Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, August 23, 2017

Private Enforcement of Competition Law - Current Issues Friday 15 September, University of East Anglia

Private Enforcement of Competition Law: Current Issues 

Friday 15 September, University of East Anglia, Norwich 9:30am - 6pm.

Hosted by the Centre for Competition Policy and the UEA Law School, this one day conference based at the University of East Anglia will bring together scholars, economic experts and practitioners with rich experience in private antitrust litigation. 

The purpose of this conference is to take stock of recent developments. Issues that will be addressed by the speakers include:

  • Private litigation after Brexit
  • The implementation of the Damages Directive in the UK
  • Private litigation and arbitration
  • Group actions in the Competition Appeal Tribunal
  • Counterfactuals in damages litigation

Confirmed speakers include: Alison Berridge, Monckton Chambers; Damien Geradin, Euclid Law, Tilburg University; Morten Hviid, UEA Law School & Centre for Competition Policy; Anthony Maton, Hausfeld; Gunnar Niels, Oxera; Sebastian Peyer, UEA Law School & Centre for Competition Policy; Barry Rodger, Law School, University of Strathclyde; Tom Sharpe QC, One Essex Court; Cento Veljanovski, Case Associates

August 23, 2017 | Permalink | Comments (0)

How Much Does the Choice between Collusion and Unilateral Effects Matter in Merger Analysis?

Malcolm B. Coate, U.S. Federal Trade Commission (FTC), and Shawn W. Ulrick, U.S. Federal Trade Commission (FTC) ask How Much Does the Choice between Collusion and Unilateral Effects Matter in Merger Analysis?

ABSTRACT: In many, but certainly not all, merger investigations, the analyst faces a choice between the coordinated interaction (collusion) and unilateral effects models when organizing a competitive review. This paper applies statistical analysis to model the implications of this decision and determine if the choice appears to materially affect the outcome of the merger review process. By first modeling the combined choice of theory of concern and policy outcome, we show that the statistical properties of the error terms allow the analysis to focus on the challenge decision. Next, we estimate merger policy models for both collusion and unilateral effects variables to determine if theory affects merger policy. As the models materially differ, they are used to parameterize a decomposition analysis and evaluate the implications of the theory choice. An alternative analysis applied a matching model to explore the effect of the theory choice on the outcome of the investigation. We find that that the choice of theory has an effect in homogeneous goods market, with a movement from a collusion theory to a unilateral theory reducing the average challenge rate by 12.7-17.4 percentage points and a movement from a unilateral theory to a collusion theory raising the challenge rate by 6.1 to 11 percentage points. For differentiated products, the changes are smaller and insignificant.

August 23, 2017 | Permalink | Comments (0)

Antitrust and Artificial Intelligence - A Research Agenda

Nicolas Petit, Liege offers Antitrust and Artificial Intelligence - A Research Agenda.

ABSTRACT: This short paper provides an overview of the claims made in the emerging scholarship on artificial intelligence and antitrust policy. It discusses in particular the conjecture that markets will be rife with algorithmic collusion and extractive personalized pricing. It stresses the main methodological, theoretical and empirical limitations that underpin the claims made in the scholarship, and concludes with a call for evidenced-based antitrust policy.

August 23, 2017 | Permalink | Comments (0)

Antitrust for Institutional Investors

Edward B. Rock, New York University School of Law and Daniel L. Rubinfeld, University of California at Berkeley - School of Law; National Bureau of Economic Research (NBER); NYU Law School have a more reasonable proposal than most on Antitrust for Institutional Investors.

ABSTRACT: With the increasing concentration of shares in the hands of large institutional investors, combined with greater involvement in corporate governance, the antitrust risk of common ownership has moved to center stage. Through an excess of enthusiasm, portfolio managers could end up exposing their firms and the portfolio companies to huge antitrust liability. In this Article, we start from basic antitrust principles to sketch out an antitrust compliance program for institutional investors and for the investor relations groups in portfolio companies. In doing so, we address the fundamental antitrust issues (explicit and tacit coordination) raised by the presence of common ownership by large, diversified investors.

