Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Saturday, July 26, 2008

Efficiency and Justice in European Antitrust Enforcement

Posted by D. Daniel Sokol

Wouter PJ Wils of DG Competition has authored the book Efficiency and Justice in European Antitrust Enforcement.

ABSTRACT: In the last few years, the public enforcement of Articles 81 and 82 EC has been thoroughly transformed: the competition authorities of the EU Member States have become active enforcers within the European Competition Network, the European Commission has imposed more and higher fines than ever before, leniency has become a major instrument of cartel detection, and some Member States have introduced criminal penalties. The overall trend towards more and stronger enforcement of Articles 81 and 82 EC has also rekindled discussion on the old question of how to strike the right balance between efficient enforcement and adequate protection of the rights of the defence. This book brings together six essays which analyse from both a legal and an economic perspective the powers of investigation of the European Commission and the competition authorities of the Member States, and the corresponding procedural rights and guarantees, the use of settlements, the theory and practice of fines and of leniency, and the criminalization of European antitrust enforcement.

July 26, 2008 | Permalink | Comments (0) | TrackBack (0)

Friday, July 25, 2008

Commission launches public consultation on keystone antitrust regulation

Posted by D. Daniel Sokol

In an important move, the European Commission has launched a public consultation on a keystone of its antitrust regulation.

According to the press release:

  • The European Commission has launched a public consultation on the functioning of the Council Regulation (1/2003) that sets out the rules for the Commission's enforcement of EC Treaty antitrust rules. This Regulation, which took effect on 1 May 2004, also entrusts national competition authorities and courts with the role of applying the EU antitrust rules, meaning that there is wide-spread enforcement of the same set of rules to prosecute cartels and other anti-competitive practices throughout Europe. The Commission is looking for views on all aspects of its implementation in practice. Regulation 1/2003 was the result of the most comprehensive reform of antitrust procedures since 1962. Its key objectives are more effective enforcement of EC antitrust rules in the interests of consumers and businesses, while bringing about a more level playing field and reducing red tape for companies operating in Europe. The Commission will use the results of the consultation to prepare the report on the functioning of Regulation 1/2003, which should be presented to the European Parliament and the Council by 1 May 2009. Interested parties are invited to submit their comments by 30 September 2008.

July 25, 2008 | Permalink | Comments (0) | TrackBack (0)

DOJ v. Realtors: Back in the Ring

Posted by D. Daniel Sokol

J. Bruce McDonald (Jones Day) writes on DOJ v. Realtors: Back in the Ring.

ABSTRACT: The question is not “will” but “when” will antitrust enforcers challenge any new real estate broker association rules prescribing how the brokers compete. The U.S. Department of Justice antitrust lawsuit against the Consolidated Multiple Listing Service is just the latest in the long-running battle between the real estate broker industry and the DOJ and U.S. Federal Trade Commission over what if any limitations the industry can impose on competition by new business models made possible by the Internet.

The development of Multiple Listing Services (“MLSs”) may have been the most significant development in the residential real estate market in the twentieth century. A joint venture among brokers, an MLS allows brokers to communicate to other brokers their listing information on homes their clients want to sell, obtain information on homes their clients may want to buy, and cooperate in other ways, including making arrangements to share commissions. By providing a mechanism to pool their listings on all or nearly all homes in a locality, an MLS increases the quality and lowers the cost of the services brokers provide to buyers and sellers of houses. These joint ventures are largely procompetitive and so valuable that participation in the local MLS is necessary for a broker to compete in almost any local market.

As it has for so many other industries, the Internet has revolutionized how Americans shop for homes. Since the MLS was conceived, the Internet more than anything has improved communication of listing information among brokers—and now directly to home buyers. Obtaining listing information once required an in-person visit with a broker, who could search the MLS “book” or later a brokers’ electronic database. Today brokers and broker associations can make the MLS database available immediately and efficiently to their clients. Brokers’ websites have become known as Virtual Office Websites because they make available all the services once found only in a broker’s office. VOWs now are present in many real estate markets, although not all. Beginning in the late 1990s, the introduction of VOWs has changed how Americans shop for homes, just as the Internet has changed how they shop for books, music, clothing, and even cars, insurance, and other products and services.

