A perceived reduction of the intensity of competition has been used by some to criticise competition authorities and to propose radical changes to competition law systems. The ability to reliably measure, track and compare the competitive intensity of a market is extremely valuable to competition authorities and other policymakers to inform decision-making. The fact that competition is a complex notion, and therefore not directly observable, has resulted in the development of numerous methods to capture and measure the degree of competition in markets over the years. Such methods, which vary in complexity and reliability, provide indicators often used to measure the intensity of competition. These indicators can provide useful information but present limitations and careful interpretation is generally necessary, in particular when they are taken in isolation.
A workshop on this topic took place on 23 February 2021 focusing on concrete experiences by competition authorities. The discussion in June 2021 complemented this workshop by discussing the principles and the suitability of these methodologies. In particular, this session explored common competition indicators and other tools to measure the intensity of competition in a market. It assessed their advantages and limitation (both conceptual and practical). It then explored the different issues for competition authorities to consider when selecting/using empirical measures to infer the intensity of competition in a market or sector such as what are the problems with relying on just one type of empirical measure? How does the purpose for which the empirical measures are to be used influence which ones are likely to be relevant? How do the relevant group of empirical measures differ according to the specificities of the sector or market?
All related documentation is available on this page.
