Notes

Question 1

SSNIP note:

Answer 1

• Used to define market
• Small signif. non transitory increase in prices
• 5-10% increase above competitive level that’s a market
• Ped and Xped important
• Cellophane fallacy dupont 1950s defined too widely no competitors

Question 2

HHI index note

Answer 2

• US DOJ main screen for mkt power
• Pre & post M&A activity
• Example calculations
• <15 competitive, 15-20 moderately concentrated, >25 highly concentrated
• Change concern: <100 moderate, 100-200 highly likely, >250 assumed
• Worst case is 2500 total and >200 change

Question 3

Coordinated effects note

Answer 3

• Increased likelihood of post merger collusion
• Collusive profit Pi/n etc
• CMA: most likely form, current collusion, post merger conduciveness, can they reach understanding, is it sustainable
• Depends on complexity
• Norman 2005 post merger softening of competition

Question 4

Vertical restraints Note

Answer 4

• All forms
• NLC Rey 1988 arbitrage
• Exclusive territory manuf. set up as monopoly

Question 5

GUPPI note

Answer 5

• Gross upwards pricing pressure index
• Concerning unilateral effects likelihood
• = Div ij * P-c ratio j * pj/pi
• I’s Lerner as result of merger
• Post merger, J and J’s demand now an asset not a competitor
• As P/c rises, GUPPI rises as absorb mkt power
• Useful when markets more difficult to define e.g. high k
• Increasing in Div and P/C ratio of competitor