Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, September 2, 2014

the American Antitrust Institute is recruiting the next generation of antitrust practitioners

To continue its growth, the American Antitrust Institute is recruiting the next generation of antitrust practitioners. The AAI is seeking the antitrust community’s support of two new programs aimed at connecting with this next generation. Antitrust practitioners can help by


1.
Sponsoring an associate to attend the December 2 Private Enforcement Conference in Washington DC which features a new “Young Lawyers Breakfast.”  At this breakfast session, targeted to the young practitioners who will be the future of our sector, a panel composed of both junior lawyers and legendary veterans will give a variety of perspectives on tightened pleading standards, restricted admissibility of expert opinions, increased roadblocks to class certification, and the proliferation of mandatory arbitration with class action bans.  Among
other things, panelists will discuss how problems like those facing our practices have been overcome in the past, and offer reasons to expect that private antitrust enforcement may well have a vibrant future.  The panel will
consider practical solutions, and how young lawyers in particular can take part. Panelists include Joe Goldberg, William Isaacson, Roberta D. Liebenberg, H. Laddie Montague, Robert Kaplan, and David A. Young.

For those not in Washington, accommodations on December 1 will be needed to be able to attend the 8:30 breakfast.  But, consider the cost of accommodations and tuition an investment in the associate as well as in the future of the AAI.  



2.
Nominating a young lawyer for Outstanding Antitrust Litigation Achievement by a Young Lawyer
which will be presented at the Antitrust Enforcement Awards dinner on December 2.
This award is limited to private civil actions. Nominees should be individual practitioner(s) under 40 years old or admitted to practice for 10 years or less. Nominees will be judged on:
1. the individual’s contribution to the case

2. the benefit realized by the client, consumers, or class

3. the positive development of antitrust policy

Qualified nominations must relate to antitrust-focused litigation that was (a) initiated in or appealed in any U.S. state or federal court and (b) resulted (whether or not subject to appeal) in a final judgment, verdict, dismissal, conviction, injunction, order, or settlement between July 1, 2013 and June 30, 2014.

The award submission period ends on September 10, 2014.
Nomination Form: http://www.antitrustinstitute.org/sites/default/files/Awards%20Entry%20Form%202014.doc
Award Procedures: http://www.antitrustinstitute.org/sites/default/files/Awards%20Procedures%202014_0.pdf


Please contact Sarah Frey at American Antitrust Institute (
sfrey@antitrustinstitute.org) with any questions.

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Targeted advertising, platform competition and privacy

Henk Kox, CPB Netherlands Bureau for Economic Policy Analysis, Bas Straathof, CPB Netherlands Bureau for Economic Policy Analysis and Gijsbert Zwart, TILEC. discuss Targeted advertising, platform competition and privacy.

ABSTRACT: Targeted advertising can benefit consumers through lower prices for access to websites. Yet, if consumers dislike that websites collect their personal information, their welfare may go down. We study competition for consumers between websites that can show targeted advertisements. We find that more targeting increases competition and reduces the websites' profits, but yet in equilibrium websites choose maximum targeting as they cannot credibly commit to low targeting. A privacy protection policy can be beneficial for both consumers and websites. If consumers are heterogeneous in their concerns for privacy, a policy that allows choice between two levels of privacy will be better. Optimal privacy protection takes into account that the more intense competition on the high-targeting market segment also benefits consumers on the less competitive segment. Consumer surplus is maximized by allowing them a choice between a high t! argeting regime and a low targeting regime which affords more privacy.

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

A Model of Dynamic Limit Pricing with an Application to the Airline Industry

Christopher Gedge, Duke, James W. Roberts, Duke, Andrew Sweeting, Maryland offer A Model of Dynamic Limit Pricing with an Application to the Airline Industry.

ABSTRACT: The one-shot nature of most theoretical models of strategic investment, especially those based on asymmetric information, limits our ability to test whether they can fit the data. We develop a dynamic version of the classic Milgrom and Roberts (1982) model of limit pricing, where a monopolist incumbent has incentives to repeatedly signal information about its costs to a potential entrant by setting prices below monopoly levels. The model has a unique Markov Perfect Bayesian Equilibrium under a standard form of refinement, and equilibrium strategies can be computed easily, making it well suited for empirical work. We provide reduced-form evidence that our model can explain why incumbent airlines cut prices when Southwest becomes a potential entrant into airport-pair route markets, and we also calibrate our model to show that it can generate the large price declines that are observed in the data.