Incumbent brokers responded to VOW entry in various ways. Some incumbents immediately embraced the new technology themselves, to face off against the new entrants. Others advocated that there be less cooperation among traditional brokers and the web-based entrants. Their arguments have raised a number of antitrust law and policy issues that still are being addressed by local broker associations, government agencies, and the public—and are making their ways through the courts. Some broker associations have imposed rules that limit the ability of VOW-based brokers to be members of a local broker association and its MLS or to have access to the MLS listing information. There now have been numerous actions challenging these rules by government antitrust authorities: the DOJ’s Antitrust Division, the FTC, and some state attorneys general. The CMLS case is only the latest in a series of antitrust agency enforcement actions against broker associations that have limited VOWs’ use of MLSs.

July 25, 2008 | Permalink | Comments (0) | TrackBack (0)

Resale Price Maintenance and the Rule of Reason

Posted by D. Daniel Sokol

Howard Marvel (Ohio State - Economics) discusses Resale Price Maintenance and the Rule of Reason.

ABSTRACT: A presumption that RPM is anticompetitive unless rebutted by a showing of efficiencies will not move the needle far from per se illegality, given the difficulties of conclusively proving efficiencies. In contrast, a default rule requiring proof of anticompetitive impact will also be tough to overcome, mostly because such anticompetitive outcomes appear to be rare. A rule between these polar defaults will be difficult to implement, as comparison periods with and without RPM are unlikely to be available. Indeed, when firms have agreed to drop RPM, the results for interbrand competition have ranged from troubling to disastrous. Without such comparisons, efficiency explanations for RPM run a significant risk of being dismissed as pretextual. If the problem of sorting uses of RPM according to their economic effects is tough, shortcuts can result in very inefficient outcomes. For example, we will see below that the states have continued to espouse an economically inappropriate price effects test.  At the end of this article, I provide suggestions for dealing with the transition period between illegality and the emergence of an agreed-upon rule of reason framework.

July 25, 2008 | Permalink | Comments (0) | TrackBack (0)

Sequential Versus Simultaneous Market Delineation: The Relevant Antitrust Market for Salmon

Posted by D. Daniel Sokol

Eating a bagel with lox and cream cheese this morning for breakfast, the following article had particular relevance - Sequential Versus Simultaneous Market Delineation: The Relevant Antitrust Market for Salmon by Niels Haldrup, University of Aarhus - Department of Economics; Peter Mollgaard, Copenhagen Business School - Department of Economics; University of Aarhus - Department of Management; and Claus Kastberg Nielsen, Copenhagen Economics.

ABSTRACT:  Delineation of the relevant market forms a pivotal part of most antitrust cases. The standard approach is sequential. First the product market is delineated, then the geographical market is defined. Demand and supply substitution in both the product dimension and the geographical dimension will normally be stronger than substitution in either dimension. By ignoring this, one might decide first to define products narrowly and then to define the geographical extent narrowly ignoring the possibility of a diagonal substitution. These reflections are important in the empirical delineation of product and geographical markets. Using a unique data set for prices of Norwegian and Scottish salmon, we propose a methodology for simultaneous market delineation and we demonstrate that compared to a sequential approach conclusions will be reversed.

July 25, 2008 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 24, 2008

The United States Department of Justice Antitrust Division's Cartel Enforcement: Appraisal and Proposals

Posted by D. Daniel Sokol

Jconnor John Connor of Purdue University's Applied Economics Department offers some important thoughts on DOJ's cartel enforcement program in his paper The United States Department of Justice Antitrust Division's Cartel Enforcement: Appraisal and Proposals.

ABSTRACT: This paper evaluates the effectiveness of the efforts of the Antitrust Division of the U.S. Department of Justice (hereafter "Division") to detect, indict, and deter horizontal collusion, and to offer suggestions for policy or procedural changes that are likely to improve that enforcement. It is unusual to read much negative criticism of federal cartel enforcement. Indeed, for decades the Division has largely been lionized for its aggressive campaign to rid the nation and the world of cartels.

Division leaders emphasize that collusion is the agency's number-one priority. Paradoxically, there is evidence that the number, size, and injuriousness of discovered cartels is increasing. This is particularly true for international cartels.

