EMEA THE ANALYSIS

Economic analysis can clarify even the most intractable issues, to inform better decisions. Here we bring the best that economics has to offer without bias: setting out what is and isn’t known, and what needs to be considered when there is no consensus.

FROM THE EDITOR

Stefano Trento | Senior Vice President

In The Analysis, we consider the complex challenges that businesses and policymakers face, and demonstrate the light that economic analysis can shed on them – albeit partially – to inform better decisions and advance important debates.

In this edition, our economists:
• Explore how the simultaneous presence of labour and product market power can make it difficult to tell whether a conduct will harm or benefit the firm’s workers and consumers, and how economic theory is useful for navigating through that complexity;
• Explain why the potential threat that long-term energy contracts pose to competition has decreased over time, and why the potential benefits of such contracts have increased; and
• Discuss how “benchmarks” can help validate whether the royalties inferred from comparable contracts are FRAND in standard-essential patent disputes.

IN THIS ISSUE

The not so-simple interaction between labour and product markets: Applications to competition policy

The not so-simple interaction between labour and product markets: Applications to competition policy

Joe Perkins, Benoit Voudon | February 28, 2024

Authorities are increasingly interested in enforcing competition in labour markets. However, since a specific conduct, such as a merger, can influence outcomes simultaneously in the labour and product markets, the overall effect is often ambiguous and difficult to unpack – what benefits the firm’s consumers can harm its employees, and vice versa. In this article, Benoît Voudon and Joe Perkins explain how economic theory helps navigate that complexity and provides insight.

The return of long-term contracts for electricity: Implications for competition policy

The return of long-term contracts for electricity: Implications for competition policy

Fabien Roques, Guillaume Duquesne | February 28, 2024

The European Commission used to see long-term electricity contracts as a potential problem for the electricity sector, threatening to suffocate competition before it could fully emerge after liberalisation. It now views these contracts as one of the potential solutions to the challenges the sector now faces to decarbonise. Fabien Roques and Guillaume Duquesne analyse the economics behind this evolution, through an assessment of the potential pro- and anti-competitive effects of long-term contracts.

Validating that royalties inferred from “comparable” SEP licences are FRAND

Validating that royalties inferred from “comparable” SEP licences are FRAND

Pekka Sääskilahti, Andrew Tuffin | February 28, 2024

When courts or arbitrators determine the fair, reasonable, and non-discriminatory (FRAND) royalty for a disputed standard essential patent (SEP) licence, they often prefer to do so informed by “comparable contracts” – that is, the prices that parties agreed for similar licences in similar situations. Pekka Sääskilahti and Andrew Tuffin explore how inference based on comparable contracts can be improved by using a “cross-check” - comparing the price proposed for the licence with the benefits it provides. They also discuss the strengths and weaknesses of the most commonly used cross-checks.

OUR PHILOSOPHY

Rigorous analysis can establish the facts: revealing what is true and what is false.

However, analysis rarely removes all ambiguity. It can pose new questions and leave others unanswered. Sometimes ambiguity may be inescapable; in which case, decisions should reflect that. Other times, further discussion and study will clarify matters. We believe that ambiguity requires more thought and analysis, not less.

In The Analysis, we aim to describe the facts on which we should agree and also set out the issues on which reasonable people disagree. As such, the views expressed here are the authors’ only and do not necessarily represent the views of Compass Lexecon, its management, its employees, or its clients. The authors will also state if third parties provided financial support for the analysis described.