MEASURING THE RATE OF RETURN FOR COMPETITION LAW

This paper focuses on the application and interpretation ofmeasures of rate of return for competition law. Amongst otherresults, we analyse how outsourcing and similar arrangementsimpact the rate of profitability and show that the measurementis more volatile the greater the rate of profit (suggestingthat the measures are most problematic when they are most needed).We identify and interpret the outsourcing arrangements thatprovide the lowest rate of profit and show that these arrangementshave a close relationship to net present value. Finally, weprovide suggestions to make profitability measures more informativefor competition law.