Antitrust & Competition Policy Blog

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

Friday, October 20, 2017

Unobserved collusion: warning signs and concerns: Keynote Address at the Antitrust Enforcement Symposium, June 2017

Bob Marshall, Penn State discusses Unobserved collusion: warning signs and concerns: Keynote Address at the Antitrust Enforcement Symposium, June 2017.

ABSTRACT: In a keynote speech Robert C. Marshall addresses unobserved collusion. Although the extent and scope of unobserved collusion is unknown, the repeated detection of cartels among some multi-product firms raises questions and concerns. Do some multi-product firms potentially have a large portfolio of cartels where detected cartels are just a small part of their total collusive activity? This address examines conduct by multi-product firms that suggests potential grounds for concern.

October 20, 2017 | Permalink | Comments (0)

New Nominations for FTC Chair and Commissioners

According to news sources, the nominees are Joe Simons as FTC Chairman, Rohit Chopra as a Democratic commissioner and Noah Phillips as a Republican commissioner.

October 20, 2017 | Permalink | Comments (0)

Welfare-Reducing Entry in a Differentiated Cournot Oligopoly Without Costs

Shohei Yoshida, Osaka University - Institute of Social and Economic Research (ISER) examines Welfare-Reducing Entry in a Differentiated Cournot Oligopoly Without Costs.

ABSTRACT: We revisit the relationships between competition and various market outcomes in a differentiated Cournot oligopoly. Consider an oligopolistic market with two differentiated varieties, where each firm sells one of the varieties. We show that social welfare and consumer surplus can decrease with the number of firms when the products of entrants and incumbents are homogeneous. Moreover, an entry of firm can increases prices and profits of firm producing the other variety. We provide a simple exposition of the conditions which determine the effect of an increase in the number of entrants on various market outcomes.

October 20, 2017 | Permalink | Comments (0)

Network effects, antitrust, and falsifiability

Paul Johnson, Canadian Competition Bureau has a paper on Network effects, antitrust, and falsifiability.

ABSTRACT:  In a speech, Paul A. Johnson discussed how network effects may affect competition analysis. Network effects arise when a product’s value to one consumer increases with consumption by others. But competition can fragment a market so that network effects may not be enjoyed. Products that rely on algorithmic analysis of big data and exhibit network effects are growing increasingly important in the economy. In response, should antitrust enforcement become less aggressive so as to allow the benefits of network effects to be enjoyed? This note answers that question in the negative based on a lack of clear consensus in the literature that the benefits of network effects outweigh the benefits of competition. As antitrust confronts new business models enabled by new technologies, the analysis also serves as a reminder of the importance of postulating theories that are scientific in the sense that they can be falsified.

October 20, 2017 | Permalink | Comments (0)

Thursday, October 19, 2017

Where Do We Stand on Discounts after Intel?

Christian Bergqvist, University of Copenhagen - Faculty of Law asks Where Do We Stand on Discounts after Intel?

ABSTRACT: The dominant undertaking’s ability to award discounts and other loyalty inducing considerations are subject to much ambiguity and unsettled issues. Despite discounts being a commercial requirement, even for the dominant undertaking, it’s difficult to draw up clear principles, and while the approach to non-dominant undertaking’s restriction of competition has been fundamentally recast over the last 20 years, the appraisal of single company behaviour remains more formal and rigid. However, there have recently been indications that some of the same leniency might have been extended to discounts and unilateral behaviour. Consequently, an attempt shall be made to provide some guidelines under EU and Danish practice. Danish companies would normally be governed by both and the later has been aligned to the former, thus providing general guidance on EU practice. Moreover, the recent Intel will be incorporated with due respect to the different possible reading of the Court of Justices ruling.

October 19, 2017 | Permalink | Comments (0)

Patent Assertion Entities and Legal Exceptionalism in Europe and the United States, a Comparative View

Jorge L. Contreras, University of Utah - S.J. Quinney College of Law and Peter Georg Picht University of Zurich - Institute of Law; Max Planck Institute for Innovation and Competition offer Patent Assertion Entities and Legal Exceptionalism in Europe and the United States, a Comparative View.

