The European Commission has adopted guidelines on various types of agreements (vertical, horizontal and technology transfer) that are all heavily based in economics, and many national competition authorities have followed suit. To minimise antitrust risks, companies with significant market presence must establish whether an agreement will benefit or hinder competition. Economic analysis is at the heart of such an assessment.
Vertical agreements between companies at different levels of the supply chain often have strong efficiency rationales and enhance competition. However, they may also have anti-competitive effects, unfairly eliminating rivals or making them less effective competitors. There is a large and growing economic literature that identifies the types of agreements that might be problematic.
Regulators require a systematic economic assessment of whether pro-competitive or anti-competitive effects of a vertical agreement will dominate when these agreements involve companies with a significant market share. CRA has provided such an assessment in a variety of industries - from consumer goods to industrial products - and before numerous regulators (from DG Competition to the competition authorities of most Member States). We have also provided policy advice to various competition authorities on vertical issues.
Horizontal agreements aimed at softening competition among firms - most obviously cartels - are illegal. However, without direct circumstantial evidence it is difficult to establish collusion. In those instances empirical analysis might play a significant role in showing whether the evolution of prices in a market could have an innocent (i.e. non-collusive) explanation.
Moreover, some horizontal agreements can be granted exemption because their efficiency benefits outweigh any competitive harm - for example, if an agreement allows a new market to be opened up. The burden of proof in such cases is high, and an exemption will therefore rely on a thorough economic assessment of costs and benefits. CRA has worked on the major reviews of existing Block Exemptions for liner shipping and IATA interlining, and on other similar cases.
Even where there is no exemption and the issue of culpability is beyond doubt, empirical economic analysis is central to assessing the size of fines and the potential for future damages claims. We have carried out estimations of the effects of cartels, including complex analyses of overcharge pass-through, in a variety of industries, including steel beams, packaging, fertilizers, auction houses and various chemical products.
We have also provided expert opinions and testimony in a number of cases where litigation and alternative dispute resolution mechanisms were being used, including working for plaintiffs in the European damages actions against the vitamins cartel.