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Vertical Mergers

Resumé

The antitrust economics of vertical mergers, and hence the enforcement policy toward them, are substantially more complicated than they are for horizontal mergers. Vertical mergers are presumed, on both theoretical and empirical grounds, to be efficiency enhancing, but that does not mean they are always welfare enhancing or in the interests of downstream consumers. They may result in foreclosure (input or costumer) involves an evaluation of (i) the integrating firm's ability to foreclose, (ii) the integrating firm's incentives to foreclose, and (iii) the effect of foreclosure of the downstream market. Ex post enforcement, using monopolization or abuse of dominance provisions is not always an effective substitute for ex ante vertical merger enforcement. A coordinated effect arises from a vertical merger if post-merger firms are able to coordinate more effectively, either because it makes reaching a tacit agreement on the coordinated outcome easier or makes enforcement more effective.

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Competition and Efficient Usage of Payment Cards

Resumé

In recent years, debit and credit cards have become increasingly common as retail payment mechanisms and have increasingly displaced checks and cash. The roundtable discussed potential market power and price setting abuses related to payment cards, reviewed the regulatory (or self-regulatory) mechanisms that sometimes govern the operation of cards networks and considered methods for increasing the role of competitive forces among payment cards. A market failure exists because costs for different payment mechanisms are rarely reflected in consumer prices. Consideration should be given to permitting merchants to form payment ventures, as this would promote system competition between owners with different incentives, and to promoting entry by potential new technologies that would not involve existing payment networks. Many other policy options are discussed. Non-cash payment systems serve a valuable role, enabling transactions to occur that otherwise would not. However, free market competition between payment systems likely results in a disproportionately high usage of high-cost payment systems. This market failure exists because relative costs for different payment mechanisms are rarely reflected in consumer prices paid.

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The Pros and Cons of High Prices

Resumé

Could there be any pros of high prices? The question is as natural as the question we got four years ago when we published The Pros and Cons of Low Prices – could there be any cons of low prices? These are questions competition authorities get from the public from time to other. It is a somewhat hard pedagogical task to answer them. The answer to both questions is yes, there are indeed pros of high prices and cons of low prices. This volume is devoted to exploring the pros and cons of high prices

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Competition in Bidding Markets

Resumé

Competition authorities become interested in auctions by a number of routes. In competition advocacy, they may advise other parts of government on how to design auctions in order to improve their efficiency the degree of competition. They may evaluate mergers and agreements between firms that operate in auction markets. And they may be concerned with collusion and abuse of a dominant position in auctions. Because their formal rules reduce “noise” and make communication among rivals easier, auctions can promote collusion, compared with ordinary “posted-price” markets. But an auction can be designed to reduce collusion or concerted practices or to promote participation. Thus, the design of an auction can be the object of lobbying pressure. Auctioneers can also behave strategically, choosing auction formats or practices that favour competition. Two fundamental prescriptions for effective auction design follow from the theoretical literature: Induce bidders to truthfully reveal their valuations by making what they pay not depend entirely on what they bid, and maximize the information available to each participant before he bids.

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Remedies and Sanctions in Abuse of Dominance Cases

Resumé

There is an important difference between remedies and sanctions. Remedies cure, correct, or prevent unlawful conduct, whereas sanctions penalise or punish it. Typically, a competition law remedy aims to stop the violator’s illegal behaviour, its anticompetitive effects, and its recurrence, as well as to restore competition. Sanctions are usually meant to deter unlawful conduct in the future, and in some jurisdictions also to force violators to disgorge their illegal gains and compensate victims. Although there is general agreement about what these objectives are, there is some difference of opinion about which ones are most important. This document comprises proceedings in the original language of a Roundtable on Remedies and Sanctions in Abuse of Dominance Cases which was held at the Competition Committee meeting in June 2006.

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Concessions

Resumé

Governments have long been engaged in providing goods or services to their citizens that could, in some form, be provided by the private sector. The trend over the past few decades, however, has been to transfer these functions, and the state-owned assets used to provide them, to private hands. The most common method, and the one usually preferred, is privatisation, or outright sale or transfer of ownership of the relevant assets to one or more private parties. Another method is concessions. Concessions are often viewed as a substitute for privatisation when the latter is not feasible for political or legal reasons. Concessions are not substitutes for regulation. Where there is a need for regulation, as in a situation of natural monopoly, a regulatory regime may be created along with the concession. This document comprises proceedings in the original language of a Roundtable on Concessions which was held at the Global Forum on Competition in February 2006.

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Improving Competition in Real Estate TransactionsC2166

Resumé

In most OECD countries, the vast majority of home sales occur with the help of a professional intermediary. It is often argued that sellers choose intermediaries because they have insufficient information about markets, prefer to avoid trouble involved with selling a home and judge that they will receive a higher price for the sale of their home by using an intermediary. However, these benefits of using a professional intermediary are likely overstated. In some countries, such as France, there is a viable and well accepted tradition of owners selling their own homes with as many as 50% of homes being sold directly by their owners without any professional intermediary. This high success of direct selling by owners is only possible because there is a well-known publication and Internet site that attracts a high number of potential buyers.

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