Behavioral Economics and Abuse of Dominance

Nicolas Petit (ULg)Vienna Competition Conference 2010 – Industry v. Competition?9 June 2010, Vienna

Do we need a shrink?

Purpose of the presentation

Show that a significant body of behavioral economics has already penetrated European Union (“EU”) competition law, in particular in the area of abuse of dominance;

The buzz around behavioral economics is greatly exaggerated. This may have more to do with US antitrust law

Dominance

Market definition Rational vs irrational substitution patterns The SSNIP test The EU empirical approach (market testing, etc.)

Dominance Dominance analysis Insights of behavioral economics on barriers to entry Empirical approach of EU law to barriers to entry

Abuse Predatory pricing Bundling/Tying

Establishing an abuse The traditional theory of harm Psychological coercion

Correcting the Abuse – Remedies and the « nudging » of consumers

Microsoft I and II

Refusal to deal Unfair trading conditions (shrouding)