TRAINING FOR TRADE PRACTICE INVESTIGATION COMMISSION (TPIC)   MAY 2008

  ADDIS ABABA, ETHIOPIA  PRESENTED BY: Peter G. Kanyi - Monopolies and Prices Commission –Kenya

 

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HORIZONTAL HORIZONTAL RESTRAINTS/AGREEMENTSRESTRAINTS/AGREEMENTS

Definition of restraints to trade.Are acts perpetrated by two or more

enterprises whose effect(s) is/are likely to eliminate or limit competition.

attributable to firms, which are horizontally related.

Competition laws postulate a competitive marketplace in which rival firms compete with respect to prices, products, and services. Any arrangement, countering this principle conduct among competitive entities, is accordingly suspect.

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NATURE OF HORIZONTAL AGREEMENTS

Always anti-competitive agreements.These agreements have a direct adverse

effect on competition and are very unlikely to bring consumers any real benefits.

Agreements with pro- and anti-competitive effects.

Best analyzed on a case-by–case basis that considers and weighs both sets of effects. Such a “rule of reason” approach is applied to horizontal agreements on:

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Agreements subject to varied treatment .

These are evaluated basing on the different views on underlying economic models on markets.

“Small” agreements. Declining/Shrinking markets. Import and Export Cartels.

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Agreements subject to varied treatment continued…

“Vertical restraints with horizontal consequences: -Most-Favored-Customer Provisions.

-Facilitating Horizontal Coordination. -Dampening Competition. -Raising Rivals' Costs.

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Efficiencies advanced in favor of most favored customer.

most-favored-customer provision helps a buyer lower his/her costs by purchasing inputs for less.

where firms must write long-term contracts with their customers knowing that supply and demand conditions might change unpredictably.

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Conditions likely to facilitate anti-competitive agreements.

Relatively small number of enterprises; High entry barriers;Homogeneous or standardized

products; Sales made in frequent small amounts

rather than infrequently in large amounts;

Facilitating practices such as the “Most Favored Nation”;

Patterns

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SOURCES OF INFORMATION SOURCES OF INFORMATION ON COLLUSIONON COLLUSION

Correspondence and meeting files;Interviews with former

management and marketing executives;

Former and current customer complaints;

Interviews with customers;Bid records;

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Interviews with small suppliers about pricing behavior of major competitors;

Interviews with importers and new entrants;

Correspondence and trade association records; and

Correspondence of the trade association director.

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THE END

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