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Competition Law and Europe's Open Borders: The Case of Motor Vehicle Distribution in Switzerland

University of St. Gallen, Department of Economics, Discussion Paper No. 2008-19

28 Pages Posted: 22 Sep 2008  

Simon Evenett

University of St. Gallen - Economics Department - SIAW

Michael Meier

University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: September 2008

Abstract

This paper contains an independent empirical analysis of the effect of a Notice, issued by the Swiss Competition Commission in 2002 concerning vertical agreements between manufacturers and distributors of motor vehicles, on the degree to which the subsequent prices of cars in Switzerland exceeded those charged on the same models in neighbouring countries. Evidence presented here implies a non-transitory reduction in the degree of price discrimination against Swiss customers of medium- and large-sized cars in the years after the Notice came into effect. The total gain to Swiss buyers of cars is very conservatively estimated to be six times the total cumulative budget of the Swiss Competition Commission during the years 2003-2006; the best estimate of those gains exceed a quarter of a billion Swiss Francs during the same period. By 2006 the cumulative price reduction of the Swiss Competition Commission's action resulted in average savings per medium- and large-sized car that are estimated to be 929 and 2113 Swiss Francs, respectively. Moreover, the recurring annual gain to Swiss consumers of this measure by the Swiss Competition Commission is conservatively estimated to exceed ten times the latter's current annual budget, providing some indication of the "value for money" that effective competition law can have, even in economies with ostensibly open borders.

Keywords: competition law, vertical agreements, motor vehicle trade, Switzerland

JEL Classification: F13, F14, F23, L11, L62

Suggested Citation

Evenett, Simon and Meier, Michael, Competition Law and Europe's Open Borders: The Case of Motor Vehicle Distribution in Switzerland (September 2008). University of St. Gallen, Department of Economics, Discussion Paper No. 2008-19. Available at SSRN: https://ssrn.com/abstract=1271885 or http://dx.doi.org/10.2139/ssrn.1271885

Simon Evenett (Contact Author)

University of St. Gallen - Economics Department - SIAW ( email )

Bodanstrasse 8
CH-9000 St. Gallen
Switzerland
41 71 224 2315 (Phone)
41 71 224 2298 (Fax)

HOME PAGE: http://www.evenett.com

Michael Meier

University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research ( email )

Dufourstr. 48
St. Gallen, 9000
Switzerland

HOME PAGE: http://www.siaw.unisg.ch

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