ABSTRACT: Patent assertion entities are playing an increasing role in patent policy and patent litigation, both in the U.S. and Europe. Analyzing the resulting case law, mainly in the SEP/FRAND context, this article shows similarities as well as differences in the approaches taken by U.S. and EU courts.

October 19, 2017 | Permalink | Comments (0)

The Effect of Optimal Penalties for Organizations Convicted of Price Fixing in the Presence of Criminal Sanctions for Individuals

Bruce H. Kobayashi, George Mason University - School of Law and Michelle Burtis, Charles River Associates (CRA) International explore The Effect of Optimal Penalties for Organizations Convicted of Price Fixing in the Presence of Criminal Sanctions for Individuals.

ABSTRACT: This chapter examines the nature of optimal price fixing penalties on organizations in the presence of criminal sanctions for individuals employed by convicted firms. In other work, we examined the nature of optimal penalties for firms convicted for price fixing when the only sanction is the one placed on the firm. This chapter expands the economic analysis to examine how optimal organizational sanctions function when individuals employed by the firm are subject to criminal penalties, including incarceration. Our analysis demonstrates how sanctions on individuals can serve to complement firm level expenditures on monitoring and compliance, resulting in better deterrence and lower compliance costs.

October 19, 2017 | Permalink | Comments (0)

Wednesday, October 18, 2017

Heterodox Antitrust Economics

Jim Chen, Michigan State examines Heterodox Antitrust Economics.

ABSTRACT: Antitrust economics is a discipline developed by academic economists in concert with the refinement of per se rules and the rule of reason by the Supreme Court. Distinct bodies of antitrust thought — such as the Chicago school, the post-Chicago school, and behavioral antitrust economics — have emerged. These competing schools of thought fall short of capturing the full complexity of economic conduct. Antitrust law cannot and should not seek to replicate often conflicting insights devised by economists. Rather, what antitrust economics can accomplish is at once more modest and more helpful. The laudable resort to economic theory in any of its guises, behavioral or otherwise, should never become detached from economic fundamentals. 

October 18, 2017 | Permalink | Comments (0)

The German Auto-Emissions Scandal: Likely U.S. Antitrust Response

John M. Connor, American Antitrust Institute (AAI) offers The German Auto-Emissions Scandal: Likely U.S. Antitrust Response.

ABSTRACT: After years of being regarded as an environmental and consumer-protection issue, the German diesel-motor emissions scandal has suddenly morphed into an antitrust case. Press reports indicate that at least five German auto or auto-parts makers are under investigation by European competition-law authorities. In this comment, I focus on the historical and likely future responses of the United States Department of Justice (DOJ) to allegations of collusion among the largest German auto manufacturers identified in the press as of 8 August 2017. I predict that the DOJ is likely to treat allegations of cartelization through manipulation of technology as simply another in a long stream of auto-parts cartels. Assuming that there is evidence of effects on the U.S. auto market, the all-German make-up of this putative cartel will be no barrier to prosecution. However, the somewhat unusual type of conduct of this remarkably close R&D collaboration means that U.S. prosecutors will have to consider several legal and economic features that are out of the ordinary.

October 18, 2017 | Permalink | Comments (0)

GCR Live Women in Antitrust, Thursday, 09 November 2017, Washington D.C.

Thursday, 09 November 2017, Washington D.C., USA

Overview

Inspiring women in competition policy: promoting support networks among women working in antitrust in the public and private sector

Competition policy: what does the future hold?

Competition policy faces many challenges in 2017 and beyond, with a traditional approach based on consumer welfare and economic effects being called into question from the left and the right. Other factors, such as the interplay between competition and the public interest, innovation, big data, privacy, and even industrial policy are coming increasingly to the fore. This conference will explore what these developments mean for antitrust, and whether they spell a growing or weakening role for competition policy in tomorrow's global economy.

