Antitrust & Competition Policy Blog

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

Monday, July 6, 2009

Firm Entry, Product Repositioning and Welfare

Posted by D. Daniel Sokol

Eleftherios Zacharias (Athens University of Economics and Business), examines Firm Entry, Product Repositioning and Welfare.

ABSTRACT: We show that the entry of a second firm in a horizontally differentiated market (ala Hotelling) may harm consumers as prices increase and consumer's surplus possibly decrease. We first derive the price and the consumer's surplus of a monopoly which is located at the center of the market. When a second firm enters the market the first firm repositions and the two firms locate at their equilibrium points. Although competition adds to variety and increases consumer's surplus, the post entry increase in price may outweight the gains from extra variety and make consumers worse off.

July 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Materials from CC/OFT Seminar on consultation draft of joint merger assessment guidelines now available

Posted by D. Daniel Sokol

From the CC website:

The OFT and CC organized a seminar to present and discuss the consultation draft of the joint merger assessment guidelines at the CC offices on 1 June 2009. Some 60 people attended, including representatives of legal firms and economic consultancies, academics and others with a professional interest in competition issues.

The CC Chairman, Peter Freeman, presiding over the meeting, outlined the three reasons why the CC and OFT had worked together to produce joint guidelines: to pool and share lessons learned in applying separate guidelines since 2003; to contribute to transparency and understanding; and to help reduce the burden on business by making the UK system of merger control work efficiently and effectively. He noted that the changes in the guidelines had been essentially evolutionary, although there had been significant developments in the definition of a merger, and during the period since 2003 the public interest regime had been seen in operation for the first time.

Amelia Fletcher (Chief Economist and Senior Director of Mergers, OFT) gave an overview of the changes in SLC methodology, highlighting the areas of market definition, coordinated effects, non-horizontal mergers and efficiencies.

Morven Hadden (Legal Director, CC) and Nicholas Scola (Assistant Director – Legal, OFT) gave a presentation on the coverage of the counterfactual in the guidelines.

Robin Finer (Director of Economic Analysis, CC) and Nicola Mazzarotto (Head of Policy Analysis, CC) spoke on market definition. Together with Chris Bowden (Legal Adviser, CC), Nicola Mazzarotto also gave the presentation on coordinated effects.

Chris Walters (Assistant Director of Mergers, OFT) spoke about unilateral effects and non-horizontal mergers

The powerpoint slides from the presentations and a full transcript of the seminar can be accessed below.

Presentation slides:

Main changes in SLC methodology (pdf, 95kb)

The counterfactual (pdf, 46kb)

Market definition (pdf, 87kb)

Unilateral effects (pdf, 48kb)

Coordinated effects (pdf, 46kb)

Non-horizontal mergers (pdf, 99kb)


July 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Did the European Union's Market Dominance Policy Have a Gap? Evidence from Enforcement in the United States

Posted by D. Daniel Sokol

Malcolm B. Coate, U.S. Federal Trade Commission (FTC) asks Did the European Union's Market Dominance Policy Have a Gap? Evidence from Enforcement in the United States.

ABSTRACT: The European Union (EU) and the United States (US) enforce the world's two best known merger policies. The EU addresses transactions that are likely to impede effective competition, historically, with some type of dominance analysis, while the US focuses on mergers that are likely to substantially lessen competition, using either a unilateral effects or coordinated interaction (collusion) analyses. Although EU regulators identified a gap in their policy relative to the US regime, it is unclear if the gap is material. This paper uses simulation analysis and a review of a sample of US merger analyses to show the EU gap is relatively small and limited to collusion analysis. Policy differences, due to regime-specific enforcement standards, remain possible, because the gap only alleged a difference in safe harbor policies.

July 6, 2009 | Permalink | Comments (0) | TrackBack (0)

An Examination of the Market Structure of the U.S. Produce Industry

Posted by D. Daniel Sokol

James E. Epperson (Georgia - Agricultural and Applied Economics) offers An Examination of the Market Structure of the U.S. Produce Industry.

ABSTRACT: Recent literature, largely from the U.S. Department of Agriculture, Economic Research Service, indicates that substantial changes have occurred in the produce industry in recent years. With the rise of retail mass merchandisers and increased concentration in the retail food industry, the procurement power of these large firms reportedly has also increased. With direct buying and contracting, market intermediaries such as brokers and wholesalers allegedly are being bypassed. As a result, these market intermediaries ostensibly are also consolidating becoming fewer and larger with increased emphasis on servicing the food service industry. However, the findings of this study indicate that there is no convincing evidence that the market structure of the U.S. produce industry has markedly changed since the early 1980s. While supermarket concentration has increased noticeably, the same cannot be said for produce market intermed! iaries such as brokers and wholesalers.

July 6, 2009 | Permalink | Comments (0) | TrackBack (0)