Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, May 28, 2012

REPUTATIONAL PENALTIES TO FIRMS IN ANTITRUST INVESTIGATIONS

Posted by D. Daniel Sokol

Stijn van den Broek,; Ron G.M. Kemp,; Willem F.C. Verschoor,; and Anne-Claire de Vries (NMA) report on REPUTATIONAL PENALTIES TO FIRMS IN ANTITRUST INVESTIGATIONS.

ABSTRACT: We estimate the impact of legal penalties imposed on Dutch listed firms targeted by competition authorities from 1998 to 2008 on a firm's stock market value. On average, firms lose 2.3 percent of their market values when an antitrust investigation is uncovered. This corresponds to a total value loss of €4.3 billion. Overall, the fines imposed by the legal system contribute to only 12 percent of this total value loss. Another 55 percent of the total value loss is explained by the lost conspiracy-generated profits. We find that the residual 33 percent of the total value loss is explained by reputation loss. Thus, cartel offenders are disciplined largely through market-induced reputational penalties, not through legal penalties.

May 28, 2012 | Permalink | Comments (0) | TrackBack (0)

VERTICAL THEORY OF HARM IN A HORIZONTAL MERGER: THE FRIESLAND FOODS/CAMPINA CASE

Posted by D. Daniel Sokol

Jurjen J.A. Kamphorst (Department of Economics, Erasmus School of Economics and Tinbergen Institute) and Vitaly Pruzhansky analyze VERTICAL THEORY OF HARM IN A HORIZONTAL MERGER: THE FRIESLAND FOODS/CAMPINA CASE.

ABSTRACT: In December 2008, the European Commission (EC) cleared the proposed merger between the two largest dairy cooperatives in the Netherlands. The transaction raised several interesting economic issues that were hotly debated during the EC investigation. In this article, we review the EC's proposed theory of harm relating to the impact of the merger on the market for raw milk in the Netherlands and the ability of the parties' competitors to source raw milk (a critical input) post-merger. We show that the EC's theory is unlikely to be supported by economic theory and facts of the market.

May 28, 2012 | Permalink | Comments (0) | TrackBack (0)

The Role of the Hearing Officer in Competition Proceedings Before the European Commission

Posted by D. Daniel Sokol

Wouter P. J. Wils - King's College London - School of Law; European Commission explores The Role of the Hearing Officer in Competition Proceedings Before the European Commission.

ABSTRACT: This paper deals with the role of the Hearing Officer in competition proceedings conducted by the European Commission for the enforcement of Articles 101 and 102 TFEU (antitrust proceedings) and under the EU Merger Regulation (merger proceedings). After a brief discussion of the status of the Hearing Officer, the paper examines the various powers and tasks of the Hearing Officer (other than the organisation and conduct of the oral hearing, which is discussed in a parallel paper 'The Oral Hearing in Competition Proceedings before the European Commission', also forthcoming in World Competition, Vol. 35, No. 3, September 2012 and accessible at http://ssrn.com/author=456087).

May 28, 2012 | Permalink | Comments (0) | TrackBack (0)