Author(s)
Víctor Pavón Villamayor
Source
Competition Law and Policy in Latin America, Eleanor M. Fox and D. Daniel Sokol, eds., Hart. 2009
Summary
This paper discusses how changes in markets can harm consumers.
Policy Relevance
When technology changes and firms that once produced different products begin to offer the same product, consumers can be harmed. Judges should look closely at each case.
Main Points
- Sometimes firms start out pursuing different lines of business and do not compete. Perhaps because of technological change, the firms enter the same business and become competitors.
- Example: fixed and mobile wireless telephone service in Latin America.
- As the markets converge, the differences between the firms' products become less. The quality of service tends to improve.
- Collusion between the firms is easier at first, and later becomes more difficult.
- When technology is changing for both firms at about the same rate in about the same way, faster innovation makes collusion more likely.
- Judges should look at each case closely to see if consumers are harmed or help (the “rule of reason”) because it depends on the facts.
