The economics of EC competition law: concepts, application and measurement

Book abstract:

This book aims to provide an overview of economic theory as applied to European competition law. One of the motivating forces of the common market is the economic advantages that are expected to flow from its completion. However, the abolition of national governmental restrictions on trade would deliver few benefits if, in their place, anti-competitive practices became rife. Hence the need for competition rules, some of the most important of which are set out in Articles 85 and 86 of the EC Treaty. European competition policy lies at the heart of the Single European Market programme, so it is unsurprising that the application of economic principles in both submissions to the Commission and in the Commission's own decisions is playing an increasingly important role in the decision-making process.
In this context, the relationship between economics and law is discussed, and some key concepts introduced, including market power and the relevant market, which are explored in the first section. In the second section, covering application of EC competition law, Articles 85 and 86 are examined in depth, together with merger control. In the third section, on measurement, the authors discuss the role of empirical analysis in competition law; multiple regression analysis as a tool of antitrust policy; estimating elasticities; price correlation analysis; shipment and transport costs tests; price concentration studies; bidding studies and Granger causality and cointegration tests.
Simon Bishop is the Associate Director at National Economic Research Associates (NERA) and has several years' experience of advising companies involved in competition law inquiries conducted under EC, UK and Australian law. Mike Walker is currently an economist at British Telecommunications and has worked for several years in economic consultancy advising companies on anti-trust matters before the European Commission and UK competition authorities. This work should prove valuable for competition lawyers, officials working in competition, economists and academics in the field.