Cover -- Half-title -- Title -- Copyright -- Contents -- Contents by potentially anticompetitive business practices -- Contents by markets -- List of figures -- List of tables -- List of contributors -- Preface -- Introduction: the transformation of competition policy in Europe -- 1. The benefits of competition -- 2. Understanding business practices and market competition -- 3. Harm and redemption in competition analysis -- 4. Competition policy in Europe -- 5. Organisation of this book -- A Anticompetitive behaviour by firms with market power -- Introduction -- A.1 Abuse of a dominant position -- 1 Michelin II - The treatment of rebates -- 1. Introduction -- 2. A short description of the case -- The markets -- The industry -- Michelin's commercial policy -- 1 General price conditions (1980-1996) -- i. Quantity discounts -- ii. Service bonus -- iii. Progress bonus -- iv. Individual agreements -- 2 The 'PRO agreement' -- 3 The Michelin Friends Club -- 4 The Commission's findings and the CFI review -- Michelin's dominance -- The abusive nature of Michelin's commercial policy -- General price conditions -- The other rebate schemes -- 5 An economist's assessment of Michelin II -- Do rebates have anticompetitive effects? -- Possible efficiency effects of rebates -- 6 Conclusions -- 2 Interoperability and market foreclosure in the European Microsoft case -- 1. Introduction -- 2. The big picture -- 3. The legal timeline -- 4. The role of servers in modern computers and the definition of markets for server operating systems -- 5. Some technical issues in the case -- Interoperability -- Market definition -- 6. Key economic issues I: economic incentives to foreclose -- The one monopoly profit theory -- Dynamic incentives to foreclose -- Static incentives to foreclose -- 7. Key economic issues II: remedies and innovation.

What did the Commission ask for in its remedies? -- Effects of the remedy on the incentives of server OS rivals to invest in innovation (R&D) -- Effects of the remedy on Microsoft's incentives to invest in innovation -- Interoperability at what price? -- 8. The media player part of the case -- 9. Conclusions -- A.2 Market investigations -- 3 Mobile call termination in the UK: a competitive bottleneck? -- 1. Background -- 2. A benchmark model -- 2.1 Fixed-oobile call termination -- 2.2 Mobile-to-mobile call termination -- 2.3 Discussion -- 3. Extensions -- 4. Conclusion -- Acknowledgements -- 4 Relationship between buyer and seller power in retailing: UK supermarkets (2000) -- 1. Introduction -- 2. Case background and key economic issues -- 3. Market definition and concentration levels -- 4. Pricing practices -- 4.1 Persistent below-cost selling -- 4.2 Local price flexing -- 4.3 CC's views on pricing practices -- 5. Retailer buyer power -- 6. Retailer buyer and seller power interaction -- 7. Conclusion -- Postscript -- Acknowledgements -- B Agreements between firms -- Introduction -- B.1 Cartels -- 5 The graphite electrodes cartel: fines which deter? -- 1. Introduction -- 2. The theory of optimal deterrence -- 3. The graphite electrodes industry -- 4. The case and the appeals -- 5. The Commission guidelines on fines -- 6. Calculating the fines -- 6.1 The basic amount -- 6.1.1 Categories -- 6.1.2 'Means testing' -- 6.1.3 Duration -- 6.2 Aggravating and attenuating circumstances -- 6.3 10 per cent annual turnover cap -- 6.4 Leniency notice -- 6.5 Ability to pay and other factors -- 7. The odd one out - C/G -- 8. Conclusion -- Appendix A: Summaries of the fines imposed in the Commission decision, the CFI decision and the ECJ decision -- Acknowledgements -- 6 Assessment of damages in the district heating pipe cartel -- 1. Introduction and motivation.

2. The decision of the European Commission -- 3. Essential cartel economics -- 4. Calculating damages -- 5. Damages in the district heating pipe cartel -- After method -- Before method -- Cost-based method -- 6. Methods not used -- 7. Conclusion -- Epilogue -- Acknowledgements -- B.2 Other horizontal agreements -- 7 Interchange fees in payment card systems: price remedies in a two-sided market -- Introduction -- 1. An overview of the payment card industry -- 2. The case: DG Comp 29.373-Visa International -- 2.1 The facts -- 2.2 The reasoning of DG Comp -- 3. Some economics of payment card systems -- 3.1 Two different kinds of externalities -- 3.2 Usage externality -- 3.3 Efficient usage of cards -- 3.4 The role of interchange fees -- 4. A model of the payment card industry -- 4.1 The model -- 4.2 Merchant acceptance -- 5. Welfare analysis -- 6. Are retailers 'forced' to accept cards? -- 7. Conclusion: an appraisal of the DG Comp decision -- 8 The Orders and Rules of British Horseracing: anticompetitive agreements or good governance of a multi-sided sport? -- 1. Introduction -- 2. The consumers of British horseracing -- The aim of competition policy -- Consumers and consumer preferences -- 3. The institutions governing British horseracing -- 4. The OFT Statement of Objections -- The 'market for fixtures and programmes' -- The 'market for British racing opportunities' -- The 'market for pre-race data' -- Some problems with the OFT's Statement of Objections -- 5. Economic analysis of the offending Orders and Rules -- The betting externality and optimal bookmaker contribution to British horseracing -- A simple model of the betting externality -- The Coase Theorem does not hold for horseracing -- Collective negotiations between BHB and the bookmakers -- Implications of alternative institutional arrangements for negotiating over the betting externality.

