Remains of course to measure elasticities

How to assess the damage to the economy in the event of infringement of the competition April 7, 2010, the commercial Chamber of the Court of cassation clearly recalled the terms of debate in the case of the exchange of information between the three operators of telephony mobile (Bouygues Telecom, SFR, Orange). It censored the Court of appeal of Paris in rejecting the assertion that "the existence of damage to the economy is presumed in the case of an agreement."

In so doing, the Court of cassation indicates that one cannot separate the existence of the prejudice of its quantum measurement. The extent of the damage was linked, according to the Court of appeal (which followed on this point the motivations of the competition Council), to the importance of the size, the market and to the gravity of the facts because all of the operators had participated in the exchange of information.

The Court of cassation adds a complementary requirement to these two observations. It is only in the analysis of the facts, but the extent of their effects on the functioning of the market concerned. Therefore an economic analysis of the sensitivity of demand to price, to measure effectively the relative importance of the damage brought to the market economy. "Whereas in is thus determining, without also taking into account the sensitivity of the request at the price, the Court of Appeal denied his decision to legal basis", sets out the High Court.

Take into account elasticity

This decision is in the right line from a previous judgment of the same case on 29 June 2007. The Court of cassation is told that it is not enough to state that the exchange of information between the three operators actually reduce their uncertainty about the behavior of each on the market. Consideration and more pro-competitive effects of the exchange of information, which may be especially better adjustment of supply to demand. Gold or the Court of appeal or of the competition Council had done. Follow the Court of cassation, the damage to the economy is bound to the sensitivity of the request at the price. This concept, which corresponds to a basic economic concept, as to the quantities purchased following the increase of 1 of the price: If this elasticity is low, it means that the operators can increase their price without the quantities to be allocated.

As a result, the increase of the benefit resulting from this increase in prices is recorded by producers, reducing even surplus consumer, concept used by the economic analysis to translate the net benefit they derive from the acquisition of property. It assesses the difference between what consumers actually pay to buy a particular property and the maximum expenditure that they would consent.

It is the uptake of the surplus by corporations, authors of anti-competitive practices, which is the damage to the economy. This situation often occurs for property of first necessity, making this particularly harmful practice. In situations of high elasticity, the quantities consumed decreased and, as a result, the eviction of some consumers just reduce the surplus results enjoyed by enterprises. It is thus that the protection of consumers and, thereby, sanctions, must be particularly on the cases of low elasticity.

It is remembered that the damage to the economy is not in itself a concept of economic theory. Taking account of the elasticity to define a true metric for assessing the damage through the loss of consumer surplus.

Hence, it is possible to connect the sanction (which can reach 10 of global turnover excluding tax of the company) to the share of the loss of surplus enjoyed by the perpetrators of anti-competitive practices. A more objective basis thus provides the sanction.

Remains, of course, to measure elasticities. This point is econometric studies. When the parties produce such economic analyses, the judge must therefore consider and give its opinion on their conclusiveness to induce an appreciation of reasons for the importance of the damage to the economy of the reference market.