Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Wednesday, April 16, 2014

Nonprofit tax exemptions and market structure: The case of fitness centers

Teresa Harrison (School of Economics LeBow College of Business Drexel University) and Katja Seim (Department of Business & Public Policy Wharton School University of Pennsylvania) analyze Nonprofit tax exemptions and market structure: The case of fitness centers.

ABSTRACT: Nonprofits are increasingly present in industries with a large for-profit sector, raising questions about their competitive advantage afforded by the nonprofit tax exemption. We estimate an equilibrium model of market structure for recreation/fitness centers to assess whether nonprofit and for-profit firms compete directly for the same customer base. Our results suggest that the two ownership types serve independent markets. Consequently, nonprofits do not meaningfully crowd out for-profit competitors. We find that local property taxes, as a proxy for a firm’s tax burden, significantly affect for-profit entry and that nonprofit entry would fall by 25%, without affecting for-profit entry, if the same property tax liability was imposed.

April 16, 2014 | Permalink | Comments (0) | TrackBack (0)

ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES Concurrences Journal & New York University School of Law Friday, October 24, 2014


Concurrences Journal & New York University School of Law
Friday, October 24, 2014

Concurrences Journal, in cooperation with New York University Law School, is pleased to invite you to its inaugural conference

Featuring China, India, Mexico, Brazil, South Africa...
The increasing number of competition regimes worldwide gives rise to new challenges for the antitrust enforcement on the global stage. This conference delves into the issues raised by the implementation and enforcement of antitrust rules in developing countries and offers the opportunity to discuss about the hottest topics with some of the most prominent antitrust academics, enforcers, and practitioners.
Speakers include, among others:
- Eleanor Fox, NYU Law School; - William Kovacic, GWU Competition Law Center; - Geeta Goouri, Competition Commission of India; - Dennis Davis, South African Competition Court of Appeal; - Frederic Jenny, OECD; - Francis Kariuki, Competition Authority of Kenya; - Alessandro Octaviani, CADE; - Randy Tritell, FTC; - Blanca Galindo Rodriguez, European Commission.
Panel sponsors include AGON, Campos Mellos Advogados, Cleary Gottlieb Steen & Hamilton, CRA, Linklaters, NERA, White & Case, and Winston Strawn. Social event sponsor includes Qualcomm.
This conference will take place on Friday, October 24, 2014 from 8:30 am to 7:00 pm, at New York University, Greenberg Lounge, 40 Washington Square South, New York.
To read the full program and register for the event click here:

April 16, 2014 | Permalink | Comments (0) | TrackBack (0)

6th ICC Roundtable on Competition Policy 22/04/2014

6th ICC Roundtable on Competition Policy 22/04/2014

This year again, ICC, the world business organization, in collaboration with ICC Morocco, will bring together senior officials from competition agencies worldwide and business executives to dialogue on subjects that will shape the competition system. The ICC Roundtable on Competition Policy will also provide a unique opportunity for participants to exchange directly with regulators and business experts on current international antitrust issues.


April 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Constrained or Unconstrained Price for Debit Card Payment?

Manjong Lee (Department of Economics, Korea University, Seoul, Republic of Korea) asks Constrained or Unconstrained Price for Debit Card Payment?

ABSTRACT: Retailers in the Netherlands and the U.K. can charge different prices for a commodity depending on whether cash or a debit card is used as payment, whereas retailers in the U.S. generally cannot. These two types of economies with and without a uniform pricing constraint for cash and debit card payments are compared in a microfounded monetary model. We place particular emphasis on the distinctive features of cash and debit cards as payment methods: the cost of a cash transaction for the seller is typically lower than that of a debit card, whereas the cost of cash holdings for the buyer is higher than that of a debit card. Our results suggest that a uniform pricing constraint makes cash-holding costs decline but consumption dispersion between the poor and the rich increase. Numerical examples show that the beneficial effect of the constraint dominates its negative effect.

April 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Entry and Competition in a Transition Economy: The Case of Slovakia

Martin Labaj (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy), Peter Silanie (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy) and Christoph Weiss describe Entry and Competition in a Transition Economy: The Case of Slovakia.

