Business Competition Law - Competition Law - Lecture Slides, Slides of Competition Law and Policy

Download Business Competition Law - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! ——— Business Competition Law BE Business Competition Law Hl yy ~~ a  Part 1: Introduction 2 Docsity.com 2. Private Law and Market Economy Ownership of resources Freedom of business Market system Competition Entitling an individual to be a right holder Institutionizing private property rights Freedom of contract Allocation of accident liability 5 Economic Conceptions Legal Conceptions Docsity.com 3. Public Law and Market Economy Market failure as a result of monopoly Market failure as a result of natural monopoly Issue 1 : Government provides “public goods” for the system Issue 2 : Government intervenes in the market to re-balance “market power” 6 Docsity.com Intervention Scheme by means of Public Law (Structure-Conduct-Performance or S-C-P Scheme) (Bain 1930) Basic conditions Market structure Public policy Conduct Performance 7 Demand Supply Material Technology Price elasticity of supply and substituted goods Number of buyers and sellers in the market Differences among goods Price conducts Marketing and advertising strategies Price control law (Regulation) Anti-trust law Productive efficiency Allocative efficiency Docsity.com Government’s Proper Interventions in the Economy 1) Basic interventions Country defense Public order Private property rights 2) Intermediate interventions 2.1 Externalities Basic education Environmental conservation 10 Docsity.com Government’s Proper Interventions in the Economy (cont.) 2.2 Monopoly Monopoly prevention Price control over infrastructures through Regulation 2.3 Asymmetric information Insurance Law concerning financial institutions 11 Docsity.com Government’s Proper Interventions in the Economy (cont.) 3) Advanced interventions Support private sector’s activities - Nurture and encourage the market - Promote clustering Public law and social goals - Environment e.g. environmental protection act - Safety e.g. food and drug acts - Justice e.g. labor protection act 12 Docsity.com a. Perfect Competition Market • Many sellers in the market • Homogeneous, and thus substitutable, products • Free entry and exit • Price taker firm – with little influence over the price • Price level – market price 15 Docsity.com Demand Curve O P Q D 16 Docsity.com Law of Demand P Q P Q Price Effect = Income Effect + Substitution Effect 17 Docsity.com Consumer’s Surplus O P Q A M B C D 20 Docsity.com b. Oligopolistic market (or Monopsony) • Few sellers • Homogeneous products • Restricted entry • Seller has little power over the market • Low price 21 Docsity.com c. Monopolistic Competition Market • Many sellers – in the long run • Heterogeneous, and still substitutable, products • Seller has little power over the market • Price steadily decreases 22 Docsity.com 3. Market Power a. Relevant Market - product market - geographical market b. “Tools” to identify “relevant market” - SSNIP Test (Small but Significant Non- Transitory Increase of Price) - HMT (Hypothetical Monopoly Test) 25 Docsity.com 4. The Purpose of Market Power Abuse - To exploit the consumers (exploitative conducts) - To exclude the rivals (exclusionary conducts.) 26 Docsity.com 5. Control of monopoly (A) Control over structure (B) Control over conduct (C) Control over performance See ‘S-C-P’ Scheme 6. Legal doctrines (A) The Per Se Rule (B) The Rule of Reason 27 Docsity.com (B) Resale price maintenance US. v. Parke Davis & Co. (1960) Meiji Shoji (1975) Shiseido (1998) (C) Vertical market division Fuji X-ray Film (1982) Continental T.V. v. GTE Sylvania (1977) 30 Docsity.com (D) Tying arrangement IBM v. US. (1936) International Salt Co. v. US. (1947) US. v. Microsoft (2001) Jefferson Parish Hospital District No. 2 v. Hyde (1984) Eastman Kodak v. Image Technical Services (1992) Toshiba Elevator Technos k.k. v. Kousei Denki Yugengaisha (1993) (E) Exclusive dealing Standard Fashion Co. v. Magrane Houston Co. (1922) (F) Price discrimination Utah Pie v. Continental Banking Hokkoku Newspaper Press v. JFTC 31 Docsity.com 8. Merger and acquisition Permanent price-fixing cartel (A) Vertical MKA (B) Horizontal MKA (C) Conglomerates MKA 9. Structure control United States v. Standard Oil (1911) United States v. AT&T (1982) United States v. Microsoft (1998) 32 Docsity.com 1. The Economic Development in Thailand 1958 Economic Development Plan (Industrialization began ?) Why industrialization ? 35 Docsity.com 2. Why Thailand enacted the Competition Act of B.E. 2542 (1997)? - The Price Control Act of B.E. 2480 (1937) - The price Control Act of B.E. 2517 (1974) (second) - The Price Control and Anti-monopoly Act of B.E. 2522 (1979) - Anand Panyarachun Administration established the Working Group in 1992 - The Business Competition Act of B.E. 2542 - The Price Control on Goods and Services Act of B.E. 2542 36 Docsity.com 3. The 1997 (B.E. 2540) Constitution and the enactment of the Competition Act - Financial crisis and the International Monetary Fund (IMF)’s conditionality - Section 87 of the Constitution 37 Docsity.com 6. Which country’s competition law that The Thai Competition Act was modeled after? - South Korea. Why? 40 Docsity.com 7. Business conducts prohibited by the Thai Competition Act 7.1 Horizontal restrictive conducts A. Cartel Section 27 (1) – (4) (1) selling price cartel (2) buying price cartel (3) market domination or control (intend to) (4) bid-rigging 41 Docsity.com - United States v. joint Traffic Association (1898) - The wheat flour price fixing case (2000-2006) (South Korea) - The powdered detergent and dishwashing liquid