We then turn to more speculative concerns that have garnered a great deal of attention and that, to our eyes, threaten to divert attention from the core antitrust issues. We critically examine the claims of this newer literature, as illustrated by Azar, Schmaltz and Tecu (2017), that existing ownership patterns in the airline industry results in substantially higher prices. We then turn to the argument in Elhauge (2016) that existing ownership patterns violate Section 7 of the Clayton Act. Finally, we find the policy recommendations of Posner, Scott Morton, and Weyl (2017) to limit the ownership shares of multiple firms in oligopolistic industries to be overly stringent. To limit the chilling effect of antitrust on the valuable role of institutional investors in corporate governance, we propose a quasi “safe harbor” that protects investors from antitrust liability when their ownership share is less than 15 percent, the investors have no board representation, and they only engage in “normal” corporate governance activities.

August 23, 2017 | Permalink | Comments (0)

Monopolistic Competition, As You Like It

Paolo Bertoletti, University of Pavia - Department of Political Economy and Quantitative Methods and Federico Etro, Ca Foscari University of Venice have written on Monopolistic Competition, As You Like It.

ABSTRACT: We study imperfect and monopolistic competition with asymmetric preferences over a variety of goods provided by heterogeneous firms. We show how to compute equilibria through the Morishima elasticities of substitution. Simple pricing rules and closed-form solutions emerge under monopolistic competition when demands depend on common aggregators. This is the case for Generalized Additively Separable preferences (encompassing additive preferences and their Gorman-Pollak extensions), implicitly additive preferences and others. For applications to trade, with markups variable across goods of different quality, and to macroeconomics, with markups depending on aggregate variables, we propose specifications of indirectly additive, self-dual addilog and implicit CES preferences.

August 23, 2017 | Permalink | Comments (0)

Tuesday, August 22, 2017

Antitrust Policy and Inequality of Wealth

Herb Hovenkamp, Penn has written on Antitrust Policy and Inequality of Wealth. When Herb writes anything, you should read it. This paper is particularly thoughtful in what is sometimes a rather nasty debate.

ABSTRACT: Why would anyone want to use antitrust law as a wealth distribution device when far more explicit statutory tools are available for that purpose? One feature of antitrust is its open-textured, nonspecific statutes that are interpreted by judges. As a result, using antitrust to redistribute wealth may be a way of invoking the judicial process without having to go to Congress or a state legislature that is likely to be unsympathetic. Of course, a corollary is that someone attempting to use antitrust law to redistribute wealth will have to rely on the existing antitrust statutes rather than obtaining a new antitrust provision that is more explicitly distributive.

One possible lever for redistributive antitrust is a link between market competitiveness and wealth equality. A good deal of literature suggests that competitive markets are conducive to the more even distribution of wealth. Of course, the antitrust laws already have an agreed upon goal of making markets more competitive. The most defensible goal for the antitrust laws is prohibition of practices that serve to reduce output anticompetitively, which is simply a statement of the consumer welfare principle.

The arguments for an antitrust consumer welfare approach are of three general kinds – those derived from legislative history, those derived from principle, and those derived from administrative concerns. The legislative history makes a weak case for consumer welfare, but as between consumer welfare and general welfare the former is a clear winner. Second, arguments from principle do not get us anywhere because they are very sensitive to assumptions. Third, the arguments from administrability strongly favor a consumer welfare approach.

That then leaves one question pertaining to wealth inequality. Suppose we start out with the premise that antitrust harm consists in a market-power-driven output reduction. Accepting that competitive markets are conducive to greater wealth equality, hasn’t antitrust already done all it can do? To ask that question differently, are there any circumstances in which antitrust should favor practices that reduce output simply because these practices also yield a more appealing distribution of wealth?

August 22, 2017 | Permalink | Comments (0)

Can Institutional Investors Soften Downstream Market Competition?

John Woodbury, CRA asks Can Institutional Investors Soften Downstream Market Competition?

