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

Listed author(s):
  • Davies, S.W.
  • Driffield, N.L.
  • Clarke, R.

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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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
Handle: RePEc:uea:papers:9808
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Order Information: Postal: Jessica Pointer, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

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