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

The course provides an introduction to the economic analysis of competition policy and antitrust enforcement, with a specific focus on financial, banking and payment markets. It combines the study of the main analytical tools used in competition economics with their application to markets characterized by concentration, regulation, network effects, interoperability issues, data-related lock-in, and systemic relevance.

The first part of the course introduces the institutional and economic foundations of competition policy. It covers the history and objectives of antitrust law in the United States and in the European Union, the structure of EU competition rules, market power, welfare standards, static and dynamic efficiency, market definition, and the measurement of concentration and market power. Particular attention is paid to the interaction between financial regulation and antitrust enforcement, including the role of competition policy in banking, payment systems, financial benchmarks, market data and financial infrastructures.

The second part of the course focuses on the main areas of antitrust enforcement: horizontal agreements and collusion, merger control, vertical restraints, predation, monopolization and abuse of dominance. The economic mechanisms underlying these practices are analysed together with their legal assessment under EU and US competition law. The course also discusses recent developments in EU competition policy, including the evolving interpretation and enforcement of Article 102 TFEU.

Applications to financial, banking, payment and related markets are discussed throughout the course. In one of the available assessment paths, students apply the theoretical and analytical tools developed during the course to an antitrust case study in financial, banking, payment or closely related markets.

Course Outline

1. Introduction to competition policy: definition, history and the law
   • Definition and objectives of competition policy
   • Historical evolution of antitrust in the US and the EU
   • Structure of EU competition rules
   • Article 101 TFEU, Article 102 TFEU and the EU Merger Regulation
   • Recent trends in antitrust enforcement
2. Competition policy, regulation and financial markets
   • Specific features of financial markets
   • Economic, prudential and information regulation
   • Financial regulation and antitrust scrutiny
   • The “too big to fail” argument and its antitrust relevance
   • Antitrust enforcement in banking, payment systems, benchmarks and financial infrastructures
3. Market power, welfare and efficiency
   • Definition of market power
   • Consumer surplus, producer surplus and total welfare
   • Allocative, productive and dynamic efficiency
   • Competition, innovation and incentives to innovate
   • The competition paradigm in the financial sector
     
4. Market definition and the assessment of market power
   • Product and geographic market definition
   • The hypothetical monopolist test and the SSNIP test
   • Critical elasticity, critical loss and the Cellophane fallacy
   • Relevant markets in banking, financial services and digital environments
   • Concentration ratios, Lerner Index, Herfindahl-Hirschman Index and market power
5. Article 101 TFEU: collusion and horizontal agreements
   • Horizontal agreements and collusive practices
   • Economic models of collusion and repeated interaction
   • Factors facilitating collusion
   • Legal assessment, standards of proof and leniency programmes
   • Applications to payment systems, financial benchmarks and network-based markets
6. Horizontal mergers
   • Unilateral effects
   • Coordinated effects and joint dominance
   • Efficiency gains and failing-firm defence
   • Structural and behavioural remedies
   • Dynamic and forward-looking merger assessment, including applications to financial and payment markets
7. Vertical mergers and vertical restraints
   • Vertical relationships and contractual restraints
   • Intra-brand and inter-brand competition
   • Double marginalization, retail services and hold-up problems
   • Vertical mergers, foreclosure and exclusive dealing
   • Strategic and collusive effects of vertical restraints
8. Predation, monopolization and abuse of dominance
   • Abuse of dominance under Article 102 TFEU
   • Predatory pricing, price discrimination, rebates and margin squeeze
   • Tying, bundling, exclusive contracts and refusal to supply
   • Interoperability, essential facilities and access to financial infrastructures
   • Recent developments in the interpretation and enforcement of Article 102 TFEU

Readings/Bibliography

Core Course materials

The core materials for the course, and for all assessment paths, are the textbook, the lecture slides, the lecture notes and the additional teaching materials made available by the instructor during the course.

The main textbook is:

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

The textbook provides the main theoretical and analytical background for the course.

Lecture slides, academic articles, handouts and additional readings will complement the textbook, especially with reference to antitrust enforcement in financial, banking and payment markets, recent developments in competition policy, and case-study applications.

These materials will be made available or indicated through the course website on Virtuale, the University’s teaching platform: https://virtuale.unibo.it/.

Further reading

For further reading and a more advanced and comprehensive analysis of Article 102 violations, students may consult:

Fumagalli, C., Motta, M., & Calcagno, C. (2018), Exclusionary Practices: The Economics of Monopolisation and Abuse of Dominance, Cambridge University Press.

This book is recommended for students interested in deepening the economic analysis of exclusionary practices and abuse of dominance.

 

Both books are available in ebook and print formats via AlmaRE, the University of Bologna’s platform for accessing digital resources. Students can consult them on campus or remotely through the AlmaStart search tool using their university credentials.

Teaching methods

The course is based mainly on face-to-face lectures and interactive discussion of antitrust cases.

Lectures introduce the main theoretical models, legal-economic frameworks and case-study applications covered in the course. Students are encouraged to read the relevant materials before each lecture and to participate through questions and discussion.

The material related to each lecture will be indicated in the detailed syllabus and lecture calendar made available at the beginning of the course on Virtuale: https://virtuale.unibo.it/.

 

Assessment methods

Non-attending students

For non-attending students, the assessment is based on a final closed-book written exam covering the entire syllabus.

The time available is 1 hour and 30 minutes.

The exam consists of:

• 2 open-ended questions, worth up to 7 points each;
• 6 multiple-choice questions, worth up to 3 points each. For each multiple-choice question, students are required to justify their answer on the basis of the theory studied during the course.

