Economic expertise & competition law
Economics is paramount in competition law. Economists are heavily engaged in more and more cases, both on the side of the authorities and on the side of the businesses investigated. Since the European Commission established the Chief Economist Team to improve its economic analysis of merger decisions in 2003, the team has more than doubled in size. The economic aspects of competition law are – within the context of European competition policy – mirrored in the texts of the horizontal and non-horizontal merger guidelines, the guidelines on horizontal cooperation and the vertical restraints guidelines. Relevant analysis has regard to market definitions, establishing dominance and its abuse and, more generally, market dynamics.
Houthoff's competition team has a solid understanding of economics and includes a number of lawyers with masters' degrees in economics. We have a thorough understanding of competition law's underlying economic principles, market dynamics and the various methodologies required to analyse markets and market conduct. Our lawyer-economists are able to conduct economic analysis and can coordinate in-depth analysis by external economic consultants. This analysis is then seamlessly integrated into any required legal work products.
The concept of the relevant market plays a central role in the application of competition law. Market definition is a tool to identify and define the boundaries of competition between firms. Consequently, the definition of a market is often the starting point for merger control analysis, determining dominance in an abuse case or, in cartel cases, assessing the applicability of exemptions based on market shares.
Dominance relates to a position of economic strength enjoyed by a business which enables it to prevent effective competition being maintained in the market, by giving it the power to behave independently of competitors, suppliers or customers. Relevant elements to determine dominance include market share, but also factors such as barriers to entry and countervailing buyer power.
Market dynamics analysis
The impact on the market of the potential restriction of competition between, for example, two merging competitors very much depends on the nature of competition between those businesses (absent the merger) and the remaining competition in the market. Thorough analysis of business activities and customer preferences may reveal limited competitive constraints between the merging parties or that the key competitive constraints in the market originates from third parties. These factors can then reduce competition concerns.