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Unformatted text preview: old through EC: all distribution channels all except home delivery services EC focuses on individual portions (mostly sold in the EC traditional sector where most exclusivity agreements are used) and refers to „impulse“ purchase made by consumer consumer type of purchase: somebody walks through town and suddenly type feels like having ice-creams feels They exclude multi-pack and take home ice creams, which are They typically not for immediate consumption typically Also industrial ice cream through home delivery, as this is not an Also „impulse“ purchase „impulse“ 46 46 Relevant market BUT BUT ice cream sold in bulk is also excluded excluded even 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. production 47 47 Relevant market Similarly: Similarly: craft-trade ice cream excluded from the relevant market from this this ice cream is not offered for sale to retail branches, „nor is there any demand for it“. branches, Court 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 but should be included in relevant market. should 48 48 Relevant market No data, but concept of SSNIP test helps. Suppose industrial price for ice cream sold Suppose in individual portions would rise 5-10%. in Are scooping ice cream (the bulk buyers‘ Are goods) or craft-trade ice cream alternatives? alternatives? Estimates of cross-price elasticities would Estimates help, but none have been done. help, 49 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 identical“ identical“ 50 50 Relevant market Then: Then: hypothetical monopolist would NOT find it NOT profitable to raise prices, unless it sells in all three markets. three SSNIP test would find that relevant product SSNIP 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 51 Relevant market geographic: Germany iimpulse ice cream market should be quite localised (we mpulse do not travel long distances if we suddenly want ice cream) cream) Similar argumentation for food stores However, reasonable simplification to consider Germany However, as a whole rather than having a huge number of small geographic areas geographic pattern of competition at more local level is most likely not very pattern different from local level, in this case different Also market should not be widened further: although trend to Also internationalize production of ice cream, distribution systems are on national basis on Also national differences in assortments, tastes, and prices. Also Consumers prefer different brands in each country. Consumers 52 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 differently di...
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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.

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