The scoring of the open-ended questions is based on the correctness, thoroughness and completeness of the answer. Students must demonstrate knowledge and understanding of the topic, the ability to present it rigorously, to critically examine its main aspects, and to account for the relevant economic, legal and policy debate.

For multiple-choice questions, each correct answer is worth 3 points when properly justified. Correct answers without a correct justification are worth 1 point. Incorrect or missing answers are worth 0 points.

The maximum total score obtainable in the final written exam is 32 points. The exam is passed with a score of at least 18/30. If the score is higher than 30, the final grade will be 30 cum laude.

 

Attending students

Students attending at least 6 out of 10 lectures may choose among the following three alternative assessment methods.

 

Option 1: Short group dissertation and group presentation

The first assessment method is available only to groups of two students and is based on:

• 50% short group research project, in the form of a dissertation of 3,000–3,500 words, excluding table of contents, abstract, footnotes and bibliography;
• 50% in-person group presentation based on the submitted dissertation, lasting no more than 30 minutes.

The short group dissertation must be submitted in Word format by email to m.alvisi@unibo.it no later than 4 days before the exam date at 5 p.m., unless otherwise agreed with Professor Alvisi under exceptional circumstances.

This assessment method is available only for the first two exam calls of the academic year.

 

Option 2: Long dissertation

The second assessment method is based entirely on the submission of an individual research project, in the form of a long dissertation of 6,000–7,000 words, excluding table of contents, abstract, footnotes and bibliography.

The long dissertation must be submitted in Word format by email to m.alvisi@unibo.it by 9 a.m. on the exam date.

This assessment method is available for all exam calls of the academic year (that is, until September 2027).

 

Option 3: Final written exam

The third assessment method is the same as the one available to non-attending students: a final closed-book written exam covering the entire syllabus.

The time available is 1 hour and 30 minutes.

The exam consists of:

• 2 open-ended questions, worth up to 7 points each;
• 6 multiple-choice questions, worth up to 3 points each. For each multiple-choice question, students are required to justify their answer on the basis of the theory studied during the course.

The scoring criteria are the same as those indicated above for non-attending students.

Topic selection for Options 1 and 2

For Options 1 and 2, the topic of the dissertation must be selected by students in mandatory consultation with Professor Alvisi.

In principle, the topic should concern a specific antitrust case in financial, banking, payment or closely related markets. Subject to the Professor’s approval, students may also propose a more theoretical or economic topic, provided that it is directly and explicitly applicable to financial and banking markets and/or payment systems.

For the first exam call, the topic must be finalized by the end of the fourth week of the course.

Detailed guidelines for selecting the case, preparing the dissertation and, where relevant, using generative AI appropriately will be made available on Virtuale. Sample presentations from previous years may also be provided as guidance.

 

Grading criteria for Options 1 and 2

For Options 1 and 2, the dissertation and, where applicable, the presentation are evaluated with a score ranging from 0 to 32, according to the following criteria:

• 0–17: insufficient knowledge and analytical skills; limited understanding of the case study; weak or incomplete discussion of the relevant issues; frequent inaccuracies in the use of technical terminology.
• 18–23: sufficient knowledge and analytical skills; basic understanding of the case study; discussion limited to some relevant aspects; generally correct use of terminology.
• 24–27: good preparation at a technical level; adequate understanding of the main elements of the case study, although with some weaknesses or uncertainties; good analytical skills and correct use of terminology.
• 28–30: very good knowledge of most elements of the case study; clear and well-structured analysis; good critical skills and appropriate use of specific terminology.
• 31–32: excellent and in-depth knowledge of the different elements of the case study; excellent critical and analytical skills; precise and sophisticated use of specific terminology.

The final grade is expressed on a 30-point scale, from 18 to 30. If the score obtained in the dissertation and presentation, or in the long dissertation, is higher than 30, the Professor may award 30 cum laude.

 

Materials allowed during the written exam

The written exam is closed-book. Textbooks, lecture notes, slides, dictionaries, smartphones, smartwatches, tablets, laptops and other electronic devices are not allowed.

Non-programmable calculators are allowed. No substitutes, including mobile phones or similar devices, are permitted.

 

Generative AI

During the written exam, the use of generative AI tools is prohibited. Any use of such tools during the written exam constitutes a violation of academic integrity.

For the dissertation and case-study assessment paths, a limited, declared and non-substantial use of generative AI tools is allowed for support activities, such as preliminary exploration of sources, summaries, language revision, reformulation or self-assessment. Generative AI tools may not be used as a substitute for the student’s own analysis, legal-economic reasoning, case selection, interpretation of sources, or writing of substantive parts of the dissertation or presentation.

Students choosing Options 1 or 2 must follow the specific instructions on the appropriate use of generative AI made available on Virtuale.

 

Students with disabilities or specific learning disorders

Students with disabilities or specific learning disorders, whether temporary or permanent, are invited to contact the University Service for Students with Disabilities and SLD in due time:
https://site.unibo.it/studenti-con-disabilita-e-dsa/en

The office will propose possible adaptations, which must be submitted to the instructor for approval at least 15 days in advance. The instructor will assess their appropriateness in relation to the learning objectives of the course.

Teaching tools

Slides and other teaching materials will be made available on Virtuale: https://virtuale.unibo.it/. Lecture slides will normally be uploaded before each lecture.

For students choosing the case-study assessment path, Virtuale will include specific support materials, such as guidelines for writing the paper on the chosen antitrust case, a quick guide to finding an appropriate case, indications on the appropriate use of generative AI, and sample presentations from previous years. The sample presentations are provided only as guidance.

Tutorial activities will be offered during the course to review the microeconomic tools required for selected topics and to support the study of recent developments in the interpretation and enforcement of Article 102 TFEU.

Office hours

See the website of Matteo Alvisi