Competition law

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Competition law

• Three sets of issues
• Unfair competition
• Misuse of monopoly power
• Mergers

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Similarities between US Antitrust laws and EU
Competition laws

• 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"

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Article 81 of the EC Treaty The following shall
be prohibited as incompatible with the common
market all agreements between undertakings,
decisions by associations of undertakings and
concerted practices which may affect trade
between Member States and which have as their
object or effect the prevention, restriction or
distortion of competition within the common
market, and in particular those which (a)
directly or indirectly fix purchase or selling
prices or any other trading conditions
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• Graphite Electrodes arrangement

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• Graphite Electrodes arrangement
• Home producer sets price others agree not to
  compete on price, or expand production
• North America Europe Asia
• UCAR SGV (most) Japanese
• UCAR (some) producers
• Eventually non-home producers withdraw from
  market
• Arrangement kept alive via regular meetings (top
  guy and working level

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• Horizontal Agreements (contd)
• English Premier League owners agree not to
  compete for players for one year, to hold
  salaries down.
• Trade shows
• Bid-rigging

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Article 81 of the EC Treaty The following shall
be prohibited as incompatible with the common
market all agreements between undertakings,
decisions by associations of undertakings and
concerted practices which may affect trade
between Member States and which have as their
object or effect the prevention, restriction or
distortion of competition within the common
market, and in particular those which (c)
share markets or sources of supply
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• Horizontal Market Divisions
• Any effort by a group of competitors to divide
  its market is a violation of EC Article 81.
• Customer divisions
• By class (religion)
• Geographically (side of town)
• Supply divisions
• We wont sell X in competition with you, if you
  dont sell Y in competition with us.

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Article 81 of the EC Treaty The provisions of
paragraph 1 may, however, be declared
inapplicable in the case of any agreement, any
decision, or any concerted practice which
contributes to improving the production or
distribution of goods or to promoting technical
or economic progress, while allowing consumers a
fair share of the resulting benefit, and which
does not (a) impose on the undertakings
concerned restrictions which are not
indispensable to the attainment of these
objectives (b) afford such undertakings the
possibility of eliminating competition in respect
of a substantial part of the products in
question. To what does this exemption refer?
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Remedies Commission investigation ? injunction
fines up to 1 million or 10 of companys annual
turnover. Private suits in national courts by
injured competitors or consumers. What were the
penalties imposed in the Graphite Electrodes
decision? How were the penalties determined?
SGL Carbon 80.2 million VAW 11.6 million UCAR
50.4 million Japanese group 12-24.5 million
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Article 82 of the EC Treaty Any abuse by one or
more undertakings of a dominant position within
the common market or in a substantial part of it
shall be prohibited as incompatible with the
common market insofar as it may affect trade
between Member States. Such abuse may, in
particular, consist in (a) directly or
indirectly imposing unfair purchase or selling
prices or other unfair trading conditions (b)
limiting production, markets or technical
development to the prejudice of consumers (c)
applying dissimilar conditions to equivalent
transactions with other trading parties, thereby
placing them at a competitive disadvantage (d)
making the conclusion of contracts subject to
acceptance by the other parties of supplementary
obligations which, by their nature or according
to commercial usage, have no connection with the
subject of such contracts.
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• Hewlett-Packard / Compaq merger

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

Product Market? Geographic Market?
ALCOA case
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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• Mergers
• EU vs. FTC
• Mario Monti ? Neelie Kroes