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2. 2 CARTELS, ABUSE OF MARKET POWER AND MERGERS by PROFESSOR ALLAN FELS, AO Dean Australia and New Zealand School of Government * Monday, 7 July 2008 CUTS Institute for Regulation & Competition New Delhi * Formerly Chairman – Australian Competition and Consumer Commission

3. 3 CARTELS  Nature and definition  Anti-competitive agreements  Incentives for cartels – their persistence  Incentives in India  Some industries are more prone:  Entry restrictions; inelastic demand; homogeneous product etc.

4. 4 CARTELS (cont)  Sources of cartels  Government-induced cartels  Secrecy and leniency policy  Communication as a requirement  The connection of cartels to other forms of anti-competitive conduct

5. 5 ABUSE OF MARKET POWER  Where this part of competition law fits in  Nature and definition  Abuse of dominance/abuse of market power  Monopolisation law in USA and the paucity of cases  Abuse of dominance in the EU

6. 6 ABUSE OF MARKET POWER (cont)  Australia  BHP case. Refusal of supply  Safeway/Woolworths – retail deletion  Compact Discs – punishing retailers  Boral case – predatory pricing

7. 7  Access to facilities  Difficulties in proving abuse:  Remedies are behavioural  High prices not addressed  Monopolist resistance  Quick remedies are not available  Lengthy cases  Inherent problems with protecting/promoting competition ABUSE OF MARKET POWER (cont)

8. 8  Difficulty with remedies  Protected monopolies  Link to other policies  Deregulation and abuse ABUSE OF MARKET POWER (cont)

9. 9 MERGERS AND ACQUISITIONS  Where merger law fits in  Mergers a big part of competition law  A neutral approach  “Authorisation”  Dominance and substantial lessening of competition  Notification dilemmas  Evidence

10. 10 MERGERS AND ACQUISITIONS (cont)  Evidence  Globalisation  Conditional approvals  Foreign takeovers

11. 11 SOME CONCLUSIONS  Cartels, abuse of dominance and mergers often go together as a pattern of anti-competitive behaviour  The role of government should be remembered  The interaction of law and economics  Does India need a competition law?  Does India need to act differently from other countries in regard to competition law and policy?