23 June 2003

Fine in Theory

In light of the increasing reliance on ever more sophisticated theories of anti-competitive effects in all areas of competition law, this Brief discusses how the relevance of economic theories should be evaluated in the practical application of competition rules. Assessing the relevance of a theory to the actual operation of a market is critical because with the right assumptions it is possible to build a theoretical model to support almost any view of the world. It is therefore important that any theory of competitive harm is carefully assessed and that its underlying assumptions and predictions are consistent with observed industry behaviour. By way of illustration, we explore how the NMa recently considered and rejected a theoretical model of the operation of the market for motor fuel retailing in the Netherlands.

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