The Economics of EC Competition Law: Concepts, Application and Measurement

Transcription

1 The Economics of EC Competition Law: Concepts, Application and Measurement Simon Bishop Founding Partner, RBB Economics and Mike Walker Vice President, Charles River Associates Visiting Professor, Loughborough University SWEET & MAXWELL ^ ^ THOMSON REUTERS

2 Tke Authors Foreword Preface List of Tables List of Figures Tables v vii ix xviii xxi xxv 1. Introduction The Goals of EC Competition Policy The Impact of a "More Economics Approach" The Use of Empirical Techniques The Plan of the Book Part I Concepts 2. Effective Competition Introduction Some Potential Definitions of "Effective Competition" The Two Extremes: Perfect Competition and Monopoly What is the Welfare Standard for EC Competition Law? Oligopoly Models Dynamic Considerations Summary The Assessment of Market Power Introduction What is Market Power? ; Indicators of Market Power Barriers to Entry and Potential Competition Countervailing Buyer Power Product Differentiation The Nature of the Oligopolistic Interaction Between Firms The Lerner Index: A Measure of Market Power? xiu

3 Power to Exclude Two-sided Markets The Relationship between Profitability and Market Power Analysing Market Power in the Light of the Alleged Anti-competitive Market Summary Annex A: Multi-product Firm and the Lerner Index The Relevant Market Introduction Defining Relevant Markets: The Hypothetical Monopolist Test The Cellophane Fallacy Common Fallacies in Denning Relevant Markets Some Further Issues in the Practice of Market Definition Interpreting Market Shares Where Products are Highly Differentiated Summary Part II Application 5. Article 81 Introduction Cartels and Collusion Vertical Restraints Horizontal Agreements The Role of Market Definition in Article Summary Article 82 Introduction The Economic Meaning of Dominance and Abuse The Appropriate Role of Dominance in Article Excessive Pricing ^ Aftermarkets Exclusive Dealing The Commission's Policy Towards Loyalty Rebate Tying and Bundling Predatory Behaviour Refusals to Supply: Essential Facilities and Margin Squeezes Collective Dominance under Article Summary Annex 6.1: Case Benchmarks xiv

4 7. Economics of Horizontal Mergers Overview of EC Merger Control Economics and the Law The Role of the Relevant Market in Merger Analysis Unilateral Effects Entry Buyer Power Coordinated Effects Efficiencies Assessing Mergers in Network Industries Assessing Mergers in Two-sided Markets - ~ Mergers Involving Failing Firms Summary The Economics of Non-Horizontal Mergers Introduction Economics and the Law Assessing Ability: The Role of the Relevant Market and Market Shares Assessing the Likelihood of Foreclosure Arising from Vertical Mergers Assessing the Likelihood of Foreclosure Arising from Conglomerate Mergers ' j Coordinated Effects Efficiencies Arising from Non-Horizontal Mergers Summary Annex 8.1: Intensity of Competition and Double Marginalisation Part III Measurement 9. Introduction to Empirical Analysis Introduction The Role of Empirical Analysis in EC Competition Law Common Criticisms of the Use.of Quantitative Techniques Empirical Techniques Discussed in Part III Summary, Price Tests Introduction, Price Correlation Analysis Econometric Price Tests: Granger Causality, Cointegration and Unit Root Tests Summary xv

5 Annex 10.1: Why do Variable Exchange Rates Invalidate Correlation Analysis? Using Elasticities: Critical Loss and Diversion Ratios Introduction Direct Implementation of the Hypothetical Monopolist Test Diversion Ratios Summary Annex 11.1: Derivation of True Diversion Ratio Formula Annex 11.2: Quantifying the Potential Inaccuracies from Using the Simple Diversion Ratio Formula Bidding Studies Introduction Empirical Analysis in Bidding Markets Examples of Bidding Markets Summary Shock Analysis Introduction Case Studies Stock Market Event Studies Conclusions Price Concentration Studies Introduction The Mechanisms of a Price Concentration Study Case Studies Analytical Issues Summary Merger Simulation Introduction The Economies of Merger Simulations Case Studies Issues in Appraising Merger Simulations * Summary ' Shipment and Transport Cost Tests Introduction Shipment Data Tests The Use of Shipment Tests in Competition Policy Decisions Analytical Issues with Shipment Tests xvi

6 Transport Cost Studies Isochrone Analysis Summary Calculating Antitrust Damages Introduction General Methodology Estimating the Level of a Cartel Overcharge Estimating Damages in Article 82 Cases Summary -.' Econometric Annex Introducing Multiple Regression Analysis as a Tool of Antitrust Policy Introduction Basic Econometric Analysis Four Examples of Multiple Regression Analysis Appraising Multiple Regression Analysis Common Problems Appraising a Model in Practice Econometric Estimation of Demand Systems Summary AN-001 AN-003 AN-007 AN-014 AN-028 AN-040 AN-044 AN-050 Appendices A. Commission Notice on the definition of relevant market for the purposes of Community competition law [1997] OJ C372/03 A-001 B. Commission's Vertical Guidelines [2000] OJ C291/01 B-001 C. Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2004] OJ C31/03 C-001 D. Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2008] OJ C265/07 D-001 E. Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings E-001 F. Guidelines on the application of Article 81 (3) of the Treaty [2004] OJ C 1*01/08 F-001 Bibliography Index ' J xvn