Economic Analysis in EU Competition Policy: Recent Trends at the National and EU Level

316 Pages·2021·2.231 MB·English

by  Pier L. Parcu (editor), Giorgio Monti (editor), Marco Botta (editor)

© The Editors and Contributors Severally 2021
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic, mechanical or
photocopying, recording, or otherwise without the prior permission of the publisher.
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Library of Congress Control Number: 2021947946
This book is available electronically in the
Law subject collection
http://dx.doi.org/10.4337/9781800370197
ISBN 978 1 80037 018 0 (cased)
ISBN 978 1 80037 019 7 (eBook)
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
Contents
List of figures vii
List of tables viii
List of contributors ix
Preface xv
List of abbreviations xvi
1 Introduction: From the legalistic to the effect-based
approach in EU competition policy 1
Pier Luigi Parcu, Giorgio Monti and Marco Botta
2 The operation of the more economic approach after Intel
and Generics 14
Giorgio Monti
3 The effect-based approach after Intel: A law and
economics perspective 43
Ginevra Bruzzone
4 The kinetic rise and potential fall of market definition 67
Timothy Brennan
5 Current issues in defining relevant antitrust markets: Data,
digitalization and innovation 91
Viktoria HSE Robertson
6 Digital markets and implications for competition policy:
Evidence from recent economic analysis 112
Roberto Alimonti, Bertram Neurohr and Helen Ralston
7 Margin squeeze: Guiding principles and the state of the
debate in Europe 146
Pietro Crocioni
8 A practitioner’s guide to quantifying damage 172
Frank P. Maier-Rigaud, C.-Philipp Heller
v
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
vi Economic analysis in EU competition policy
9 The passing-on principle in EU private antitrust
enforcement: A policy at war with itself? 217
Pier Luigi Parcu and Maria Alessandra Rossi
10 The effectiveness of judicial review of decisions of the
Italian Competition Authority in the aftermath of the
Damages Directive 240
Rosa Perna
11 Economic evidence in Dutch administrative law: A judge’s
perspective 267
Henk Jaap Albers
Index 290
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
Figures
6.1 Reinforcement learning framework 117
6.2 Stylized example of MFNs in a merchant model 125
6.3 Stylized example of MFNs in an agency model 126
6.4 European competition interest in MFNs 129
8.1 Decomposition of buyer’s damages due to seller cartel 174
8.2 Comparison market methods 183
8.3 Components of a general simulation model 184
8.4 Observed prices and quantities – hypothetical cartel example 187
8.5 Explanatory variables 191
8.6 Prices in affected and comparison country 193
8.7 Observed prices, simulated cournot prices and simulated
bertrand prices during the cartel period 200
8.8 Change in buyer’s profit 202
8.9 Change in buyer’s profit 203
8.10 Buyer’s quantity with downstream and upstream prices 205
8.11 Downstream demand factor 206
8.12 Prices of the affected good and a substitute 213
vii
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Tables
7.1 Incumbent’s behaviour, incentives and consumer harm
under price caps 166
8.1 Simple time comparison – overcharge 188
8.2 Time-based comparison – full controls 190
8.3 Difference-in-differences results 194
8.4 Demand estimation for simulation model 197
8.5 Direct estimation of pass-on and volume effect 206
8.6 Indirect estimates of pass-on and the quantity effect 207
8.7 Indirect estimate of quantity effect 208
8.8 Estimating after-effects 211
8.9 Regression analysis for indirectly estimating umbrella effects 214
8.10 Regression analysis for directly estimating umbrella effects 215
9.1 Compensation and liability under alternative legal rules on
passing-on 231
9.2 Total compensation and liability under alternative legal
rules on passing-on 231
viii
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
Contributors
EDITORS
Pier Luigi Parcu is part-time professor at the Robert Schuman Centre for
Advanced Studies (RSCAS) of the European University Institute (EUI)
in Florence (Italy), where he directs a number of projects: the European
Networking and Training for European Competition Law Enforcers
(ENTraNCE); the Florence Competition Programme; the Communications and
Media Area of the Florence School of Regulation; and the Centre for Media
Pluralism and Media Freedom. He is also chairman of Studio Economico,
a consultancy firm that specializes in antitrust and regulatory issues of network
industries. From 2000 to 2003, he was CEO of the independent system opera-
tor running the Italian electricity grid. From 1991 to 2000, he was the director
of investigations at the Italian Competition Authority, in charge of several reg-
ulated sectors. Previously, he served as chief economist at the Italian Security
and Exchange Commission and as economist at the International Monetary
Fund. He holds a PhD in economics from the University of California, Los
Angeles (United States). His research in the area of industrial organization and
law and economics focuses on the interaction between regulation and antitrust
in shaping firms’ behaviour in network industries.
