This course introduces students to economic concepts, legislation and practice of competition policy in the European Union. After providing an overview and some basic economic insights about market power and welfare, the course covers different forms of antitrust measures (policies to prevent cartels, the abuse of market power, etc.) and merger control. For each topic, economic concepts and analyses and the EU legislation and a selection of relevant cases are presented. Reference is made to related US legislation. The focus of the second part of the course is the liberalization and (re-)regulation of service industries. Energy and transport markets, as well as telecommunication and postal services have undergone fundamental changes in recent years due to EU legislation requiring the opening of markets. The liberalization of water markets is currently being discussed. An introduction explains the "disaggregated approach" to the regulation of network industries. This is a helpful tool in analyzing the crucial issues for legislation and regulatory practices after liberalisation in the EU. A comparison to US legislation and experience provides additional insights. A final topic – reflecting its increasing importance in a globalized world – is international cooperation in competition policy.
Prerequisites:
Introductory microeconomics
Learning outcomes:
: At the end of this course students are able to explain the economic concepts that are relevant for competition policy and issues regarding the liberalization of network industries and use them to recommend suitable policy options in those fields. With this background they are able to explain real-life cases in the EU and evaluate the chosen policy.
Method of presentation:
The learning objectives are achieved by a mixture of class room lecture, activating learning methods, students’ presentations and – in the second part of the course – with a learning environment that is based on the problem-based learning approach, where students are enabled to investigate the relevant issues independently in small working groups.
Required work and form of assessment:
Mandatory attendance, classroom participation, homework, and presentations (20%), 3 quizzes (5%, 10 %, 10%), final exam (25%), term paper (30%)
Term papers are 10-12 page research papers. Students may choose between either a case study related to one of the discussed policies (e.g. an antitrust case), or a comparative country analysis regarding liberalization and regulation of one of the service sectors covered. One week before the term paper is due the students have to hand in an outline of their term paper. The quizzes and the final exam consist of structured questions. The deadline depends on the topic and is provided individually by the instructor. Students are required to complete all reading assignments and will be expected to demonstrate this through regularly assigned homework, pop quizzes and/or insightful and relevant contributions to in-class discussion. All of these components will count toward the final grade. Seminar discussions are based on the compulsory readings and the teaching introductions given at each session.
content:
1. Introduction/Overview
2. Foundations of competition policy
- The functions of competition
- The traditional schools of competition policy
- Objectives of competition policy
Readings: Motta 2004 (ch. 1)
3. Economic starter kit: Market structure and welfare
- Perfect competition
- Monopoly
- Welfare comparison
- Market power
Readings: Martin 1988 (ch. 2)
4. Antitrust I: Collusion
- Economic analysis: cartels
- Factors that facilitate collusion
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 5); Motta 2004 (ch. 4.4, pp. 185-195)
5. Antitrust I: Collusion – Case study
- Case study ‘collusion’: wood pulp Readings: e.g. Motta 2004 (pp. 211-219)
Antitrust II: Vertical restraints (1)
- Types of vertical restraints
- Economic analysis
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 12, pp. 395-396; 414-433); Motta 2004 (ch. 6.5, pp. 377-378)
6. Antitrust II: Vertical restraints (2) and Case study ‘vertical restraints’
- Types of vertical restraints
- Economic analysis
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 12, pp. 395-396; 414-433); Motta 2004 (ch. 6.5, pp. 377-378)
- Case study ‘vertical restraints’: ice creams
Readings: e.g. Motta 2004 (pp. 391-398)
7. Business Europe: Current Issues in European Competition Policy
8. Antitrust III: Abuse of a dominant position (1)
- Tagging of a dominant position
- Predatory pricing
- Price discrimination
- Non-price monopolization practices
- Policy implications
- Legislation: Article 82 of the EC Treaty
Readings: Motta 2004 (ch. 3); Carlton/Perloff 2005 (ch. 11, pp. 350-360); Motta 2004 (ch. 7.2.4, pp.
