolopy?

Transcription

1 Merger Telefoongids Gouden Gids A merger to monolopy? Ron Kemp Netherlands Competition Authority Norwich,

2 Outline The case The process The Dutch directory market Theory of harm Arguments parties Market research Decision

3 The case 2 national paper directories: TG en GG Market share approx. 95% Both also online directories &

4 Process Phase I Phase II

5 Directory market Directory: list of all companies categorized on the basis of products and services supplied Two-sided market Empirical study Rysman (2004) Two-sided market A more competitive market is preferable

6 Directory market Advertisers in only 1 directory (non-overlapping) advertisers in both directories (overlapping) Heterogenity directories Potential competitors - local directories - online directories: ilocal and Google (general search) - local/national newspapers and magazines

7 Theory of harm (1) Market for directories with main revenue source print business : Media markets: advertisers are often using different kinds of media for different purposes. TG pre and post merger bundle and large majority GG advertisers buy both online and print ads Market share approx. 95% (near monopoly) Although online advertising is increasing, only limited competitive pressure from other online players

8 Theory of harm (2) Parties are each other s nearest competitors Only 2 players with a print directory (TG and GG) Only 2 players with print and online directory (TG and GG) Strategic documents Market seems to be somewhat differentiated, but substantial part of advertisers see products as substitutes or partly substitutes (survey, almost 40%) Non-overlapping advertisers will experience a nominal price increase and can no longer choose between 2 alternatives Overlapping advertisers will have less bargaining power in negotiating discounts from list prices New advertisers can no longer choose between two alternatives This transaction will significantly impede effective competition

9 Main arguments parties Online alternative (Google, Marktplaats) exert high competitive pressure Little or no (price) competition between directories Independent or even complementary products 1 directory is beneficial for advertisers and users And synergies for the parties Conclusion: no significant restriction of competition

10 Study information parties Research (1) (questionnaire results, econometric analyses, data analyses, white papers) Internal strategic documents Despite online threat expectation that the turnover (paper and online) will be stable Each others nearest competitor but also threats from the online market Interviews/questionnaire trade associations and advertisers Mixed results Small numbers Questionnaire potential competitors (paper and online)

11 Research (2) Data-analyses Large dataset, approx. 20 million records 1995/ Some problems Paper versus online or bundle Type of advertisement Focus on

12 Research (3) Results Reduced use and lower number of advertisers Able to consolidate the turnover Online sales increasing Low number of switchers between directories (3%) Relation switching and relative price unclear

13 Questionnaire advertisers and users Telephone interviews, > 5000 respondents 5 different versions Users Search behavior, willingness to pay Normal advertisers Ssnip, advertising policy Switchers Reasons for switching Online advertisers Preferences paper versus online Free listings Willingness to pay for listing Research (4)

14 Price increase 5-10% and equal usage both print directories 44% of the advertisers stop 25% no advertising 15% more advertising elsewhere 8% reduce the advertising spending Research (5) Price increase 5-10% one of the print directories and equal usage 49% stop in this directory 23% no advertising 15% more advertising elsewhere 6% switch to online directories of parties 1,5% switch to other print directory 7% reduce the advertising spending

15 Research (6) Increase usage (50%) 79% do not change 5% a bigger ad 4% extra ad in other category Decrease usage (10-15%) 57% do not change 26% stop advertising 10% smaller ad Both increase usage (50%) and price increase (5-10%) On average 64% chance of buying More ads (50-75% 70% do not change 8% bigger ad 9% stop advertising

16 Research (7) Why so many stoppers? Data analyses show lower % stoppers Free listing Low involvement Price close to monopoly price Prices other media increase as well

17 License granted Effect approach (no market delineation and market shares): Strong discipline of stoppers Two-sidedness Low proportion of switchers between TG and GG Likely that advertisers will use more online in the near future For one integrated directory: - Non-overlap advertisers benefit from increased usage - Overlap advertisers benefit from lower costs Unlikely that other competition parameters will deteriorate (disciplined by high % of stoppers) No efficiency defense Positive and negative effects in the assessment 1 directory is a new product Decision

18 Decision: m pdf