Glossary of competition terms

This Glossary is based on definitions from DG COMP’s Glossary of terms used in EU competition policy (© European Union, 2002) and the OECD’s Glossary of industrial organisation economics and competition law (© OECD, 1993). Each term is enriched with references of national case laws from the e-Competitions Bulletin and Concurrences Review.

Economic analysis

In its Best practices for the submission of economic evidence and data collection in cases concerning the application of Articles 101 and 102 TFEU and in Merger cases the Office of Chief Economist defined the scope and purpose of economic analysis as follow :

"Economic analysis plays a central role in competition enforcement. Economics as a discipline provides a framework to think about the way in which each particular market operates and how competitive interactions take place. This framework further allows formulating the possible consequences of the practices under review, whether a merger, an agreement between firms, or single firm conduct. It also provides tools to identify the direction and magnitude of these effects empirically, if appropriate and relevant. In a number of cases, economic analysis may involve the production, handling and assessment of voluminous sets of quantitative data, including, when appropriate, the development of econometric models.

Economic analysis needs to be framed in such a way that the Commission can evaluate its relevance and significance. Furthermore, as an administrative authority the Commission is required to take a decision within an appropriate or sometimes a statutory time limit. It is therefore necessary to: (i) ensure that economic analysis meets certain minimum standards at the outset, (ii) facilitate the efficient gathering and exchange of facts and evidence, in particular any underlying quantitative data, and (iii) use in an efficient way reliable and relevant evidence obtained during the administrative procedure, whether quantitative or qualitative.

In order to determine the relevance and significance of an economic analysis for a particular case, it is first necessary to assess its intrinsic quality from a technical perspective, i.e. whether it has been generated and presented to adequate standards. This involves, in particular, an evaluation of whether the hypothesis to be tested is formulated without ambiguity and clearly related to facts, whether the assumptions of the economic model are consistent with the institutional features and other relevant facts of the industry, whether economic models are well established in the relevant literature, whether the empirical methods and the data are appropriate, whether the results are properly interpreted and robust and whether counterarguments have been given adequate consideration."

© European Commission

In its Best Practices on the Submission of Economic Evidence and Data Collection the office of chief economist noted that :

"It is worth distinguishing between two dimensions in the evaluation of economic analysis. First, the decision maker needs to assess the intrinsic quality of the economic evidence from a technical perspective, i.e. whether it has been generated and presented to adequate professional standards. As detailed in the Best Practices, this involves, in particular, an evaluation of whether the hypothesis to be tested is formulated without ambiguity and clearly related to facts, whether the assumptions of the economic model are consistent with the institutional features and other relevant facts of the industry, whether economic models are well established in the relevant literature, whether the empirical methods and the data are appropriate, whether the results are properly interpreted and robust and whether counterarguments have been given adequate consideration.

Second, the decision maker needs to determine how much weight to assign to the economic analysis. This depends importantly on its relevance with respect to the main issues at stake. For example, is the evidence a direct test of the theory of harm? Or does it merely provide useful circumstantial evidence? Other considerations include the potential for error when relying on certain types of evidence and the congruence and consistency of the economic analysis with other evidentiary elements (such as customer responses and documentary evidence) (...)."

© European Commission

Glossary