442-454); Motta 2004 (ch. 7.3 & 7.4, pp. 454-457, 460-468, 491-502)
9. Antitrust III: Abuse of a dominant position (2)
- Tagging of a dominant position
- Predatory pricing
- Non-price monopolization practices
- Price discrimination
- Policy implications
- Legislation: Article 82 of the EC Treaty
Readings: Motta 2004 (ch. 3); Carlton/Perloff 2005 (ch. 11, pp. 350-360); Motta 2004 (ch. 7.2.4, pp.
442-454); Motta 2004 (ch. 7.3 & 7.4, pp. 454-457, 460-468, 491-502)
10. Antitrust III: Abuse of a dominant position – Case study
- Case study ‘abuse of a dominant position’: Microsoft
Readings: e.g. Motta 2004 (pp. 511-523)
Merger control (1)
- Economic analysis
- Policy implications
- Legislation: Regulation (EC) No 139/2004
Readings: Carlton/Perloff 2005 (pp. 20-29); Motta 2004 (ch. 5, pp. 231-243, 250-252, 265-277)
11.Merger control (2) and Case study ‘merger control’
- Economic analysis
- Policy implications
- Legislation: Regulation (EC) No 139/2004
Readings: Carlton/Perloff 2005 (pp. 20-29); Motta 2004 (ch. 5, pp. 231-243, 250-252, 265-277)
- Case study ‘merger control’: Nestlé/Perrier
Readings: e.g. Motta 2004 (pp. 277-286)
12.Liberalization of network sectors I: Introduction
- The rationale for liberalization
- Economic background: the "disaggregated approach" to the regulation of network industries
- Policy implications
- Legislation: Article 86 of the EC Treaty
Readings: Sidak and Spulber 1998 (ch. 2, pp. 19-28); Knieps 2004a
13.Liberalization II: Rail transport and Air transport
- Economic analysis
- Historical and legal overview regarding the EU
- Case studies regarding regulatory problems in liberalised transport markets: Regulating access to the infrastructure
Readings: Knieps 2004b
14. Liberalization IV: Telecommunication and Postal Services
- Economic analysis
- Historical and legal overview regarding the EU
- Cross country analysis: Competition and regulation in the telecommunications markets in the EU
member countries
Readings: Knieps 2003
15.Liberalization III: Liberalization of water markets?
- Economic analysis
- Current state of EU legislation
- Pro and contra liberalization of water markets
- Different models of liberalisation of the water markets
Readings: to be announced
16.Liberalization V: Electricity and Gas
- Economic analysis
- Historical and legal overview regarding the EU
- Case study regarding regulatory problems: The Californian Power Crisis of 2001 – A case against liberalisation?
Readings: Brunekreeft/Keller 2004
17.Liberalization VI: Services of general interest in a liberalized market
- Competition versus the public interest?
- Current state of EU legislation
- Case study: Guaranteeing universal service in the telecommunication sector
Readings: European Commission 2003
18.International Cooperation
- The need for international cooperation in competition policy
- The International Competition Network (ICN)
- Bilateral Cooperation of the EU with the US and other countries
Readings: Utton 2003 (ch. 12)
19.Final Discussion
20.Final Exam
Required readings:
Brunekreeft, Gert and Katja Keller (2004): Competition in European Electricity Supply: Issues and Obstacles, in: Johann Eekhoff (ed.), Competition Policy in Europe, Heidelberg, pp. 161-195.
Carlton, Dennis W. and Jeffrey M. Perloff (2005): Modern Industrial Organization, 4. ed.; Boston et al. European Commission (2003): Green Paper on Services of General Interest, COM(2003) 270 final, Brussels,
21.5.2003.
European Commission (2004): EU Competition Policy and the Consumer, Luxembourg.
Knieps, Günter (2003): Regulatory Reform of European Telecommunications: Past Experience and Forward- Looking Perspectives, in: Talia Einhorn (ed.), Spontaneous Order, Organization and the Law, Liber Amicorum Ernst-Joachim Mestmäcker, The Hague, pp. 213-227.
