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Archive for July 5th, 2011

Old Wine, New Bottles

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In their 2010 Horizontal Merger Guidelines, the US agencies have poured old wine in new bottles.

The section on coordinated effects adds a theory of harm to standard tacit collusion analysis. It is entitled “parallel accomodating conduct“, and consists in:

situations in which each rival’s response to competitive moves made by others is individually rational, and not motivated by retaliation or deterrence nor intended to sustain an agreed-upon market outcome, but nevertheless emboldens price increases and weakens competitive incentives to reduce prices or offer customers  better terms. Coordinated interaction includes conduct not otherwise condemned by the antitrust  laws” (see p.24).

My reaction: this looks familiar, and similar, to unilateral effects scenarios arising in oligopolies as a result of product/location differenciation or in cases of price leadership.

But aren’t those theories of harm already caught under merger control rules?

Moreover, shouldn’t unilateral and coordinated effects scenarios be mutually exclusive on a given relevant market?  This also seems to be the view of DG COMP’s former chief economist.

The alternative explanation: an attempt of the US agencies to discretely relax the heavy evidentiary constraints required for a finding of coordinated effects?

PS: it is now summer time in Europe. Our friends keep harassing us with end afternoon drinks proposals at Brussels’ terrasses.  For social reasons, Alfonso and I have thus decided to limit our posting pace to three stories a week in July.  BTW, I heard through the grapevine that the Hogan Lovells party was huge (in very many respects…).

Written by Nicolas Petit

5 July 2011 at 4:43 pm