1) Briefly summarise the main points of the case
Verboven’s (2009) discusses vertical restraints, concluding their necessity for efficient distribution, discussing how the European Commission has altered its interpretation of Article 81 overtime. Three types of restraint are highlighted: Selective distribution, Exclusive distribution and Exclusive dealing, and that restraint adoption depended on current levels of regulation. Verboven (2009) explains that vertical restraints became subjected to EU Competition Laws and due to ‘cumulative anti-competitive effects ’ were reformed, becoming stricter. By 2002, new block exemptions aimed to increase flexibility on acceptable agreements and that only Selective or Exclusive distribution can be applied, not both. Black clauses including Retail Price Maintenance (RPM) and passive selling outside of territories were listed. Nevertheless, post-2002 manufacturers were now allowed to make certain vertical agreements (excluding black clauses), assuring their market share was within the newly defined thresholds (in general 30%).
Overall, Verboven (2009) emphasised three main issues. Firstly, double marginalisation occurring when both manufacturer and dealer apply separate profit incentivised mark-ups. Secondly, vertical externalities result in dealers having no incentive to provide sale and after-sale services, as the dealer ultimately provides the manufacturer with increased profits. Finally, competing dealerships may freeride on
Decision Making. Company S can motivate scooter dealerships as intermediaries by involving them in the decision making process. Company S is the producer, so the company should include the dealership in any decision regarding how the product is distributed to their stores, or to the customers. An advantage is the dealership feels a strong sense of ownership in the sales results or responsibility to the company. Another advantage would be that Company S would have a closer involvement with consumer preferences or needs, allowing the company to make better decisions and possibly save money. A disadvantage for Company S would be the exposure to the competition. Company S would be revealing confidential information to dealerships that have previous ties with the competition. There are documents to help protect Company S from a dealership leaking information to the competition, but that does not mean it won’t happen; and once the information is out, it cannot be undone.
Member countries’ laws and regulations should permit authorities to suspend, to an appropriate degree, from competition for public contracts or other public advantages, including
The economics of supply and demand suggest that output restriction will increase demand which in turn will increase prices. Consequently, output restriction can affect prices in much the same way as price fixing. Those four forms of cartel conduct exist when the individuals or businesses agree to act together for competition fairly and maintain profits. Moreover, there are other anti-competitive practices such as boycotts and misuse of market power. A boycott is an agreement between two or more parties not to deal with a third party, or to do so only upon certain terms. On the other hand, misuse of market power is the individuals or businesses who use their market power for the purpose of eliminating or substantially damaging a competitor or make barriers to enter into the market. The ACCC educates consumers and businesses as to their right and responsibilities under the CCA.
When consumers decide to purchase a product or service a car, a new refrigerator, or prescription drugs, the goal of the antitrust laws is to make sure their choices are not restricted unreasonably. Consumer choice is a powerful incentive for the sellers of any products to keep their prices low and their quality high. When the antitrust laws are vigorously enforced, businesses must respond to what consumers want. A business that ignores consumer wishes, by refusing either to keep prices competitive or to offer
In this paper I am going to explain some of the key terms that companies need to keep in mind when operating their business. First, we will start with marginal revenue, which is defined simply as the extra revenue that is made for each additional unit of a product that is sold. This is directly related to marginal cost, which is what it costs the company to make that additional unit of product.
Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.
In many cases this level of marketing has fostered premium prices, and dealership refusal to honor ongoing promotions, such as employee pricing.
prices lead to turf wars in which one dealer attempts to protect his sales from
The UCTA 1977 was a primary legislative whereas the UTCCR 1999 are an implementation of the European Court’s Directive on Unfair terms in Consumer Contracts. Both the UCTA and UTCCR covered nearly all forms of contracts and one of their most important functions was limiting the applicability of
Oligopolistic markets are also characterised by barriers to entry (Sloman, et al., 2013). One of the OFT’s main concerns noted in the second referral to the Competition Commission surrounded the restrictions in acquiring planning permission to open a new supermarket (OFT, 2006). For a supermarket to achieve planning permission, there is a requirement for it to have demonstrated a ‘need’ in the area for more shopping space. This can act as a barrier to entry (Seely, 2012). Indeed, the Competition Commission (2008) concluded that the planning regime “necessarily act[s] as a barrier to entry or expansion” (p. 175). As a remedy, the Commission suggested the implementation of a ‘competition test’ as well. Griffith & Harmgart (2012) create a Cournot
An Analysis of the Powers of the European Parliament History of the European Parliament: On the 18th April 1951 the Ministers representing France, Germany, Italy, Belgium, Holland and Luxembourg signed in Paris a treaty which established the European Coal and Steel Community, the ECSC was born. The most important feature of the ECSC was its supranational character, it was a supranational organization. It was aptly described as a 'quasi federation in an important economic sector.[1] The Community was endowed with five organs; 1. An executive, called the High Authority 2.
However, this rule is subject to a number of exceptions. Notably, the rule does not apply to some consumer contracts. These consumer contracts will be governed by the rules contained in ‘Brussels Regulation’ and ‘Rome Convention’ which are beyond the scope of this article.
In the aftermath of the 1957 Treaty , the European Economic Community (EEC) was established and customs barriers between the member states have been abolished. Member States throughout the Community, can “promote a harmonious development of economic activities, a continuous and balanced expansion, an increased stability, an accelerated raising of the standard of living and closer relations between them”. Therefore, in order for a common market to be established between Member States, the Community enacted some legislative provisions which aimed to a true harmonization of laws; incorporate different legal systems under a basic legal framework. The main issue arising is whether these legal provisions in accordance with the case law, ensured the free movement of goods within this market.
One of the main objectives of the European Union (EU) is the establishment of the internal market, which shall consist of “area without internal frontiers in which the free movement of goods, persons, services and capital is ensured. The internal market is based upon a customs union achieved through the abolition of the imposition of customs duties and charges having an equivalent effect and the prohibition of discriminatory taxes on intra-EU imports. The internal market is enhanced by the provisions on free movement of workers, freedom of establishment, free movement of services, and free movement of capital. Whereas Articles 28 to 30 of the Treaty on the Functioning of the European Union (TFEU) provide for the establishment of an EU common external tariff and the elimination of customs duties, Articles 34 and 35 of the TFEU (with exceptions under Article 36) go further, and prohibit quantitative restrictions and measures having equivalent effect. Taken together, Articles 28 to 32 and 34 to 36 serve to ensure the free movement of goods within the EU and to facilitate the operation of the internal market.
With the effect of the Single European Act on 1st July 1987, the emergence of European Union (EU) as a common market has essentially been created. The benefits of this act are substantial to European firms, economies, and workers. It eliminates conflicting national regulations and trade barriers, as well as offering firms opportunity to sell their goods to all other EU members (Griffin & Pustay 2005).