Volker Nocke and Michael D. Whinston on ‘Concentration Screens for Horizontal Mergers’ (2020) NBER Working Papers no 27533

Concentration measures play a central role in merger analysis. Existing guidelines identify various presumptions – both safe harbours and presumptions of anticompetitive effects – based on the level of the post-merger Herfindahl index and of the change that the merger induces in that index. These presumptions have a significant impact on agency decisions, especially in screening mergers for further review. However, the basis for these screens, in both form and level, remains unclear. The authors of this paper, available here, show that there is both a theoretical and an empirical basis for focusing solely on changes in the Herfindahl index, and ignoring its level, in screening mergers for whether their unilateral effects will harm consumers. The authors also argue that the levels at which the presumptions currently are set may allow mergers to proceed that cause consumer harm. Section 2 reviews concentration screens in various versions of the US Horizontal Merger Guidelines. The first version of the Merger Guidelines –…

Michal Gal ‘The Case for Limiting Private Litigation of Excessive Pricing’ (2020) Journal of Competition Law and Economics 15(2-3) 298

Excessive pricing raises strong concerns for private competition litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair in order to calculate damages; and (3) the institutional features of general courts in EU member states. Given that private litigation of competition law violations is only beginning to develop in the EU, and collective redress mechanisms are still viewed with caution by many member states, this is exactly the time to ensure that, as private litigation expands, it will increase welfare. This is the purpose of this paper, which is available here. Section 2 addresses the inherent difficulty of determining when a price becomes unfair. The excessive pricing prohibition, though longstanding, suffers from serious and inherent difficulties in its implementation. In particular, it lacks clear and workable criteria. The challenges can be summarised as follows: to decide…

Eugenio Olmedo-Peralta ‘The Evidential Effect of Commitment Decisions in Damages Claims’ (2019) Common Market Law Review 56 979

The European Commission and national competition authorities (NCAs) make extensive use of commitment decisions. Since these decisions do not establish the existence of competition infringements, claimants still have to bear the burden of proof in stand-alone damages actions concerning conduct covered by them. However, some evidential effects should be recognised to commitment decisions, as well as to certain statements made in the context of related public enforcement proceedings. This article, available here, describes such effects as follows. Section II outlines the relationship between commitment decisions and the private enforcement of competition law. According to Regulation 1/2003, commitment decisions are adopted without concluding whether competition law has been infringed. Commitment decisions merely state that there are no longer grounds for action by a competition authority, as the behavioural or structural measures taken by the companies involved in an investigation are sufficient to put an end to the potential restriction of competition. In short, the main features of commitment decisions are that: (i) they…

Jorge Padilla and Nicolas Petit on ‘Competition policy and the Covid-19 opportunity’ (2020) Concurrences 2 1

Every economic crisis raises the same normative question for competition law. Should decision makers be temporarily more permissive in their application of the law to private and public restraints of competition? While historical evidence suggests that this is a bad idea, most economic crises since the 1970s led to some softening of competition law. In countries around the world, massive amounts of state aid have been injected into the economy. While such policies deserve praise in their concern for the protection of jobs, recessions have a “cleansing effect” which is desirable and can be dampened by such interventions. Recessions facilitate the exit of zombie firms that crowd out growth opportunities for more efficient competitors, and delay the diffusion of technological innovation. A case might thus be made that the current recession might be a source of opportunities for the EU economy, long trapped in a cycle of weak productivity, low economic dynamism and conspicuous absence of superstar firm creation. The…

Marco Botta and Klaus Wiedemann  ‘To Discriminate or not to Discriminate? Personalised Pricing in Online Markets as Exploitative Abuse of Dominance’ (2019) European Journal of Law and Economics 1

The advent of big data analytics has favoured the emergence of forms of price discrimination based on consumers’ profiles and their online behaviour (i.e. personalised pricing). This paper, available here, analyses this practice as a possible exploitative abuse by dominant online platforms. It concludes that such practices can have ambiguous welfare effects, and be subject to a case-by-case analysis. It also argues that competition law is more suitable than omnibus regulation – particularly data protection and consumer law – to tackle the negative effects of personalised pricing, particularly because competition authorities could negotiate with online platforms different kinds of behavioural commitments that could significantly tame the risks of personalised pricing. Section II looks at price discrimination in online markets. Economists typically distinguish between three different types of price discrimination. First-degree price discrimination takes place when a firm is able to discriminate perfectly among its customers. Second-degree price discrimination means that the firm discriminates between its customers by granting discounts once…