ABSTRACT: Recently, a number of papers have noted the dramatic increase in the extent to which institutional investors account for the ownership of publicly-traded stock, including holding ownership stakes in multiple market rivals. This change, in turn, has raised the intriguing or disturbing possibility that large institutional investors have used their influence to discourage aggressive rivalry among competitors. Indeed, two papers have developed evidence of such reduced rivalry in the airline and banking industries. If generally true, this evidence could lead to a radical reset of antitrust enforcement policy. This paper considers the original conclusions of these two papers and reviews the potential conceptual and empirical flaws in the analysis. While the evidence is still too sparse to justify antitrust action on this front, there can be little doubt that more research should be pursued to further validate (or not) the effect of institutional investors on market rivalry (and so prices). If so validated, then antitrust policy may well need to hit the "reset" button.

August 22, 2017 | Permalink | Comments (0)

Relative Dominance and the Protection of the Weaker Party: Enforcing the Economic Dependence Provisions and the Example of Greece

Emmanuela N. Truli, Athens University for Economics and Business describes Relative Dominance and the Protection of the Weaker Party: Enforcing the Economic Dependence Provisions and the Example of Greece.

ABSTRACT: A number of EU counties have adopted specific rules on the abuse of economic dependence: Germany, France, Italy, Portugal, Czech Republic and Greece. In most countries the economic dependence provisions are included in the respective competition act and are more or less conceptually associated with the notion of abuse of dominance. Indicatively, in the case of Germany, Section 20 (2) of the Competition Act applies to companies enjoying market power (not reaching that of the classical dominant position) in bilateral relations vis a vis their suppliers and/or buyers. 

By contrast, a number of other countries have enacted equivalent provisions, not in their competition acts but in their fair trade legislation or other, whereby competency for the enforcement of the economic dependence rules may or may not be entrusted to a competition authority.

In Greece, the provisions regarding economic dependence formed part of the former Competition Act, Law No. 703/1977. The Hellenic Competition Commission (HCC) received, in the 12 years of its competency for the enforcement of said provision, numerous complaints and issued over forty economic dependence decisions - mostly dismissing the respective claims. 

Due to this burden on the authority, and also because it was too often invoked by enterprises with only minor impact on competition and, more often than not, involved private disputes which could have easily been resolved by civil courts, it was abolished from the Competition Act in the year 2009. Voices from the legal theory had seconded this development expressing concerns about the private interests of the weaker party which the provision sought to protect, unlike the main goals of competition law. As a result, the economic dependence provision was transferred to Law 146/1914 on Unfair Competition Practices, as Section 18a thereof.

When a particular provision changes position, it is interesting to see what the effect on its application may be. Possible changes include changes in the requirements of a provision, its legal consequences (sanctions, commitments etc.), protection scope, and other conditions of enforcement. In this regard, the paper builds on the Greek example to touch upon a number of points of interest for European law enforcement, and in particular: How does the inclusion or exclusion of a particular provision from the competition act affect its enforcement? Which would be an optimal allocation of responsibilities between private parties, the courts and competition authorities in relative abuse of dominance cases? Is the division between unfair trade practices and competition law entirely clear? And finally, how does the aim of competition law to protect competition versus competitors affect the application of the respective provisions?

August 22, 2017 | Permalink | Comments (0)

Monday, August 21, 2017

Upstream Partnerships among Competitors When Size Matters

Øystein Foros, Norwegian School of Economics (NHH) - Department of Business and Management Science and Hans Jarle Kind, Norwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute); Norwegian School of Economics (NHH) - Department of Economics analyze Upstream Partnerships among Competitors When Size Matters.

