Exploring Aspects of the State of Competition in the EU

26 June 2024 | Competition Competition Policy Studies News
Exploring Aspects of the State of Competition in the EU Read More

The European Commission has published the report “Exploring Aspects of the State of Competition in the EU” on June 24 2024.

The report was prepared by a consortium of firms led by Lear and comprising E.CA Economics, Fideres, Prometeia, the University of East Anglia, and Verian. Our report has contributed to the Commission’s own report entitled “Protecting Competition in a Changing World”, also published on June 24 2024.

Our report contains five chapters


Chapter 1: Widened gap between market leaders and followers – by Lear and Prometeia

The first chapter describes the available evidence on how competition seems to have weakened across markets in the EU over the past few decades: industry concentration and markups have increased, while the gap between market leaders and followers has widened and business dynamism seems to have declined. Against this background, this report investigates four other important aspects of the state of competition in the EU.

Chapter 2: Impact of industry concentration on prices – by the University of East Anglia and Fideres

The second chapter explores the role played by market or industry concentration in determining market outcomes in specific industries. It provides evidence that higher concentration is generally associated with higher prices through price-concentration studies concerning six sectors of economic activity: mobile telecom, airlines, beer, mortgages, modern consumer retail and cement.

For mobile telecoms and airlines, the report includes original empirical analyses that shows causal effect of market concentration on prices and other outcomes.

Chapter 3: Development of the profits of global superstars – by E.CA Economics

The third chapter provides an analysis of the evolution of “Global Superstars” – the most profitable of the world’s largest firms. It finds that their profit rates have increased significantly over the last 25 years, and that the distribution of profits has become more skewed.

This section also investigates why these profits are not competed away, focusing particularly on certain sectors of economic activity (the IT, pharma and consumer goods sectors) where Global Superstars are protected by barriers to entry.

Chapter 4: Interplay between domestic competition and export competitiveness – by Lear

The fourth chapter informs the debate on the interplay between domestic competition and export competitiveness.

A survey of EU-based exporting firms, conducted by Verian, suggests that effective domestic competition within the Single Market (i) is an important driver of their global export competitiveness (particularly in upstream goods markets) and (ii) does not, for a majority of respondents, constrain their scale in a way which would prevent them from being successful on global export markets.

Chapter 5: Costs of non-competition – by Prometeia

The final chapter provides original estimates of the costs of non-competition to the wider economy. Relying on own estimates of markups, the report shows that effective competition brings about sizeable macro-economic benefits, positively affecting investment, employment, productivity and GDP growth.



If you want to get more insights and results please contact our expert, Alexis Walckiers.

Download full report
15 January 2024 | Competition Competition Policy Studies
Ex post evaluation of vertical mergers Read More

In April 2022, the British Competition and Markets Authority (CMA) published E.CA Economics’ ex post evaluation of its approach to vertical mergers. The CMA retained us to look at four recent mergers with a vertical component and evaluate whether CMA’s assessment was reasonable and correct. We also reviewed the current thinking on vertical mergers to help the CMA learn from the latest developments.


Merger cases that have been analysed

E.CA’s evaluation reviewed four CMA assessments of vertical mergers, or mergers with a
vertical component. All took place in 2017. They were:

  1. the acquisition by a vertically integrated pig farming and pork processing operation,
    Tulip, of a large pig farm specialised in outdoor bred pigs, Easey;
  2. the acquisition by the brewer and pub owner, Heineken, of Punch pubs;
  3. the acquisition by Mastercard of the payment infrastructure provider, Vocalink; and
  4. the acquisition by the UK’s largest grocery retailer, Tesco, of the UK’s largest grocery
    wholesaler, Booker.


Key findings

E.CA found that the CMA carried out largely reasonable and correct assessments of these mergers. The following key findings aim to help the CMA fine tune its practice in the future:

Business evidence is important
Vertical mergers tend to be more complex than horizontal mergers, which means that vertical harm can be more difficult to understand. We found that in all reviewed cases there was good quality evidence, that would have helped the CMA understand the purpose of the merger. The CMA could have derived useful knowledge from this evidence for its assessment of competition concerns.

Vertical mergers are rarely isolated events
In all reviewed industries other cases of vertical consolidation were taking place within a similar time frame. The CMA would have benefitted from understanding the impact of and motivation for the mergers in a wider industry context, and from taking a more dynamic approach to the counterfactual.

Updating the vertical toolkit
The CMA’s Merger Assessment Guidelines help with some vertical cases, but may not provide sufficient guidance to tackle some of the recently formulated concerns, such as softening of competition through a vertical recoupment mechanism, or potential competition concerns in a platform market setting.

