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The Oligopoly Problem in EU Competition Law

Research Handbook in European Competition Law, I. Liannos and D. Geradin eds., Edward Elgar, September 2013

80 Pages Posted: 6 Feb 2012 Last revised: 18 Feb 2013

Nicolas Petit

University of Liege - School of Law; International Center for Law & Economics (ICLE); University of South Australia - School of Law

Date Written: February 5, 2012

Abstract

This paper offers a complete overview of the oligopoly problem in competition law and economics, with a specific focus on European Union (EU) law. A related purpose of the paper is to challenge the dominant view that merger control is the ultimate preventive remedy against tacit collusion. On close analysis, the merger-only enforcement paradigm against tacit collusion generates a systemic risk of type II errors. Part of this enforcement gap may, however, be alleviated through a more muscular enforcement of the rules on coordinated conduct (i.e. Article 101 TFEU) and on unilateral conduct (i.e. Article 102 TFEU). In this later respect, the paper formulates a possible theory of harm that would entitle agencies and courts to apply Article 102 TFEU to specific types of conduct by oligopolists.

The concept of abuse of collective dominance may in particular be applied to the artificial tactics which oligopolists adopt to protect an observed collusive equilibrium from the natural, disruptive effect caused by an external shock (entry, natural disaster, change in tax rate, etc.). In this sense, the paper is different from other scholarly proposals that recommend applying rules on unilateral conduct to excessive oligopoly prices and/or facilitating practices.

Keywords: Oligopoly, tacit collusion, competition, collective dominance, mergers, abuse of dominance

JEL Classification: K21, L4

Suggested Citation

Petit, Nicolas, The Oligopoly Problem in EU Competition Law (February 5, 2012). Research Handbook in European Competition Law, I. Liannos and D. Geradin eds., Edward Elgar, September 2013. Available at SSRN: https://ssrn.com/abstract=1999829 or http://dx.doi.org/10.2139/ssrn.1999829

Nicolas Petit (Contact Author)

University of Liege - School of Law ( email )

B-4000 Liege
Belgium

International Center for Law & Economics (ICLE) ( email )

United States

HOME PAGE: http://www.laweconcenter.org/contact.html

University of South Australia - School of Law ( email )

GPO Box 2471
Adelaide SA 5001
Australia

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