What is antitrustcompetition law What is its purpose

1
What is antitrust/competition law? What is its
purpose?
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What is antitrust/competition law? What is its
purpose?

• Concerned with
• Fears of concentrations of economic power in the
  hands of a few
• harmful effects of some forms of business
  cooperation
• misuse of monopoly power
• Simultaneous rise of regulatory agencies and
  antitrust law
• National laws 1800s through early 1900s
• EU laws 1980s

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History of Antitrust Rockefeller and standard
oil Public utilities and antitrust
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Overview of Antitrust/Competition Laws

• Antitrust/Competition laws place faith in the
  market.
• EC Art. 81 prohibits agreements which have as
  their object or effect the prevention,
  restriction or distortion of competition within
  the common market
• US Sherman Act outlaws "every contract,
  combination . . . , or conspiracy, in restraint
  of trade"
• Who enforces antitrust/competition law?

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• Who enforces antitrust/competition law?
• Rules and regulations?
• EU European Commn Competition Directorate ?
  ECJ
• US FTC/Justice Dept ? US courts
• Private suits
• Defining harm per se vs. rule of reason
  violations

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• Economic definition of monopoly
• vs.
• Legal definition of monopoly
• KEY market power

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• Market Power

BAD ACT Collusion Market share Monopoly power
in another market Etc.
Power to increase prices above competitive price
Is the power to increase the market price
sustainable? Ease of entry to market
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• Market divisions
• Price fixing bid rigging
• Boycotts
• Predatory pricing
• Tying arrangements
• Mergers
• Misuse of monopoly power

Horizontal Agreements
Walmart
(Risk of) Abuse of Market Power
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Mergers and Joint Ventures

• Horizontal Mergers
• A horizontal merger involves companies that
  compete in the same market.
• FTC and European Commission halt/approve mergers,
  based on likely impact on competition
• HHI as measure of market concentration too much
  concentration creates rebuttable presumption of
  violation

Herfindahl-Hirschman Index Calculator sum of
the squares of the market shares of firms in
industry. Threshold inquiry.
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Mergers and Joint Ventures

• Horizontal Mergers
• FTC and European Commission halt/approve mergers,
  based on likely impact on competition
• HHI as measure of market concentration too much
  concentration creates rebuttable presumption of
  violation
• What is market?
• Product market
• Geographic market

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• Hewlett-Packard / Compaq merger

Product Market? Geographic Market?
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• Hewlett-Packard / Compaq merger

Product Market? Geographic Market?
Access Devices?
HHD
Laptops PCs workstations
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• Hewlett-Packard / Compaq merger

• Product Market?
• Market shares?
• Access devices?
• Entry level servers?
• Geographic Market? EEA

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• Office Depot/Staples Merger

Office Depot Staples Other office supply