Index Definitions

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Total Index Score (Minimum possible score 0 – Maximum 30)

The total index score is simply the sum of the scores for each category (e.g. scope, remedies, private enforcement, etc). Defenses and pro-defendant elements do not contribute to the scores within each category, and likewise do not contribute to the total index score.

Scope (0-1)

Extraterritoriality: The applicable law or Act applies to foreign companies and citizens as long as the activity has some effect in the particular country.

Remedies (0-3)

Fines: The law allows fines for violations of the applicable Act.

Prison Sentences: The law includes criminal violations which are punishable by imprisonment.

Divestitures: The law allows the selling of assets or division of the company in response to certain violations.

Private Enforcement (0-3)

Third Party Initiation: Third parties (usually those damaged by the violations) can file private lawsuits or initiate an investigation or hearing by the applicable Commission or Council.

Remedies Available to Third Parties: Remedies for damaged third parties are provided for in the Act. Third Party Rights in Proceedings: Third parties have access to evidence and/or can testify or otherwise participate in proceedings.

Merger Notification (0-5)

Voluntary: Companies are encouraged, but not required, to notify the applicable Commission or Council of an intended merger.

Mandatory: Companies fitting particular criteria are required to notify the applicable Commission or Council of any intended merger. This gets a score of 3 if fulfilled in order to represent the comparative severity of a mandatory distinction as compared with a voluntary scheme.

Pre-Merger: The Commission must be notified before the merger occurs (includes countries where the notification happens somewhat simultaneously with the merger). This gets a score of 2 if fulfilled.

Post-Merger: The Commission is notified after the merger (and then often has the power to invalidate the completed merger).

Merger Assessment (0-4)

Dominance: The Commission or Council takes into consideration the dominant position or market share that the company will have if the merger occurs.

Restriction of Competition: The Commission or Council considers the merger in light of maintaining effective competition, the potential effects on the structure of the market, and possible barriers to entry.

Public Interest (Pro D): The Commission or Council considers whether an otherwise impermissible merger may be allowed because it is in the public interest and/or will have benefits or advantages to the consumers.

Public Interest (Pro Authority): The Commission or Council has the power to prohibit a merger if they are concerned it runs contrary to public interests such as national security.

Other: The Commission or Council considers other issues such as international competitiveness, effects on employment markets, and promoting minority ownership.

Efficiency Defense: The Commission or Council may allow an otherwise impermissible merger if it will contribute sufficiently to economic efficiency.

Dominance (0-6)

Limits Access: A single dominant firm may not limit the supply of goods to the market or in other ways restrict access to the market by consumers or competitors.

Abusive Acts: The Act lists or otherwise indicates acts that would constitute an impermissible abuse of a dominant position.

Price Setting: It is impermissible for a single firm to arbitrarily or unfairly set the price of a good by taking advantage of its dominant position.

Discriminatory Pricing: A single dominant firm may not impose different prices for the same goods or services for different customers.

Resale Price Maintenance: The Act does not allow single firms to set the price at which its customers will ultimately sell their product to consumers.

Obstacles to Entry: A dominant firm is prohibited from imposing various restrictions or coercive practices that make it very difficult for competitors to enter the market or increase their market share.

Efficiency Defense: An otherwise impermissible act is excused if it substantially contributes to economic efficiency or to the public good.

Restrictive Trade Practices (0-8)

Price Fixing: A cartel or group of companies is not allowed to attempt to set the price for their product in the market.

Tying: A group of companies is not allowed to condition contracts on buying additional products that are not directly connected to the product that is the subject of the contract.

Market Division: A group of companies cannot agree to divide or allocate the market by a particular geographic, demographic, price-defined, or otherwise-defined characteristic.

Output Restraint: A group of companies is not allowed to agree to limit the overall rate of production or amount of products made available to the market.

Market Sharing: A group of companies cannot agree to share a certain market by not competing with each other for business or customers.

Eliminating Competitors: The law prohibits acts by a group of companies that have the purpose and/or effect of reducing the amount of competition in the market.

Collusive Tendering/Bid-Rigging: It is illegal for a group of firms to agree not to bid at market price for a certain product in order to manipulate the market price of that product.

Supply Refusal: A group of companies cannot agree not to sell their products to certain other companies or groups of companies for arbitrary reasons.

Efficiency Defense: An otherwise impermissible practice may be allowed if it contributes significantly to economic efficiency or to the public good.