B0022 - ANTITRUST IN THE FINANCIAL SECTOR

Learning outcomes

This course studies the economics of competition and antitrust, with a special focus on financial and banking markets. Students learn how to define the relevant markets; how to measure the market power of agents and the degree of market concentration. They are then introduced to the major antitrust violations and the typical measures taken to stop competition-harming behavior (from price fixing to abuse of dominance). They consider antitrust implications of network interconnectedness in different segments of financial markets (included payment systems). The economic analysis of merger regulation is also examined. At the end of the course, the student knows how to apply the most important economic models to antitrust cases, and knows how to use rigorous models in the analysis of competition policy issues.

Course contents

1. Introduction to competition policy: definition, history, and the law

Definition of competition policy

History of competition policy in the EU and in the US

Structure of EU competition Rules

Introduction to Art 101 TFEU, Art 102 TFEU, ECMR

Objectives of Competition Policy

2. Market power and Welfare

Definition of market power

Allocative efficiency, productive efficiency, and dynamic efficiency

Public policies and incentives to innovate

The validity of the competition paradigm of antitrust for the financial sector: the “too big to fail” argument.

Financial Regulation and Antitrust scrutiny: complements or substitues?

3. Market definition and the assessment of market power

The definition of the relevant market.

Relevant markets in the banking system.

Concentration Ratios, Lerner Index, HH index and market power

4. Art 101 TFEU : Collusion and Horizontal Agreements

Horizontal agreements

Collusion: an economic definition

The sustainability of collusion in a repeated game

Factors that facilitate collusion

Competition policies against collusion

The Antitrust implications of network interconnectedness in financial markets: the case of payment systems

5. Horizontal mergers

Unilateral effects

Pro-collusive effects

Remedies: structural and behavioral remedies

Merger policy in the EU

An antitrust analysis of US health insurance markets.

6. Vertical mergers

Intra-brand competition

Inter-brand competition

Anti-competitive effects

7. Predation, monopolization, and other abusive practices

Predatory pricing

Price Discrimination

Non-price monopolization: strategic investment, bundling, tying, exclusive contracts.

Interoperability in Financial markets.

Readings/Bibliography

M. Motta (2004), Competition Policy. Theory and Practice. New York, Cambridge University Press.

Other material and readings will be added or distributed during lectures and/or through the course website (see https://virtuale.unibo.it). The course website will also contain sample presentations.

Teaching methods

Lectures and interactive discussions of antitrust cases in class. Students are advised to read the material before the class comes. The material for each lecture will be indicated in the detailed calendar published on the official website (see https://virtuale.unibo.it) at the beginning of the course.

Assessment methods

A) For those who attend the course (for a minimum of 70% of the lectures), one first method of assessment will be based 50% on individual or group in-person presentations (not longer than 30 minutes) within the first two exam dates (“primo” and “secondo appello” of the “sessione estiva”) and 50% on the submission of an individual/group research project (dissertation) of a length between min 3,000 words and max 3.500 words (excluding bibliography and/or bibliographical references in the footnotes) on a case of own choice regarding one of the topics within the syllabus and dealing with financial/ markets (groups should not contain more than 2 students). The dissertation shall be submitted via email to m.alvisi@unibo.it [mailto:m.alvisi@unibo.it] in Word format within 5 days before the exam date at 5 p.m. (unless differently agreed with Prof. Alvisi under exceptional circumstances).

 

B) In all other cases (that is: 1. students did not attend the course, 2. students attended it but they don't want to make a presentation; 3. Independently of their attendance, students don't take the exam within the first two exam dates), the assessment on this course will be 100% on submission of an individual research project (dissertation) of a length between min 6,000 words and max 7.000 words (excluding bibliography and/or bibliographical references in the footnotes) on a case of own choice regarding one of the topics within the syllabus and dealing with financial/insurance markets. The dissertation shall be submitted in Word format via email to m.alvisi@unibo.it [mailto:m.alvisi@unibo.it] by the exam date at 9 a.m.

 

Both the dissertations and the presentations will be evaluated with a score ranging from 0 to 32, as follows:

0-17: The student shows insufficient knowledge and analytical skills, spread over just few components of the case-study, the overall jargon is often imprecise.

18-23: The student shows sufficient knowledge and analytical skills, spread however over just few components of the case-study, the overall jargon is correct

24-27: The student shows an adequate preparation at a technical level with some doubts over single parts of the case-study. Good, yet not articulate analytical skills, with the use of a correct jargon

28-30: Great knowledge about most of the elements of the case-study, good critical and analytical skills, good usage of the specific jargon

31-32: excellent and in depth knowledge of the different elements of the case-study, excellent critical and analytical skills, excellent usage of specific jargon.

 

The course score is expressed into thirties, from 18 to 30, and if the score obtained in the dissertation+presentation or in the longer dissertation is above 30, the professor may assign an honor mark (lode).

 

Teaching tools

- Slides and other material will be available on the course website.

- During the first three weeks a tutor will offer 1-2 review sessions on the economic tools that the Professor will use in the remainder of the course.

Office hours

See the website of Matteo Alvisi