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Monopoly in the UK: What Determines whether the MMC finds against the Investigated Firms?

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Author Info

  • Davies, S.W.
  • Driffield, N.L.
  • Clarke, R.

Abstract

This paper draws on data from 73 UK Monopolies and Mergers Commission reports on monopoly between 1973 and 1995. It shows that there is a roughly two in three chance that the Commission will come to an adverse conclusion against the investigated firms in a given case. although the underlying philosophy of UK policy in this area has always been based on a case-by-case approach (in which precedent plays little part), the model demonstrates that a significant majority of MMC decisions are predictable using a very simple probit model, based on standard, readily observable characteristics. Specifically, 75-80% of decisions can be explained purely in terms of the market share of the leading firm (but not those f the second and third ranked firms), and knowledge of the broad nature of the alleged anti-competitive practice. An adverse finding is most likely in cases involving exclusive dealing, and least likely where other vertical restraints are involved.

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Bibliographic Info

Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series University of East Anglia Discussion Papers in Economics with number 9808.

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Length: 25 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:uea:papers:9808

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Postal: Helen Chapman, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK
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Keywords: MONOPOLIES ; MARKET STRUCTURE ; MERGERS;

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Cited by:
  1. Bergman, Mats A. & Jakobsson, Maria & Razo, Carlos, 2005. "An econometric analysis of the European Commission's merger decisions," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 717-737, December.
  2. Avalos, Marcos & De Hoyos, Rafael E., 2008. "An empirical analysis of Mexican merger policy," Policy Research Working Paper Series 4527, The World Bank.
  3. Aghion, Philippe & Blundell, Richard William & Griffith, Rachel & Howitt, Peter & Prantl, Susanne, 2005. "The Effects of Entry on Incumbent Innovation and Productivity," CEPR Discussion Papers 5323, C.E.P.R. Discussion Papers.
  4. Sunel Grimbeek & Steven F. Koch & Richard J. Grimbeek, 2012. "The Consistency of Merger Decisions in a Developing Country: The South African Competition Commission," Working Papers 286, Economic Research Southern Africa.
  5. Davies, Stephen & Olczak, Matthew & Coles, Heather, 2011. "Tacit collusion, firm asymmetries and numbers: Evidence from EC merger cases," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 221-231, March.
  6. Martin Carree & Andrea Günster & Maarten Schinkel, 2010. "European Antitrust Policy 1957–2004: An Analysis of Commission Decisions," Review of Industrial Organization, Springer, vol. 36(2), pages 97-131, March.
  7. Schinkel, Maarten Pieter & Tuinstra, Jan, 2006. "Imperfect competition law enforcement," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1267-1297, November.
  8. Martina Lauk, 2003. "Ökonometrische Analyse der Entscheidungspraxis des Bundeskartellamtes," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(6), pages 680-711, November.
  9. Robert Feinberg & Mieke Meurs & Kara Reynolds, 2012. "Maintaining New Markets: Explaining Antitrust Enforcement in Central and Eastern Europe," Journal of Industry, Competition and Trade, Springer, vol. 12(2), pages 203-219, June.
  10. Ghosal, Vivek, 2002. "Potential foreign competition in US manufacturing," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1461-1489, December.
  11. Jordi Gual & Núria Mas, 2011. "Industry Characteristics and Anti-Competitive Behavior: Evidence from the European Commission’s Decisions," Review of Industrial Organization, Springer, vol. 39(3), pages 207-230, November.

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