ABSTRACT: In several industries downstream competitors form upstream partnerships. An important rationale is that higher aggregate upstream volume might generate efficiencies that reduce both fixed and marginal costs. Our focus is on the latter. We show that if upstream marginal costs are decreasing in sales volume, then a partnership between downstream rivals will make them less aggressive. However, a partnership might nonetheless induce both partners and non-partners to charge lower prices. We also show that it might be better for two firms to form a partnership and compete downstream than to merge. Somewhat paradoxically, this is true if they compete fiercely in the downstream market with a third firm. The reason is that a merger is de facto a commitment to set higher prices. Under aggressive competition from the third firm, the members will not want to make such a commitment when upstream marginal costs are decreasing in output.

August 21, 2017 | Permalink | Comments (0)

Measuring Benchmark Damages in Antitrust Litigation: Extensions and Practical Implications

Ai Deng, Bates White Economic Consulting; Advanced Academic Programs, Johns Hopkins University is Measuring Benchmark Damages in Antitrust Litigation: Extensions and Practical Implications.

ABSTRACT: McCrary and Rubinfeld (2014) studied the consistency of two reduced-form regression-based estimators of cartel overcharges and emphasized the usefulness of the fully interacted approach. In this paper, we extend their study in multiple directions. We consider a more general framework and relax the assumptions of exogeneity and stationarity. We also focus on the small sample properties of the estimators. An extensive simulation is reported to corroborate the theoretical findings. We conclude that there are good reasons why the forecasting approach, in comparison to the fully interacted approach, is still the more robust and cost-effective option.

August 21, 2017 | Permalink | Comments (0)

Interface between the Brazilian Antitrust, Anti-Corruption, and Criminal Organization Laws: The Leniency Agreements

Denis Alves Guimaraes, The Catholic University of Brasilia - UCB examines the Interface between the Brazilian Antitrust, Anti-Corruption, and Criminal Organization Laws: The Leniency Agreements.

ABSTRACT: Since the enactment of the new Anti-corruption Law, the interaction between the antitrust and anti-corruption leniency regimes has attracted the attention of policy makers. More recently, the emergence of Operation Car Wash ("operação lava jato"), one of the biggest corruption scandals of all time, has established a need to more closely analyze the criminal leniency regime under the Criminal Organization Law. Following an introduction, the paper addresses the most significant challenges brought by the interface between administrative antitrust, administrative anti-corruption, and criminal legislation: the issues related to the enforcement of the leniency agreements. The conclusion reinforces the importance of the antitrust, anti-corruption, and criminal authorities working together to reach the best practices that could lead to an optimum enforcement of the three leniency regimes.

August 21, 2017 | Permalink | Comments (0)

Does merger enforcement depend on the portion of the merger associated with the competitive concerns?

Malcolm B. Coate and Shawn W. Ulrick ask Does merger enforcement depend on the portion of the merger associated with the competitive concerns? Worth reading!

ABSTRACT: Most mergers involve firms that participate in multiple markets. Usually, only a subset of a deal creates competitive concerns sufficient to spark a challenge from an antitrust agency. We call this portion the ‘concern ratio’. When it is low, a settlement allows the acquiring firm to consummate most of a challenged deal by divesting a small portion of the acquired assets. A moderate or high concern ratio means settlement is less palatable to (or impossible for) the firm. This relationship raises the Public Choice question of whether antitrust agencies challenge transactions more aggressively when the concern ratio is low and settlement is likely or less aggressively when the concern ratio is high and settlement is virtually impossible. We address this question with 20 years of data on Federal Trade Commission (FTC) merger decisions. Our models predict that challenge probabilities are 13–19 percentage points higher for mergers with low concern ratios than with high. Comparing FTC enforcement to court decisions offers insight into whether this reflects over or under enforcement. The conclusion depends on assumptions used to interpret the evidence. One set of assumptions suggests less enforcement when the concern ratio is high; another finds more enforcement when it is low.

August 21, 2017 | Permalink | Comments (0)

Predatory Innovation: The Definite Need for Legal Recognition

Thibault Schrepel University of Paris-Saclay has written on Predatory Innovation: The Definite Need for Legal Recognition.

ABSTRACT: In recent years, there has been an increasing interest in high-tech markets. The existing body of research on the topic suggests that such markets lead to reinterpret antitrust law key concepts – which should be done. There is little published literature, however, on the subject of the new anti-competitive strategies nestle in these markets, which this paper addressed.