1. BHB negotiates with collective bookmakers -- 2. BHB negotiates with individual bookmakers -- 3. Individual courses negotiate with collective bookmakers -- 4. Individual courses negotiate with individual bookmakers -- 5. No property rights for BHB (or racecourses) to exclude bets on British horseracing -- Conclusion on agreements that enable BHB to negotiate collectively -- Coordination of fixtures and race planning -- Integrity and prize money -- 6. Outcome and conclusion -- Acknowledgements -- B.3 Vertical agreements -- 9 Efficiency enhancing or anticompetitive vertical restraints? Selective and exclusive car distribution in Europe -- 1. Introduction -- 2. Distribution agreements in the car market -- 2.1 From individual to block exemptions -- 2.2 The car distribution system between 1985 and 2002 -- 2.3 The liberalisation in 2002 -- 2.4 Adoption and enforcement of the block exemptions -- Adoption of the block exemptions -- Enforcement of black clauses -- Enforcement issues regarding the 2002 market share thresholds -- 3. Economic analysis -- 3.1 Efficiencies from distribution agreements -- Mitigating double marginalisation problems -- Dealer services incentives and freeriding -- Manufacturer investment incentives and freeriding -- 3.2 Limited cross-border trade and international price differences -- Obstacles to crossorder trade -- International price differences -- 3.3 Limited domestic trade and softening interbrand competition -- 3.4 Foreclosure -- Foreclosure of competing manufacturers -- Foreclosure of spare-part manufacturers -- 4. Concluding remarks -- Acknowledgements -- 10 Beer - the ties that bind -- Introduction -- The economic framework -- Legal analysis -- Specific cases -- Offsetting benefits in Bass -- Does Crehan jump the hurdles? -- How much was Crehan damaged? -- Hopes dashed -- Final comments.

Appendix 1 The Rey and Stiglitz (1995) vertical arrangements framework -- Appendix 2 Modelling a duopoly with dissimilar costs -- Acknowledgements -- 11 Parallel trade of prescription medicines: the Glaxo Dual Pricing case -- 1. Background -- 2. The Glaxo Dual Pricing case -- 2.1 Glaxo-Wellcome's Spanish pricing agreement -- 2.2 The Commission's decision -- 2.3 The judgment of the Court of First Instance -- 3. Analysis -- 3.1 The position of the Court -- Consumer welfare -- Article 81(1) -- Article 81(3) -- 3.2 An economic perspective -- Price discrimination and welfare -- Non-price factors including R&D incentives -- 4. Concluding remarks -- C Mergers -- Introduction -- C.1 Measurement of unilateral effects -- 12 A merger in the insurance industry: much easier to measure unilateral effects than expected -- 1. Introduction -- 2. Descriptive analysis -- 2.1 Correlation among insurance segments and their relative weights -- 2.2 Correlation between number of policies and amount of premia -- 2.3 Average prices are not rising and margins are fair -- 2.4 Insurance firms are differentiated in terms of risk level -- 2.5 The structure of the insurance sector is stable since 2000 -- 3. Empirical analysis -- 3.1 Specification of the econometric model -- Demand -- Cost -- Pricing -- 3.2 Estimation -- 3.3 Discussion -- 4. Merger analysis -- 5. Conclusions -- Acknowledgement -- 13 Merger simulations of unilateral effects: what can we learn from the UK brewing industry? -- 1. Introduction -- 2. Simulation of unilateral effects -- 3. The building blocks -- 3.1 Demand -- The logit -- The nested logit -- Extensions to the nested logit -- The distance metric -- Discussion -- 3.2 Marginal costs -- Exogenous costs -- Implicit costs -- Estimated costs -- 3.3 The game -- 4. The UK beer market -- 4.1 International comparisons -- 4.2 The UK industry.

4.3 Public policy towards the UK beer industry.