Unilateral Conduct

Overview

Whether a firm’s unilateral conduct should be considered to breach antitrust law raises complex legal and economic issues that often require sophisticated analysis. The complexity of such analysis means that these cases are often the source of protracted investigations and analysis by regulators and courts, who often find themselves policing a fine line between what is procompetitive and what is anticompetitive conduct. These are high-stakes issues; firms found to have engaged in illegal anticompetitive conduct are often faced with large fines and restrictions on their commercial freedom.

In many jurisdictions, regulatory agencies and courts have also been carrying out wider reviews of sectors to assess not only if antitrust rules are being broken, but also if competition is working well in the interests of consumers. Recently, this has led to proposals for the largest tech companies to be subject to some form of ex ante regulation and/or higher levels of antitrust scrutiny over their conduct.

These investigations turn on the analysis of the economic effects of the conduct. Economic theory is clear that the economic effects of a specific conduct will depend on the specific facts of the market in question and the assessment therefore requires in-depth economic and empirical analysis. Similarly, the potential for intervention to remedy identified market failures also needs to be grounded in a thorough analysis of the market in question.

We have advised on the full range of market-power abuse matters, including tying, bundling, loyalty rebates and exclusive dealing, refusal to supply, raising rivals’ costs, predation, price discrimination, excessive pricing, and margin squeeze. Many cases have required analysis of how intellectual property rights influence alleged anticompetitive behavior, particularly in technology and pharmaceutical sectors. We often work closely with forensic accounting experts on detailed analysis of costs required for effective application of relevant price-cost tests.

NOTABLE CASE OUTCOMES

Fortune 100 Chemical company (US)

This Fortune 100 chemical firm faced numerous antitrust regulatory investigations in the US and globally alleging it had for more than 10 years operated in an illegal cartel. We conducted an extensive review of the relevant market and developed an econometric model that explained market-wide price movements as a function of oil and benzene feedstock prices and the entrance of a new competitor. These analyses demonstrated that observed commonality in the price movements had resulted from these external factors affecting the entire chemical industry.

The investigations were subsequently closed.

NOTABLE CASE OUTCOMES

Achilles Rail v Network Rail supplier assurance services dispute (UK)

We were engaged to provide economic expert witness evidence on behalf of the defendant in a standalone competition dispute between Achilles Information Limited, a provider of supplier assurance services, and Network Rail Infrastructure Limited. Achilles accused Network Rail of foreclosing it from the rail supplier assurance market.

Our team reviewed disclosed documents, studied factual witness statements, and drafted an expert report addressing key issues relevant to the dispute such as market definition, counterfactual outcomes, and objective justification. The report clearly set out the two-sided nature of the supplier assurance market and explained the implications of this for the effects analysis.

NOTABLE CASE OUTCOMES

Coca-Cola Turkey, multiproduct rebates (Turkey)

We assisted Coca-Cola Turkey to respond to an investigation by the Turkish Competition Authority (TCA) regarding allegations that Coca-Cola Turkey had acted abusively by hindering competition in the carbonated soft drinks market through its cooler and rebates practices. This included preparing economic expert reports for submission to the TCA during the investigation and following the issuance of a statement of objections.

Based on a thorough analysis of the relevant economic theory, the AlixPartners team set out the appropriate economic framework to undertake an effects-based analysis to distinguish competitive and anticompetitive conduct. The team assessed the economic and factual evidence using that framework to evaluate the authority’s underlying theory of harm and to determine whether Coca-Cola Turkey’s practices were capable of excluding rivals via loyalty effects, leading to anticompetitive foreclosure. The authority agreed on commitments with Coca-Cola Turkey and ended its investigation without an infringement finding.

NOTABLE CASE OUTCOMES

Retail banking inquiry (UK)

Our economists were retained by HSBC to advise on the CMA market inquiries into retail and SME banking in the UK. This 18-month inquiry assessed whether these markets were working well in the interests of consumers, whether any market features created adverse effects on competition, and, if so, whether remedies should be imposed. We compiled economic evidence and analysis on a wide range of issues in particular consumer behavior, product profitability, market outcomes, and the likely impact of various structural and behavioral remedies.

The CMA considered a wide range of potential remedies to improve outcomes for consumers and eventually settled on a range of behavioural remedies.