ABSTRACT: The present paper provides first empirical evidence on the effects of entry on market conduct for a transition economy. We estimate size thresholds required to support different numbers of firms for seven retail and professional service industries in a large number of distinct geographic markets in Slovakia. Our results suggest a differential impact of entry on market conduct: while market conduct is unaffected by entry in the north-western parts of Slovakia, competition tends to kick in slowly in most professions in the south-east. This latter region suffers from infrastructure bottlenecks and competitors require a larger increase in the number of customers to come in.

April 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 15, 2014

Complementarity, Fragmentation, and the Effects of Patent Thickets

NAGAOKA Sadao and RIETI NISHIMURA Yoichiro, Kanagawa University discuss Complementarity, Fragmentation, and the Effects of Patent Thickets.

ABSTRACT: This paper empirically investigates the effects of patent thickets. One unique feature of our study is to identify two sources of patent thickets: (1) complementarity as measured by the number of the patents to be used jointly with the focal patent in commercialization, and (2) ownership fragmentation as measured by the number of firms whose patents are cited by an examiner for the granting of the focal patent. There are three major findings. First, there is a significant difference between complex industry sectors and discrete ones regarding complementarity, while the difference regarding fragmentation at the patent level is small. Second, more complementarity is significantly associated with the importance of first mover advantage in research and development (R&D) and (less significantly) with that in commercialization, while fragmentation has little effect on them. Consistent with this finding, complementarity is associated with high patent value. Third, cross licensing motivation significantly accounts for patenting propensity while blocking motivation does not. Complementarity is significantly associated with more patenting for cross licensing, which facilitates both combining the inventions of different firms and preventing the risk of being held up. Furthermore, it does not invite patenting for blocking. Thus, we do not see significantly negative consequences of patent thickets on R&D, as seen by incumbents. At the same time, it is important to pay focus on policy to avoid granting patents to low quality inventions and to facilitate the mechanism of ex-ante contracting in complex industry sectors where patenting motivations are high.

April 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Antitrust in Health Care Conference May 13-14, 2014

Antitrust in Health Care Conference

May 13-14, 2014 Ritz-Carlton Hotel Pentagon City Arlington, VA


Register Early & Save! Registration rates increase after April 21st.


With stepped up government enforcement in health care, the antitrust issues posed by the collaboration of providers and payers, and private antitrust litigation, the Antitrust in Health Care program, May 13-14, is an important educational opportunity you shouldn't pass up.

The FTC is focusing closely on antitrust in health care as evidenced by its public workshop, "Examining Health Care Competition," held on March 20-21, 2014. To discuss this re-invigorated focus, AHLA and the ABA have invited leading government enforcers, private counsel, and economists, who will share insights, offer practical advice, and analyze recent developments and guidance. Here is a glimpse of just some of the sessions you’ll be able to attend:

  • Keynote Address, Edith Ramirez, Chairwoman, FTC
  • Year in Review, Roxane Busey, Tim Greaney, and Doug Ross
  • View from the Enforcers, Jeff Brennan (moderator), Mark Meier, and Peter Mucchetti
  • State of State Action, Holden Brooks, Richard Feinstein, and Eric Stock
  • Clinical Integration: Answering the Tough Questions, Christi Braun, Bob Leibenluft, and Chris White
  • Assessing Market Power and Harm to Competition in Evolving Health Care Markets, Christopher Garmon, Jeff Spigel, and Lawrence Wu
  • Exclusionary Conduct: Do You Know It When You See It? Robert Bloch, Robert McCalln and Richard Raskin


This program is co-sponsored with the American Health Lawyers Association, ABA Section of Antitrust Law, and ABA Health Law Section

April 15, 2014 | Permalink | Comments (0) | TrackBack (0)


Milena Klasing Chen (CGS - Centre de Gestion Scientifique - MINES ParisTech) has written on THE TWO MODELS BEHIND LOW COST PRODUCTS.