price fixing case (2006) (South Korea) - The pest control companies case in Singapore (2007) - The UBC case (Thai) 42 Docsity.com - United States v. Topco Associates (1972) - Continental T.V. v. GTE Sylvania (1977) - National Society of Professional Engineer v. United States (1978) - Broadcast Music v. Columbia Broadcasting System (1979) - Arizona v. Maricopa Country Medical Society (1982) 45 Docsity.com 7.2 Vertical Restrictive Conducts A. Abuse of dominant position (European) (monopolization or attempt to monopolize) (American) Requirement(s) (1) Status (a) >50% + > 1 billion Baht turn over of the previous year or (b) CR 3 > 75% Exception <10% market share or <1 billion Baht turn over (2) Abuse (vertical restrictive conducts) (Unilateral conducts) 46 Docsity.com Section 25 Abuse of dominant position (1) Unreasonably fixing or maintaining purchasing or selling prices of goods or fees for services; (2) Unreasonably fixing compulsory conditions e.g. RPM, price discriminatory, exclusive dealing and tie-in (3) Suspending, reducing or restricting services, production, purchase, distribution (4) Intervening in the operation of business of other persons without justifiable reasons 47 Docsity.com Thai cases (investigated dropped) 1. Movie theater business (the price was too high) 2. Drinking straw (the price was too low) (The Brook Groups 1993) (American) 3. Eggs (the price was too low) 4. Chicken cuts (the price was too low) 50 Docsity.com B. Restrictive conducts done by non-dominant business operator (Section 5 of the FTC Law ?) - What is a non-dominant business operator ? Section 29 “ A business operator shall not carry out any act which is not free and fair competition and has the effect of destroying, impairing, obstructing, impeding or restricting business operation of other business operators or preventing other persons from carrying out business or causing their cessation of business.” 51 Docsity.com Section 29 Unfair trade practices United States v. Park, Davis & Co. (1960) Shiseido (1995) 52 (1)Retail price fixing (2)Market division Intra-brand competition (3)Exclusive dealing (4)Tie-in Inter-brand competition Docsity.com Issue(s) 1. parallel import ? (Japan is a good example?) (trademark vs. patent) 2. substantive provision relating to business competition or consumer protection ? Case The Abbott Laboratories case (2007) (HIV/AIDs block-buster drug) 55 Docsity.com 8. Merger and Acquisition Section 26 “ A business operator shall not carry out a business merger which may result in monopoly or unfair competition as prescribed and published in the Government Gazette by the Commission unless the Commission’s permission is obtained… The merger of business under paragraph one shall include: (1) a merger made by a producer with another producer,…which has the effect of maintaining the status of one business and terminating the status of the other business or creating a new business; 56 Docsity.com (2) a purchase of the whole or part of assets of another business with a view to controlling business administration policies, administration and management; (3) a purchase of the whole or part of shares of another business with a view to controlling business administration policies, administration and management… 57 Docsity.com (2) Ways to do M&A in Thailand ? a. Merger, Amalgamation (Consolidation) (Thai CCC) A+B = B A+B = A A+B = C b. Asset Acquisition c. Stock (Share) Acquisition Central Department Store + Robinson Department Store. Major + EGV. 60 New share New share Docsity.com (3) Is “holding company” allowed to be established under the Thai laws ? (4) How many percents of the total share(s) of a company that a commercial bank or a trading company can hold under the Thai laws ? (5) How about inter-locking directors ? Thai cases 1. Siam Pulp (paper pulp business) 2. UBC (subscription TV.) 3. Major + EGV (movie theater business) 61 Docsity.com 9. The relationship between the Thai Competition Act and the Intellectual Property Protection Laws 9.1 Why there are problems ? IPR Protections Laws vs. Competition Law ? Japan Article 21 Pachinko Machine Patent Pool (1998) Yakult (1965) Microsoft (2006) 62 Docsity.com Part 4: Assessment of the past experience (1997 – 2010) 65 Docsity.com 1. Substantive provision(s) 1.1 Section 29 Should “tend to impede competition” be added to Section 29 ? 1.2 Should Section 21 of the Japanese Anti-Monopoly Act be added to the Competition Act? 1.3 Should “Guidelines on Unfair Trade Practices” be issued ? 66 Docsity.com The General Designation released by the FTC in 1982 Article 1 (Concerted Refusal to Deal) Article 2 (Other Refusal to Deal) Article 3 (Discriminatory Pricing) Article 4 (Discriminatory Treatment on Transaction Terms, etc.) Article 5 (Discriminatory Treatment in Trade Association, etc.) 67 Docsity.com Article 14 (Abuse of Dominant Bargaining Position) Mitsukoshi case Article 15 (Interference with a Competitor’s Transaction) Article 16 (Interference with Internal Operation of a competing company) 70 Docsity.com 2. Sanctions 2.1 Should Administrative fine be added to Section 25 of the Competition Act ? 2.2 Should “warning” be clearly specified in Section 31 ? 2.3 There should be no imprisonment for Section 26 (M&A) violation ? 71 Docsity.com 3. Enforcement Agency 3.1 Is independent enforcement agency needed ? (we should learn from South Korea). 3.2 Who should be “the Chairman of the Competition Commission” ? 3.3 Who should sit in the Competition Commission ? 3.4 Should all members of the Commission work “full time” ? 3.5 Should all decisions be required to give reasoning in detail and posed on the Competition Commission's website ? 72 Docsity.com