market would enforce, or which results in the achievement of such different market conduct and performance. In my opinion, this contrast between private regulation through collective action and competition is a handy lens through which to analyse the effects of arrangements on competition. In Mc Hugh v Australian Jockey Club Limited (No 13) [2012] FCA 1441 the Federal Court found that no substantial lessening of competition had been proved even though the rules in question substituted private, collective action for the forces of competition. I shall comment on that case later in the lecture. The nature of competition is influenced by the structure of the market. This proposition is one that all Australian competition lawyers will know, repeat and (possibly) even love. The Tribunal stated: Competition is a process rather than a situation. Nevertheless, whether firms compete is very much a matter of the structure of the markets in which they operate. The elements of market structure which we would stress as needing to be scanned in any case are these: the number and size distribution of independent sellers, especially the degree of market concentration; the height of barriers to entry, that is the ease with which new firms may enter and secure a viable market; the extent to which the products of the industry are characterized by extreme product differentiation and sales promotion; the character of relationships” with customers and with suppliers “vertical and the extent of vertical integration; and the nature of any formal, stable and fundamental arrangements between which restrict their ability to function as independent entities. Although these propositions are familiar to competition lawyers, they are embodied in the language of the structure-conduct-performance schema that fashion has passed by. Economics has fashions, just as there are fashions in clothing, food and the practice of medicine. The structure-conduct-performance schema is merely a way of ordering one’s thinking when analysing competition in markets. One will need to consider the structure of the market, the conduct of the enterprises within the market and the extent to which that conduct is consistent with economic efficiency. Although the language of the structure-conduct-performance schema is not found in today’s textbooks, the proposition that patterns of competition are very much
market would enforce, or which results in the achievement of such different market conduct and performance. In my opinion, this contrast between private regulation through collective action and competition is a handy lens through which to analyse the effects of arrangements on competition. In Mc Hugh v Australian Jockey Club Limited (No 13) [2012] FCA 1441 the Federal Court found that no substantial lessening of competition had been proved even though the rules in question substituted private, collective action for the forces of competition. I shall comment on that case later in the lecture. The nature of competition is influenced by the structure of the market. This proposition is one that all Australian competition lawyers will know, repeat and (possibly) even love. The Tribunal stated: Competition is a process rather than a situation. Nevertheless, whether firms compete is very much a matter of the structure of the markets in which they operate. The elements of market structure which we would stress as needing to be scanned in any case are these: the number and size distribution of independent sellers, especially the degree of market concentration; the height of barriers to entry, that is the ease with which new firms may enter and secure a viable market; the extent to which the products of the industry are characterized by extreme product differentiation and sales promotion; the character of “vertical relationships” with customers and with suppliers and the extent of vertical integration; and the nature of any formal, stable and fundamental arrangements between which restrict their ability to function as independent entities. Although these propositions are familiar to competition lawyers, they are embodied in the language of the structure-conduct-performance schema that fashion has passed by. Economics has fashions, just as there are fashions in clothing, food and the practice of medicine. The structure-conduct-performance schema is merely a way of ordering one’s thinking when analysing competition in markets. One will need to consider the structure of the market, the conduct of the enterprises within the market and the extent to which that conduct is consistent with economic efficiency. Although the language of the structure-conduct-performance schema is not found in today’s textbooks, the proposition that patterns of competition are very much
Bannerman%20Competition%20Lecture%202016%20-%20Dr%20Philip%20Williams%20%20lecture%20paper.docx