Antitrust & Competition Policy Blog

Help Needed From US Academics

Posted by D. Daniel Sokol

I am organizing a signature campaign from US academics to Congress for direct appropriations for the DOJ and FTC for technical assistance (see my papers on antitrust technical assistance here and here).  There is currently movement in Congress to get direct funding this year, which would acoord with the AMC's recommentation that Congress “should provide budgetary authority, as well as appropriations, directly to the Federal Trade Commission and the Antitrust Division of the Department of Justice to provide international antitrust technical assistance.”

Email me if you want to sign on to the letters.  I attach the current draft versions.  I need a response from academics no later than June 12, 2008.

Download doj_letter.doc
Download ftc_letter.doc  

Fordham Competition Law Training Institute Programs for Summer 2008

Posted by D. Daniel Sokol

In Summer 2008, the Fordham Competition Law Training Institute Training Center will offer the following courses:

1.  Course for competition authority economists, June 16 to 20, 2008: Following the successful first course for agency economists in June 2007, FCLI will offer a one week course for economists from competition authorities. Through discussion and practical examples, the course will enable competition economists to refresh their knowledge of key economic concepts, learn about recent developments in economic theory, and develop the skills apply economic theory in case work. The course is open to competition authority economists with at least three years experience in an authority. A PhD in economics is not required.

2.  Workshop for judges, June 24 to 27, 2008: This three day workshop for judges will include a review of basic antitrust law & economics concepts as well as a discussion of issues arising in the context of judicial review and litigation in competition cases, in particular the use of economic experts and models and practices in assessing damages in competition cases. Applications from members of courts are welcome.

3.  Refresher course for experienced competition authority officials and judges, July 7 to 11, 2008: This year's refresher course will closely follow the successful programs in the previous years. The course will cover major areas of competition policy, economics and law enforcement, including basic economic concepts, horizontal agreements, mergers, single firm conduct, vertical agreements and remedies. FCLI encourages applications by competition authority officials and judges with at least three years of experience.

A highly experienced, geographically diverse faculty from competition authorities, academia and the judiciary will lead the courses and workshop, taking an interactive approach and utilizing case studies.

What's Wrong With Royalties in High Technology Industries?

Posted by D. Daniel Sokol

Damien Geradin (College of Europe, Tilburg University, and Howrey) asks What's Wrong With Royalties in High Technology Industries?

ABSTRACT: Over the past few years, there has been an unprecedented degree of interest among competition authorities, scholars, Standard-Setting Organizations (hereafter, SSOs) and trade associations with respect to the level of royalties that are charged by holders of intellectual property rights (IPRs).  For instance, in the past two years, the US Department of Justice (DoJ) granted business letter clearance to two SSOs - VITA and IEEE - to implement new IPR policies designed to control the IPR costs.  In April 2007, the DoJ and the Federal Trade Commission (FTC) jointly released a report on "Antitrust Enforcement and Intellectual Property Rights".  But the interest is not limited to the United States. The European Commission is currently investigating the compatibility of certain licensing regimes and conduct within SSOs against EC competition law.  Reflecting the debate at the policy level, scholars have produced a large body of legal and economic literature on IPR and standardization issues, including patent hold-up (where the patent holder exploits ill-gotten market power in "excessive" licensing fees) and royalty stacking (where multiple patents must be licensed and thus the royalty rates stack up to "excessive" amounts).

Against this background, this paper addresses the issue of whether something has gone wrong with royalties in high technology industries. This paper seeks to answer this question first by looking at a number of concrete scenarios where firms holding IPRs seek to obtain a return on their patent portfolios by licensing them. As will be seen, the behaviour of these firms essentially depends on whether they are vertically-integrated  or non vertically-integrated. Vertically-integrated firms engage in research and development activities, patenting at least some of their inventions, and also manufacturing products based on their own innovations and the innovations produced by others. Non vertically-integrated firms, in contrast specialize in one or the other layers of production. Pure upstream firms conduct research and development activities and patent their innovations, but they do not engage in manufacturing. Downstream firms specialize in manufacturing, but do not engage in R&D.

A Practical Guide to the Hypothetical Monopolist Test for Market Definition

Posted by D. Daniel Sokol

Malcolm Coate and Jeffrey Fischer, both of the Federal Trade Commission, provide A Practical Guide to the Hypothetical Monopolist Test for Market Definition.

ABSTRACT: The hypothetical monopolist test has been used to define antitrust markets for over 20 years. However, many of these applications occur within the enforcement agencies and thus the implementation process is not fully transparent to antitrust practitioners. This paper provides a study of 116 market definition decisions from the Federal Trade Commission's archives. We find that the agency rarely has trouble defining both product and geographic markets; in fact, the demand-side market definition process is relatively simple in over half of the cases reviewed. In many of the remaining matters, critical loss, analysis of natural experiments, and various studies of data patterns are undertaken to identify the relevant market. These studies show a remarkable variety in data requirements, sophistication, and analytical technique. Supply-side considerations affect a few markets and price discrimination supports more focused analysis in about 10 cases.

