On May 1, 2013, Professor Eberhard Feess of the Frankfurt School of Finance and Management, held a seminar at ISET on Competition Policy. The presentation covered theoretical and applied aspects of competition policy and its relevance to Georgia.
Professor Feess started the seminar by discussing the importance of competition agencies, corresponding laws and policies in the developed countries. He named three issues which any good competition law must address: abuse of dominant position on the market, control of mergers and acquisitions and cartel detection.
The importance of controlling cartels and monopolies stems out of the basic economic theory, which indicates that abuse of market power and cartel behavior lead to distortions of quantities produced, distortion of choices between products and lower social welfare.
In order to detect cartel behavior competition law and relevant agencies regulate and address the issues of agreements on prices and discounts, division of markets, joint marketing of products, joint purchases and exchange of market relevant information. When it comes to the problem of abusing dominant position on the market, relevant market has to be identified which in practice is usually a rather difficult task, requiring lengthy and expensive research. In order to define a relevant market and to justly assess whether a given firm's behavior is abusive of dominant position, USA and EU countries have worked out relatively simple methods of analysis and credible rules of thumbs. Professor Feess discussed such methods.
In the last part of his talk, professor illustrated the concept of abuse of dominant position as it is usually defined in legislations and which frequently pins down to excessive pricing, dumping, measures to lock in consumers and artificial barriers to entry. Professor explained how legislation and enforcers usually assess, detect and address such issues. Competition Law, after being enacted, should prevent acquisitions and mergers which are likely to result in dominant market position. Yet another important direction is the evaluation whether mergers completed before enacting of the law, are currently abusing dominant position. Professor Feess mentioned that the new draft of the Competition Law of Georgia is on a good way along these guidelines and is deeply rooted in the international best practice such as competition laws of the EU and the USA. However, applying the law will be challenging and the new agency should be eager to involve economists in order to be effective.
The school would like to thank Professor Eberhard Feess for presenting one of the most interesting, informative and useful seminars to the ISET community.
