Past Event

The role of market definition in a globalised economy

Have competition authorities kept up with globalisation? Geographic market definition is one of the most pressing issues.

Date: June 30, 2016, 1:00 pm Topic: Innovation & Competition Policy

SUMMARY

Please see below for video recording and event materials.

Amelia Fletcher and Bruce Lyons present recent work on Geographic Market Definition (GMD) in EC Merger Control. They did 10 case studies to assess whether the European Commission uses the right methodology in its geographical market definition, in particular whether a wider supply-side analysis should be used, and whether the Commission appropriately incorporates the constraints from outside the geographic market in the competitive analysis. The last question stems from the concern of being too narrow, given globalization.

Market definition is key when determining market shares, which is the most powerful statistic in merger analysis as it is considered an indication of whether a firm has market power. The authors find that the Commission’s GMDs are generally well-evidenced, with some repetition between the market definition and competitive assessment sections. However, the Commission should clarify that GMD is not an end in itself, that it is useful for assessing competition but should not unduly affect outcomes; what really matters is the competitive assessment. Moreover, the Commission should be clear that it will not use supply side substitution (including by imports) for GMD. The analysis of supply side arguments should be clarified and developed in the competitive assessment. While GMD is done quite well it would benefit from more clarity in its purpose.

One of the main findings of a similar 2009 study, by prof. Roeller for the European Roundtable of Industrialists, was that supply side substitution and potential entry are hardly applied in the market definition, even though the guidelines open at least some room for that compared to those in the US. This may have caused problems in industries with rather strong supply side substitution but downstream national markets when serving customers.

When it comes to local competition, a lot of expertise is with national competition authorities and the EC could benefit from that. In cases with price discrimination one may want to center the assessment on where the consumers are, rather than the merging parties’ location. This is also what the EC has done particularly in industrial cases where the customers buy inputs. There is still much to learn on how to use geography and distance, how to cluster around customers and how to deal with heterogeneity in member states.

One of the takeaways from the report is that we need more clarity regarding the relationship between GMD, supply side substitutability and competitive assessment as well as what should be mentioned where. Moreover, it is difficult to determine how to incorporate competitive constraints from outside the market in the analysis. In past cases, the EC has used historical data to incorporate swing-capacity and imports in the analysis.

An example of a case in which GMD played a decisive role is the T-Mobile ATT merger which was blocked 5 years ago.

Perhaps an underestimated aspect of GMD is its dynamic aspect. A national market today may be different in the near future, for which industrialists may already be competing. There is a notion in the GMD Guidelines to take into account EU Market integration when defining markets, which may call for the Commission to take a more forward-looking perspective. Moreover, companies like Google and Amazon consider each other to be their core competitors. It would be good to somehow find a balance between taking into consideration this dimension of competition and the current more narrow definition that is needed to protect consumers.

Due to internet competition we will probably get used to cases with the higher market shares that get cleared, which will help the presumption among non-economists that higher market shares are a bad thing.

Event summary by Nuria Boot, Research Assistant

Video recording

 

EVENT MATERIALS

Presentation | Amelia Fletcher and Bruce Lyons

Geographic Market Definition in European Commission Merger Control  | Report by Amelia Fletcher and Bruce Lyons

Schedule

Jun 30, 2016

12.30 - 13.00

Check-in and lunch

13.00 - 13.20

Presentation: Geographic Market Definition in European Commission Merger Control

Amelia Fletcher, Professor, Norwich Business School

Bruce Lyons, Professor, University of East Anglia

13.20 - 14.00

Panel Discussion

Chair: J. Scott Marcus, Senior Fellow

Giulio Federico, Head of Unit – Mergers, DG COMP – Chief Economist Team, European Commission

Hans W. Friederiszick, Managing Director, E.CA Economics, and Research Fellow, ESMT

Volker Stapper, Vice-President for Competition Policy, Deutsche Telekom

Raphaël de Coninck, Vice President, CRA, and Professor, Université libre de Bruxelles

14.00 - 14.30

Audience Q+A

Speakers

Raphaël de Coninck

Vice President, CRA, and Professor, Université libre de Bruxelles

Giulio Federico

Head of Unit – Mergers, DG COMP – Chief Economist Team, European Commission

Amelia Fletcher

Professor, Norwich Business School

Hans W. Friederiszick

Managing Director, E.CA Economics, and Research Fellow, ESMT

Bruce Lyons

Professor, University of East Anglia

J. Scott Marcus

Senior Fellow

Volker Stapper

Vice-President for Competition Policy, Deutsche Telekom

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Bryn Watkins

Bryn Watkins

bryn.watkins@bruegel.org +32 2 227 42 88

Read about event More on this topic

Upcoming Event

Oct
5
12:30

Crowd Employment

This event aims to discuss the various nuances and diversity that characterize crowd employment.

Speakers: Cristiano Codagnone, Valerio Michele De Stefano, Irene Mandl, Georgios Petropoulos and Amit Singh Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event

Past Event

Past Event

Bruegel Annual Meetings 2017

The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe.

Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys, Zsolt Darvas, Jean Luc Demarty, Maria Demertzis, Anna Ekström, Lowri Evans, Ferdinando Giugliano, Sandro Gozi, Peter Grünenfelder, Reiner Hoffmann, Levin Holle, Kate Kalutkiewicz, Steffen Kampeter, Peter Kažimír, Emmanuel Lagarrigue, Matti Maasikas, Steven Maijoor, Reza Moghadam, Nathalie Moll, James Murray, Johan Van Overtveldt, Julia Reinaud, André Sapir, Dirk Schoenmaker, Mateusz Szczurek, Marianne Thyssen, Jean-Claude Trichet, Reinhilde Veugelers, Nicolas Véron, Ida Wolden Bache, Liviu Voinea, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Square - Brussels Meeting Centre Date: September 7, 2017
Read article More on this topic More by this author

Blog Post

EU posted workers: separating fact and fiction

After President Macron’s recent tour of Central and Eastern European countries, EU posted workers are getting a lot of attention. However, a major reform of the system is already underway and we should not confuse posted workers with long-term labour migrants. Posted workers are a small part of the labour force, and their labour market impact is likely to be minor.

By: Uuriintuya Batsaikhan Topic: European Macroeconomics & Governance Date: August 31, 2017
Read article Download PDF More by this author

Parliamentary Testimony

European Parliament

Could revising the posted workers directive improve social conditions?

This presentation was delivered in Brussels on 31 January 2017 at a hearing of think-tanks, to advise the European Parliament on the revision of the Posting of Workers Directive.

By: Zsolt Darvas Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: August 29, 2017
Read article More on this topic More by this author

Opinion

The EU and the US: a relationship in motion

Europe’s post-crisis recovery has been disappointing in comparison with the USA. But lower rates of inequality are staving off populism and bolstering support for globalisation. With the USA an increasingly unpredictable partner, the EU must address internal imbalances and build alliances to defend the multilateral order.

By: Maria Demertzis Topic: Global Economics & Governance Date: July 28, 2017
Read about event

Past Event

Past Event

Is there a way out of non-performing loans in Europe?

At this event we looked at the issue of non-performing loans in Europe. The event also saw the launch of the latest issue of "European Economy – Banks, Regulation and the Real Sector."

Speakers: Emilios Avgouleas, Giorgio Barba Navaretti, Giacomo Calzolari, Maria Demertzis, Martin Hellwig, Helen Louri and Laura von Daniels Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 6, 2017
Read article More on this topic More by this author

Opinion

Engagement in a time of turbulence

The arrival of China as an increasingly significant setter of global standards may be uncomfortable for India but is near-inevitable and needs to be planned for.

By: Suman Bery Topic: Global Economics & Governance Date: July 5, 2017
Read about event

Past Event

Past Event

Fintech and the digital transformation of banking

FinTech is changing the financial sector. What are the challenges associated with this and what policies should we adopt in response?

Speakers: Xavier Corman, Cora van Nieuwenhuizen, Georgios Petropoulos, Ezequiel Szafir and Pēteris Zilgalvis Topic: Finance & Financial Regulation, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 20, 2017
Read about event More on this topic

Past Event

Past Event

Lessons for the future governance of financial assistance in the EU

On 14th June, Randall Henning will present his latest book on the Euro crisis and we will discuss how financial assistance should be governed in the euro area in the future.

Speakers: Servaas Deroose, C. Randall Henning, Rolf Strauch and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 14, 2017
Read about event More on this topic

Past Event

Past Event

Substance requirements for financial firms moving out from the UK

In the run-up to Brexit, UK-based financial firms are considering how to organize their operations across the future divide between the UK and EU27. This event will discuss the regulatory requirements on how self-sustaining the operations in the EU should be, and implications for the single market and third countries.

Speakers: Gerry Cross, Simon Gleeson and Nicolas Véron Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 2, 2017
Read about event

Past Event

Past Event

Inclusive growth: global and European lessons for Spain

Can manufacturing still be a driver for inclusive growth around the world? What European and national policies can foster inclusive growth in Europe? What is the situation in Spain and what can Spain learn from the global and European experiences?

Speakers: Cristina Cabrera, Zsolt Darvas, Maria Demertzis, Alejandra Kindelán, Robert Lawrence and Federico Steinberg Topic: European Macroeconomics & Governance, Global Economics & Governance Location: Calle Los Madrazo 36-38 Madrid Date: May 31, 2017
Read about event More on this topic

Past Event

Past Event

Geo-blocking in the digital single market

Geo-blocking is a discriminatory practice that is wide-spread in EU. It prevents online customers from accessing and purchasing products or services from a website based in another member state

Speakers: Marine Elgrichi, J. Scott Marcus, Fabian Paagman, Bertin Martens, Georgios Petropoulos, Agustin Reyna, Gareth Shier, Werner Stengg and Roza von Thun Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 30, 2017
Load more posts