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Panelists: Milan Brouček - Chief Economist , Office for the Protection of Competition

Second Annual Conference on Competition Enforcement in the Recently Acceded Member States , Brno , 23 April 20 10 Economic analysis in competition law. Panelists: Milan Brouček - Chief Economist , Office for the Protection of Competition

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Panelists: Milan Brouček - Chief Economist , Office for the Protection of Competition

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  1. Second Annual Conference on Competition Enforcement in the Recently Acceded Member States, Brno, 23April 2010Economic analysis in competition law Panelists: Milan Brouček- Chief Economist, Office for theProtection of Competition Gergely Csorba- Chief Economist, Hungarian Competition Authority (GVH) Josef Bejček – Professor at Faculty of Law, Masaryk University in Brno

  2. More economic approachin competition policy:Latest trends in the Czech Republic Milan Brouček Chief Economist Second Annual Conference on Competition Enforcement in the Recently Acceded Member States, Brno, 23April 2010

  3. Opening • the role of economics/economists in competition policy: • economics explains how markets work(models of competition, firm behaviour, consumer behaviour) • economists have developed quantitative techniques • role in particular areas of competition policy? • economists can quantify the „counterfactual“: • „what if“ situation for mergers • „but for“ situation for dominance and cartels

  4. I. More economic approach • conceptual issue - change in approach (effect-based approach vs. form-based approach) • priority: assess effect (actual,likely), clear theory of harm • individual approach to cases • necessity to apply analytical methods • greater demand on economic data • possible objective necessity and efficiencies

  5. I. More economic approach • key role of economic analysis in definition of relevant markets: • SSNIP test • unavoidable: price-based conduct • use of quantitative techniques – no reason for different approach in mergers and antitrust

  6. II. Recent development - EC • pressure from courts (CFI, ECJ) • apparent shift to more economic approach(MEA): • horizontal merger guidelines (2004) • non-horizontal merger guidelines (2008) • art. 82 (102) reform – guidance (2009) • current art. 81 (101) reform • giving priority to assess effects of merger/conduct effect-based approach(EBA)

  7. III. Recent development - Office • background: • no pressure from courts • very low pressure from undertakings • internal decision to apply MEA/EBA • main objective: • increasing efficiency of competition policy

  8. III. Recent development – Office • advantages: • harmonization with some other key jurisdictions • too formalistic approach eliminated • competition on merits recognized and permitted • risks: • burden too high? • prioritization? • response from courts?

  9. III. Recent development – Office • chief economist’s unit established (revived) - consists of economists, financial analyst, statistician 2009: 4 members, 2010: 7 members • part of Competition Section within the Office: • engaged in:mergers, abuse of dominance, cartels, vertical restraints • not engaged in: abuse of buyer power („retail chains“), state aid • role of chief economist unit • part of Devil’s Advocates’ panel

  10. IV. Office´s experience since 2009 • mainly in abuse of dominance area: • possible margin squeeze/bundling in ADSL • possible predatory pricing in bus transportation • possible predatory pricing in energy sector • possible margin squeeze in energy sector • possible refusal to deal in financial sector • mergers: • influence of financial crisis? • recently two candidates for econometrics (unfortunately not realized)

  11. IV. Office´s experience since 2009 • analytical materials (exchange of information, RPM, art. 82 (102) reform, definition of relevant markets …) • personal view: chief economist unit had/has significant impact in-house • key task - data collection: • looking for optimal way (learning by doing)

  12. V. Office´s further plans (visions) • finish „first more economic“ cases • guidelines/best practices on applying MEA • cartels detection (screening markets) • using consumer survey • quantifying antitrust damages (i.a. to endorse private enforcement)

  13. Conclusions • MEA: right direction of competition policy • Office has reflected/followed that direction • but: • prioritization (econometrics) • conjunction: legal and qualitative assessment • wish: economic analysis to be a standard tool used by Office, undertakings and courts…

  14. Thank you for your attention. milan.broucek@compet.czwww.compet.cz

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