Competition between firms is usually the most effective way of delivering economic efficiency and what consumers want. However, there is a balance to be struck. Firms must not be over-regulated and so hampered in their development of innovative products and new strategies to compete for customers; but nor must they be completely free to satisfy a natural preference for monopoly, which would give them higher profits and a quieter life. The economic role of competition policy is to maintain this balance, and an effective policy requires a nuanced understanding of the economics of industrial organisation.
The seed of an idea for this book was first sown in 1989 after an editorial board meeting of the Journal of Industrial Economics when Larry White kindly gave me a copy of his new book, co-edited with John Kwoka: The Antitrust Revolution. That book, now entering its fifth edition, was to become a classic publication in the field because it showed how economics was being used very practically by leading American academics in US antitrust (i.e. competition policy) cases. While this may have been revolutionary at the time, as the reader will see, the application of well-argued and finely tuned economic analysis in competition cases has long since crossed the Atlantic. Competition policy has come out of the legal closet.
This book demonstrates how economics is used (and sometimes abused) in competition cases across Europe. It also aims to show how the use of economics in case analysis can be improved.