This conference will be unique not only in its broad vision of the future of competition enforcement and policy. It will also celebrate the many leading women in antitrust. The conference is chaired by women and will showcase the strength of women in antitrust among our speakers and moderators. GCR will also celebrate the leading Women in Antitrust named in our recent survey with an all-conference dinner after the event.

CONFERENCE TOPICS WILL INCLUDE:

  • Populism, public interest and antitrust
  • The nexus between competition and innovation
  • Big data and privacy as competitive concerns
  • US and EU: diverging competition enforcement priorities?

E-mail Tel: +44 20 3780 4137

Chairs

Kristina Nordlander

Sidley Austin, Brussels

Kristina Nordlander has a thriving EU competition, litigation and regulatory practice, representing major companies in a variety of sectors, including e-commerce, life sciences, financial services and payments, technology and chemicals. 

Edith Ramirez

Hogan Lovells, Washington, DC and Los Angeles

Edith Ramirez, former Chairwoman of the U.S. Federal Trade Commission (FTC), is co-head of the Antitrust and Competition practice and a partner in the Privacy and Cybersecurity practice. She has long been a strong presence in the international competition and privacy arena.

Speakers

Melanie Aitken

Bennett Jones, Washington DC

Fiona Carlin

Baker McKenzie, Brussels

Vicky Eatrides

Deputy Commissioner, Competition Promotion Branch, Canada Competition Bureau, Quebec

Deborah Garza

Covington & Burling, Washington, DC

Céline Gauer

Director, Energy & Environment, DG Competition, European Commission, Brussels

Catriona Hatton

Baker Botts, Brussels

Renata Hesse

Sullivan & Cromwell, Washington DC

Bojana Ignjatovic

RBB Economics, London

Aimee Imundo

Senior counsel, General Electric, Washington, DC

Claire Jeffs

Slaughter and May, Brussels

Susan Jones

Head Corporate Legal Antitrust, Novartis, Basel

Mary Lehner

Freshfields Bruckhaus Deringer, Washington DC

Karin Lunning

Director, Department of Communications and International Affairs, Swedish Competition Authority, Stockholm

Lindsay Lutz

Legal Director, Antitrust and Regulatory, eBay, San Francisco

Maureen Ohlhausen

Acting Chairman, Federal Trade Commission, Washington DC

Leigh Oliver

Hogan Lovells, Washington, DC

Alejandra Palacios Prieto

President, Federal Economic Competition Commission (COFECE), Mexico City

Maria Raptis

Skadden, Arps, Slate, Meagher & Flom, New York

Lauren Stiroh

Managing Director, NERA Economic Consulting, New York

Yingling Wei

JunHe, Shanghai

Programme

8.30: Welcome coffee and registration

9.00: Chairs' opening remarks

Edith Ramirez, Hogan Lovells, Washington, DC and Los Angeles
Kristina Nordlander, Sidley Austin, Brussels

9.15: Fireside chat 

Speakers:
Maureen Ohlhausen, Acting Chairman, Federal Trade Commission, Washington DC
Alejandra Palacios Prieto, President, Federal Economic Competition Commission (COFECE), Mexico City
Karin Lunning, Director, Department of Communications and International Affairs, Swedish Competition Authority, Stockholm

Interviewer
Melanie Aitken, Bennett Jones, Washington DC

10.15: Populism, public interest and antitrust

With political rhetoric in the developed world taking on a strong nationalist, anti-globalisation hue, what will be the impact on competition policy? What have we learned about US public enforcement in the Trump Administration in 2017? What about the EU's focus on fairness, including in corporate taxation? To what extent should governments globally consider public interest facets such as employment, environment or ‘industrial policy' in enforcement of competition law?

Moderator:
Mary Lehner, Freshfields Bruckhaus Deringer, Washington DC

Panel:
Vicky Eatrides, Deputy Commissioner, Competition Promotion Branch, Canada Competition Bureau, Quebec
Deborah Garza, Covington & Burling, Washington, DC
Céline Gauer, Director, Energy and Environment, DG Competition, European Commission, Brussels
Yingling Wei, JunHe, Shanghai

11.30: Coffee break

12.00: The nexus between competition and innovation

Is there a connection between innovation and concentration? Are new innovation theories of harm being pursued in competition enforcement? How are agencies considering innovation across the world?

