David Spector grew up in France, where he studied mathematics and economics. After a PhD at LSE, he joined the MIT economics department and then the Paris School of Economics, while at the same time starting a competition economics consulting firm, MAPP. David Spector advises clients in all areas of competition economics. He is the author of two books and numerous articles published in academic journals.
DESCRIBE YOUR CAREER TO DATE.
I studied economics in Paris (École Normale Supérieure) and London (LSE), before joining the faculty at MIT (Boston) and returning to France (as an associate professor at the Paris School of Economics). On a parallel track, I had a career in competition economics, first as a freelance consultant, then as a special consultant to NERA and LECG, which I helped build their presence in France, and finally by creating MAPP in 2007. In 2018, MAPP was acquired by KPMG France as part of an effort to expand our offering.
HOW HAS THE ROLE OF A COMPETITION ECONOMIST CHANGED SINCE YOU STARTED PRACTISING?
The nature of the work has changed, following the overall trend in economics research, towards much more sophisticated empirical, statistical and econometric work. Theoretical arguments remain important, but they are no longer the centrepiece of competition economists’ contributions, as they were 20 years ago.
Another change is that the quality and quantity of economic expertise in competition authorities has improved tremendously, as has lawyers’ familiarity with economics. This has obviously had an impact on the nature of the work we do and the way we present it. Also, many clients are well aware now that economists need to be on board early on, which was not the case 10 or 15 years ago. This leaves us more time to collect and analyse data and this has also led to a change in the kind of work we do.
WHAT ATTRACTED YOU TO A CAREER IN ECONOMICS?
I love both maths and the humanities, and economics seemed a perfect mix. My interest in competition economics specifically came a bit later, while I was a faculty member at MIT and had the opportunity to see two of my colleagues, who were on opposing sides of the US Microsoft case, argue with passion about it. I thought it was interesting and fun and decided to conduct this kind of work upon returning to Europe.
WHAT REFORMS, IF ANY, WOULD YOU MAKE TO THE CURRENT EU APPROACH TO COMPETITION REGULATION?
On the procedural side, I believe the timeline for merger control is no longer in line with the complexity of the analyses that are required.
On substance, I believe that the EU approach has improved a lot over the last two decades, with a more rigorous assessment of the impact on consumer surplus and a better integration of economic analysis. However, I believe that the EU approach could be improved with respect to three issues: information exchanges, resale price maintenance and merger synergies. On the first two subjects, I believe that the current approach (considering certain types of practices restrictions by object) is not well grounded in economics. On merger synergies, I believe that the standard of proof is so high that efficiency arguments are rarely discussed, which is a bit paradoxical since achieving efficiency gains is the motive for most mergers.
WHAT IMPACT HAS TECHNOLOGY HAD ON COMPETITION MATTERS IN RECENT YEARS?
The main impact was the possibility to handle extremely large datasets and conduct sophisticated econometric analyses that would not have been possible, at least not as quickly, 10 or 20 years ago.
The other impact was obviously on the nature of the cases, with novel questions arising from internet-related cases. In a sense, no one really knows yet whether the magnitude of network effects in internet-related sectors is creating barriers to entry that are more formidable than in the “old economy” and that call for exceptional intervention by competition authorities, or whether the threat of disruptive innovations is enough to keep the internet giants in check.
LOOKING BACK OVER YOUR CAREER, WHAT IS THE MOST INTERESTING CASE THAT YOU HAVE BEEN A PART OF?
Probably the General Electric/Alstom merger, with complex questions about the right way to address bidding markets and product segmentation.
HOW DO YOU SEE YOUR PRACTICE DEVELOPING OVER THE NEXT FIVE YEARS?
With our integration within KPMG, we plan to be more present in large, cross-jurisdictional mergers by leveraging on our presence in Belgium, France, the UK and Spain. We also hope to combine our abilities with KPMG’s strengths in data analytics, which is likely to become an increasingly important part of competition economics.
WHERE, IN YOUR OPINION, DOES THE FUTURE OF THE PRACTICE AREA LIE?
One of the main trends ahead is, I believe, the integration in our analyses of recent insights from behavioural economics. Our analyses rely on the view that markets are best understood by assuming consumers and firms to be rational. This assumption was seen as the best possible approximation of the real world, since departures from rationality, even when acknowledged, were supposed to “cancel out”. In recent years, advances in economic psychology have challenged this view and provided new tools that are meant to better reflect actual economic behaviour. Integrating these tools (which economists specialising in financial markets or in macroeconomics have already done) will likely change the way one simulates the impact of a merger or the assessment of exclusionary conduct.