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Here below you find the most read articles on over the last week.
"I believe that in a couple of years, their largest owner Etihad will sell Air Berlin to Lufthansa." So said Ryanair CEO Michael O’Leary in May 2016. As it turned out, 15 months later, Germany’s second-largest airline, Air Berlin, filed for insolvency on August 15 after Etihad withdrew its financial backing. Lufthansa, Germany’s main carrier, is now first in line to take parts of the business. Read More.
I think this is fun from Senator Klobuchar, of Minnesota, she is questioning why the Federal Trade Commission's look into the Amazon and Whole Foods deal took only 3 months. The answer here being a simple one, possibly even one that a Senator can understand. There are no antitrust issues here, the FTC is supposed to look into antitrust issues, as there aren't any it doesn't take long to reach a decision. Read More.
The Bundeskartellamt has imposed fines amounting to 9.6 million euros on three manufacturers of heat shields and their representatives. Read More.
On 11 August 2017 the Office of Gas and Electricity Markets (Ofgem) announced the opening of an investigation into a suspected abuse of dominance by an unnamed company providing services to the energy industry. The regulator is looking into any infringement of the provisions of Chapter II of the Competition Act 1998 and/or Article 102 TFEU on abuse of a dominant position. Read More.
We study the anti-competitive effects of predatory pricing and the efficacy of three policy responses. In a series of experiments where an incumbent and a potential entrant interact, we compare prices, market structures and welfare. Under a laissez-faire regime, the threat of post-entry price cuts discourages entry, and allows incumbents to charge monopoly prices. Current U.S. policy (Brooke Group) does not help. A policy suggested by Baumol (1979) lowers post-exit prices, while Edlin's (2002) proposal reduces pre-entry prices and encourages entry. While both policies show outcomes after entry that are less competitive than under Laissez-Faire, they nevertheless increase consumer welfare. Read More.
This paper finds evidence of an inverse U shape in the number of cartels detected by a Competition Agency (CA) over its lifetime. We interpret this as evidence that, as the CA builds up experience in enforcement, this feeds back into the business community to deter future cartel formation. We present two simple theoretical models, focussing respectively on composition and frequency deterrence, to describe how the feedback would work. Empirically, we simulate the long-term dimension by applying cohort analysis on an international panel of CAs during the time period 2006-2014. Read More.
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