Moderator:
Kristina Nordlander, Sidley Austin, Brussels

Panel:
Fiona Carlin, Baker McKenzie, Brussels
Susan Jones, Head Corporate Legal Antitrust, Novartis, Basel
Leigh Oliver, Hogan Lovells, Washington, DC
Lauren Stiroh, Managing Director, NERA Economic Consulting, New York

13.15: Networking lunch

14.15: Big data and privacy as competitive concerns

At what point does large-scale information become a competition concern? Where and what is the overlap between data privacy and competition?

Moderator:
Claire Jeffs, Slaughter and May, Brussels

Panel:
Maria Raptis, Skadden, Arps, Slate, Meagher & Flom, New York
Lindsay Lutz, Legal Director, Antitrust and Regulatory, eBay, San Francisco

15.30: Coffee break

16.00: Global competition regimes: diverging or converging?

In the US, Trump's seeming aim of dismantling the administrative state is in full swing, whereas in the EU, enforcement is if anything broadening - and post-Brexit, one can arguably expect even heavier regulation from the EU27. With this seeming tension between the two major regulatory approaches to competition law, what is the future for convergence and cooperation between the world's authorities? Where should agencies and counsel from developing economies look for leadership when different approaches emerge?

Moderator:
Catriona Hatton, Baker Botts, Brussels

Panel:
Renata Hesse, Sullivan & Cromwell, Washington DC
Bojana Ignjatovic, RBB Economics, London
Aimee Imundo, General Electric, Washington, DC

17.15: Chairs' closing remarks

Edith Ramirez, Hogan Lovells, Washington, DC and Los Angeles
Kristina Nordlander, Sidley Austin, Brussels

17.30: Drinks reception

19.00: All delegates are invited to attend an all-conference dinner, kindly hosted by NERA Economic Consulting

October 18, 2017 | Permalink | Comments (0)

Airline Economics: An Introductory Survey

Anming Zhang, University of British Columbia (UBC) - Sauder School of Business and Yahua Zhang, University of Southern Queensland offer Airline Economics: An Introductory Survey.

ABSTRACT: This paper has surveyed the topics in the field of airline economics, including areas such as airline costs and production, airline demand and revenue management, airline financial issues, and airline profitability. The debates in these areas are explored from an economic perspective to help readers understand contemporary economic issues and challenges facing the airline industry, and to provide the airline management with an economic way of thinking in dealing with these issues. This paper also aims to serve a purpose for air transport researchers to consider some under-researched areas where definitive answers to some interesting issues are still lacking. These include, among others, effective ways of reducing fuel cost risks such as fuel hedging and the adoption of new technologies, development of non-price competition strategies that can be used by airlines to differentiate their products, establishing new marketing strategies, and redesigning airline networks when surface transportation modes (e.g., high-speed rail) become a threat.

October 18, 2017 | Permalink | Comments (0)

Coopetition and Profit Sharing for Ride-Sharing Platforms

Maxime C. Cohen, New York University (NYU) - Leonard N. Stern School of Business and Renyu (Philip) Zhang, New York University Shanghai study Coopetition and Profit Sharing for Ride-Sharing Platforms.

ABSTRACT: The introduction of on-demand ride-hailing platforms totally changed the way people commute. In recent years, several firms entered this market to directly compete with traditional taxi companies. These online platforms often offer a carpooling service in which several passengers heading in the same direction can share a ride by being efficiently matched to an available vehicle. Examples of such services in NYC include uberPOOL, Lyft Line and Via. Recently, some of these platforms decided to engage in a profit sharing contract with one of their competitors by introducing a new hybrid service. For example, on June 6, 2017, Via officially announced a partnership with an online NYC taxi-hailing platform called Curb. This partnership allows riders to order a taxi, and share some portion of the trip with other riders by using Via's efficient matching algorithm. Since these two platforms are competing with each other, this form of partnership is often referred to as coopetition. This paper is motivated by this specific type of coopetition. We model the price competition between ride-hailing platforms by using the Multinomial Logit choice model, and show that a unique equilibrium exists. Then, we analyze the impact of introducing the new joint service to the market. Interestingly, we show that a well-designed profit sharing contract benefits both platforms. This result admits a similar win-win outcome as in the supply chain contract literature, even though these two settings are very different. In addition, we show that one can design a profit sharing contract that also benefits the riders and the drivers. Consequently, such a coopetition partnership may benefit every single party (riders, drivers and both platforms) when using a properly designed profit sharing contract.

