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HoustonKemp.com
Estimating the benefit of anti-
competitive conduct
How the maximum penalty for anti-
competitive conduct could be calculated
Dr Luke Wainscoat
31 August 2019
Competition and Consumer Workshop, Melbourne
HoustonKemp.com
The maximum penalty
2
3x benefit
$10 million
vs
10% of turnover
$10 million
vs
But, if benefit cannot be determined:
If benefit can be determined:
HoustonKemp.com
Maximum penalties have almost always been set
by reference to turnover
3
Law
implemented
2006 2019
Visa
Colgate-
Palmolive
Yazaki
NYK
Flight
Centre
Mitsubishi
Electric
ANZ
Renegade
Gas
K-Line
2013
HoustonKemp.com
What’s the problem with using turnover?
• Law states that benefit should be used when it can be
determined
• Turnover may lead to sub-optimal deterrence
› Penalty can be too low for single-product firm
› Penalty can be too high for large firm with many products
4
HoustonKemp.com
Maximum penalty increases with turnover if
benefits not estimated
5
HoustonKemp.com
Techniques to estimate
benefits
6
HoustonKemp.com
Techniques are available to estimate benefits
• Various techniques for estimating the additional profit
gained from anti-competitive conduct
• Key is to estimate the price that would have occurred in
the absence of the conduct
7
HoustonKemp.com
Before and after technique
8
HoustonKemp.com
Before and after technique
9
HoustonKemp.com
Need to know when the conduct started and
stopped
10
HoustonKemp.com
Need to know when the conduct started and
stopped
11
HoustonKemp.com
Need to take other effects on prices into account
12
HoustonKemp.com
Need to take other effects on prices into account
13
HoustonKemp.com
Need to take other effects on prices into account
14
HoustonKemp.com
Difference-in-differences technique
15
HoustonKemp.com
Difference-in-differences technique
16
HoustonKemp.com
Difference-in-differences technique
17
HoustonKemp.com
Conclusion
• Benefits have almost never been used to calculate the
maximum penalty
• Benefits can be calculated, and I expect this will be
attempted in the near future
18
HoustonKemp.com
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Sydney NSW 2000
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Benefit of anti -competitive conduct - luke wainscoat - 31 august 2019