Giorgio Monti is part-time professor at the Law Faculty of the University of
Tilburg (Netherlands) and part-time professor at the RSCAS. He previously
acted as full-time professor and head of the Law Department of the EUI
(2010–19). In addition, he is scientific coordinator of ENTraNCE. Before
joining the EUI, Professor Monti taught law at the University of Leicester
(United Kingdom) (1993–2001) and at the London School of Economics
(United Kingdom) (2001–10).
Marco Botta is part-time professor at the Robert Schuman Centre for
Advanced Studies of the EUI, where he coordinates ENTraNCE and the
Florence Competition Programme. In addition, he is an affiliated research
fellow at the Max Planck Institute for Innovation and Competition in Munich
(Germany), and adjunct professor at the Law Faculty of the University of
Vienna (Austria). Professor Botta holds a bachelor’s degree in international
ix
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
x Economic analysis in EU competition policy
relations from the University of Turin (Italy); an LLM in European business
law from Leiden University (Netherlands) and a PhD from the EUI Law
Department.
CONTRIBUTORS
Henk Jaap Albers is a judge at the High Court for Trade and Industry in the
Hague (Netherlands). Before becoming a judge, he practised competition law
at a law firm in Brussels. In addition, he is a lecturer at Leiden University
(Netherlands).
Roberto Alimonti is a senior economist at Oxera in Rome. He specializes in
competition economics and market regulation. He has advised competition
authorities and companies in the context of competition and market investiga-
tions, mergers, cartel and abuse of dominance cases, disputes and retrospective
evaluation studies, in both the United Kingdom and Italy. Before joining
Oxera, Mr Alimonti worked for over five years in KPMG’s competition eco-
nomics team in London, where he managed large and complex engagements
with private sector clients and their legal advisers. In addition, he worked at
the UK Office of Fair Trading and at an Italian economics consultancy based
in Rome. Throughout his professional career, Mr Alimonti has advised clients
across a wide range of industries, including communications, energy, financial
services, healthcare, pharmaceuticals and transport.
Timothy Brennan is a professor emeritus of public policy and economics
at the University of Maryland Baltimore County (United States) and a senior
fellow at Resources for the Future (RFF). He began his career as a staff
economist at the Antitrust Division of the US Department of Justice, where
he worked on the monopolization cases against AT&T and Microsoft. He
has been the senior staff economist for industrial organization and regulation
for the White House Council of Economic Advisers and a staff consultant
at the Bureau of Economics at the US Federal Trade Commission. In 2006,
he held the TD MacDonald Chair in Industrial Economics at the Canadian
Competition Bureau; and in 2014, he served as chief economist at the US
Federal Communications Commission. Professor Brennan has published over
130 articles and book chapters. He has co-authored two books on electricity
policy with colleagues at RFF and, with Pier Luigi Parcu and others, has
co-edited five books on postal sector economics. He holds an MA in math-
ematics and a PhD in economics from the University of Wisconsin (United
States).
Ginevra Bruzzone is an economist who specializes in competition law.
Currently, she is deputy director general of Assonime, a private think tank active
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
Contributors xi
in corporate law, tax law and regulatory policies based in Rome. At Assonime,
which she joined in December 2000, she is in charge of EU and Italian com-
petition law, consumer protection, IP law and regulation. Furthermore, Ms
Bruzzone teaches internal market, competition and intellectual property law
on the master’s programme on European economic governance at the School
of European Political Economy, Luiss Guido Carli University (Rome). She has
published extensively in the field of law and economics. She is a member of
the advisory board of the Italian Transport Regulation Authority; the advisory
committee of the 4iP Council; and the steering council of the Italian section of
the International Chamber of Commerce.
