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all distribution channels
all except home delivery services EC focuses on individual portions (mostly sold in the
traditional sector where most exclusivity agreements
are used) and refers to „impulse“ purchase made by
consumer type of purchase: somebody walks through town and suddenly
feels like having ice-creams
They exclude multi-pack and take home ice creams, which are
typically not for immediate consumption
Also industrial ice cream through home delivery, as this is not an
46 Relevant market BUT
BUT ice cream sold in bulk is also
even though the consumer would percept it as
close substitute, because it will be served
later in individual portions, the supply
technologies are different: impulse ice cream
is sold to consumer for „self-service“, but
catering ice cream requires an additonal
production step: serving it.
47 Relevant market Similarly:
Similarly: craft-trade ice cream excluded
from the relevant market
this ice cream is not offered for sale to retail
branches, „nor is there any demand for it“.
Court of First Instance (CFI) (in an appeal
of the two accused firms in 1995) agreed
agreed with EC that craft-trade belongs to
separate market, but not the ice cream for bulk buyers. This
should be included in relevant market.
48 Relevant market No data, but concept of SSNIP test helps. Suppose industrial price for ice cream sold
in individual portions would rise 5-10%.
in Are scooping ice cream (the bulk buyers‘
goods) or craft-trade ice cream
alternatives? Estimates of cross-price elasticities would
help, but none have been done.
49 Relevant market EC
EC says: „From the consumer‘s point of
view, that part of industrial ice cream for
bulk-buying customers and of craft-trade
ice cream which is served for consumption
at point of sale without catering service,
and industrial ice cream which is not sold
through doorstep delivery services are
50 Relevant market Then:
Then: hypothetical monopolist would NOT find it
profitable to raise prices, unless it sells in all
three SSNIP test would find that relevant product
market is „industrial
industrial impulse ice cream“ (except home delivery service), craft-trade ice cream
craft-trade and industrial scooping ice cream (bulk buyers‘) BUT craft-trade was excluded by EC!!!!
51 Relevant market geographic: Germany
iimpulse ice cream market should be quite localised (we
do not travel long distances if we suddenly want ice
Similar argumentation for food stores
However, reasonable simplification to consider Germany
as a whole rather than having a huge number of small
geographic pattern of competition at more local level is most likely not very
different from local level, in this case
Also market should not be widened further: although trend to
internationalize production of ice cream, distribution systems are
on national basis
Also national differences in assortments, tastes, and prices.
Consumers prefer different brands in each country.
52 Market Power Based on relevant market definition: Schöller 20%, Langnese 45% market share would
would have been lower if relevant market was been defined
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This note was uploaded on 01/22/2014 for the course ECON D0T32A taught by Professor Czarnitzkidirk during the Spring '13 term at Katholieke Universiteit Leuven.
- Spring '13