Since 1990, the number of cartel investigations has not risen appreciably. Moreover, the number of criminal Section 1 cases filed annually fell during 1990-2007. Even from 1995-99 to 2004-06 cartel cases filed fell by 49%. Moreover, the number of corporations charged annually averaged 68 in 1990-1994 and dropped continuously throughout 1995-2007. There now is a significant and growing backlog of criminal investigations and unresolved matters that may exceed the Division's ability to dispose of cases effectively.

Although the Division is bringing fewer Section 1 cases, the monetary penalties imposed on convicted price fixers have grown. The total amount of cartel fines imposed since FY1990 is approximately $4.2 billion, but damages recouped by private plaintiffs in the United States are roughly four times as large.

Division policy statements place great weight on the deterrence value of predictably high prison sentences for convicted cartel managers. Not only the frequency but also the severity of prison sentences has increased. These trends are positive in terms of cartel deterrence. However, the number of prison-days imposed per person is flat; the number of carve-outs of officers of guilty corporations is also flat.

There is no question that higher cartel penalties would be in the public interest, especially for international cartels. The Division should take several steps to expand potential fines that do not require new legislation. They include: filing more multiple counts, substituting the global affected sales of cartels members in place of U.S. sales when computing the base fine, applying the principle of joint and several liability to maximum fines, using the middle or upper end of the Guidelines' range as the standard starting demand in plea negotiations, applying strong culpability multipliers to recidivists, and requiring cartel fines to include pre-plea interest. Other improvements would require changes in the U.S. Sentencing Guidelines (USSGs). For example, the 10% overcharge assumption should be raised to at least 20 or 30%, with the latter applying to international conspiracies. To effectively deter cartels, a substantial increase in Division positions and budget is amply justified; perhaps at least a 50% increase in professional positions dedicated to cartel matters.

July 24 Update

Listen to Scott Hammond's (DOJ) comments on this paper.

July 24, 2008 | Permalink | Comments (0) | TrackBack (0)

The Viability Of Antitrust Price Squeeze Claims

Posted by D. Daniel Sokol

Herb Hovenkamp of the University of Iowa Law School and Erik N. Hovenkamp, University of Iowa - Department of Economics, B.S. Candidate 2009 (I am guessing this is Herb's son) have written on The Viability Of Antitrust Price Squeeze Claims.

ABSTRACT: At this writing the Supreme Court has granted certiorari in the Ninth Circuit's Linkline decision holding that the plaintiff stated a claim for an unlawful price squeeze. A price squeeze occurs when a vertically integrated firm "squeezes" a rival's margins between a high wholesale price for an essential input sold to the rival, and a low output price to consumers for whom the two firms compete. Here we examine the law and economics of the price squeeze, beginning with Judge Hand's famous discussion in the Alcoa case in 1945. While Alcoa has been widely portrayed as creating a "fairness" or "fair profit" test for unlawful price squeezes, Judge Hand actually adopted a cost-based test, although a somewhat different one than most courts and scholars would adopt today. We conclude that Brooke Group style predatory pricing tests are not appropriate to the concerns being raised in a price squeeze. We also consider several efficiency explanations, the importance of joint costs, situations in which the dominant firm uses a squeeze to appropriate the fixed cost portion of the rival's investment, as well as those where the shared input is a fixed rather than variable cost for the rival. Ultimately, we find little room for liability except in one circumstance where a squeeze is used to restrain the rival's vertical integration into the monopolized market.

July 24, 2008 | Permalink | Comments (0) | TrackBack (0)

India's New Competition Law: A Comparative Assessment

Posted by D. Daniel Sokol

Aditya Aditya Bhattacharjea of the University of Delhi - Delhi School of Economics has a forthcoming article on India's New Competition Law: A Comparative Assessment.

ABSTRACT: This paper critically examines India's new Competition Act. I begin by examining the working of its predecessor, the 1969 Monopolies and Restrictive Trade Practices Act. Earlier studies, as well as a survey of recent cases undertaken for this paper, show that most cases under that Act involved consumer complaints and contractual disputes unrelated to competition. Very few cartels were prosecuted, the development of a rule of reason for vertical agreements was hamstrung by the legislature, and merger review was terminated in 1991. Thereafter, judgments increasingly tried to enforce "fair" business conduct "in the public interest," often protecting competitors rather than competition. India thus has little relevant experience for the many technical economic criteria in the Competition Act. Although the new Act has several positive features, it is riddled with loopholes that might condone hard-core cartels, predatory pricing, and potentially anticompetitive cross-border mergers, while it also perpetuates the earlier tendency to penalize "unfair" behavior with no bearing on competition. I argue that several institutional limitations will also impair the Act's effectiveness and conclude with a plea for capacity building and phased implementation.

