vGUPPIs: An interesting tool for the analysis of vertical mergers

This article provides an insight on a recently developed economic tool : vGUPPIs (vertical Gross Upward Pricing Pressure Indexes), and on how it might be valuable for competition practitioners. After first reminding the principle of GUPPIs in horizontal mergers and the wide use competition authorities are making of it, the derivation of GUPPIs to vertical cases is presented, along with examples illustrating the recent rise of this new tool in merger cases.

Introduction 1. Economics provides tools for assessing anticompetitive effects likely to arise in mergers and acquisitions. The key question competition agencies try to solve in these cases is whether the transaction provides the parties with incentives to change their behaviour in a way that is harmful to consumers. 2. The profitability of such ex post anticompetitive strategies is closely linked to the notion of market power. Market shares have traditionally been used as a proxy for market power: the larger the share a firm holds, the less sensitive it is to the pressure exerted by its competitors. However, this tool is not always well suited for the job, as it does not always accurately represent the intensity of competition. 3. Finer indexes have now been developed that better

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Hélène Bourguignon, Meryem Haraj Touzani, vGUPPIs: An interesting tool for the analysis of vertical mergers, November 2016, Concurrences Nº 4-2016, Art. N° 81324,

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