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CARTELS, ABUSE OF MARKET POWER AND MERGERS by PROFESSOR ALLAN FELS, AO Dean

CARTELS, ABUSE OF MARKET POWER AND MERGERS by PROFESSOR ALLAN FELS, AO Dean Australia and New Zealand School of Government * Monday, 7 July 2008 CUTS Institute for Regulation & Competition New Delhi * Formerly Chairman – Australian Competition and Consumer Commission. CARTELS.

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CARTELS, ABUSE OF MARKET POWER AND MERGERS by PROFESSOR ALLAN FELS, AO Dean

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  1. CARTELS, ABUSE OF MARKET POWER AND MERGERS by PROFESSOR ALLAN FELS, AO Dean Australia and New Zealand School of Government* Monday, 7 July 2008 CUTS Institute for Regulation & Competition New Delhi * Formerly Chairman – Australian Competition and Consumer Commission

  2. CARTELS • Nature and definition • Anti-competitive agreements  • Incentives for cartels – their persistence • Incentives in India • Some industries are more prone: • Entry restrictions; inelastic demand; homogeneous product etc.

  3. CARTELS (cont) • Sources of cartels • Government-induced cartels • Secrecy and leniency policy • Communication as a requirement • The connection of cartels to other forms of anti-competitive conduct

  4. ABUSE OF MARKET POWER • Where this part of competition law fits in • Nature and definition • Abuse of dominance/abuse of market power • Monopolisation law in USA and the paucity of cases • Abuse of dominance in the EU

  5. ABUSE OF MARKET POWER (cont) • Australia • BHP case. Refusal of supply • Safeway/Woolworths – retail deletion • Compact Discs – punishing retailers • Boral case – predatory pricing

  6. ABUSE OF MARKET POWER (cont) • Access to facilities • Difficulties in proving abuse: • Remedies are behavioural • High prices not addressed • Monopolist resistance • Quick remedies are not available • Lengthy cases  • Inherent problems with protecting/promoting competition

  7. ABUSE OF MARKET POWER (cont) • Difficulty with remedies  • Protected monopolies • Link to other policies • Deregulation and abuse

  8. MERGERS AND ACQUISITIONS • Where merger law fits in • Mergers a big part of competition law • A neutral approach • “Authorisation” • Dominance and substantial lessening of competition • Notification dilemmas • Evidence

  9. MERGERS AND ACQUISITIONS (cont) • Evidence • Globalisation • Conditional approvals • Foreign takeovers

  10. SOME CONCLUSIONS • Cartels, abuse of dominance and mergers often go together as a pattern of anti-competitive behaviour • The role of government should be remembered • The interaction of law and economics • Does India need a competition law? • Does India need to act differently from other countries in regard to competition law and policy?

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