ABSTRACT: Low cost products and services are nowadays present in most sectors. However a clear definition of what makes a low cost product seems to be missing. This article proposes a state of the art on low cost products (through the study of a sample of 42 products recognized as "low cost") and aims to develop a framework to classify them through their design principles, to identify their main characteristics, how they emerge, how they are managed, as well as the impact they have on markets. One of the main conclusions of this work is that two main low cost models should be distinguished. They are labeled i) 'low cost adaptation', where the classical products are striped naked of their non-essential functions to reduce costs, following a functionalist design approach; and ii) 'smart low cost design', that develops a less costly new product from scratch answering to consumer needs, and that can be linked to innovative design theories. These two models should not be mixed up with cost efficiencies models, which are also aimed at reducing costs, but are not a company's main strategy. The studied products show that 'smart low cost design' products are more innovative than 'low cost adaptation' products. The second model is richer and uses elements of the first one. Furthermore, similar effects on the market are observed for both low cost product models, like the creation of demand and the overall price reduction, but the second model seems to have a stronger impact. This work illustrates that a low cost approach can be used as a design tool.

April 15, 2014 | Permalink | Comments (0) | TrackBack (0)

A Price Theory of Vertical and Lateral Integration under Productivity Heterogeneity

Konstantinos Serfes (School of Economics LeBow College of Business Drexel University) A Price Theory of Vertical and Lateral Integration under Productivity Heterogeneity.

ABSTRACT: We develop a model of organizational choice in a perfectly competitive product market with heterogeneous firms and incomplete contracts. Successful production requires two inputs that are supplied by two different firms. The input suppliers can either remain as separate units or integrate to form an enterprise. The market consists of a continuum of suppliers with heterogeneous productivities. An important feature of our model is the endogenously determined, through matching, distribution of surplus in the bargaining problem between two input suppliers, which as we show has a profound effect on organizational design in a market. We study the interplay between market price, firm productivity and firm boundaries. We show that integration decisions can be non-monotonic with respect to firm productivity. Moreover, depending on the market distribution of firm productivities, a higher market price can induce more or fewer firms! to integrate. In the latter case, the industry supply curve can be backward-bending. These results generate new empirical implications.

April 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Competitive Cross-Subsidization

Zhijun Chen (Aukland) and Patrick Rey (Toulouse) analyze Competitive Cross-Subsidization.

ABSTRACT: This paper analyzes competitive pricing policies by multiproduct firms facing heterogeneous buying patterns. We show that cross-subsidization arises when firms have comparative advantages on different products but are equally efficient overall: Firms earn a profit from multi-stop shoppers by charging positive margins on their strong products but, as price competition for one-stop shoppers drives total margins down to zero, they price weaker products below cost. Banning below-cost pricing leads to higher profits and higher prices for one-stop shoppers, and may reduce consumer surplus as well as total social welfare.

April 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, April 14, 2014

Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers

Orley C. Ashenfelter (Princeton), Daniel Hosken (FTC), and Matthew C. Weinberg (Drexel) ask Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers.

ABSTRACT: In The Antitrust Paradox, Robert Bork viewed most mergers as either competitively neutral or efficiency enhancing. In his view, only mergers creating a dominant firm or monopoly were likely to harm consumers. Bork was especially skeptical of oligopoly concerns resulting from mergers. In this paper, we provide a critique of Bork’s views on merger policy from The Antitrust Paradox. Many of Bork’s recommendations have been implemented over time and have improved merger analysis. Bork’s proposed horizontal merger policy, however, was too permissive. In particular, the empirical record shows that mergers in oligopolistic markets can raise consumer prices.

April 14, 2014 | Permalink | Comments (0) | TrackBack (0)

Heterogenous switching costs

Gary Biglaiser (University of North Carolina, Chapel Hill), Jacques Cremer Toulouse School of Economics (GREMAQ, CNRS and IDEI), and Gergely Dobos European Commission,(DG Competition) examine Heterogenous switching costs.

ABSTRACT: We consider a simple two period model where consumers have different switching costs. Before the market opens, there was an incumbent who sold to all consumers. We identify the equilibrium both with Stackelberg and Bertrand competition and show how the presence of low switching cost consumers benefits the incumbent, despite the fact that it never sells to any of them.

