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