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES: China, India, Mexico, Brazil, South Africa ...

ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES: China, India, Mexico, Brazil, South Africa ...

Concurrences Journal + New York University School of Law                               

Friday, October 24, 2014 from 8:30 AM to 6:30 PM (EDT)

New York, United States

 

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Do "Reverse Payment" Settlements of Brand-Generic Patent Disputes in the Pharmaceutical Industry Constitute an Anticompetitive Pay for Delay?

Keith M. Drake, Greylock McKinnon Associates, Martha A. Starr, American University and Thomas McGuire, Harvard Medical School ask Do "Reverse Payment" Settlements of Brand-Generic Patent Disputes in the Pharmaceutical Industry Constitute an Anticompetitive Pay for Delay?

ABSTRACT: Brand and generic drug manufacturers frequently settle patent litigation on terms that include a payment to the generic manufacturer along with a specified date at which the generic would enter the market. The Federal Trade Commission contends that these agreements extend the brand’s market exclusivity and amount to anticompetitive divisions of the market. The parties involved defend the settlements as normal business agreements that reduce business risk associated with litigation. The anticompetitive hypothesis implies brand stock prices should rise with announcement of the settlement. We classify 68 brand-generic settlements from 1993 to the present into those with and without an indication of a “reverse payment” from the brand to the generic, and conduct an event study of the announcement of the patent settlements on the stock price of the brand. For settlements with an indication of a reverse payment, brand stock prices rise on average 6% at the announcement. A “control group” of brand-generic settlements without indication of a reverse payment had no significant effect on the brands’ stock prices. Our results support the hypothesis that settlements with a reverse payment increase the expected profits of the brand manufacturer and are anticompetitive.

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Nothing so certain as your anchors? A consumer bias that might lower prices

Barna Bako, Corvinus University of Budapest and Andras Kalecz-Simon, Corvinus University of Budapest argue Nothing so certain as your anchors? A consumer bias that might lower prices.

ABSTRACT: Anchoring is a well-known decision-making bias: original guesses for a certain question could act as anchors and could influence our final answers. Reference prices - in a similar fashion - can lead to a bias in consumer valuations, and thus consumer demand will be coherent but not one derived from a utility framework. In our paper we investigate the effect of the existence of anchoring on how oligopolistic firms might change their pricing strategy. More specifically, we analyze the effect of anchoring on pricing when differentiated firms compete in Bertrand fashion. We show that if the anchoring effect is smaller than a threshold the average price is lower compared to the no-anchoring case.

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, September 1, 2014

On the Optimality of Pure Bundling for a Monopolist

Domenico Menicucci, Universita degli Studi di Firenze Sjaak Hurkens, Institute for Economic Analysis (CSIC) and Barcelona GSE and Doh-Shin Jeon, Toulouse School of Economics write On the Optimality of Pure Bundling for a Monopolist.

ABSTRACT: This paper considers a monopolist selling two objects to a single buyer with privately observed valuations. We prove that if each buyer’s type has a non-negative virtual valuation for each object, then the optimal price schedule is such that the objects are sold only in a bundle; weaker conditions suffice if valuations are independently and identically distributed. Under somewhat stronger conditions, pure bundling is the optimal sale mechanism among all individually rational and incentive compatible mechanisms.

September 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Selling Experiments: Menu Pricing of Information

Dirk Bergemann (Cowles Foundation, Yale University), Alessandro Bonatti (MIT) and Alex Smolin (Dept. of Economics, Yale University) are Selling Experiments: Menu Pricing of Information.

ABSTRACT: A monopolist sells informative experiments to heterogeneous buyers. Buyers differ in their prior information, and hence in their willingness to pay for additional signals. The monopolist can profitably offer a menu of experiments. We show that, even under costless information acquisition and free degrading of information, the optimal menu is quite coarse. The seller offers at most two experiments, and we derive conditions under which at vs. discriminatory pricing is optimal.

