Measuring market concentration according yo European competition policy
For European Commission, the measurement of market concentration is important because it lies at the heart of decisions about whether to approve mergers and acquisitions that might pose a potentially harmful impact on consumers. The most commonly utilized measure of market concentration is the Herfindahl Hirschman Index (HHI), and the change in the HHI from pre-merger to post-merger (“delta”). In first part of the paper I focused on the definition of concentration as it appears in European legislation and on the relevant market by identifying those substitute products or services which provide an effective constraint on the competitive behavior of the products or services being offered in the market by the parties under investigation. In the second part of the paper, I took an example using the HHI index to see how a merger affects the degree of market concentration. Further, I brought to light several issues regarding the measurement of market concentration and analysis of results as they are addressed by the european competition policy. As a result of this paper, I reached the conclusion that HHI index is more complete and elaborate than other market indicators and I find that a concentration operation (acquisition or merger) between two companies may have an important impact on the degree of market concentration and can lead to anti-competitive effects, requiring detailed analysis of the European Commission
Volume (Year): 18 (2012)
Issue (Month): 2 ()
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