Balancing the SLC test
The CMA could be more mindful of the need to balance its SLC test with both greater interest in (and rigorous testing of) efficiencies, as well as with consistent application of the ability-incentive-effect framework for the assessment of foreclosure. The CMA could also be more thorough in its assessment of entry ans expansion.

Benefits of simplicity
The CMA tended to investigate more theories of harm for longer than we considered necessary. Given that some of the most plausible theories of harm were complex and required careful assessment, the CMA would have benefitted from focusing on a smaller number of higher likelihood concerns.



For more insights or any questions, please contact the E.CA’s experts.

These E.CA employees were also involved: Rafael Aigner, Bas Dessens, Vedika Hegde, Nicola Heusel, Raphael PoncetGiulia Santosuosso.

Click here to find the full report.
8 November 2023 | Competition Competition Policy Studies
E.CA supports study for the revision of the EEAG & Section 7 of GBER Read More

DG Competition of the European Comission commissioned a consortium with a study to support the revision of the EU Guidelines on State aid for environmental protection and energy (EEAG) and the General Block Exemption Regulation (GBER). E.CA Economics was part of this consortium together with DIW Berlin, LEAR, SheppardMullin and University of East Anglia.

The report provides  with background information for the review of the EU Guidelines on State aid for environmental protection and energy (EEAG) applicable in 2014-2020 and on the provisions applicable to aid for environmental protection and energy (Section 7) of Commission Regulation (EU) 651/2014 (GBER).


The study consists of three study items.

Transparency, Tendering, Broadening

This study item examines whether and how the transparency of environmental protection costs of decarbonisation aid schemes should be increased by quantifying both the benefits to environmental protection and their costs. It also addresses whether tendering requirements in aid schemes should be extended. Finally, the study item assesses whether environmental protection schemes can be broadened to different sectors and technologies which could advance the same environmental protection objective to a similar extent, rather than being sector- or technology-specific.

Operating Aid vs. Investment Aid

The challenges of the green transition might require new types of aid and the traditional distinction between operating aid and investment aid needs to be re-examined. Hence, study item 2 examines the effectiveness and distortive effect of different forms of aid by reviewing the existing literature, case stud-ies on four representative schemes and modelling hypothetical future aid schemes in important sectors.

Energy intensive Users

This study item assesses whether the currently used economic parameters to determine the eligibility of sectors for exemptions from decarbonisation levies for Energy-Intensive Users (“EIUs”) are the most relevant parameters for the risk of relocation from an economic perspective. Further it aims at determining the extent to which the profitability of EIUs is affected by different levels of Renewable Energy Sources (RES) and Combined Heat Power (CHP) levies on electricity for a sample of 10 sectors.


Interested in the main findings?

Please contact our experts. They can answer all questions.

E.CA representatives also involved: Hans W. FriederiszickJan Christopher Rönn

Link to full report
3 November 2023 | Competition Competition Policy Studies
State aid in the railway sector published by DG COMP Read More

DG COMP of the European Commission has published a study conducted by a consortium led by E.CA Economics on State aid in the field of rail transport. The results of the study support the Commission in the revision of the current Community Guidelines on State aid for railway undertakings. The consortium included E.CA Economics, LEAR, Sheppard Mullin, UEA and the Institute for Transport Studies at the University of Leeds.

In the context of the European Green Deal, the European Union aims at doubling rail freight traffic by 2050. The revision of the current Railway Guidelines is aimed at supporting this ambitious goal. It provides detailed market information, based on desk research and data collection.

The low modal share of rail (only 8.8% of total freight transport) endangers important goals in environmental and transport policy.

Compared to highly polluting road transport by truck, rail freight is a safe and low-emission type of transport. A substantial rise in the rail modal share will require improvements at three different levels of the overall rail freight system.


More, better and modern infrastructure

As of now, bottlenecks in rail network lead to congestion and slow and unreliable delivery times; outdated infrastructure makes cross-border transport tedious; facilities like intermodal terminals with outdated technology increase transport times and costs; private sidings are often missing to connect customers to the rail network.


More and up-to-date rolling stock

The existing fleet of rolling stock will not suffice for a substantial increase of the rail modal share. Furthermore, a significant share of the rolling stock is outdated and not fit for future requirements, such as automated coupling etc.


Rail freight must become competitive with road transport

Rail freight is in close competition with road transport, especially in combined transport and single-wagon transport. Only if it’s overall cheaper, shippers will choose rail transport instead of road transport. At the moment, rail freight is not competitive in many cases – as the low modal share proves.

Public policies can improve this situation with a modern State aid framework that encourages the modal share.

The study provides data on the rail freight market, such as the costs and revenues associated with rail freight. It alsoprovides policy options, including examples of good practices, for the design of State aid for rail freight which can support and guide the revision of the Railway Guidelines.



If you want to get more insights and results please contact our experts.

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