Knieps, Günter (2004a): Privatisation of Network Industries in Germany: A Disaggregated Approach, CESifo
Working Papers, No. 1188, May 2004.
Knieps, Günter (2004b): Limits to the (De-)Regulation of Transport Services, Discussion Paper No. 99, Institut für Verkehrswissenschaft und Regionalpolitik, Albert-Ludwigs-Universität Freiburg.
Martin, Stephen (1988): Industrial Economics, New York, London.
Motta, Massimo (2004): Competition Policy – Theory and Practice, Cambridge.
Sidak, J. Gregory and Daniel F. Spulber (1998), Deregulatory Takings and the Regulatory Contract, Cambridge et al.
Utton, Michael A. (2003): Market Dominance and Antitrust Policy, 2.ed., Cheltenham/Northampton.
Recommended readings:
Baldwin, Richard and Charles Wyplosz (2004): The Economics of European Integration, London et al. EC Competition Policy Newsletter, various issues.
Eekhoff, Johann (ed.) (2004): Competition Policy in Europe, Heidelberg.
El-Agraa, Ali M. (2004): The European Union – Economics and Politics, 7. ed., Harlow et al.
Knieps, Günter (2002): Does the System of Letter Conveyance Constitute a Bottleneck Resource? Discussion
Paper #88, Institut für Verkehrswissenschaft und Regionalpolitik, Albert-Ludwigs-Universität Freiburg. Neumann, Manfred (2001): Competition Policy: History, Theory and Practice, Cheltenham/Northampton.
Annette Kern holds a MA in economics from the University of Freiburg, and a post-graduate qualification in Japanese language and culture from Tübingen University and Doshisha University/Kyoto. Currently, she is working as the International Program Coordinator at the Department of Economics at Freiburg University. She has also been lecturing in Environmental Economics, and International Economics at IES and the University.
This course introduces students to economic concepts, legislation and practice of competition policy in the European Union. After providing an overview and some basic economic insights about market power and welfare, the course covers different forms of antitrust measures (policies to prevent cartels, the abuse of market power, etc.) and merger control. For each topic, economic concepts and analyses and the EU legislation and a selection of relevant cases are presented. Reference is made to related US legislation. The focus of the second part of the course is the liberalization and (re-)regulation of service industries. Energy and transport markets, as well as telecommunication and postal services have undergone fundamental changes in recent years due to EU legislation requiring the opening of markets. The liberalization of water markets is currently being discussed. An introduction explains the "disaggregated approach" to the regulation of network industries. This is a helpful tool in analyzing the crucial issues for legislation and regulatory practices after liberalisation in the EU. A comparison to US legislation and experience provides additional insights. A final topic – reflecting its increasing importance in a globalized world – is international cooperation in competition policy.
Introductory microeconomics
: At the end of this course students are able to explain the economic concepts that are relevant for competition policy and issues regarding the liberalization of network industries and use them to recommend suitable policy options in those fields. With this background they are able to explain real-life cases in the EU and evaluate the chosen policy.
The learning objectives are achieved by a mixture of class room lecture, activating learning methods, students’ presentations and – in the second part of the course – with a learning environment that is based on the problem-based learning approach, where students are enabled to investigate the relevant issues independently in small working groups.
Mandatory attendance, classroom participation, homework, and presentations (20%), 3 quizzes (5%, 10 %, 10%), final exam (25%), term paper (30%)
Term papers are 10-12 page research papers. Students may choose between either a case study related to one of the discussed policies (e.g. an antitrust case), or a comparative country analysis regarding liberalization and regulation of one of the service sectors covered. One week before the term paper is due the students have to hand in an outline of their term paper. The quizzes and the final exam consist of structured questions. The deadline depends on the topic and is provided individually by the instructor. Students are required to complete all reading assignments and will be expected to demonstrate this through regularly assigned homework, pop quizzes and/or insightful and relevant contributions to in-class discussion. All of these components will count toward the final grade. Seminar discussions are based on the compulsory readings and the teaching introductions given at each session.