April 14, 2014 | Permalink | Comments (0) | TrackBack (0)

The Application of EU Competition Rules in the Transport Sector

Itai Rabinovici (DG Competition) analyzes The Application of EU Competition Rules in the Transport Sector.

ABSTRACT: The major legislative development in 2013 was the adoption of the Commission's proposal for a fourth railway package. Air transport was the focus of competition enforcement with the adoption of a commitments decision and three major merger decisions.

April 14, 2014 | Permalink | Comments (0) | TrackBack (0)

New Kid on the Block-Croatia's Path to Convergence with EU Competition Rules

Mirta Kapural, Croation Competition Authority discusses New Kid on the Block-Croatia's Path to Convergence with EU Competition Rules.

ABSTRACT: Rules and policies started to develop in Croatia in the field of competition more than fifteen years ago. They have aligned on European rules and policies as part of the accession process to the European Union. During that process, one significant hurdle has been the low level of understanding of competition within the judiciary, the administration, civil society, and even business.

April 14, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, April 11, 2014

Allan Fels AO and Mark Williams to University of Melbourne

Melbourne Law School has picked up two senior lateral hires - Allan Fels AO (from ANSZOG) and Mark Williams (from Hong Kong Polytechnic).  See the press release here.  They join Caron Beaton-Wells and Arlen Duke as part of the competition law core faculty.  This is a big pick-up for Melbourne and solidifies the school as the top competition law program in the the broader East Asia/Pacific Rim area.

In terms of four competition law specialists, this makes Melbourne one of the top schools anywhere in the world.* It also has, to my knowledge, the only dedicated competition law LLM program in the Pacific Rim.  See here for details. Melbourne also has a number of visiting professors from around the world who teach in the competition law program.





* I note that the University of Florida, among others, also has four - Harrison, Page, Sokol and Zheng.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)

ABA Section of Antitrust Law presents Antitrust in Asia: China May 21 - 23, 2014

The ABA Section of Antitrust Law presents
See the conference brochure here.
The conference will present high-level discussion and debate on the key developments in China and elsewhere in Asia, and provide insights into U.S. litigation risks for Asian firms. You will hear:
·         Leaders of Asian competition agencies debate whether and how competition law and policy in Asia differs from how it is practiced elsewhere;
·         DG Shang Ming, Professor Huang Yong, and leading Chinese and U.S. practitioners discuss how MOFCOM reviews mergers – from process to analysis to remedies;
·         DG Xu Kunlin, Supreme People’s Court Judge Zhu Li, and others discuss substantive and procedural issues in NDRC’s enforcement, including in the high-tech sector;
·         DG Ren Airong, FTC Commissioner Maureen Ohlhausen, the General Counsel of Tencent, and others explain how they analyze issues at the intersection of antitrust and intellectual property law, including conduct involving standard-essential patents;
·         Supreme People’s Court Chief Judge Kong Xiangjun, Senior Judge Douglas Ginsburg, and others discuss private actions in Asia and the risks to Asian entities from private litigation in the United States and elsewhere;
·         Professor Bill Kovacic, German Federal Cartel Office and ICN Chair Andreas Mundt, and others discuss the application of international best practice to competition law in Asia;
·         Deputy Assistant Attorney General Leslie Overton, Michael Han, John Fingleton, and others discuss the interplay of competition and other policies; and
·         The General Counsel of Qualcomm and senior in-house counsel from BHP Billiton, General Electric, Intel, and Microsoft share insights on their experience in dealing with the challenges of Chinese and other Asian competition laws.
Other highlights include:
·         Keynote addresses by FTC Chairwoman Edith Ramirez and China Investment Corporation recent president Gao Xiqing;
·         Fundamentals of Chinese and U.S. competition law presented by experts including Professor Wang Xiaoye, Judge Douglas Ginsburg, and Professor Bill Kovacic; and
·         A session on careers in the competition law field with successful professionals from China and the United States.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)

Most-favoured-customer clauses and two-sided platforms

Daniel Zimmer (Bonn) and Martin Blaschczok describe Most-favoured-customer clauses and two-sided platforms.

