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

Download Competition Policy - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! Competition Policy and Law Docsity.com 2 Main topics • What do Competition Authorities do? • What is Abuse of Dominance? • A Case Study Docsity.com 5 Decisions by competition authorities • Criteria based on objectives • "Independent" - decisions in individual cases are not indicated by politicians • But - always policy direction set by politicians • Some systems have appeal of individual decisions to politicians • Independent 2 - "All" systems have appeal of individual decisions to courts • Limited by ability to get and analyze facts Docsity.com 6 Economics Review (Competition law is composed of economics concepts adjusted to be administrable) • Markets • Market power • Substantial & durable market power • Barriers to entry & barriers to expansion • Coordination & collusion • Principal - agent problems (hidden action, hidden knowledge) Docsity.com 7 Diagram 1: Supply Curve Price Quantity Supply Docsity.com 10 Diagram 4: Supply & Demand with Market Power Price Quantity Demand Supply Docsity.com 11 Diagram 5: Vertical restraints (hidden action, hidden knowledge) Retailer Brand owner ("manufacturer") Retailer Retailer Price Territory Customer Other brands Docsity.com 12 Main topics • What do Competition Authorities do? • What is Abuse of Dominance? • A Case Study Docsity.com 15 Russian Federation • Federal Law № 135-FZ of July 26, 2006 «On Protection of Competition» • Article 5 defines dominant position • One or more economic entities can "have a decisive impact on the general conditions" of the market, or can exclude or prevent the entry of other economic entities onto the market. • Market share presumptions • Article 10 defines and prohibits abuses of dominance Docsity.com 16 Russia – Dominance • Presumed dominant if market share > 50% (but rebuttable) • Presumed not dominant if market share < 50% (but FAS can show dominance using stability of market shares, barriers to entry, or other characteristics specific to the commodity market) • Cannot be found dominant if market share < 35% (with exceptions related to financial firms and collective dominance). Docsity.com 17 Russia - Abuses • Actions or inaction of an economic entity occupying a dominant position, which result or can result in prevention, restriction or elimination of competition and (or) infringement of the interests of other persons are prohibited, including: – establish and maintain a monopolistically high or monopolistically low price for a commodity {COMMENT: " monopolistically low price" is defined in Art. 7 and seems to be intended to be an analog to "predatory pricing," but is much broader than usual} – withdrawal of a commodity from circulation, if it causes price to rise Docsity.com 20 European Union Art. 82 "Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts." Docsity.com 21 EU • Dominance not defined in Treaty, but in case law. • Dominance must be in reference to a market. • Market share is the most important indicator but not determinative. • Therefore market definition is essential. Docsity.com 22 EU • Market shares: 0% 100% Dominant Unlikely dominant 30% 50–70% Docsity.com 25 US • A common law system, so law is court decisions. Good reference: American Bar Association, Antitrust Law Developments. • “Monopolization” ≠ “abuse of dominance" – Monopolization requires more market power than dominance requires. – The conduct focus is on exclusion. Exploitation is not illegal. Docsity.com 26 US • Market share is a starting point for determining if monopoly power >70% almost always supports inference, but rebuttable <50% almost never find monopoly • Other evidence is very important – Barriers to entry - most important – Barriers to rivals' expansion - also important Docsity.com 27 US standard on exclusive dealing agreements: • The concern is that it may be an improper means of maintaining a monopoly. 1. Must have monopoly power. 2. The exclusionary conduct must have an anti- competitive effect. 3. Even if both conditions are met, then the monopolist still retains a defense of business justification. Docsity.com