The Role of Economics in Competition Law & Practice
The objective of this course, organised by the Centre for Law, Economics and Society at UCL, is to introduce the economic theories that underlie competition law and the methods that are used to assess whether business practices are nefarious, benign, or healthy. This year it is taught by Dr Andrea Coscelli, Director of Competition Economics at Ofcom, and the team of experts from Charles River Associates (CRA) led by Dr Cristina Caffarra (Head of European Competition) and including Professor Damien Neven (former Chief Economist at the European Commission), Dr Uğur Akgün, Dr Valter Sorana, Dr Hugh Wills and Dr Hans Zenger.
The course consists of two parts:
The first part involves an introduction to microeconomics and industrial organization theory. It provides a basic introduction to the economics of markets including how firms maximise profits, the theory of demand, the role of costs, perfect competition, monopoly, oligopoly, product differentiation and vertical relationships.
The second part involves the application of economics to competition policy. It includes the analysis of market power, market definition, cartels and other coordinated behaviour, unilateral conduct including predatory and exclusionary practices, horizontal and vertical mergers. The course is designed to provide students with a deep understanding of how economics is applied to competition policy as well as practical tools for applying this to cases.
Although both parts provide a rigorous introduction to the topic, the course does not require students to have any previous coursework or knowledge of economics and does not require students to a know anything beyond very basic math. Lectures rely on graphs and verbal descriptions to convey key concepts. Typical students generally have undergraduate degrees in law or other liberal arts subjects. Most students who take the course go on to practice as competition lawyers or in another field of law in which knowledge of economics is helpful.
|1||4 October||Economics of Competition Policy (Coscelli)
Dimensions of competition—price, quality, innovation. Types of competition - static vs. dynamic. Economic objectives of competition law. Demand and supply. The role of economics in competition policy. The use of the error-cost framework to derive competition policy rules.
|2||11 October||Firms and Profit Maximisation (Coscelli)
Demand; costs; profit maximisation; monopoly and the measurement of market power; the Lerner (price-cost margin) index and its application to the analysis of market power.
|3||18 October||Demand, Supply and Static Competition (Coscelli)
Supply and demand and the notion of equilibrium. Comparison with monopoly. The use of the demand and supply framework to predict changes in prices and output (comparative statics).
|4||25 October||Market Power and Welfare (Coscelli)
Consumer and social welfare; static versus dynamic analysis of welfare; implications of market power and welfare for identifying anticompetitive practices.
|5||1 November||Oligopoly and Game Theory (Sorana)
Role of oligopolies in economy; introduction to game theory; static games: Cournot and Bertrand models of oligopoly; dynamic games; applications of game theory in competition policy.
|6||29 November||Cartels and Other Coordinated Practices (Wills)
The economic theory of collusion; tacit collusion and information exchanges; facilitating factors for cartels; detecting and discouraging cartels; estimation of damages and assessment of fines for cartels.
|7||17 January||Market Definition and the Analysis of Market Power (Akgün)
Background on case law and economics; demand and supply substitution; hypothetical monopolist test; critical loss analysis; factors that enhance or reduce market power; dominant firm with competitive fringe model.
|8||24 January||Horizontal Mergers (Sorana)
Legal and economic framework; unilateral effects; the role of diversion ratios; pricing pressure indices and merger simulation models; coordinated effects; analysis of efficiencies.
|9||31 January||Pricing Strategies and the Competitive Process (Zenger)
Competition, innovation and welfare; excessive pricing, price discrimination; limit pricing; predatory pricing
|10||7 February||Exclusive Dealing and Loyalty Rebates (Zenger)
Exclusive dealing and loyalty rebates as part of the competitive process; anticompetitive exclusive dealing; efficiency justifications
|11||21 February||Tying and refusal to supply (Akgün)
Procompetitive tying, bundling and bundled discounts; anticompetitive tying, bundling and bundled discounts; refusal to supply and intellectual property
|12||28 February||Vertical Integration and Mergers (Caffarra)
Foreclosure incentives and single-monopoly profit theorem; ability to foreclose; vertical integration, complementary products and mergers.
