Practice Competition law

1 practice

1.1 collusion , cartels
1.2 dominance , monopoly
1.3 mergers , acquisitions
1.4 intellectual property, innovation , competition

practice
collusion , cartels


scottish enlightenment philosopher adam smith enemy of cartels.


dominance , monopoly


the economist s depiction of deadweight loss efficiency monopolies cause

when firms hold large market shares, consumers risk paying higher prices , getting lower quality products compared competitive markets. however, existence of high market share not mean consumers paying excessive prices since threat of new entrants market can restrain high-market-share firm s price increases. competition law not make merely having monopoly illegal, rather abusing power monopoly may confer, instance through exclusionary practices.

first necessary determine whether firm dominant, or whether behaves appreciable extent independently of competitors, customers , of consumer. under eu law, large market shares raise presumption firm dominant, may rebuttable. if firm has dominant position, there special responsibility not allow conduct impair competition on common market. collusive conduct, market shares determined reference particular market in firm , product in question sold. although lists seldom closed, categories of abusive conduct prohibited under country s legislation. instance, limiting production @ shipping port refusing raise expenditure , update technology abusive. tying 1 product sale of can considered abuse too, being restrictive of consumer choice , depriving competitors of outlets. alleged case in microsoft v. commission leading eventual fine of million including windows media player microsoft windows platform. refusal supply facility essential businesses attempting compete use can constitute abuse. 1 example in case involving medical company named commercial solvents. when set own rival in tuberculosis drugs market, commercial solvents forced continue supplying company named zoja raw materials drug. zoja market competitor, without court forcing supply, competition have been eliminated.

forms of abuse relating directly pricing include price exploitation. difficult prove @ point dominant firm s prices become exploitative , category of abuse found. in 1 case however, french funeral service found have demanded exploitative prices, , justified on basis prices of funeral services outside region compared. more tricky issue predatory pricing. practice of dropping prices of product 1 s smaller competitors cannot cover costs , fall out of business. chicago school (economics) considers predatory pricing unlikely. however, in france telecom sa v. commission broadband internet company forced pay million dropping prices below own production costs. had no interest in applying such prices except of eliminating competitors , being cross-subsidized capture lion s share of booming market. 1 last category of pricing abuse price discrimination. example of offering rebates industrial customers export company s sugar, not customers selling goods in same market in.

mergers , acquisitions

a merger or acquisition involves, competition law perspective, concentration of economic power in hands of fewer before. means 1 firm buys out shares of another. reasons oversight of economic concentrations state same reasons restrict firms abuse position of dominance, regulation of mergers , acquisitions attempts deal problem before arises, ex ante prevention of market dominance. in united states merger regulation began under clayton act, , in european union, under merger regulation 139/2004 (known ecmr ). competition law requires firms proposing merge gain authorization relevant government authority. theory behind mergers transaction costs can reduced compared operating on open market through bilateral contracts. concentrations can increase economies of scale , scope. firms take advantage of increase in market power, increased market share , decreased number of competitors, can adversely affect deal consumers get. merger control predicting market might like, not knowing , making judgment. hence central provision under eu law asks whether concentration would, if went ahead, impede effective competition... in particular result of creation or strengthening off dominant position... , corresponding provision under antitrust states similarly,

no person shall acquire, directly or indirectly, whole or part of stock or other share capital... of assets of 1 or more persons engaged in commerce or in activity affecting commerce, where... effect of such acquisition, of such stocks or assets, or of use of such stock voting or granting of proxies or otherwise, may substantially lessen competition, or tend create monopoly.

what amounts substantial lessening of, or significant impediment competition answered through empirical study. market shares of merging companies can assessed , added, although kind of analysis gives rise presumptions, not conclusions. herfindahl-hirschman index used calculate density of market, or concentration exists. aside maths, important consider product in question , rate of technical innovation in market. further problem of collective dominance, or oligopoly through economic links can arise, whereby new market becomes more conducive collusion. relevant how transparent market is, because more concentrated structure mean firms can coordinate behavior more easily, whether firms can deploy deterrents , whether firms safe reaction competitors , consumers. entry of new firms market, , barriers might encounter should considered. if firms shown creating uncompetitive concentration, in can still argue create efficiencies enough outweigh detriment, , similar reference technical , economic progress mentioned in art. 2 of ecmr. defense might firm being taken on fail or go insolvent, , taking on leaves no less competitive state happen anyway. mergers vertically in market of concern, although in aol/time warner european commission required joint venture competitor bertelsmann ceased beforehand. eu authorities have focused lately on effect of conglomerate mergers, companies acquire large portfolio of related products, though without dominant shares in individual market.

intellectual property, innovation , competition

competition law has become increasingly intertwined intellectual property, such copyright, trademarks, patents, industrial design rights , in jurisdictions trade secrets. believed promotion of innovation through enforcement of intellectual property rights may promote limit competitiveness. question rests on whether legal acquire monopoly through accumulation of intellectual property rights. in case, judgment needs decide between giving preference intellectual property rights or towards promoting competitiveness:

should antitrust laws accord special treatment intellectual property.
should intellectual rights revoked or not granted when antitrust laws violated.

concerns arise on anti-competitive effects , consequences due to:

intellectual properties collaboratively designed consequence of violating antitrust laws (intentionally or otherwise).
the further effects on competition when such properties accepted industry standards.
cross-licensing of intellectual property.
bundling of intellectual property rights long term business transactions or agreements extend market exclusiveness of intellectual property rights beyond statutory duration.
trade secrets, if remain secret, having eternal length of life.

some scholars suggest prize instead of patent solve problem of deadweight loss, when innovators got reward prize, provided government or non-profit organization, rather directly selling market, see millennium prize problems. innovators may accept prize when @ least as how earn patent, question difficult determine.