Vertical mergers are not necessarily competition law friendly

The vertical integration of producers of complementary products or services results in no loss of direct competition as they operate at different levels of the supply chain. On the one hand, vertical mergers are likely to produce efficiency gains because they give rise to a direct incentive to reduce prices and/or improve quality. On theContinue reading “Vertical mergers are not necessarily competition law friendly”

Is economics helpful when it comes to cartels?

Economics implies that cartels are inherently unstable and so should be short-lived because they price above the Nash equilibrium. However, the evidence is cartels are often long-lived. When players interact for an infinite number of times, as do firms in real markets, they can escape the short-run Nash equilibrium of the Prisoner Dilemma. In theContinue reading “Is economics helpful when it comes to cartels?”

When the market definition/market share approach does not work to assess market power

Traditionally, competition authorities start their assessment by identifying the competitive scene, i.e. the relevant market, which includes the firm’s product and potential substitutes. They then calculate market shares to decide whether the firm(s) under scrutiny has enough market power to benefit from the adoption of an anticompetitive strategy.  However, when market shares are not aContinue reading “When the market definition/market share approach does not work to assess market power”

Economics and Competition Law

“Economics is the study of how society decides what, how and for whom to produce.” Begg, Fischer and Dornbusch “A lawyer who has not studied economics…is very apt to become a public enemy.“ Justice Brandeis (1916) “To abandon economic theory is to abandon the possibility of rational antitrust law.“ Judge Robert Bork (1978)   ItContinue reading “Economics and Competition Law”