Competition Policy in Mexico and Its Implications on Economic Development

Posted by D. Daniel Sokol

Mexico's CFC has published a study on the impact of competition policy on the Mexican economy.  See here for details.

The State of Antitrust in 2008

Posted by D. Daniel Sokol

FTC Commissioner Tom Rosch recently provided The State of Antitrust in 2008 in which he discusses three recent Supreme Court decisions (Twombly, Weyerhaeuser, and Leegin) and broader themes from the Supreme Court’s recent antitrust jurisprudence.

Ninth ACCC Regulatory Conference

Posted by D. Daniel Sokol

Australia's ACCC (Australian Competition and Consumer Commission) is hosting its Ninth ACCC Regulatory Conference on July 24-25, 2008 at the Surfers Paradise Marriott Resort, Gold Coast, Queensland.

The theme for this year's conference is 'Revisiting the Rationale for Regulation'.

International Speakers include:
Professor George Yarrow, University of Oxford
Dr. Mark Jamison, University of Florida
Professor Paul Kleindorfer, Wharton School of the University of Pennsylvania
Russell Pittman, US Department of Justice
Giuseppe Nicoletti, OECD
Professor John Cubbin, City University, London
Dr. David Gabel, CEO Gabel Communications Ltd.
Dr. Stan Besen, Vice President - CRA
Phillip Dixon, Head of Competition - Ofwat
Professor Ravi Jagannathan, Kellogg School of Management, Northwestern University

Topics to be discussed include:
What do today's regulators and regulated firms need to know?
Does economics provide all the answers for regulation?
What can we learn from economic studies of regulatory policies?
Environmental issues in the regulation of energy Sources of market power in broadband
Achieving competitive outcomes in the urban water & wastewater sector
Regulating Intellectual Monopolies The CAPM - Should regulators be looking at alternatives?
The role of the courts and tribunals in providing greater guidance to regulators

Will There Be Article 82 Guidelines and What Are the Implications?

Posted by D. Daniel Sokol

Liza Lovdahl-Gormsen (ESRC Centre for Competition Policy, University of East Anglia) asks Will There Be Article 82 Guidelines and What Are the Implications?

ABSTRACT: The question that is the title of this article is very topical as the five-year anniversary of the initiation of the Commission’s June 2003 internal policy review of Article 82 EC approaches.

The answer to the question is currently unknown—at least to this author. This short contribution does not predict the future, but presents an educated guess.

First, it sets the state of play in the modernization process: what has gone before and how far along are we.

Second, it questions the aim of guidelines. In other words, what is the European Commission’s Directorate-General for Competition (DG Comp) trying to achieve by issuing guidelines in this area of law? While this may not be all that clear, an answer may be available in DG Comp’s Discussion Paper on the Application of Article 82 of the Treaty to Exclusionary Abuses in December 2005.

Third, it examines whether some recent case law or policy statements give any indications as to whether guidelines are the way forward.

Finally, it looks at implications. Not implications of guidelines as DG Comp has yet (if ever) to issue guidelines, but the implications of issuing guidelines as opposed to not issuing guidelines.

Unlocking Technology: Innovation and Antitrust

Posted by D. Daniel Sokol

Dan Spulber of Northwestern's Kellogg School of Business has a forthcoming article that is a worthwhile read on Unlocking Technology: Innovation and Antitrust.

ABSTRACT: Technology lock-in advocates argue that governments should step in to coordinate technology adoption decisions. Due to the presence of network effects, advocates warn that consumers may fail to adopt the best technology, thus missing out on potential benefits. Even worse, consumers may split, adopting multiple technologies and thus missing out on the benefits of network effects. Due to coordination problems, consumers cannot mitigate the effects of bad technology choices and the economy becomes stuck with inferior innovations. This article demonstrates that consumer coordination solves the underlying network effects problem, thus eliminating technology lock-in. Network effects are confined at most to the information and communications technology and selected electronics industries, which have developed mechanisms for interconnection and interoperability. Firms have incentives to provide interconnection and interoperability when it is efficient to do so. Rapid technological innovation is apparent whereas technology lock-in is a rare phenomenon. Antitrust policy founded on technology lock-in arguments is misguided and is likely to damage incentives for innovation.

5th Annual Seoul International Competition Forum

Posted by D. Daniel Sokol

The 5th Annual Seoul International Competition Forum in conjunction with the Asian International Competition Policy Conference and the 13th International Workshop on Competition Policy, together perhaps Asia's most important competition policy conference, is soon approaching-- September 3-5, 2008 in Seoul, Korea.