Competition Policy and Consumer Protection Dr. Patrick Krauskopf Swiss Competition Commission (COMCO) National Training Workshop on Competition Policy and Law organised by CUTS International & Coordinated by CUTS Institute for Regulation and Competition (CIRC), Botswana, 25 – 27 July, 2007

What is competition? BMW Fiat Costumer

The importance of competition in an economy Competition allows a suitable assignment of resources and a better distribution of income

Competition promotes innovation and productivity (1) In a competitive market, the firms must seek to fulfill the requirements of their clients and to offer them: better prices better quality new and improved products and services better services before and after sales Otherwise, they will probably lose their market shares

Competition promotes innovation and productivity (2) Competition leads to: A better assignment of the resources More innovation and technical development More consumers satisfied

Competition promotes innovation and productivity (3) Competition is in the interest of the consumers For firms competition means lot of stress and plenty of risks to loose money. Therefore firms try to restraint competition How can this be done?

Cartels or mergers influence (1) Cartels or mergers influence the degree of competition/ can lead to dominant firms Firms on the market: 2 situations Cartel or merger Degree of competition I + II -

Cartels or mergers influence (2) Firms can they form cartels or merge as long as they do not restraint competition too much / do not become too dominant In single cases it is very difficult to decide whether a cartel or merger restraints competition too much / whether a cartel or merger leads to too dominant firms

Cartels or mergers influence (3) Producers Dealers Consumers

The monopoly and monopoly conducts Mesures against the benefit of consumers Economic welfare is reduced as well as the market and the investment The costs are raised and the competitiveness is reduced The price is raised The production and the commerce are restricted More incentives to get extraordinary income Monopoly

Ideal market structure: no firm is dominant Producers Dealers Consumers

Typical market structure on many markets: today Producers Dealers Consumers

Importance of competition policy Allows market access and eliminates distortions Reduces the cost of supplies or capital goods Allows the access of financial resources Reduces the uncertainty of investment

Application of competition law (1) Promotes a better use of productive resources to generate a variety of goods and services with better prices and availability Prevents excessive market concentrations and creates opportunities for small enterprises Prevents and eliminates monopolistic practices

Application of competition law (2) Strengthens industry and internal markets Promotes growth of innovative and efficient enterprises, with better potential and endurance to adverse changes, which allows them to improve and compete in national and international markets.

The three pillars of competition law What can today competition law do? Cartels – horizontal or vertical ones Mergers Abusive use of market dominance Control and eventually forbid cartels (Art. 81 EC, Art. 5 KG) Control and eventually forbid mergers (Art. 2 Merger Reg, Art. 9 and 10 KG) Control and eventually forbid abuse use of market dominance (Art. 82 EC, Art. 7 KG)

Thank you For further information, please do not hesitate to contact: Mr. Patrick Krauskopf: patrick.krauskopf@weko.admin.ch Ms.Katrin Emmenegger: katrin.emmenegger@weko.admin.ch