1. Introduction/Overview
2. Foundations of competition policy
- The functions of competition
- The traditional schools of competition policy
- Objectives of competition policy
Readings: Motta 2004 (ch. 1)
3. Economic starter kit: Market structure and welfare
- Perfect competition
- Monopoly
- Welfare comparison
- Market power
Readings: Martin 1988 (ch. 2)
4. Antitrust I: Collusion
- Economic analysis: cartels
- Factors that facilitate collusion
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 5); Motta 2004 (ch. 4.4, pp. 185-195)
5. Antitrust I: Collusion – Case study
- Case study ‘collusion’: wood pulp Readings: e.g. Motta 2004 (pp. 211-219)
Antitrust II: Vertical restraints (1)
- Types of vertical restraints
- Economic analysis
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 12, pp. 395-396; 414-433); Motta 2004 (ch. 6.5, pp. 377-378)
6. Antitrust II: Vertical restraints (2) and Case study ‘vertical restraints’
- Types of vertical restraints
- Economic analysis
- Policy implications
- Legislation: Article 81 of the EC Treaty
Readings: Carlton/Perloff 2005 (ch. 12, pp. 395-396; 414-433); Motta 2004 (ch. 6.5, pp. 377-378)
- Case study ‘vertical restraints’: ice creams
Readings: e.g. Motta 2004 (pp. 391-398)
7. Business Europe: Current Issues in European Competition Policy
8. Antitrust III: Abuse of a dominant position (1)
- Tagging of a dominant position
- Predatory pricing
- Price discrimination
- Non-price monopolization practices
- Policy implications
- Legislation: Article 82 of the EC Treaty
Readings: Motta 2004 (ch. 3); Carlton/Perloff 2005 (ch. 11, pp. 350-360); Motta 2004 (ch. 7.2.4, pp.
442-454); Motta 2004 (ch. 7.3 & 7.4, pp. 454-457, 460-468, 491-502)
9. Antitrust III: Abuse of a dominant position (2)
- Tagging of a dominant position
- Predatory pricing
- Non-price monopolization practices
- Price discrimination
- Policy implications
- Legislation: Article 82 of the EC Treaty
Readings: Motta 2004 (ch. 3); Carlton/Perloff 2005 (ch. 11, pp. 350-360); Motta 2004 (ch. 7.2.4, pp.
442-454); Motta 2004 (ch. 7.3 & 7.4, pp. 454-457, 460-468, 491-502)
10. Antitrust III: Abuse of a dominant position – Case study
- Case study ‘abuse of a dominant position’: Microsoft
Readings: e.g. Motta 2004 (pp. 511-523)
Merger control (1)
- Economic analysis
- Policy implications
- Legislation: Regulation (EC) No 139/2004
Readings: Carlton/Perloff 2005 (pp. 20-29); Motta 2004 (ch. 5, pp. 231-243, 250-252, 265-277)
11.Merger control (2) and Case study ‘merger control’
- Economic analysis
- Policy implications
- Legislation: Regulation (EC) No 139/2004
Readings: Carlton/Perloff 2005 (pp. 20-29); Motta 2004 (ch. 5, pp. 231-243, 250-252, 265-277)
- Case study ‘merger control’: Nestlé/Perrier
Readings: e.g. Motta 2004 (pp. 277-286)
12.Liberalization of network sectors I: Introduction
- The rationale for liberalization
- Economic background: the "disaggregated approach" to the regulation of network industries
- Policy implications
- Legislation: Article 86 of the EC Treaty
Readings: Sidak and Spulber 1998 (ch. 2, pp. 19-28); Knieps 2004a
13.Liberalization II: Rail transport and Air transport
- Economic analysis
- Historical and legal overview regarding the EU
- Case studies regarding regulatory problems in liberalised transport markets: Regulating access to the infrastructure
Readings: Knieps 2004b
14. Liberalization IV: Telecommunication and Postal Services
- Economic analysis
- Historical and legal overview regarding the EU
- Cross country analysis: Competition and regulation in the telecommunications markets in the EU
member countries
Readings: Knieps 2003
15.Liberalization III: Liberalization of water markets?
