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

Author

Listed:
  • 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.

Suggested Citation

  • Davies, S.W. & Driffield, N.L. & Clarke, R., 1998. "Monopoly in the UK: What Determines whether the MMC finds against the Investigated Firms?," University of East Anglia Discussion Papers in Economics 9808, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:papers:9808
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    Cited by:

    1. Martin Carree & Andrea Günster & Maarten Schinkel, 2010. "European Antitrust Policy 1957–2004: An Analysis of Commission Decisions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(2), pages 97-131, March.
    2. Marcos Avalos & Rafael E. De Hoyos, 2008. "An Empirical Analysis of Mexican Merger Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 113-130, March.
    3. Jordi Gual & Núria Mas, 2011. "Industry Characteristics and Anti-Competitive Behavior: Evidence from the European Commission’s Decisions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 207-230, November.
    4. Coate Malcolm B., 2006. "Economic Models and the Merger Guidelines: A Case Study," Review of Law & Economics, De Gruyter, vol. 2(1), pages 53-84, May.
    5. Sunel Grimbeek & Steve Koch & Richard Grimbeek, 2013. "The Consistency of Merger Decisions at the South African Competition Commission," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 561-580, December.
    6. Ghosal, Vivek, 2002. "Potential foreign competition in US manufacturing," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1461-1489, December.
    7. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    8. Richard J. Grimbeek & Sunel Grimbeek & Steven F. Koch, 2011. "The Consistency of Merger Decisions in a Developing Country: The South African Competition Commission," Working Papers 201117, University of Pretoria, Department of Economics.
    9. 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.
    10. Schinkel, Maarten Pieter & Tuinstra, Jan, 2006. "Imperfect competition law enforcement," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1267-1297, November.
    11. 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.
    12. Lauk Martina, 2003. "Ökonometrische Analyse der Entscheidungspraxis des Bundeskartellamtes / Econometric Analysis of the Decisions of the German Federal Cartel Office," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(6), pages 680-711, December.
    13. 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.

    More about this item

    Keywords

    MONOPOLIES ; MARKET STRUCTURE ; MERGERS;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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