October 18, 2017 | Permalink | Comments (0)

The Prohibition of Single-Firm Market Abuses: US Monopolization versus EU Abuse of Dominance

Francisco Marcos, IE Law School details The Prohibition of Single-Firm Market Abuses: US Monopolization versus EU Abuse of Dominance.

ABSTRACT: This article looks at the commonalities and disparities in the rules against single-firm market abuses in the US and in the EU and their enforcement. Despite they target the same type of business behaviour, the US and the EU have always followed divergent paths. This article will examine alternative explanations for the differences and will also look at the different forms of conduct caught under the prohibition, underlining the most recent enforcement discordances.

October 18, 2017 | Permalink | Comments (0)

Tuesday, October 17, 2017

Developing Competition Law for Collusion by Autonomous Price-Setting Agents

Joseph E. Harrington Jr, University of Pennsylvania is Developing Competition Law for Collusion by Autonomous Price-Setting Agents.

ABSTRACT: After arguing that collusion by software programs which choose pricing rules without any human intervention is not in violation of section 1 of the Sherman Act, the paper offers a path towards making collusion by autonomous agents unlawful.

October 17, 2017 | Permalink | Comments (0)

Competitive harm in global supply chains: assessing current responses and identifying potential future responses

David Gerber, Chicago Kent has a new article on Competitive harm in global supply chains: assessing current responses and identifying potential future responses.

ABSTRACT: Global supply (or ‘value’) chains add much to the value of global markets, offering benefits to both producers and consumers. Yet, global supply chains also carry a potential for harm that is often beyond the reach of current legal remedies. They can shield those that produce faulty or hazardous products or artificially raise prices from legal responsibility for the harms they cause to markets, consumers, or the environment. This article focuses on one set of those potential harms—those caused by anti-competitive conduct, but many of the issues also arise in relation to environmental, financial, and other types of harm. Producers anywhere in a chain can impede competition and raise prices for all subsequent purchasers. Such conduct may have effects in many jurisdictions, and its harmful effects are likely to be incurred outside the jurisdiction in which the conduct is located. Few legal tools are available for deterring such harms, and until very recently legal analysts have tended to subsume the issues under existing categories, often failing to notice that these categories and the tools based on them may be inadequate and ineffective in responding to a new organizational form. The inadequacy of the current legal framework calls for efforts to develop more effective tools, both domestic and transnational. This article reviews current responses to the problem and identifies the potential value of transnational coordination as a response.

October 17, 2017 | Permalink | Comments (0)

How Efficient is Dynamic Competition? The Case of Price as Investment

David Besanko, Ulrich Doraszelski, and Yaroslav Kryukov ask How Efficient is Dynamic Competition? The Case of Price as Investment.

ABSTRACT: We study industries where the price that a firm sets serves as an investment into lower cost or higher demand. We assess the welfare implications of the ensuing competition for the market using analytical and numerical approaches to compare the equilibria of a learning-by-doing model to the first-best planner solution. We show that dynamic competition leads to low deadweight loss. This cannot be attributed to similarity between the equilibria and the planner solution. Instead, we show how learning-by-doing causes the various contributions to deadweight loss to either be small or partly offset each other.

October 17, 2017 | Permalink | Comments (0)

Search Engines and Data Retention: Implications for Privacy and Antitrust

Lesley Chiou and Catherine Tucker  have a new paper on Search Engines and Data Retention: Implications for Privacy and Antitrust.