Alfonso Lamadrid ‘Shortcuts in the Era of Digitisation’ (2019) CPI Antitrust Chronicle – October

Competition law is arguably one of the areas of least importance when it comes to the major societal challenges posed by digitalisation. Nonetheless, competition law has been advertised as a sort of miraculous tool that would right all wrongs. In this context, the idea of entrusting a Report to three independent Special Advisers before advancing a reorientation of the competition rules was a very sensible initiative on the part of the European Commission. However, the author does not really agree with the report’s conclusions. He explain why in a paper that can be found here. Section two discusses what are the specific problems that digital markets raise for competition law. The first question to ask is whether there is consensus about competition problems in digital markets. If the answer is in the affirmative, we then need to ask whether we can address those problems while still preserving the benefits flowing from digitisation. The Report and other similarly-timed initiatives suggest that there…

Marc van der Voude ‘Judicial Control in Complex Economic Matters’ (2019) Journal of European Competition Law & Practice 10(7) 415

Already in the early 1960’s, the Court of Justice made clear that the application of competition law depends on contextual analysis that takes a wide range of economic and legal factors into account. Modern economics provides useful tools to deal with competition matters. The European Commission increasingly relies on these ‘mainstream’ economics in its assessment of competition cases, and courts have to make up their own mind on the merits of the Commission’s complex assessments and of the economic concepts on which the Commission relied to that effect. What kind of judicial control are the Union courts supposed to exercise over these complex assessments?  Under the current system set up by Article 263 TFEU, judicial review by the General Court, which has the final say on the interpretation of the facts of the case, is limited to the review of the legality of the Commission’s decision. In its case law, the Court of Justice has traditionally used formulae that suggest…

Massimiliano Kadar ‘Article 102 and Exclusivity Rebates in a Post-Intel World: Lessons from the Qualcomm and Google Android Cases’ (2019) Journal of European Competition Law & Practice 10(7) 439

Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits behaviour by a dominant undertaking that is capable of harming competition. The notion of ‘capability to harm competition’ has been at the centre of the legal and economic debate for many years. A strict interpretation of ‘capability’ would require evidence of actual or quasi-actual effects on the market in the form of, for example, the exit of existing competitors or sustained price increases. A lax interpretation of capability could make it possible to enforce competition rules also in circumstances where harm to competition is purely hypothetical and not supported by concrete evidence. This discussion – which is ultimately about the level of the standard of proof – not only influences the likelihood of Type 1 and Type 2 letters, but also the amount of resources that administrative agencies needs to devote to individual enforcement cases. Modulating this impact are presumptions, which can lead to significant savings…

Cani Fernández ‘Presumptions and Burden of Proof in EU Competition Law: The Intel Judgment’ (2019) Journal of European Competition Law & Practice 10(7)

Some of the procedural tools used by competition authorities and courts (in particular, presumptions) present an inherent link to the burden of proof and to the rightful exercise of the rights of the defence. In principle, the use of presumptions can be an efficient response to the enforcement of competition policy both in situations where a given behaviour usually amounts to an infringement or where it is competitively innocuous. In any rule of law system, presumptions of illegality must be rebuttable. Indeed, a resort to presumptions not surrounded by proper procedural guarantees may infringe the presumption of innocence and undertakings’ rights of defence. The Intel judgment provides a good opportunity to discuss the role of presumptions under Article 102 TFEU and their implications for the burden of proof. In addition to this, this article, available here, analyses how defendants in exclusivity rebate cases can rebut the presumption of illegality in practice, with a special focus on the efficiency defence. It does so…

Pietro Crocioni ‘On the Relevant Cost Standard for Price-Cost Tests in Abuses of Dominance’ (2018) Journal of Competition Law & Economics 14(2) 26

This article, available here, reviews the use of cost standards in selected European abuse of dominance cases. It shows that a variety of cost standards were employed until recently, and criticises the ECJ’s case law for ignoring challenges with identifying the appropriate cost standard for each case. To address such challenges, it is important to identify the key questions a price–cost test should answer, and agree on the features of such a test. The paper is structured as follows: Section II summarises current knowledge on price-cost tests. This knowledge is outlined in the European Commission’s Article 102 Enforcement Guidance, which puts forward two widely accepted concepts: Average Avoidable Cost (AAC) and Long Range Average Incremental Costs (LRAIC). These tests provide the benchmarks for predatory behaviour in Europe. There is a legal (but rebuttable) presumption that prices below AAC anticompetitively foreclose competition; that prices above LRAIC do not to raise concerns; and that prices between AAC and LRAIC require consideration of…