ABSTRACT: Due to network effects, most-favoured-customer clauses (MFC clauses) in favour of two-sided platforms raise particular competition concerns. Article 101 and—in a case of a dominant position of the platform—Article 102 TFEU can apply in such cases. MFC clauses can be exempt under the Vertical Block Exemption Regulation from the application of Article 101(1) of the Treaty on the Functioning of the EU (TFEU). It appears doubtful whether the hard-core restraint of Article 4(a) of the Regulation includes MFC clauses in favour of two-sided platforms.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)

Specialty Drug Prices and Utilization After Loss of U.S. Patent Exclusivity, 2001-2007

Rena M. Conti and Ernst R. Berndt discuss Specialty Drug Prices and Utilization After Loss of U.S. Patent Exclusivity, 2001-2007.

ABSTRACT: We examine the impact of loss of U.S. patent exclusivity (LOE) on the prices and utilization of specialty drugs between 2001 and 2007. We limit our empirical cohort to drugs commonly used to treat cancer and base our analyses on nationally representative data from IMS Health. We begin by describing the average number of manufacturers entering specialty drugs following LOE. We observe the number of firms entering the production of newly generic specialty drugs ranges between two and five per molecule in the years following LOE. However, the existence of time-varying and unobservable contract manufacturing practices complicates the definition of "manufacturers" entering the market. We use pooled data methods to examine whether the neoclassical relationship between price declines and volume increases upon LOE holds among these drugs. First, we examine the extent to which estimated prices of these drugs undergoing LOE fall w! ith generic entry. Second, we estimate reduced form random effect models of utilization subsequent to LOE. We observe substantial price erosion after generic entry; average monthly price declines appear to be larger among physician-administered drugs (38-46.4%) compared to oral drugs (25-26%). Additionally, we find average prices for drugs produced by branded firms rise and prices for drugs produced by generic firms fall upon LOE; the latter effect is particularly large among oral drugs. In pooled models, volume appears to increase following generic entry, but this result appears to be largely driven by oral drugs. Molecule characteristics, number of manufacturers and 2007Q4 revenues are significant predictors of post-2007 drug shortages. We discuss second best welfare consequences of these results.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)

The EU Merger Regulation Ten Years after the 2004 Review

Johannes Luebking (DG Competition) reviews The EU Merger Regulation Ten Years after the 2004 Review.

ABSTRACT: Nearly ten years after the last major overhaul of the EU Merger Regulation (Council Regulation (EC) No 139/2004), the European Commission has now taken new initiatives in the legislative field to further strengthen EU merger control, one of the central pillars of EU competition law. The objective of the initiatives is twofold: to make EU merger control more efficient and to ensure that it addresses all sources of possible competitive harm caused by corporate restructuring.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)

Kamakahi v. ASRM: The Egg Donor Price Fixing Litigation

Kimberly D. Krawiec, Duke University - School of Law has written on Kamakahi v. ASRM: The Egg Donor Price Fixing Litigation.

ABSTRACT: In April 2011, Lindsay Kamakahi caused an international stir by suing the American Society for Reproductive Medicine (ASRM), the Society for Assisted Reproductive Technology (SART), SART-member fertility clinics, and a number of egg donor agencies on behalf of herself and other oocyte donors. The suit challenged the ASRM-SART oocyte donor compensation guidelines, which limit payments to egg donors to $5,000 ($10,000 under special circumstances), as an illegal price-fixing agreement in violation of United States antitrust laws. Ensuing discussion of the case has touched on familiar debates surrounding coercion, commodification, and exploitation. It has also revealed many misconceptions about oocyte donation, the allegations in the case, and antitrust law’s application to the ASRM-SART oocyte donor compensation guidelines. Regardless of outcome, the suit is an important one that could signal a change in public attitudes about the propriety of mixing money with motherhood. It should — and will — be closely watched.

April 11, 2014 | Permalink | Comments (0) | TrackBack (0)