Economic Effects From Bundling
Oxford, England
15 September 2004
Hosted By: The Regulatory Policy Institute
NERA Director Dr. Mark Williams spoke at the Regulatory Policy Institute's Oxford Competition Policy Conference on 15 September 2004 on the competition effects from bundling. On a common platform with Aidan Roberston of Brick Court Chambers, who discussed the legal treatment, he commented on the economics of bundling.
Dr. Williams is a regular speaker at this well-established conference, which features speeches by key UK regulators as well as leading practitioners from Europe, the UK and the US. This year's edition included John Vickers, John Shenefield, Peter Freeman, Malcolm Nicholson and F. Enrique González Díaz.
In his presentation, Dr. Williams pointed out that a cautious enforcement approach towards bundling may encourage firms with anticompetitive motives to implement their agenda through bundling, rather than a more "clear cut" abusive practice.
"There are not many general rules in the analysis of bundling. Yet, bundling allegations merit careful investigation as the effects on competition can be very large indeed," said Dr. Williams. "The Chicago Critique only applies under particular assumptions."
Dr. Williams illustrated the possible anticompetitive effects from bundling that recent developments in economic analysis have identified. He pointed out that bundling can be used to raise barriers to entry as well as to exclude rivals by creating artificial economies of scale. Said Dr. Williams: "Many types of abusive behavior can be replicated by bundling."
The bundling debate had reached a particular peak after the European Commission's record fine on Microsoft's business practices. This debate is likely to be further stimulated by the eagerly awaited judgment on the GE/Honeywell appeal to the Court of First Instance.
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