ABSTRACT: This paper investigates whether larger quantities of historical data affect a firm's ability to maintain market share in Internet search. We study whether the length of time that search engines retained their server logs affected the apparent accuracy of subsequent searches. Our analysis exploits changes in these policies prompted by the actions of policymakers. We find little empirical evidence that reducing the length of storage of past search engine searches affected the accuracy of search. Our results suggest that the possession of historical data confers less of an advantage in market share than is sometimes supposed. Our results also suggest that limits on data retention may impose fewer costs in instances where overly long data retention leads to privacy concerns such as an individual's ``right to be forgotten."

October 17, 2017 | Permalink | Comments (0)

Monday, October 16, 2017

The Political Economy of Competition Law in China

Wendy Ng (Melbourne Law and one of the best junior competition law scholars in the world) has a new book forthcoming  The Political Economy of Competition Law in China.

BOOK ABSTRACT: The Political Economy of Competition Law in China provides a unique perspective of China's competition law that is situated within its legal, institutional, economic, and political contexts. Adopting a framework that focuses on key stakeholders and the relevant governance and policy environment, and drawing upon stakeholder interviews, case studies, and doctrinal analysis, this book examines China's Anti-Monopoly Law in the context of the political economy from which it emerged and in which it is now enforced. It explains the legal and economic reasoning used by Chinese competition authorities in interpreting and applying the Anti-Monopoly Law, and offers valuable and novel insights into the processes and dynamics of law- and decision-making under that law.

October 16, 2017 | Permalink | Comments (0)

Multi Product Firms, Import Competition, and the Evolution of Firm-Product Technical Efficiencies

Emmanuel Dhyne, National Bank of Belgium, Amil Petrin, University of Minnesota - Duluth; National Bureau of Economic Research (NBER), Valérie Smeets, Aarhus School of Business; Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES), and Frederic Warzynski, University of Aarhus - Department of Economics discuss Multi Product Firms, Import Competition, and the Evolution of Firm-Product Technical Efficiencies.

ABSTRACT: We study how increased import competition affects the evolution of firm-product technical efficiencies in the small open economy of Belgium. We observe quarterly firm-product data at the 8-digit level on quantities sold and firm-level labor, capital, and intermediate inputs from 1997 to 2007, a period marked by stark declines in tariffs applied to Chinese goods. Using Diewert (1973) and Lau (1976) we show how to estimate firm-product quarterly technical efficiencies using a multi-product production (MPP) function that avoids using single-product (SP) production function approximations to it. We find that a 0.01 increase in the import share leads to a 1.05% gain in technical efficiency. This elasticity translates into gains from competition over the sample period exceeding 1.2 billion euros, which is over 2.5% of the average annual value of manufacturing output in Belgium. Firms appear to be less technically efficient at producing goods the further they get from their "core" good and firms respond to competition by focusing more on their core products. Instrumenting import share - while not important for the signs of the coefficients - is very important for the magnitudes as the effect of competition increases tenfold when one moves from OLS to IV. We close by testing the SP approximation to MPP and reject in eight of twelve industries.

October 16, 2017 | Permalink | Comments (0)

A €6 Billion Unpaid Fine: The Ukrainian Antitrust Case Against Gazprom

Sergiy Glushchenko analyzes A €6 Billion Unpaid Fine: The Ukrainian Antitrust Case Against Gazprom.

ABSTRACT: The recent commitments offered by Gazprom to the European Commission (EC) in the long running abuse of dominance case provide a good opportunity to revisit another abuse of dominance case against the Russian gas giant, which recently concluded not with commitments but a prohibition decision and fines.

On 22 January 2016, the Antimonopoly Committee of Ukraine (AMC) announced a decision with a record fine on Gazprom. The investigation started in 2015 after the AMC investigated possible violations by Gazprom in the gas transit market. The AMC found the company had abused its monopsony position as the only buyer of gas transit services through Ukraine.

October 16, 2017 | Permalink | Comments (0)