Download Competition Law and Policy: Understanding Dominance and Abuse and more Slides Competition Law and Policy in PDF only on Docsity! Law and Economics Competition Policy and Law Docsity.com 1. Main topics (1) Why do we have: – competition law, and – competition policy? (2) What is “abuse of dominance”? Docsity.com 4. Competition Policy What is competition policy? (1) Making markets work better. (2) Efficiency. (3) Fairness. (4) Broad definition includes many public policies. Docsity.com 5. Advantages of Competition Law (1) Applies broadly – less distorting. (2) Reduces scope for corruption. (3) Problem of international cartels – countries without competition law targeted more. (4) Provides a focus for: − pro-competition measures, − privatisation, − regulated sectors. Docsity.com 6. Competition and… International trade. Intellectual property rights (IPRs). Regulation (of partly regulated utilities). Business hours. Public procurement (öffentliches Vergabe-/ Beschaffungswesen). Concessions. Docsity.com 9. What is prohibited? (1) Competition law prohibits the deliberate exploitation of a dominant market position by a firm. (2) Generally any agreement, arrangement or understanding between enterprises that has the effect of substantially lessening or limiting access to market is prohibited by Competition law. (3) This prohibition applies not only to written agreements but also to oral and informal agreements. Docsity.com Price Quantity Demand Supply Figure 1: Supply & Demand with Market Power Docsity.com Retailer Brand owner ("manufacturer") Retailer Retailer Price Territory Customer Other brands Figure 2: Vertical restraints (hidden action, hidden knowledge) Docsity.com 11.1. European Union (General information EU: http://europa.eu/pol/comp/index_de.htm ) European Union Article 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.” Docsity.com 11.1. European Union (cont.) “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 11.1. European Union (cont.) Dominance: Dominance is 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 (objectively and spatially) is essential. Docsity.com 11.2. USA (General information USA: http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm ) Three core federal antitrust laws: (1) Sherman Act (1890). (2) Federal Trade Commission Act (1914). (3) Clayton Act (1914). Docsity.com 11.2. USA (cont.) US Sherman Act Section 2: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony…” Docsity.com 11.2. USA (cont.) The antitrust laws proscribe unlawful mergers and business practices in general terms, leaving courts to decide which ones are illegal based on the facts of each case. A common law system, so law is court decisions. Good reference: Antitrust Law Developments (American Bar Association). Docsity.com
