Working paper-serie

This paper attempts to provide an all-in-one guide for practitioners who are interested in getting a full grasp of how the UPP framework has been developed and how to apply it. In this paper we review and summarize the underpinnings of what has become a popular tool in identifying potentially problematic mergers, known as the Upwards Pricing Pressure (UPP) methodology and discuss how it has been applied in five recent cases reviewed by Konkurrensverket (the Swedish Competition Authority).

Serie: Working Paper 2015:3
Publicerad: 2015-09-17
Antal sidor: 48

UPP Analysis in Five Recent Merger Cases. Authors: Apostolos Baltzopoulos, Jaewon Kim and Martin Mandorff.pdf (0,9 MB)

However, traditional market definitions are being challenged by (1) the technological convergence of services and (2) innovative product offerings taking advantage of this convergence. Consumers now routinely purchase a bundle of telecoms services with a single payment (known as ‘quad play’), including fixed and mobile voice calls, broadband connectivity, and premium broadcasting content. How should such unilateral conduct be assessed ex post by a competition authority under Article 102 TFEU? We suggest that convergence and innovation present both theoretical and practical difficulties for assessing “muddled margins” on telecoms markets. New and different enforcement approaches to exclusion will have to be formulated within the Article 102 framework and tested in the Courts. This may even require abstaining from applying Article 102 TFEU during material periods of convergence, and confining ex post enforcement activity to sector regulation, even when this is inferior for safeguarding effective competition.

Serie: Working Paper 2015:2
Publicerad: 2015-09-17
Antal sidor: 33

Enforcing Margin Squeeze Ex Post Across Converging Telecommunications Markets. Authors: Christian Bergqvist and John Townsend.pdf (0,9 MB)

Private platforms' price structure is distored in favor of buyers for several reasons: asymmetric choices between buyers and merchants, merchant internalization and/or platform competition. Furthermore, market power of platforms leads to higher total user prices similar to the case of one-sided markets. Platform competition can help to correct for such market power distortions but may exacerbate the price structure distortions.

Serie: Working Paper 2015:1
Publicerad: 2015-09-17
Antal sidor: 34

Economics of Payment Cards. Authors: Ozlem Bedre-Defolie and Linda Gratz.pdf (0,6 MB)

It is shown that firms which receive higher fines, have a lower equilibrium threshold for reporting. To validate this result and analyze the sources of fine heterogeneity, data for EU and US cartels are used. Being the first reporter is shown to be correlated with recidivism, leadership and reductions received outside the Leniency Programme. Some characteristics of the cartels where reporting occurred are also unveiled. Identifying the characteristics of the reporting firms is vital to dissolve and dissuade cartels and the wider policy implications of these findings are discussed in the paper.

Serie: Working Paper 2014:1
Antal sidor: 44

Heterogeneous Penalties and Private Information. Author Catarina Marvao.pdf (0,4 MB)

With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by `distrust'; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels' strategic features, including corruption and financial fraud.

Serie: Working Paper 2014:2
Antal sidor: 42

Trust, Leniency and Deterrence. Authors Maria Bigoni, Sven-Olof Fridolfsson, Chloe Le Coq, and Giancarlo Spagnolo.pdf (0,5 MB)