Metcash, Market Power and Counterfactuals

Abstract:     
The standard of proof required in merger cases has become the centre of considerable controversies and confusion following the Australian Federal Court’s decision in Metcash. This paper reviews the use of counterfactuals and the inherent contradictions in adopting the real chance standard of proof. It also critically examines the different approaches of the judgments in Metcash, and the more formal approach by the New Zealand High Court in the Warehouse decision. This is assessed using probability theory. The discussion points to the adoption of the balance of probabilities as the requisite standard of proof, and a watering down of the counterfactual in preference to a more direct approach to merger assessments. The discussion also critically assesses the use of counterfactuals in monopolisation and anticompetitive practices cases under Australian and New Zealand competition laws.

Number of Pages in PDF File: 38

Keywords: counterfactual, substantially lessen competition, evidential standards, mergers, monopolisation

JEL Classification: D4, K0, K21, L1, L4, L11, L12, L13, K14, L41, L44, N60

working papers series