July 24, 2008 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 23, 2008

Agenda for Roundtable on 'FTC at 100: Into Our Second Century'

Posted by D. Daniel Sokol

The agenda for the very important Roundtable on 'FTC at 100: Into Our Second Century', which will be held on July 29-30, 2008 is now available.  These panels look great and the panelists are all top notch.  I commend the Commission for undertaking this critical self study and hope that we see some implementation of this self study.

According to the press release, "The sessions on July 29-30 will be composed of a series of panels designed to examine: 1) the FTC's Mission, Structure, and Resources, 2) the Deployment of Agency Resources in the Enforcement Area, 3) the Deployment of Agency Resources in the Policy Research and Development Areas, 4) the Agency's External Relationships, 5) Characteristics of a Successful Government Agency, 6) the Effectiveness of the FTC's Competition Mission, 7) the Effectiveness of the FTC's Consumer Protection Mission, and 8) How to Measure the Welfare Effects of the FTC's Competition and Consumer Protection Efforts."

July 23, 2008 | Permalink | Comments (0) | TrackBack (0)

The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger

Posted by D. Daniel Sokol

Joseph A. Clougherty, Wissenschaftszentrum Berlin (WZB) and Tomaso Duso, Humboldt University of Berlin - School of Business and Economics, Wissenschaftszentrum Berlin für Sozialforschung (WZB) discuss The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger in their latest working paper.

ABSTRACT:  It is commonly perceived that firms do not want to be outsiders to a merger between competitor firms. We instead argue that it is beneficial to be a non-merging rival firm to a large horizontal merger. Using a sample of mergers with expert-identification of relevant rivals and the event-study methodology, we find rivals generally experience positive abnormal returns at the merger announcement date. Further, we find that the stock reaction of rivals to merger events is not sensitive to merger waves; hence, 'future acquisition probability' does not drive the positive abnormal returns of rivals. We then build a conceptual framework that encompasses the impact of merger events on both merging and rival firms in order to provide a schematic to elicit more information on merger type.

July 23, 2008 | Permalink | Comments (0) | TrackBack (0)

Implementation of China's AML

Posted by D. Daniel Sokol

In something that should come as no surprise to readers of this blog, today's Wall Street Journal reports on problems with the implementation of the Chinese Anti-Monopoly Law.

July 23, 2008 | Permalink | Comments (0) | TrackBack (0)

The New Spanish Competition System

Posted by D. Daniel Sokol

Carlos Pascual Pons (Comisión Nacional de la Competencia) provides an overview of The New Spanish Competition System.

ABSTRACT: The new Spanish Competition Act, which was unanimously approved by the Spanish Parliament and came into force on the first of September 2007, introduces significant modifications to the system applied to date. This Act builds on the system designed by the 1989 Act, largely drawing on the experience gained at the Community and national level during the last two decades.

The reform stems from the need to face national and European legislation changes. At a national level, a number of complementary regulations had been enacted, such as the Act 1/2002, dated February 21, concerning the Coordination of the Competences of the State and the Regional Governments on antitrust matters. This Act was the result of a Constitutional Court Ruling, and sets an allocation scheme of responsibilities where no overlapping is allowed.

Moreover, over the last few years, a significant reform has taken place in the EU antitrust framework which has resulted in the new Council Regulation (EC) No. 139/2004, of January 20, 2004, on merger control and, above all, in the modernization of the fight against anticompetitive practices based on the Council Regulation (EC) No. 1/2003, of December 16, 2002, and on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty. The latter set up a new distribution of responsibilities among the European Commission, national authorities, and national courts (national judicial bodies). On the other hand, the modernization brings about a new legal exemption system that substitutes the former regime of individual authorizations.

In this context, the reform takes into account the evolution of the Spanish economy marked by a significant transformation of its market structure, from certain public monopolies to free competition, after a process of privatization, liberalization, and deregulation, in order to achieve a competitive environment. To achieve effective market competition, the role played over the last fifteen years by the competition authorities has been vital. This role has operated through a dual and complementary approach. On the one hand, a certain deterrent capability has been created either by sanctioning anticompetitive practices, mainly after parties’ complaints, or by hindering the appearance of anticompetitive market structures, through the blocking or conditioning of relevant concentrations. On the other hand, authorities had somehow pursued an offensive advocacy approach when it came to the design of the liberalization processes and the guarantee that these processes were correctly directed towards free competition.

