Abstract
We review the Brazilian experience on the use of economic analysis in antitrust practice. Economic theory provides a sound foundation for working with Constitutional principles that back Antitrust law. This allows economic theory and analysis to play a central role in interpreting evidence in cases. Merger analysis extensively uses economic arguments for rulings in Brazil, with practice following closely international guidelines and standards. Economic analysis is also widely used in abuse of dominance/ monopolization (conduct) cases, but its scope is often limited by per se interpretations. We argue that this state of affairs is influenced by a perception of few robust economic results on agreements or collective dominance/monopolization; more explicit law statements on conduct than in merger analysis; higher risk of judicial challenge of decisions (compared to mergers) and relatively limited expertise. Particularly in a developing country, echoing previous authors, economic analysis can achieve a more prominent role if it is able to provide guidelines for investigation and differentiation between pro-competitive and anti-competitive effects of business practices.
This chapter draws from the experience as former Deputy Chief Economist, Chief Economist and Commissioner at CADE/Brazil. The opinions stated do not represent the official view of CADE and UFRJ.
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- 1.
Author’s free translation of the legal code.
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Even in cases where prices and margins are not used to delimit relevant market, data intensive methods have been used, e.g., to delimit catchment areas in Higher Education Institutions, with data sets of hundreds of thousand consumers (Teodorovicz et al. 2014).
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But these may be relevant when deciding on fines totals (art. 45).
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Law 12529/2011, the ‘new’ antitrust law has a marked difference from Law 8884/1994, namely, ‘excessive prices’ is not listed explicitly as a anticompetitive practice.
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Even though theory is keen to show that this bilateral surplus creation may come at the cost of third parties. See Motta (2004) and the discussion of exclusive dealing, e.g.
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This has been argued by some commentators as a reason to the rise and fall of merger simulation (or suggestions for a less exaggerated role), as in OECD (2011).
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Per object convictions are seen as a conviction where the conduct itself is proven and a weighting on possible positive and negative benefits ex-ante points to net negative effects. Actual proof of the negative effect would not be required for conviction as mentioned above. This differs from per se conviction in Brazilian law where the conduct in the latter case would not have possible positive benefits to begin with. I thank Carolina Saito and Ricardo Botelho for clarifying on this issue, but the final interpretation is my own.
- 8.
Comissioner Verissimo first used the null hypothesis illustration in the SKF case (Gonçalves 2015).
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When one lives under price controls for many years a general mistrust of market forces is the norm. Cartelists in wiretaps are often longing for the ‘good old days’ of regulated prices, where firms were more ‘loyal’ to each other and did not ‘unfairly compete’ using lower prices. More than once, a business union filed a suit at CADE against an associated firm that was not following ‘industry price setting principles’. See a list of bizarre cartels in Basile and Marchesini (2014).
- 10.
Santacruz (1998) an economist and CADE Comissioner in the 1990s associated abusive price conduct as dried codfish head. There is no fish without a head, but one never sees a dried codfish with its head on in stores.
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Ribeiro, E.P. (2016). Economic Analysis in Antitrust: The Case of Brazil. In: Jenny, F., Katsoulacos, Y. (eds) Competition Law Enforcement in the BRICS and in Developing Countries. International Law and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-30948-4_8
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