Month: October 2017

How to bust a cartel.

I don’t have the technical training to give a lesson on how to raid a meth lab. Although, in this blog post, I will describe how you can report and claim compensation for an anticompetitive practice. 

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There are a lot of markets that are dominated by few players. Apple and Microsoft, Visa and Mastercard, Coke and Pepsi. When that’s the case, it’s really easy for such companies to coordinate their actions and avoid competing to make profits on the backs of consumers. Of course, going after such giants is not an easy – or cheap – task. That’s the reason why antitrust is heavily enforced by competition authorities. The best way to deal with a competition concern is to contact a competition authority to invite them to investigate the issue. If the authority finds a violation of competition laws, then consumers that have been affected by it have the right to claim compensation in their local courts.

 

Finding the right competition authority

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Commissioner Vestager (Image: Ted.com)

So, let’s say (hypothetically) that you think that two cheese brands that produce the delicious halloumi cheese, agreed among themselves to sell it at the inflated price of €12 per piece. If the halloumi cartel is something that can affect the markets of many EU countries, it’d be best to contact the EU competition watchdog to investigate it. The European competition enforcer is the European Commission, lead by the Commissioner for Competition Margrethe Vestager. If the halloumi cartel is most likely to affect the consumers of just one EU country, you would have to contact your local competition authority to investigate the claim. Thankfully, the European Commission has a useful website with links that direct to the websites of the EU national competition authorities.

Commission

So you would have to look at whether the companies that you’re going after are just small, local companies that sell in your country or whether they are so big that they need to be taken down by the Commission. Obviously there are no rules of thumb here, but if you’re thinking of going after Google, do email Vestager! After deciding which authority will investigate your concern, the process is not at all difficult for you. All you need to do is to contact the authority and to give them as much information as possible to help them with the investigation. You don’t even need to be an affected consumer to do it. So, you can contact them about your suspicion without having bought any halloumi. The contact email for the European commission is this (for national competition authorities, their contact information is available on their website). 

Claiming Compensation

CourtIf you have been personally affected by an antitrust violation, you have a right to compensation for not only your actual loss but for any potential loss of profit, plus interest. The good news is that as soon as the Commission or a National Competition Authority establishes that there has been a violation of antitrust law, you don’t need to make your case against the companies again. That means that all you need to do to claim compensation from the halloumi companies is to prove that you bought a halloumi when the prices were fixed by them.

So here you go. With just one email, you busted the notorious halloumi cartel!

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See more information about how to contact a competition authority here.

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Anti…what?

If you read the word antitrust somewhere before, it probably ended up being the reason why you closed that article tab. If you haven’t done so again already, I’ll try to explain what antitrust is and why you should care about it.

What is it?

Antitrust is a collection of laws that are put in place to make sure that companies compete with each other effectively and fairly. In order to do so, antitrust is interested in three main issues:

1. Unilateral actions of big market players

Unilateral

Companies that enjoy large market power can act, to a large degree, independently. Take Microsoft for example. More than 80% of the computers out there at the moment run the Windows Operating System (‘OS’). That means that if Microsoft tries to spoon-feed you their software (Office, Outlook or Internet Explorer to name a few) by integrating them in their OS, rival software like Google Docs, Gmail and Chrome will have a hard time competing with them. In the end, you might end up being stuck using a lesser product or a product that you just don’t like, just because the competitors don’t integrate well with Windows.

2. Cooperation between companies

When companies are not big enough themselves, they might try to cooperate with each other to avoid competing. The simplest situation is when a company secretly approaches their rival to agree to fix their prices. In the early 2000, for example, a number of banana importers were found to have conspired to keep the price of bananas at a higher rate than what they would have charged otherwise. That way, everyone won! Except you, who ended up paying for a golden banana.

 Conspiracy2

3. Mergers and acquisitions 

Similar problems can arise when a company buys another one. For example, when Google bought Motorola,  competitors worried whether Google would only offer the best versions of Android to Motorola phones. In the end that didn’t end up being the case, but if that happened, competitors would have been driven away because you wouldn’t want to buy a phone with a bad version of Android.

Megers

Why care for it?

Antitrust can be very relevant to you because, at the end of the day, it makes sure that you will end up getting the best products. Antitrust is designed to help companies, small or big, to compete on a level playing field. In this way, antitrust rewards innovators and punishes those who are sluggish. Next time that you’re frustrated about the prices of printer cartridges or about the fact that every time that you click on a link on iMessage Safari pops up, antitrust might come to the rescue.

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