The process of competition generally encourages companies to lower their prices, which benefits the consumer. And yet, in certain specific cases, antitrust rules intend to sanction predatory prices because they eliminate the competitive process itself. A similar situation applies to innovation. Innovation is one of the main bases for competition between companies and it is beneficial to consumers who may enjoy new products which are also better suited to their needs. But certain “innovative” behaviors are considered as being predatory and are punished accordingly, despite the fact that no legal concept specifically addresses this issue.

This absence of a legal category specifically dedicated to anti-competitive practices disguised as “innovation” leads judges to create numerous type I and II errors. The jurisprudence didn’t yet generalize the etiquette of “predatory innovation,” which nevertheless answers some of the modern problems encountered by antitrust law with high-tech markets development.

This article seeks to substantiate the value of this notion. Because many practices in high-tech markets are simultaneously occurring on several continents at once – the new version of software is generally available at the same moment around the world – we chose to carry out a comparative analysis between the United States and Europe. We are doing so because these two bodies of antitrust law may learn from each other – they have homologous roots – and also because the concerned countries have the highest GDP in the world. 

The main objective of this paper, in the first instance, is to portray the practices that can and should be condemned as predatory innovation. And in fact, most predatory innovation practices are currently addressed under the label of “technological tying.” The creation of some legal rules dedicated to predatory innovation would lead to removing this legal concept and to create – instead – a more coherent legal regime – in both continents – that could be understood by business leaders.

August 21, 2017 | Permalink | Comments (0)

Friday, August 18, 2017

Collusive Benchmark Rates Fixing

Nuria Boot, German Institute for Economic Research (DIW Berlin); KU Leuven, Timo Klein, University of Amsterdam - Amsterdam School of Economics (ASE), and Maarten Pieter Schinkel, University of Amsterdam - Amsterdam Center for Law & Economics (ACLE); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) have an interesting paper on Collusive Benchmark Rates Fixing.

ABSTRACT: The fixing of benchmark rates such as Libor, Euribor and FX has proven vulnerable to manipulation. Individual rate-setters may have incentives to fraudulently distort their submissions. For the contributing banks to collectively agree on the direction in which to rig the rate, however, their interests need to be sufficiently aligned. In this paper we show how a continuous benchmark rates cartel could be sustained by preemptive portfolio changes. Exchange of information facilitates front running that allows members to reduce conflicts in their trading books. Designated banks then engage in eligible transactions rigging to justify their submissions. As the cartel is not able to always find stable cooperative submissions against occasional extreme exposure values, there is episodic recourse to non-cooperative quoting. The benchmarks remain vulnerable to these cartel mechanisms, also after the implementation of recent and proposed reforms. It is not obvious how to make them more resilient to collusion. Periods of heightened volatility in the rates can be indicative of collusion.

August 18, 2017 | Permalink | Comments (0)


Adriaan Dierx, Fabienne Ilzkovitz, Beatrice Pataracchia, Marco Ratto, Anna Thum-Thysen and Janos Varga ask DOES EU COMPETITION POLICY SUPPORT INCLUSIVE GROWTH?

ABSTRACT: This article proposes a novel methodology to strengthen the micro-foundations of a macroeconomic assessment of EU competition policy. A unique database containing case-specific information on merger and cartel decisions is exploited to conduct macroeconomic policy simulations using a Dynamic Stochastic General Equilibrium model. The model has been extended to allow investigating the effects of EU competition policy interventions not only on standard macroeconomic variables such as GDP and employment, but also on distributional outcomes across households with different skill levels and across different types of income earners (capital owners, wage earners, and benefit recipients). The policy simulations presented include both direct and indirect (deterrent) effects of competition policy interventions. They show that competition policy has a sizeable impact on GDP growth, job creation, and the distribution of consumption across different types of households.

