1. Law and Economics EU/EC Competition Law Professional Career Programme (PCP) Yoshiharu, ICHIKAWA 2011/11/05

2. What we learned at the last session 1 The effects of economics on law in US antitrust --- ‘now so embedded in the rationale for antitrust policy’ European competition policy and economics --- ‘redirected towards an increased use of economic analysis’, but…

3. Introduction to today’s session 1 Competition law is a case-law based law. We will observe the EU’s current economic approach through the concept ‘market power’. Student’s presentation

4. Chapter 5: Market Power 1 Four concepts of market power market power offers a helpful preliminary filter to identify the sources of competition problem to price profitably above the competitive level (economic consideration) commercial power （ economic freedom ） ability to devise strategies that can harm rivals (post-Chicago) jurisdictional concept (threshold)

5. Chapter 5: Market Power 1 Dominance in EC competition law read Article 102 TFEU(Article 82 EC) meaning of ‘dominance’ --- from commercial power to market power However, the Michelin case etc. --- harm the economic freedom of the other market players ‘Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.’

6. Chapter 5: Market Power 1 Dominance in EC competition law In US, ‘a firm is a monopolist if it can profitable raise prices above the competitive level.’ (the Microsoft case) - ‘economic freedom is preserved…it is the defendant’s.’ In EU: - ‘protect the economic freedom of other market participants’ --- overlap of commercial power / strategic power in post Chicago (irrespective of market outcomes)

7. Chapter 5: Market Power 1 Dominance in EC competition law New approaches by European Commission? --- DG Competition discussion paper on Article 82 --- However, …

8. Chapter 5: Market Power 1 Measuring market power - Market definition hypothetical monopolist test – is this a market worth monopolising? ‘Substitutability’ in EU Geographical market – against market partitioning Policy-driven market definition? --- market definition can be strategic - Market shares 50%, presumption of dominance - Entry barriers Bain vs Stigler

9. 3 Question: Come up with the competition case against Apple. (But this is related to Article 102 TFEU (Article 82 EC)) How do you define the market? Chapter 5: Market Power

10. 3 Case: British Airways introduced the loyalty rebate* for the travel agencies. *pure quantity discounts, bundled discounts, and market-share discounts BA’s share is decreasing from 50% to 40%. This conduct will be punished or not? Chapter 5: Market Power

11. 3 Question: With the knowledge by this session, Which do you prefer, the US way or the EU way? Chapter 5: Market Power

12. Course web site: 1 My webpage: http://www32.ocn.ne.jp/~estate4/education2011.htm You can download the presentation I used in the session. Contact address: 4thestate@mail.goo.ne.jp4thestate@mail.goo.ne.jp or from my Facebook page

13. Course Schedule [updated] 1 11/10/01 Chapter 2-1, 2 [student A( TAKABAYASHI )] 11/10/08 Chapter 2-3, 4, 5, 6 [student B( Lecturer )] 11/10/15 Chapter 3-1, 2, 3, 4, 5 [student C( MERCKEN, CASTELLANE)] 11/10/22 Chapter 3-6, 7, 8 [student D( decided )] 11/10/29 class cancellation 11/11/05 Chapter 5-1, 2, 3 [student E( OSAWA, KIKUCHI )]

14. 1 11/11/12 class cancellation (Sorry! I attend the international conference.) 11/11/19 class cancellation (Mita Festival) 11/11/26 - Chapter 5-4, 5, 6, 7 [student F( SAKAMOTO, TAKEDA )] - Mid-term examination (open-book) * pre-condition for qualification of this class --- if you are absent, please contact me. 11/12/03 class cancellation 11/12/10 Chapter 6-1, 2, 3, 4 [student G( Taiki, Takaaki)] 11/12/17 Chapter 6-5, 6, 7 [student H( Junichiro, Kenmei)] Course Schedule [updated] NEXT Session

15. 1 11/12/24 Enforcement – Watch the movie ‘Informant!’ 12/01/14 Chapter 11-1, 2, 3 [student I( not yet decided )] At the same day, Submission of take-home exam and final discussion Course Schedule [updated]