July 23, 2008 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 22, 2008

Footloose Monopolies: Regulating a "National Champion"

Posted by D. Daniel Sokol

Giacomo Calzolari, University of Bologna - Department of Economics and Carlo Scarpa, University of Brescia have a new working paper on Footloose Monopolies: Regulating a "National Champion"

ABSTRACT: We analyze the design of optimal regulation of a domestic monopolist that also competes in an unregulated foreign market. We show how foreign activities by the regulated firm affect domestic regulation, consumers' surplus and firm's profits. Although expansion in unregulated foreign markets amplifies the regulatory distortions that are caused by the regulator's limited information, we also show that allowing the firm to compete abroad does not necessarily harm domestic consumers and we analyze if and when the firm's decision to expand abroad does in fact coincide with consumers' interests in the regulated market.

July 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Facilitating Practices and Concerted Action Under Section 1 of the Sherman Act

Posted by D. Daniel Sokol

Page_big Bill Page of the University of Florida Levin College of Law recently posted Facilitating Practices and Concerted Action Under Section 1 of the Sherman Act.

ABSTRACT: Successful collusion requires that rivals reach consensus on the key terms and deploy some means of detecting and penalizing cheaters, usually by tracking rivals' transaction prices. Economists have shown that firms in an oligopoly can, in certain conditions, achieve noncompetitive prices and outputs without an express agreement by making choices that anticipate each others' likely responses. "Facilitating practices" are mechanisms that enhance rival firms' ability to police such an arrangement. If firms expressly agree to adopt one of these facilitating practices, for example as a trade association rule, and the effect of the practice is to reduce competition, then that agreement may be independently illegal under Section 1 of the Sherman Act. Moreover, the Sherman Act may preempt a state law that requires rivals to use a facilitating practice. A more difficult question arises, however, where the firms each adopt the same facilitating practice without any express agreement: does parallel pricing together with parallel adoption of facilitating practices allow a court to infer the requisite agreement? Both Donald Turner and Richard Posner believed that, unlike simple parallel pricing, the parallel adoption of a facilitating practice that permits noncompetitive pricing should be unlawful, because the problem of remedy is mitigated.

But conduct is not evidence of an anticompetitive agreement simply because it can be enjoined. Facilitating practices may do more than simply facilitate rivals' efforts to achieve an inefficient oligopoly price. They also may provide certain immediate benefits to consumers by, among other things, reducing search or transaction costs. In these circumstances, the firms' adoption of the practice might well be for the benign reason rather than the collusive reason. Courts will not easily infer an agreement from the parallel adoption of facilitating practices where the practices have beneficial functions apart from facilitating price coordination.

Unfortunately, the stated legal definitions of agreement under which courts evaluate circumstantial evidence, including facilitating practices, are inadequate. In this article, I review the deficiencies of the present law governing the definition and proof of agreement under Section 1 and propose that the law should recognize that communication among rivals is necessary for concerted action. I then examine cases involving facilitating practices in a variety of Section 1 contexts, and suggest that the courts have come to recognize the importance of communications among rivals in evaluating whether the evidence warrants an inference of agreement.

July 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Slot-Based Approaches to Airport Congestion Management

Posted by D. Daniel Sokol

Image003 Jan K. Brueckner, University of California, Irvine - Department of Economics has a new paper on one of my pet issues, Slot-Based Approaches to Airport Congestion Management

ABSTRACT: This paper analyzes slot-based approaches to management of airport congestion, using a model where airlines are asymmetric and internalize airport congestion. Under these circumstances, optimal congestion tolls differ across carriers, and since a slot-sale regime (with its uniform slot price) cannot duplicate this pattern, the equilibrium it generates is inefficient. Flight volumes tend to be too low for large carriers and too high for small carriers. Under a slot-trading regime or a slot auction, however, the existence of a fixed number of slots causes carriers to treat total flight volume (and thus congestion) as fixed, and this difference can lead to an efficient outcome.