August 18, 2017 | Permalink | Comments (0)

11th Junior Competition Conference (JCC) - Friday 8 September 2017

11th Junior Competition Conference (JCC)
Friday 8 September 2017
Competition Appeal Tribunal
Victoria House, Bloomsbury Place, London WC1A 2EB
UK merger control: where are we now and where are we going?
Competition law in a digital world

Details are here

August 18, 2017 | Permalink | Comments (0)

Competition Law and Fundamental Rights

Arianna Andreangeli, University of Edinburgh describes Competition Law and Fundamental Rights .


  • This survey covers the following rights: right to a fair hearing and to an effective judicial remedy (Article 47, EU Charter of Fundamental Rights—hereinafter referred to as CFR); right to good administration (Article 41 CFR); tight to equal treatment, (Article 20 CFR); the presumption of innocence (Article 48 CFR); the principle of nulla poena sine lege (Article 49 CFR); the right to privacy (Article 7 CFR).

  • In the Evonik Degussa appeal judgment the Court of Justice rules on the remit of the expectation of confidentiality concerning leniency documents and on the interplay between the right to privacy and the demands of transparency of the EU Commission’s action.

  • In the FSL judgment the Court of Justice ruled that the EU Commission is entitled to rely on information received by national tax authorities for the purpose of investigating a competition infringement, provided that the information was obtained in accordance with the applicable domestic procedural laws.

  • In the Janssen Cilag judgment the European Court of Human Rights examined the compatibility of the search-and-seizure powers, enjoyed by the French Competition Authority, with Article 8 ECHR (right to privacy and to the inviolability of the ‘home’), including the power to seize documents prima facie covered by legal professional privilege.

  • The issues arising from parent/subsidiary liability and the more general question of whether and in which cases antitrust liability should extend to non-cartel participants were addressed once again in E-Turas and in the Toshiba and AKZO Nobel appeals.

  • Roca Sanitario and Timab addressed issues of fairness and equal treatment in the assessment of fines, both in the context of infringement proceedings and in relation to settlement negotiations.

  • The scope of the right to be heard in merger cases was brought to the attention of the General Court in the UPS appeal.

August 18, 2017 | Permalink | Comments (0)

Thursday, August 17, 2017

Responding to Antitrust and Information Technology

D. Daniel Sokol, University of Florida is Responding to Antitrust and Information Technology.

ABSTRACT: In his recent article, Antitrust and Information Technology, Professor Hovenkamp addresses some of the most important issues involving antitrust. In particular, he addresses the issues of market power, consumer choice in the context of Google, the Apple e-books case, net neutrality and antitrust issues involving FRAND commitments and patent pooling. In doing so, Professor Hovenkamp offers an intellectual tour du force of most of the important issues in this interface of antitrust, intellectual property and high tech. Further, Professor Hovenkamp offers a policy roadmap for courts and antitrust authorities. This response provides an overview of the article and offers some suggestions of further implications of Professor Hovenkamp’s work.


August 17, 2017 | Permalink | Comments (0)

Free for In-house Practitioners: Fordham Competition Law Institute 44th Annual Conference on International Antitrust Law and Policy and Pre-Conference Events

I want to note that the excellent Fordham Competition Law Institute understands price discrimination.  In house counsel may attend for free.  The same is true for junior lawyers from law firms.  To see the schedule and to register, please see here

August 17, 2017 | Permalink | Comments (0)

Villains or Heroes? Private Banks and Railroads after the Sherman Act

Miguel Cantillo ask Villains or Heroes? Private Banks and Railroads after the Sherman Act.

ABSTRACT: Abstract This paper analyzes and measures the value that American private banks added as directors of non financial companies. Using data between 1874 and 1913, and an event study from 1906, I find that bank directors added about 20% of a firm's market capitalization. Collusive practices encouraged by private banks accounted for 65% of this value, and were the equivalent of creating a three player market among railroads. About 35% of the value added by banks came from better governance. I argue that although policymakers were partly right in sidelining private banks as activist investors, this helped entrench managers.

August 17, 2017 | Permalink | Comments (0)