Assessing the Consequences for Competition
Chapter 8: Assessment of Remedies Adopted by the EC in Pharmaceuticals Mergers
1 8.0 INTRODUCTION AND OVERVIEW This chapter considers the choice and impact of remedies required by the European Commission. It uses the benchmarking methodology outlined in Chapter 3 to investigate the ex ante choice of remedy whenever this might be relevant. However, given the extensive review of pharmaceuticals competition set out in Chapter 7, simple simulation techniques are not always appropriate in this industry. The equivalent task in the presence of buyers who have such an inﬂuence on prices should be a complementary analysis of how the direct and indirect effects of the price regulation process would be aﬀected by the merger and its proposed remedy. Unfortunately, the documents at our disposal did not allow us to do this. In this chapter, we also introduce an experimental new model which aims to explain the incentives and price consequences of a merger involving a pipeline product. Unlike standard models reviewed in Chapter 3, it is consistent with the pricing results in an unregulated market (see Chapter 7) and it draws out the incentive to suppress or introduce the pipeline product under diﬀerent ownerships. However, it is currently insuﬃciently developed to be able to rely on it as a practical simulation model. The range of cases, markets and simulation techniques applied is summarized in Table 8.1. Sections 8.1–8.5 review these cases in detail. Section 8.6 draws some conclusions for merger appraisal and remedy in pharmaceuticals markets. Some more general conclusions on the simulation methodology are reserved for...
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