Brief 54: An innovative leap into the theoretical abyss: Dow/DuPont and the Commission’s novel theory of harm 05.07.17
In March 2017, the European Commission approved the proposed merger between chemical companies Dow and DuPont, subject to undertakings. The Commission applied an innovation theory of harm that is based on a much broader and more speculative concern than in other recent mergers (e.g. Pfizer/Hospira); namely, that the parties would find it profitable to reduce overall R&D investments post-merger causing a reduction in the number of innovative pesticide products in the future. This Brief explains why this theory of harm marks a departure from previous “innovation” cases. It also responds to the recently published paper by Chief Economist Tommaso Valletti and his colleagues, which claims, on the basis of a theoretical model, that horizontal mergers can be expected to reduce innovation incentives as a result of a standard unilateral effect.
Value of YouTube to the music industry 26.06.17
RBB Economics, Value of YouTube to the music industry – Paper I – Cannibalization, May 2017
RBB Economics, Value of YouTube to the music industry – Paper II – Growth of all platforms, June 2017
RBB Economics, Value of YouTube to the music industry – Paper III – Promotion, June 2017
RBB Economics, Value of YouTube to the music industry – Paper IV – Value for consumers, June 2017
RBB Economics,Value of YouTube to the music industry – Paper V – Direct value to the industry, June 2017
Brief 53: Passing judgment on passing-on 29.03.17
The harm suffered by a firm as a result of a competition law infringement that increases its purchase costs may be reduced if it can pass on some or all of this overcharge to its own customers. At the same time, such passing-on will lead to harm, and provide the basis for claims, further down the supply chain. In this Brief we offer an economic perspective on passing-on, highlighting in particular some of the issues raised by the UK Competition Appeal Tribunal’s Judgment on the damages claim brought by supermarket retailer Sainsbury’s against payment card scheme operator MasterCard. In doing so, we have drawn on insight and analysis from the Study on the Passing-On of Overcharges recently co-authored by RBB for the European Commission.
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.