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

More economic approach in 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, 23 April 2010

Opening the role of economics/economists in competition policy: oeconomics explains how markets work (models of competition, firm behaviour, consumer behaviour) oeconomists 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

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

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

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

III. Recent development - Office background: ono pressure from courts overy low pressure from undertakings ointernal decision to apply MEA/EBA main objective: oincreasing efficiency of competition policy

III. Recent development – Office advantages: oharmonization with some other key jurisdictions otoo formalistic approach eliminated ocompetition on merits recognized and permitted risks: oburden too high? oprioritization? oresponse from courts?

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: oengaged in: mergers, abuse of dominance, cartels, vertical restraints onot engaged in: abuse of buyer power („retail chains“), state aid role of chief economist unit part of Devil’s Advocates’ panel

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

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)

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)

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…

Thank you for your attention.