|13||6 March||Frontiers of Antitrust [bonus lecture] (Neven)|
About the Teachers:
Dr Andrea Coscelli is a Director of Competition Economics at Ofcom in London. He joined Ofcom in December 2008 from CRA where he was a Vice President in the Competition Practice. He previously worked at economic consulting firms Lexecon (acquired by CRA in 2005) and NERA. He holds a PhD in Economics from Stanford University and first degree in economics from Bocconi University in Milan. He is a frequent speaker at European antitrust conferences and has published articles in a number of journals including the Journal of Econometrics, Journal of Industrial Economics and the European Competition Journal.
Dr Cristina Caffarra is Head of European Competition at CRA and is an expert in the application of modern industrial economics to competition law, and in the empirical analysis of markets in the context of competition investigations. She has provided economic advice to companies on issues of merger control, assessment of vertical restraints, finding of dominance, evaluation of abusive conduct, and several other competition/antitrust issues including bundling, tying, rebates, price discrimination, other forms of potentially exclusionary conduct, intellectual property rights, collusion and the assessment of damages. She has directed and coordinated empirical and theoretical economic analyses, and provided expert witness testimony on several cases before the European Commission, the competition authorities of several member states (including the UK, Germany, Italy, Belgium, Ireland, Spain, Finland and Sweden) and other jurisdictions such as South Africa.
Professor Damien Neven is a senior academic consultant to the Competition Practice of CRA. He is also Professor of Economics at The Graduate Institute, Geneva. He is a distinguished academic economist with a record of publications in applied industrial organization and competition policy. Previously, he was the Chief Economist at DG Competition where he led the expansion of the Chief Economist Team over just four years from around 10 to nearly 30 highly trained economists, playing a role in all major matters. He provided direct advice to the Competition Commissioner and was closely involved in a number of key developments, both in terms of policy and case assessment.
Dr Ugur Akgün is a Principal at CRA. He has been working the field of competition policy since completing a PhD in Economics from Universitat Autònoma de Barcelona in 2004. He specializes on the application of economic theory in merger analysis and abuse of dominance cases. He has worked on merger cases that involved horizontal, vertical and conglomerate issues and on matters relating to predatory pricing, foreclosure and excessive pricing. He has advised clients during investigations by the European Commission and the UK authorities and on issues before the UK’s Competition Appeal Tribunal and commercial courts in Spain. He has published articles in scholarly journals such as Journal of Industrial Economics and European Competition Law Review.
Dr Valter Sorana is a Principal at Charles River Associates. Prior to joining CRA, he was a faculty member in the Department of Econometrics and Operations Research, the Center for Economic Research (CentER), and the Tilburg Law and Economics Center (TILEC) at Tilburg University in the Netherlands. Dr Sorana has a PhD in economics from Stanford University and has previous consulting experience in the United States as a senior associate with CRA. He has provided advice on mergers, allegations of abuse of dominant position, auction design, auction bidding strategies, competition, and regulatory policy in a variety of industries and jurisdictions.
Dr Hugh Wills is a Principal at CRA. Prior to joining CRA (Lexecon Ltd) in 2000 he taught microeconomics, industrial economics (including regulation and competition law) and econometrics (theoretical and applied) at Sussex University, the London School of Economics, the Australian National University and the University of California. He has published on industrial economics and regulation, pricing in the computer industry and theoretical econometrics. Dr Wills has advised on a number of cases before the OFT and MMC and the European Commission covering a wide range of industries. He has considerable experience of damage assessment in cartel cases. Dr Wills read economics at Cambridge University (BA) and has an MSc in Statistics and a PhD in Economics from the University of California at Berkeley.
Dr Hans Zenger is a Senior Consultant with CRA. Prior to joining CRA, he was a member of the Chief Economist’s Team at DG Competition, and a research associate in the Department of Economics at the University of Munich. Dr Zenger is widely published in competition and economics journals.
When is it being held
13 x 2 hours tuition
October 2011 - March 2012
UCL Faculty of Laws
Tel: 020 7679 1514
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