Definition of the relevant market : (lack of) harmony between industrial economics and competition law / Hila Nevo.
2015
KJE6456 .N485 2015 (Map It)
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Details
Author
Title
Definition of the relevant market : (lack of) harmony between industrial economics and competition law / Hila Nevo.
Published
Cambridge ; Antwerp ; Portland : Intersentia, [2015]
Copyright
©2015
Call Number
KJE6456 .N485 2015
ISBN
9781780681375 (paperback)
1780681372 (paperback)
1780681372 (paperback)
Description
xi, 277 pages : illustrations ; 24 cm.
System Control No.
(OCoLC)897734278
Summary
"Market definition plays a critical role in EC competition law, as the first step of any investigation into the nature of competition in a given industry. While not an end in itself, definition of the relevant market serves to identify those products and areas which effectively restrain the behaviour of the firms of interest, such that those firms cannot act independently within the market. However, the main challenge in this process is to outline which products should be included within the market, and which should be left outside its bounds. Whereas traditional market definitions highlight product characteristics, functionality and intended use as key provisions, modern competition-law inquiries attempt to reformulate the market delineation exercise in more economic terms. This book strives for a greater harmony between law and economics in defining antitrust markets"--Back cover.
Bibliography, etc. Note
Includes bibliographical references (pages 263-277).
Record Appears in
Table of Contents
List of Tables and Figures
xi
ch. 1
Introduction
1
1.1.
The Increasing Role of Economics in EU Competition Policy
1
1.2.
The Economics of Market Definition
10
1.3.
Structure of the Book
14
ch. 2
Market Power
19
2.1.
Introduction
19
2.2.
Economic Foundations of Competition Law Analysis
23
2.2.1.
Perfect Competition
23
2.2.2.
Monopoly
26
2.2.3.
Competition in the Real World
28
2.3.
The Assessment of Market Power
30
2.3.1.
The Exercise of Market Power Leads to Lower Output
32
2.3.2.
The Increase in Price Leads to an Increase in Profitability
32
2.3.3.
Market Power is Exercised Relative to the Outcome under Perfect Competition
39
2.4.
Indicators of Market Power
40
2.4.1.
The Persistent Structure-Conduct-Performance Paradigm
41
2.4.2.
Ascendancy of the Structural Analysis
44
ch. 3
Market Definition
53
3.1.
Introduction
53
3.2.
What Qualifies for an Antitrust Market? The Concept of a Market in Economic and Legal Practice
57
3.2.1.
Antitrust Markets versus Economic and Strategic Markets
57
3.2.2.
The Emergence of the Relevant Market Definition Methodology
60
3.3.
Antitrust Market Delineation in the EC - Theory and Practice
69
3.3.1.
Introduction
69
3.3.2.
The Commission's Notice on the Definition of the Relevant Market
71
3.3.2.1.
A Preliminary Comment on the Legal Status of the Notice
71
3.3.2.2.
Principles of Market Definition - The Notice's Theoretical Framework
72
3.3.2.3.
The Notice's Pitfalls
77
3.3.3.
Potential Difficulties in the Application of the SSNIP Test
80
3.3.3.1.
The Application of the SSNIP Test to Monopolisation Cases: The Cellophane Fallacy
80
3.3.3.2.
Market Definition in High-Technology Markets
85
ch. 4
Quantitative Techniques
91
4.1.
Introduction
91
4.2.
Shock Analysis
92
4.2.1.
Implementing Shock Analysis
93
4.2.1.1.
Kimberly-Clark/Scott
93
4.2.1.2.
Procter & Gamble/VP Schickedanz
94
4.3.
Similarity of Price Level
94
4.3.1.
Employing Price Differences in Competition Law Analysis
96
4.4.
Price Correlation Analysis
97
4.4.1.
Shortcomings of Price Correlation Analysis
98
4.4.1.1.
Causality
98
4.4.1.2.
Supply Responses of Competing Firms
99
4.4.1.3.
Spurious Correlation
100
4.4.1.4.
Delayed Response
101
4.4.1.5.
Benchmarking
102
4.4.2.
Employing Price Correlations in Competition Law Analysis
103
4.5.
Granger Causality Test and Cointegration Analysis
105
4.5.1.
The Use of Granger Causality and Cointegration Analysis in Competition Law Analysis
107
4.6.
Trade Flows
110
4.6.1.
Elzinga-Hogarty Test
111
4.6.2.
Shortcomings of the Elzinga-Hogarty Test
112
4.6.2.1.
Determination of the LIFO and LOFI Thresholds
112
4.6.2.2.
Interpretation of the Results
112
4.6.3.
Transport Cost Tests
114
4.6.4.
