CCP Research Bulletin, Issue 27 – Now available

The Summer 2014 edition of the CCP Research Bulletin is now available for download [PDF, 332KB].

Research Bulletin (Summer 2014)

Articles in Issue 27 include:

‘At last, a competition inquiry for energy – will it bring relief or disappointment?’ (Catherine Waddams)

‘Differentiated tax on differentiated products markets’ (Anna Rita Bennato and Franco Mariuzzo)

‘The processes for regulatory appeals: One size does not fit all’ (Despoina Mantzari)

‘Do small business customers need more buyer protection?’             (Amelia Fletcher, Antonios Karatzas and Antje Kreutzmann-Gallasch)

‘What happens when collusive firms try to avoid antitrust punishment?’ (Subhasish M. Chowdhury and Frederick Wandschneider)

‘The use of general merger control in English healthcare’ (Mary Guy)

Plus: News from CCP, upcoming events and our book launch.

Policy Briefing: Retail Price MFNs: Are they RPM ‘at its worst’?

Policy Briefing of CCP Working Paper 14-5:

Amelia Fletcher and Morten Hviid, ‘Retail Price MFNs: Are they RPM ‘at its worst’?’. (Available to download from our Working Papers pages on the CCP website).

KEYWORDS: Retain Price Most Favoured Nation clauses, Retail Price Maintenance, anti-competitive effects, competition law


  • A number of recent competition cases have involved a hitherto rarely observed form of Most Favoured Nation (MFN) clause in which sellers through an internet retail platform explicitly agree not to sell at a lower price elsewhere, including through other retail platforms. These are sometimes known as platform MFNs or platform parities.

  • The economics literature on this topic is still nascent and the effects of these clauses have not yet been fully explored.

  • Competition authorities in a number of jurisdictions including the EU, Germany, the UK and the US have been willing to take on such cases and push them to successful conclusions, with the parties either agreeing, or being required, to drop Retail Price MFN clauses.

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Policy Briefing: Is the Korean Innovation of Individual Informant Rewards a Viable Cartel Detection Tool?

Policy Briefing of CCP Working Paper 14-3:

Stephan A, ‘Is the Korean Innovation of Individual Informant Rewards a Viable Cartel Detection Tool?’. (Available to download from our Working Papers pages on the CCP website).


  • The defining characteristic of modern cartel enforcement is the use of leniency programmes. This innovation, first employed by the US in the late 1970s, has been emulated by the vast majority of competition law enforcement regimes around the world.

  • The basic principle of these programmes is to offer immunity to the first firm to report a cartel infringement to the competition authority.

  • It is thought leniency programmes have been instrumental in destabilising and uncovering cartel infringements, thereby undermining the trust that exists between cartel members and increasing the rate at which cartels are detected.

  • Despite the offer of leniency and the increasing levels of fines imposed on cartels, competition authorities continue to uncover a high volume of infringements. This might suggest that more could be done to strengthen deterrence in cartel enforcement. It has been suggested that the next logical step in advancing antitrust enforcement may be the use of rewards or bounties to individual whistle-blowers.

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Policy Briefing – ‘Mergers after cartels: How markets react to cartel breakdown’

Policy Briefing of CCP Working Paper 14-1:

Davies S, Ormosi P and Graffenberger M, ‘Mergers after cartels: How markets react to cartel breakdown‘ (Available to download from Working Papers 2014 on the CCP website).


  • Anti-cartel enforcement is widely heralded as the single most important part of antitrust activity. But there have been only a few studies analysing how markets react to the elimination of cartels.


  • The authors approach cartel detection from a dynamic perspective by analysing what happens in markets in the years after a competition authority has detected a cartel. At issue is whether markets revert to competitive behaviour or whether firms find alternative ways of reinstating collusive equilibria (short of cartelisation) in the longer run.

  • Data was collected on mergers, acquisitions and joint ventures between firms involved in those cartels for which the European Commission issued decision documents between 1990 and 2012. The useable sample is 84 cartels that were detected between 1984 and 2009.

  • Three questions are posed:

1. Was there more intense merger activity amongst the former cartelists in the years immediately following breakdown?

2. Were certain types of cartel more likely than others to be followed by merger?

3. Is there evidence that the competition authority intervened in those proposed mergers which were most likely to raise potential anti-competitive concerns, or is there evidence of deterrence of such mergers?

  • The authors employ a novel application of survival analysis.

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Policy Briefing: Consumer behaviour in the British retail electricity market

Policy Briefing of CCP Working Paper 13-10:

Flores M and Waddams Price C, ‘Consumer behaviour in the British retail electricity market’ (PDF, 759KB).


  • Consumer activity plays a crucial role in securing effective markets. Understanding what determines consumer activity, and how this varies between customers, is essential to maximise the effectiveness of policies targeting consumer searching and switching.

  • Despite government efforts to promote consumer activity, the European Commission finds that consumers often fail to take advantage of the potential gains available from switching suppliers in liberalised energy markets.

  • In the UK there is growing concern that the competition process has not worked well, despite the energy regulator’s promotion of consumer empowerment and activity.

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Executive Summary: Hospital Procurement with Concentrated Sellers – A Case Study of Hip Prostheses

Executive Summary of CCP Working Paper 13-13:

Davies C and Lorgelly P, ‘Hospital Procurement with Concentrated Sellers: A Case Study of Hip Prostheses’ (PDF, 375KB).


