Brief 52: Estimating post-merger price effects in bidding markets: lessons from GE/Alstom 21.06.16
In September 2015, the European Commission cleared General Electric’s proposed acquisition of Alstom’s power generation business, subject to undertakings, after a Phase II investigation. The transaction reduced the number of major suppliers of heavy duty gas turbines from four to three. As part of its assessment, the Commission estimated the likely price impact of the proposed transaction, taking into account the bidding nature of competition.
In this Brief, we examine the intuition behind the techniques used by the Commission, which we expect it to employ when evaluating future transactions involving bidding markets. Whilst less simplistic, these techniques suffer from similar drawbacks to the price pressure tests which the Commission and other authorities around the world are increasingly employing.
Brief 51: Better together? Commission adds a new tune to its repertoire on music rights mergers 22.03.16
In October 2015, the European Commission approved a joint venture between three of the largest music publishing collecting societies in Europe: PRSfM, GEMA and STIM. As in other recent music industry mergers, the Commission investigated whether the combination of the parties’ repertoires would enhance their negotiating power when licensing digital services. However, in marked contrast to previous decisions, the Commission concluded that larger repertoires are not able to command higher royalties. In this Brief, we consider the Commission’s assessment and implications for other cases involving combinations of product/service portfolios, such as patent pools and airline alliances.
Brief 50: The CMA Energy Market Review: a remedy without a cause? 09.10.15
On 7 July 2015, the UK’s Competition and Markets Authority published the provisional findings of a market investigation into the UK energy market. It found an Adverse Effect on Competition (AEC) in the way in which energy companies retail gas and electricity to UK households. In this Brief we examine the CMA’s provisional findings and explore some of the public policy issues raised by its proposed remedies. Having, notably, spent much of its report cataloguing the failures of energy regulator Ofgem’s efforts to micro-regulate the energy market, the CMA’s apparent confidence in its ability to find and implement prescriptive pricing remedies is striking.
Brief 49: Refining its Tool Kit – The ACCC’s decision to authorise RPM in the Tooltechnic case 24.02.15
In December 2014, Australia’s Competition and Consumer Commission (ACCC) granted conditional authorisation to Tooltechnic Systems (Australia) Pty Ltd to engage in minimum resale price maintenance in marketing its premium brand of power tools.
Brief 49 considers the analysis undertaken by the ACCC and explores the implications for other firms that might seek to emulate Tooltechnic’s attempts to gain authorisation for RPM.
Brief 48: The price effect of cost changes: passing through and here to stay 18.12.14
Cost pass through arises when a firm changes the prices of its products or services in response to a change in its costs. This Brief highlights some of the
key theoretical and empirical insights on pass-through that are relevant to competition policy. In doing so, it addresses a number of common pass-through fallacies.