July 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Monday, July 21, 2008

Competition Bureau Publishes Enforcement Guidelines on Predatory Pricing

Posted by D. Daniel Sokol

According to its press release, "The [Canadian] Competition Bureau today published Enforcement Guidelines on Predatory Pricing. These guidelines describe the Bureau's enforcement approach to predatory pricing and will help ensure that Canadian businesses and the public understand when pricing below cost may result in an investigation under the Competition Act."

July 21, 2008 | Permalink | Comments (0) | TrackBack (0)

The Antitrust Standard for Unlawful Exclusionary Conduct

Posted by D. Daniel Sokol

Herberthovenkampphp Herb Hovenkamp of the University of Iowa Law School has written on The Antitrust Standard for Unlawful Exclusionary Conduct.

ABSTRACT: This essay considers the general definition of unlawful exclusionary practices under Section 2 of the Sherman Act as acts that: (1) are reasonably capable of creating, enlarging or prolonging monopoly power by impairing the opportunities of rivals; and (2) that either (2a) do not benefit consumers at all, or (2b) are unnecessary for the particular consumer benefits claimed for them, or (2c) produce harms disproportionate to any resulting benefits. An important purpose of this progression of queries is to permit the court to avoid balancing, although balancing certainly cannot be avoided in some close cases. The given definition is very general, in the sense that it does not provide precise tests for specific practices, such as improper patent infringement suits or predatory pricing. Numerous definitions of exclusionary conduct have been proposed that are more focused or more technical, and some of these may be more useful for analyzing specific exclusionary practices than the very general definition offered here. However, as this paper develops, these definitions are also incomplete, in the sense that they do not account for every type of exclusionary conduct that the law of monopolization should condemn. Proof of actual consumer harm is generally unnecessary to the definition, but the challenged conduct must be of a type that the anticipated end result is actual consumer harm. Of course, the private plaintiff must prove the requisite actual or threatened harm to itself. Most importantly, the given definition of monopolizing conduct is flexible and frees the court of doctrinal rigidity, but it requires an extremely careful determination that the defendant has substantial market power.

July 21, 2008 | Permalink | Comments (0) | TrackBack (0)

Impact of the Economic Politics in Agreement of Open Skies in Chile

Posted by D. Daniel Sokol

Marcelo Villena, University of Adolfo Ibanez - Economics, Rodrigo Harrison, Catholic University of Chile - Economics and Mauricio Villena, University of Adolfo Ibanez - Business School have posted a paper on the Impact of the Economic Politics in Agreement of Open Skies in Chile.

ABSTRACT:  In 1979, the "Ley de Aviaciýn Comercial" (Commercial Aviation Act) was passed in Chile. Its main goal was to improve the air transport by means of "Open Sky Policies", competence (freedom of prices) and a progressive lesser intervention of the official authority. Since then an international air policy is applied under the frame of "Open Skyes with Reciprocity". This article evaluates economically the impact of the Chilean liberalization policy in this market during the last years. Specifically, we evaluated the impacts of the Agreements on Open Skyes that Chile has reached with the most important countries in terms of air traffic. Besides that, a comparison is made with other countries in the region with lower levels of economic openness.

July 21, 2008 | Permalink | Comments (0) | TrackBack (0)

Merger Simulation in Competition Policy: A Survey

Posted by D. Daniel Sokol

Oliver Budzinski, University of Marburg - Faculty of Economics and Business Administration and Isabel Ruhmer, University of Mannheim - Center for Doctoral Studies in Economics and Management provide Merger Simulation in Competition Policy: A Survey.

ABSTRACT: Advances in competition economics as well as in computational and empirical methods have offered the scope for the employment of merger simulation models in merger control procedures during the past almost 15 years. Merger simulation is, nevertheless, still a very young and innovative instrument of antitrust and, therefore, its "technical" potential is far from being comprehensively exploited and teething problems in its practical use in the antitrust environment prevail. We provide a classification of state-of-the-art merger simulation models and review their previous employment in merger cases as well as the problems and limitations currently associated with their use in merger control. In summary, merger simulation models represent an important and valuable extension of the toolbox of merger policy. However, they do not qualify as a magic bullet and must be combined with other, more traditional instruments of competition policy in order to comprehensively unfold its beneficial effects.

July 21, 2008 | Permalink | Comments (0) | TrackBack (0)