  • Total hip replacement surgery is a routine procedure, carried out throughout the NHS, and accounting for a large share – 2.9% – of the aggregate NHS budget for surgery.
  • The market for hip prostheses is characterised by horizontal product differentiation because no one prosthesis type best meets the needs of all patients.
  • In addition to the needs of the patient, three other players are involved in the choice of hip prosthesis: the surgeon, the hospital and the prosthesis manufacturer.

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Dr Peter Whelan publishes a case note on the CISAC judgment in the Journal of European Competition Law and Practice

In April 2013 the General Court partially annulled the Commission’s CISAC decision on the basis that there was a lack of sufficient evidence to prove a concerted practice involving copyright collecting societies. Dr Whelan‘s case note explains the judgment and analyses its future implications.

To access the case note, please click here.

Dr Peter Whelan publishes article on cartel criminalisation and due process in the Northern Ireland Legal Quarterly

Dr Peter Whelan (CCP and UEA Law School) has had his article, ‘Cartel Criminalisation and Due Process: the Challenge of Imposing Criminal Sanctions Alongside Administrative Sanctions within the EU’, published in the latest edition of Northern Ireland Legal Quarterly. An abstract of his article can be found below.


There is increasing debate within the EU concerning the imposition of criminal sanctions upon those individuals who engage in cartel activity. For it to be legitimate, such cartel criminalisation must respect the due process guarantees contained in the European Convention on Human Rights. Unfortunately the literature on this issue is deficient and the specifics of this legal challenge are not fully understood. In particular, a comprehensive analysis of the due process-related challenge presented when personal criminal antitrust sanctions are employed alongside administrative sanctions for a given cartel is conspicuously absent from the literature. This article rectifies this deficiency by examining this particular legal challenge and its relevance to information exchange, double jeopardy and concurrent antitrust proceedings. In doing so, it identifies practical techniques designed to meet the challenge of due process in this context, as well as the inherent tensions between due process and the objectives of European antitrust criminalisation.

Peter Whelan, ‘Cartel Criminalisation and Due Process: the Challenge of Imposing Criminal Sanctions Alongside Administrative Sanctions within the EU’ (2013) 64(2) Northern Ireland Legal Quarterly 143.

Policy Briefing: The Impact of Competition Policy – What are the Known Unknowns?


Evaluations of competition policy are increasingly common and typically establish that the consumer benefits from detected cases easily outweigh the costs of competition authorities.

These assessments are often driven by data availability and only capture a small part of the total impact of competition policy because they sidestep the difficult issue of how to evaluate those cases that go unobserved because they are deterred. Assessments also ignore a second class of unobserved cases, those involving anti-competitive harm but which the competition authority fails to detect.


The authors present a broader conceptual framework for the evaluation of competition policy which takes into account the deterred and undetected cases as well as those which are detected.

The analysis draws on stylised facts from existing academic and policy literatures, alongside what it is reasonable to infer from theory about what is not known, in particular, the nature of the underlying population of potential cases, and how samples are drawn from it, in the form of cases detected by the competition authority.

Numerical simulations are conducted within this framework.


The simulations suggest that, while the benefits of deterrence, especially for merger enforcement, are considerable, it is also likely that considerable harm may remain unremedied due to the non-detection of cartels.

Drawing on insights from economic theory, the authors argue that selection bias is likely to be substantial because the unobserved cases could well be those which are the most harmful. If so, the deterrence of anti-competitive mergers may have a much greater positive impact, but the effects of non-detected cartels may be more serious than is usually supposed.


The full working paper 13-7 and more information about CCP and its research is available from our website:


Peter Ormosi is a Lecturer in Norwich Business School and member of the ESRC Centre for Competition Policy

Stephen Davies is Professor of Economics in the School of Economics at UEA and member of the ESRC Centre for Competition Policy.

Policy Brief: Product Quality and Business Contracts – Intermediary Crude Oil Pricing in a Southwest-US


Crude oil plays an important role in the world economy. In the US, domestic oil production has increased, and increased in importance, and this holds the prospect of fundamentally changing the balance of power in the world crude market. This is turn lends importance to the determinants of performance in the US submarket of the world oil market.

There are four modes of transportation for US domestic crude oil: water tanker, pipelines, railways and motor transport. Pipeline is the predominant form but, for nearly two decades, motor transportation has continuously gained in importance.


The authors study upstream and downstream prices, and the profit margin of crude oil, for the period 2007-08 in a Southwest-US regional crude oil intermediary market, where oil is transported by motor vehicle.

The analysis draws on a proprietary dataset from an intermediary firm that buys crude oil from well owners and transports it by motor vehicle to downstream buyers that are mostly oil refineries.

The authors estimate panel hedonic models to analyse (i) the effects of geographic variables, (ii) the characteristics of bilateral business deals between an intermediary and their upstream and downstream trading partners, and (iii) the quality components of the crude oil on prices and margins.


The analyses show that crude oil prices in this market may depend, not only on the market valuation of oil quality, but also on other transaction characteristics such as distance and business contracts.

In line with existing results, the authors find significant effects of quality components, such as basic sediment and water, sulphur content, and specific gravity, on buying and selling prices and on the profit margin, but only the effect of specific gravity is nonlinear.


The full working paper 13-6 and more information about CCP and its research is available from our website:


Subhasish M. Chowdhury is a Lecturer in Economics at the Centre for Behavioural and Experimental Social Science, and ESRC Centre for Competition Policy, University of East Anglia

Oindrila De, works in the Economics Area, Indian Institute of Management Indore

Stephan Martin is Professor of Economics at Purdue University,West Lafayette.