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CARTELS, ABUSE OF MARKET POWER AND MERGERS

by

PROFESSOR ALLAN FELS, AO

Dean Australia and New Zealand

School of Government*

Monday, 7 July 2008

CUTS Institute for Regulation & CompetitionNew Delhi

* Formerly Chairman – Australian Competition and Consumer Commission

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CARTELSCARTELS

Nature and definition

Anti-competitive agreements 

Incentives for cartels – their persistence

Incentives in India

Some industries are more prone: Entry restrictions; inelastic

demand;homogeneous product etc.

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CARTELS (cont) CARTELS (cont)

Sources of cartels

Government-induced cartels

Secrecy and leniency policy

Communication as a requirement

The connection of cartels to other forms of anti-competitive conduct

 

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ABUSE OF MARKET POWERABUSE OF MARKET POWER

Where this part of competition law fits in

Nature and definition

Abuse of dominance/abuse of market power

Monopolisation law in USA and the paucity of cases

Abuse of dominance in the EU

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ABUSE OF MARKET POWER (cont)ABUSE OF MARKET POWER (cont)

Australia BHP case. Refusal of supply Safeway/Woolworths – retail

deletion Compact Discs – punishing retailers Boral case – predatory pricing

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Access to facilities

Difficulties in proving abuse: Remedies are behavioural High prices not addressed Monopolist resistance Quick remedies are not available Lengthy cases 

Inherent problems with protecting/promoting competition

ABUSE OF MARKET POWER (cont)ABUSE OF MARKET POWER (cont)

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Difficulty with remedies 

Protected monopolies

Link to other policies

Deregulation and abuse

ABUSE OF MARKET POWER (cont)ABUSE OF MARKET POWER (cont)

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MERGERS AND ACQUISITIONSMERGERS AND ACQUISITIONS

Where merger law fits in

Mergers a big part of competition law

A neutral approach

“Authorisation”

Dominance and substantial lessening of competition

Notification dilemmas

Evidence

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MERGERS AND ACQUISITIONS (cont)MERGERS AND ACQUISITIONS (cont)

Evidence

Globalisation

Conditional approvals

Foreign takeovers

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SOME CONCLUSIONSSOME CONCLUSIONS

Cartels, abuse of dominance and mergers often go together as a pattern of anti-competitive behaviour

The role of government should be remembered

The interaction of law and economics

Does India need a competition law?

Does India need to act differently from other countries in regard to competition law and policy?