Capacity Constraints and Irreversible Investments: Defending Against Collective Dominance in UPM Kymmene/Norske Skog/Haindl

CASES IN EUROPEAN COMPETITION POLICY: THE ECONOMIC ANALYSIS, B. Lyons, ed., Cambridge University Press, Forthcoming

34 Pages Posted: 18 Sep 2007

See all articles by Kai-Uwe Kuhn

Kai-Uwe Kuhn

University of East Anglia (UEA) - Centre for Competition Policy; Centre for Economic Policy Research (CEPR)

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Abstract

Scrutiny of potential mergers by the European Commission often focuses on unilateral effects or single firm dominance. But some cases have involved concerns over coordinated effects: the concern that the merger could increase the likelihood of consumer harm through tacit collusion by the reduced number of firms in the industry (this is known as collective dominance). The economic and legal issues are far less certain in these cases and a particular challenge is how to bring empirical evidence to bear on the decision. In this chapter we examine a case in newsprint and magazine paper - UPM Kymmene/Norske Skog/Haindl. Here, coordinated effects were at the centre of the Commission's concerns. We discuss how collusion theory and evidence were used to help clear the merger without remedies in the final Decision.

Keywords: coordinated effects, joint dominance, irreversible investment, capacity constraints

JEL Classification: L1, L4, L73

Suggested Citation

Kuhn, Kai-Uwe and Van Reenen, John Michael, Capacity Constraints and Irreversible Investments: Defending Against Collective Dominance in UPM Kymmene/Norske Skog/Haindl. CASES IN EUROPEAN COMPETITION POLICY: THE ECONOMIC ANALYSIS, B. Lyons, ed., Cambridge University Press, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1013932

Kai-Uwe Kuhn (Contact Author)

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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