Pietro Crocioni currently works as an economist at the Directorate General
of Competition of the European Commission (DG Competition). He has over
20 years of experience in the field of competition and regulatory policies,
working in both agencies and economic consultancies. Prior to joining the
European Commission, he was director of economics at Ofwat (the UK water
regulatory and competition authority); a senior manager at PwC; a member
of the chief economist team at the UK Office of Communications; and an
internal consultant at the World Bank. His main sectoral focus is communi-
cations, but he also covers other sectors such as energy, water, airlines, local
buses, rail, sport, cement, credit cards, beer, cruises, casinos, audit, online
services, public procurement and computer maintenance. He was an associate
fellow at the Centre for Management under Regulation, Warwick Business
School (United Kingdom) from 2007 to 2012. He holds an MSc in economics
(Warwick University); an MA in international relations (John Hopkins School
of Advanced International Studies, United States) and a BA in economics
(Bologna University, Italy). He has written extensively on competition and
regulatory issues.
C.-Philipp Heller is an Associate Director in NERA’s antitrust and competi-
tion practice, based in Berlin. He advises clients on all aspects of competition
and antitrust economics. Dr Heller has experience working on cartel damages
litigation; national and international merger notifications; international arbi-
tration; government antitrust investigations; and regulatory procedures. He is
a skilled user of a variety of theoretical, empirical and econometric techniques,
including game theory, surveys and regression analysis. Dr Heller’s work
covers a variety of industries, including telecommunications, transport, phar-
maceuticals, chemicals, consumer goods, automotive, payment services and
food products. Dr Heller has written research articles on topics including the
competition economics of sports media rights; the regulation of self-driving
cars; exclusionary bundle discounts; and the pass-on of overcharges. His
research has been published in journals such as the Journal of German and
European Competition Law; the New Journal of Antitrust Law; the American
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197
xii Economic analysis in EU competition policy
Economic Review; the Journal of Transport Economics and Policy; Social
Choice and Welfare; the Economics Bulletin; and Games and Economic
Behavior.
Bertram Neurohr is a member of Oxera’s competition team. His work
focuses on economic analysis of competition and regulation in the context
of market investigations, merger inquiries and litigation. He advises clients
across a wide range of areas, including digital, energy, financial services,
healthcare, intellectual property, mining, retail and telecommunications. He
is listed in Who’s Who Legal: Competition Economists – Future Leaders. Mr
Neurohr has published a number of academic articles on topics that include
merger analysis, cost pass-through estimation and cartel overcharge analysis.
He teaches competition and regulation at the University of Warwick (United
Kingdom). Before joining Oxera, he worked at another international economic
consulting firm, where he advised clients on competition and regulation issues;
and subsequently at the UK Competition and Markets Authority (CMA),
where he worked on market investigations and merger reviews, gaining expe-
rience of the public sector.
Frank P. Maier-Rigaud is managing director at ABC economics. Previously,
he was the head of NERA’s European competition practice. He has over
20 years of competition experience and has appeared as an expert witness
in numerous court and arbitration proceedings. He is a full professor in the
Department of Economics and Quantitative Methods at the IÉSEG School of
Management Paris (France) and the Université Catholique de Lille (France),
and a member of LEM-CNRS, the French Centre National de la Recherche
Scientifique. He previously held academic positions at the Max Planck
Institute in Bonn (Germany); the University of Bonn (Germany); Indiana
University, Bloomington (United States) and the University of California,
Berkeley (United States). Professor Maier-Rigaud was a senior economist
at DG Competition, where he was responsible for the review and scrutiny of
hundreds of antitrust and merger decisions. He notably also led the economic
work in the context of the private enforcement initiative. In addition, he
worked as senior economist at the Competition Division of the Organisation
for Economic Co-operation and Development (OECD), where he oversaw the
Working Party on Competition and Regulation. In that function, he authored
several OECD studies, including on market definition and excessive prices.
Rosa Perna is a senior judge at the Regional Administrative Tribunal of
Lazio, where she deals with cases in the field of competition and electronic
communications law, taxation, public financing, public tenders and transport.
Previously, she was a lawyer at the National Central Bank of Italy, working
in the fields of taxation, supervision of banking and financial systems and
Pier L. Parcu, Giorgio Monti and Marco Botta - 9781800370197