The Use of Shipment Tests in Competition Law Analysis
115
4.6.4.1.
Nestle/Perrier
115
4.6.4.2.
Saint-Gobain/Wacker-Chemie/NOM
116
4.6.4.3.
Barloworld Coatings/Midas Paints
117
4.7.
Demand Analysis
118
4.7.1.
The Choice of Demand Model
119
4.7.2.
The Identification Problem
122
4.7.3.
The Importance of Price Elasticities in Competition Law Analysis
124
4.7.3.1.
Own-Price Elasticity of Demand
124
4.7.3.2.
Critical Elasticity
127
4.7.3.3.
Cross-Price Elasticity of Demand
130
4.7.3.3.1.
Potential Pitfalls in the Application of Cross-Price Elasticity
130
4.7.3.4.
Additional Subtleties in the Application of Demand Elasticities
132
4.7.3.4.1.
The Appropriate Time Interval for Measuring Demand Elasticities
132
4.7.3.4.2.
Problems with Measuring Price-Cost Margins
133
4.7.3.4.3.
The Reverse Cellophane Fallacy
134
4.7.3.4.4.
Further Adjustments to the Analysis
134
4.7.4.
The Use of Demand Elasticities in Competition Law Analysis
135
4.7.4.1.
Kimberly-Clark/Scott
135
4.7.4.2.
Procter & Gamble/VP Schickedanz
137
4.7.4.3.
Bumble Bee/Connor Brands
138
4.8.
Critical Loss Analysis
139
4.8.1.
Calculating the Critical Loss
141
4.8.2.
Estimating the Price-Cost Margin
142
4.8.3.
Estimating the Actual Sales Loss
143
4.8.4.
Focusing Critical Loss: Advantages versus Potential Pitfalls
144
4.8.5.
The Use of Critical Loss in Competition Law Analysis
146
4.8.5.1.
FTC v. Tenet Healthcare
146
4.8.5.2.
SunGard/Comdisco
147
4.8.5.3.
Wild Oats/Whole Foods
149
4.8.5.4.
Critical Loss in the EU
151
4.9.
Diversion Ratios
154
4.9.1.
Potential Pitfalls in the Application of Diversion Ratios
156
4.9.2.
The Application of Diversion Ratios in Competition Law Analysis
158
4.9.2.1.
Vail Ski/Ralston Resorts
158
4.10.
Price Concentration Analysis
160
4.10.1.
Analytical Issues of Implementation
163
4.10.2.
Price-Concentration Analysis and Market Definition
164
4.10.3.
Implementing Price Concentrations in Competition Law Analysis
165
4.10.3.1.
Staples/Office Depot
165
4.10.3.2.
Praxair/Liquid Carbonic Corporation
166
4.11.
Bidding Studies
166
4.11.1.
Bidding Studies and Market Power Analysis
168
4.11.2.
The Application of Bidding Studies in Competition Law Analysis
170
4.11.2.1.
Philips/Agilent
170
4.11.2.2.
General Electric/Instrumentarium
171
4.12.
A Simulation Approach to Mergers
173
4.12.1.
Technicalities of Merger Simulation
176
4.12.2.
Implementing Merger Simulation in Competition Law Analysis
180
4.12.2.1.
Volvo/Scania
180
ch. 5
Cases
185
5.1.
Introduction
185
5.2.
United Brands
188
5.2.1.
Facts and Judgement
188
5.2.2.
Assessment of the Court Decision
191
5.3.
Nestle/Perrier
194
5.3.1.
Facts and Judgement
194
5.3.1.1.
Demand Considerations
195
5.3.1.2.
Supply Considerations
197
5.3.2.
Assessment of the Commission Decision
199
5.4.
Procter & Gamble/VP Schickedanz (II)
204
5.4.1.
Facts and Judgement
204
5.4.2.
Assessment of the Commission Decision
206
5.5.
Kimberly-Clark/Scott
211
5.5.1.
Facts and Judgement
211
5.5.2.
Assessment of the Commission Decision
213
5.6.
Carnival Corporation/P&O Princess
218
5.6.1.
Facts and Judgement
218
5.6.2.
Assessment of the Commission Decision
222
5.7.
Blackstone/Acetex
230
5.7.1.
Facts and Judgement
230
5.7.2.
Assessment of the Commission Decision
231
ch. 6
Conclusions
237
6.1.
A General Overview
237
6.2.
Is the European Commission's Practice Sufficiently Guided by Sound Economic Theory?
243
6.3.
Do Decisions in Real-Life Cases under European Competition Law Utilise all Relevant Empirical Measures?
248
6.4.
An Outlook into the Future of Market Definition
255
References
263