Case studies

Question 1

Explain the OFT 2004 market power report findings

Answer 1

• An undertaking isnt dominant unless it has substantial market power
• An undertaking is more likely to be dominant if its competitors enjoy relatively weak positions or it has a high and stable market share
• Undertaking is unlikely to be dominant if its market share is <40%

Question 2

What is the Coase conjecture (1972)?

Answer 2

• Product durability might eliminate market power

- Good last forever, fast price changes and optimal for monopolist to set a competitive price

Question 3

What did the 2006 OFT UK market study find?

Answer 3

Evidence of existing barriers to entry

Question 4

Explain the 2008 competition commission market investigation report UK

Answer 4

• Recommended preventing land agreements which can restrict market entry
• Recommended implementation of a competition test in planning decisions

Question 5

What was the competition test recommended by the competition commission in 2008?

Answer 5

A firm can only open a second store in a market if there are fewer than 3 firms and its market share is less than 60%, or there are more than 4 firms in the town

Question 6

Explain the 1972 US cereal market case

Answer 6

• FTC issued a complaint for the market
• Biggest six firms had introduced 80 new brands between 1950-72
• 5 Firms created from big 3 suggested as a remedy
• Case dismissed in 1982 as no conspiracy detected, and strategic entry deterrence was deemed natural

Question 7

What is the scenario in EU commission cartel prosecutions?

Answer 7

• Increase in number of cartels prosecuted by EUC since 1999

- 2.5/yr in 1999 vs 5.4/yr in 2019

Question 8

Describe the 1993 Danish concrete market case

Answer 8

• Prior to 1993, sellers offered confidential discounts to buyers
• Danish competition council published prices in 1993
• Prices increased by 15-20% within a year despite no increase in prices in other regions, and no general demand increase

Question 9

Describe the Davies and Olczak 2010 study

Answer 9

• Analysed EU cartel market structure
• Found three structures: Few large symmetric firms, one dominant firm with a number of small firms, and a single large fringe of unconcentrated small firms

Question 10

Describe the UK impulse icecreams 1979-2000 case

Answer 10

• BEW, Mars and Nestle had entered into agreements with retailers to only stock their products (exclusive dealing)
• MMC remedy was to prohibit such freezer space agreements unless 50% of the freezer was open to other products