- Economic analysis
- Current state of EU legislation
- Pro and contra liberalization of water markets
- Different models of liberalisation of the water markets
Readings: to be announced
16.Liberalization V: Electricity and Gas
- Economic analysis
- Historical and legal overview regarding the EU
- Case study regarding regulatory problems: The Californian Power Crisis of 2001 – A case against liberalisation?
Readings: Brunekreeft/Keller 2004
17.Liberalization VI: Services of general interest in a liberalized market
- Competition versus the public interest?
- Current state of EU legislation
- Case study: Guaranteeing universal service in the telecommunication sector
Readings: European Commission 2003
18.International Cooperation
- The need for international cooperation in competition policy
- The International Competition Network (ICN)
- Bilateral Cooperation of the EU with the US and other countries
Readings: Utton 2003 (ch. 12)
19.Final Discussion
20.Final Exam
Brunekreeft, Gert and Katja Keller (2004): Competition in European Electricity Supply: Issues and Obstacles, in: Johann Eekhoff (ed.), Competition Policy in Europe, Heidelberg, pp. 161-195.
Carlton, Dennis W. and Jeffrey M. Perloff (2005): Modern Industrial Organization, 4. ed.; Boston et al. European Commission (2003): Green Paper on Services of General Interest, COM(2003) 270 final, Brussels,
21.5.2003.
European Commission (2004): EU Competition Policy and the Consumer, Luxembourg.
Knieps, Günter (2003): Regulatory Reform of European Telecommunications: Past Experience and Forward- Looking Perspectives, in: Talia Einhorn (ed.), Spontaneous Order, Organization and the Law, Liber Amicorum Ernst-Joachim Mestmäcker, The Hague, pp. 213-227.
Knieps, Günter (2004a): Privatisation of Network Industries in Germany: A Disaggregated Approach, CESifo
Working Papers, No. 1188, May 2004.
Knieps, Günter (2004b): Limits to the (De-)Regulation of Transport Services, Discussion Paper No. 99, Institut für Verkehrswissenschaft und Regionalpolitik, Albert-Ludwigs-Universität Freiburg.
Martin, Stephen (1988): Industrial Economics, New York, London.
Motta, Massimo (2004): Competition Policy – Theory and Practice, Cambridge.
Sidak, J. Gregory and Daniel F. Spulber (1998), Deregulatory Takings and the Regulatory Contract, Cambridge et al.
Utton, Michael A. (2003): Market Dominance and Antitrust Policy, 2.ed., Cheltenham/Northampton.
Baldwin, Richard and Charles Wyplosz (2004): The Economics of European Integration, London et al. EC Competition Policy Newsletter, various issues.
Eekhoff, Johann (ed.) (2004): Competition Policy in Europe, Heidelberg.
El-Agraa, Ali M. (2004): The European Union – Economics and Politics, 7. ed., Harlow et al.
Knieps, Günter (2002): Does the System of Letter Conveyance Constitute a Bottleneck Resource? Discussion
Paper #88, Institut für Verkehrswissenschaft und Regionalpolitik, Albert-Ludwigs-Universität Freiburg. Neumann, Manfred (2001): Competition Policy: History, Theory and Practice, Cheltenham/Northampton.
Homepage of the European Commission, DG Competition: http://ec.europa.eu/competition The EC Competition Policy Newsletter, published three times a year by the DG Competition: http://ec.europa.eu/competition/publications/cpn/
Annette Kern holds a MA in economics from the University of Freiburg, and a post-graduate qualification in Japanese language and culture from Tübingen University and Doshisha University/Kyoto. Currently, she is working as the International Program Coordinator at the Department of Economics at Freiburg University. She has also been lecturing in Environmental Economics, and International Economics at IES and the University.