Market Dominance and Antitrust Policy, Second Edition

Market Dominance and Antitrust Policy, Second Edition

Michael A. Utton

This new edition addresses the recent fundamental changes in antitrust law, especially in the UK and the EU, and reviews some high profile and controversial cases such as the Boeing–McDonnell Douglas merger and the Microsoft monopoly. The author moves on to deal with several unresolved questions including the conflicts between trade and antitrust policy, the foreign take-over of domestic assets and extra-territorial claims made by certain countries.

Chapter 2: Market Dominance in Practice: Current Perceptions and Trends

Michael A. Utton

Subjects: economics and finance, competition policy, industrial economics, industrial organisation


I Introduction The application of any policy to a set of economic problems is clearly not costless. Organizing and carrying out the policy uses scarce resources but also, since policy tools are by no means perfect, mistakes will be made which with hindsight show that a better economic performance would have resulted had no policy intervention occurred. Antitrust policy is no different in this respect from other forms of economic policy. Those in charge of antitrust policy therefore have to be confident that the benefits of enforcement will outweigh the costs, not only those incurred by the firms directly involved but also the costs of applying the policy itself. The point may appear obvious, but behind it lies a very important issue which has been at the centre of antitrust discussions for at least the past decade. It concerns the speed with which unregulated markets are self-correcting, even in the face of market dominance. If those inefficiencies identified in the previous chapter are fairly quickly eroded by the forces of competition it may be better to withhold any policy intervention; the market may do the job more efficiently. Even if the record of a dominant firm appears to show that it has consistently and over a long period abused its position, it does not necessarily follow that in the absence of antitrust action it will be able to continue. An innovation from a totally unexpected source may very rapidly undermine its market share. In the analysis of antitrust questions, therefore,...

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