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  • Print publication year: 2015
  • Online publication date: August 2015

8 - Brands, product differentiation and EU competition law

from PART II - Brands and competition law

Summary

Introduction

The term of the art ‘brands’ is often used in EU Competition law with the aim of providing factual information on the competitive, or not, relation between products or services provided by different economic actors. The European Commission often refers in its merger or antitrust decisions to the products (or services) of brand X that enter into competition on a relevant market with the products (or services) of brand Y. The term brand used in this context aims to provide a factual observation on the operation of the specific relevant market. No further inferences are made. Inquiring into the role of brands in this context is a simple exercise and offers little to the research question explored in this volume. However, the issue becomes more complex if one engages with the use of brands as an operational concept in EU competition law. Operational concepts connect theoretical concepts to simple factual observations. For instance, the operational concept of ‘market power’ connects a fact concerning the level of prices in a specific market at a certain point in time, which is partially an observable fact, with the theoretical construction of price theory, for instance the theoretical concept of monopoly or its antithesis, that of perfect competition, from which market power is a departure. These operational concepts help decision-makers to make inferences (they serve as analytical shortcuts) about the relation between the different facts they observe in order to assess causal relations and make predictions.

It is now accepted that competition law makes extensive use of operational concepts transplanted from the discipline of economics, in particular neoclassical price theory. Yet its receptivity to operational concepts developed in other disciplines, management studies in particular, has been relatively limited. And here lies the core of the problem with regard to the engagement of EU competition law with the concept of ‘brands’. Although the discipline of economics and in particular neoclassical price theory perceives brands as a fact of economic life, until recently price theory has not made use of the term as an operational concept. Instead, economists prefer to focus on the semi-operational concepts of product differentiation, advertising or that of barriers to entry, which describe the consequences of the existence of brands, but do not engage directly with the concept of brand.

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