LLM Programme

Teaching Method:

One one-hour introductory/presentation lecture (to be given twice in a row on October 2) and 10 two-hour seminars.
Additionally, there will be 7 optional tutorials.
The module runs over term 1 and 2.

Module summary

The objective of this course, organised by the Centre for Law, Economics and Society at UCL, is to introduce the economic theories that underlie competition law and the methods that are used to assess whether business practices are nefarious, benign, or healthy. This year it is taught by a team of experts from Charles River Associates (CRA) - Dr Cristina Caffarra (Head of European Competition), Ms Diana Jackson (Vice-President, London), Dr Valter Sorana (Principal, London), Dr Robert Stillman (Vice-President, London and Brussels), and Dr Hans Zenger (Senior Consultant, Brussels).

The teaching method is by two-hour seminars, conducted as part lecture and part discussion. Students will therefore be required to read material in advance and come to seminars prepared to participate in class discussion.

The course consists of two parts:

The first part involves an introduction to microeconomics, game theory and industrial organization theory. It provides a basic introduction to the economics of markets including how firms maximise profits, the theory of demand, the role of costs, perfect competition, monopoly and oligopoly.

The second part involves the application of economics to competition policy. It includes the analysis of market power, market definition, cartels and other coordinated behaviour, unilateral conduct including predatory and exclusionary practices, horizontal and vertical mergers. The course is designed to provide students with a deep understanding of how economics is applied to competition policy as well as practical tools for applying this to cases.

Module syllabus

2 October 2012: Introduction to the Economics of Competition Policy (Valter Sorana)
Dimensions of competition—price, quality, innovation; types of competition - static vs. dynamic; economic objectives of competition law; demand and supply; the role of economics in competition policy; the use of the error-cost framework to derive competition uses.

16 October 2012: Firms and Profit Maximisation (Valter Sorana)
Demand, costs, profit maximisation; monopoly and the measurement of market power; the Lerner (price-cost margin) index and its application to the analysis of market power; static versus dynamic analysis and implications for identifying anticompetitive practices.

13 November 2012: Demand, Supply and Welfare (Valter Sorana)
Supply, demand and the notion of equilibrium; the use of the demand and supply framework to predict changes in prices and output (comparative statics); consumer surplus and social welfare.

27 November 2012: Oligopoly and Game Theory (Valter Sorana)
Role of oligopolies in economy; introduction to game theory; static games: Cournot and Bertrand models of oligopoly; dynamic games; applications of game theory in competition policy.

11 December 2012: Cartels and Other Coordinated Practices (Robert Stillman)
The economic theory of collusion; tacit collusion and information exchanges; facilitating factors for cartels; detecting and discouraging cartels; estimation of damages and assessment of fines for cartels.

8 January 2013: Market Definition (Diana Jackson)
Background on case law and economics; demand and supply substitution; hypothetical monopolist test; critical loss analysis; factors that enhance or reduce market power; dominant firm with competitive fringe model.

22 January 2013: Horizontal Mergers (Valter Sorana)
Legal and economic framework; unilateral effects: diversion ratios, pricing pressure indices and merger simulation; coordinated effects; analysis of efficiencies and remedies.

5 February 2013: Pricing Strategies and the Competitive Process (Hans Zenger)
Competition, innovation and welfare; excessive pricing, price discrimination; limit pricing; predatory pricing.

19 February 2013: Exclusive Dealing and Loyalty Rebates (Hans Zenger)
Exclusive dealing and loyalty rebates as part of the competitive process; anticompetitive exclusive dealing; efficiency justifications.

5 March 2013: Tying and refusal to supply (Hans Zenger)
Procompetitive tying, bundling and bundled discounts; anticompetitive tying, bundling and bundled discounts; refusal to supply and intellectual property.

19 March 2013: Non-horizontal mergers (Cristina Caffarra)
Foreclosure incentives and single-monopoly profit theorem; ability to foreclose; vertical integration, complementary products and mergers.

Recommended materials:

Seminar hand-outs and other material will be provided electronically via Moodle (virtual learning environment) at the start of the academic year. Moodle cannot be accessed until enrolment in September.

Preliminary reading:

Seminar hand-outs and other material will be provided electronically via Moodle (virtual learning environment) at the start of the academic year. Moodle cannot be accessed until enrolment in September.

The application process for the 2013-14 academic session is open.
The deadline for applications to be received has been extended to Monday 1 July 2013

Please refer to the How to apply section for information on the application process.