September 1, 2014 | Permalink | Comments (0) | TrackBack (0)

King’s College London presents the Postgraduate Diploma in EU Competition Law 2014 - there is still time to enroll (through this Friday)

King’s College London presents the Postgraduate Diploma in EU Competition Law 2014

Start date 1st October 2014

Some of the key elements of the course:

Professor Richard Whish is the guru on EU Competition Law and the reason many students choose to do this programme. Professor Whish has been the Professor of Law at Kings College London since 1991 and this year has been awarded Emeritus Professor at Kings. He is a qualified solicitor and also acts as a consultant to a variety of companies and regulatory agencies and was a non-executive director at the Office of Fair Trading. He is actively involved in research on many aspects of competition law policy, including the international merger process, pricing behaviour and the relationship between competition law and regulation.

As well as including the expertise of Professor Richard Whish, the course also includes a number of Competition experts with years of varied experience between them. Wouter Wills, Hearing Officer and Leo Flynn, Member of the Legal Service of the European Commission; Paula Riedel, Partner, Linklaters; and Rafique Bachour, Partner, Freshfields are all part of this impressive programme.

The course has been running for around 16 years and has had over 2000 students study during this period. Many law firms and Competition Authorities use this course as their training programme for employees in the competition field.

The course is completed in a short 8 months and gives the Students who gain a merit level the opportunity to go on to study the MA in EU Competition Law starting in the following September

Ranking 4th amongst UK law schools*, law at King’s has enjoyed a tradition of excellence for over 175 years and is recognised globally as one of the UK’s premier law schools

*source: 2013 QS World University Rankings by Subject

Please quote the booking code TT112 which will help ensure that the application is processed as quickly as possible.

To enrol, complete the two page application form at the back of the brochure and return it to me or follow this link to enrol through my booking page: http://www.ibclegal.com/FKW12322TT112.

If you have any questions please contact

Hannah Osborne

Divisional Training Manager

Informa Professional Academy

Lloyd’s Maritime Academy

IBC Academy

T: +44 (0) 20 7017 4940

F: +44(0) 20 7017 7853

hannah.osborne@informa.com

September 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Period of limitations in follow-on competition cases: when does a ‘decision’ become final?

Pınar Akman, Associate Professor of Law, School of Law, University of Leeds asks Period of limitations in follow-on competition cases: when does a ‘decision’ become final?

ABSTRACT: A series of private competition law cases in the UK has demonstrated that there are significant procedural issues that need resolving before private enforcement can flourish in the way that the European Commission and the UK Government are currently encouraging. One of these issues is the calculation of the period of limitations in a follow-on case where there are multiple infringers some of whom appeal the infringement decision of the competition authority and some of whom do not. A closely related issue is that of when the underlying infringement decision of the competition authority becomes final and consequently binding on a national court deciding a follow-on case. This has been a recurring problem in the UK in the context of follow-on actions before the Competition Appeal Tribunal (CAT) culminating in the Deutsche Bahn decision of the Supreme Court. This article shows that this seemingly simple issue of establishing when a decision becomes final and the calculation of the period of limitations is in fact loaded with serious implications going well beyond a procedural, timing point. Although the issue is pertinent to all types of infringements of competition law with multiple infringers, it has particular implications for leniency recipients in cartel cases and therefore, for the overall relationship between private and public enforcement of competition law. This article demonstrates how suboptimal the current legal situation is and what the overall preferable solution is for establishing when an infringement decision becomes final and the period of limitations in follow-on cases based on infringement decisions in the presence of multiple infringers under UK and EU law.

September 1, 2014 | Permalink | Comments (0) | TrackBack (0)

The Rocky Relationship between the Federal Trade Commission and Administrative Law

Richard J. Pierce Jr., George Washington University Law School describes The Rocky Relationship between the Federal Trade Commission and Administrative Law.

ABSTRACT: In this contribution to a symposium in honor of the 100th anniversary of the FTC, Professor Pierce describes the problems that FTC has experienced as a result of conflicts between its practices and basic principles of administrative law. He traces those problems to the history of the FTC, including the language of the FTC Act of 1914 and FTC's attempt to implement that statute. He describes the ways in which the conflicts between FTC practices and administrative law handicap FTC's efforts to perform its antitrust mission. He then proposes a combination of changes in antitrust statutes that would allow FTC to perform its antitrust mission more effectively over the next century. Those changes include: (1) repeal sections 5 and 13(b) of the FTC Act; (2) confer on FTC power to issue legislative rules to implement the Sherman and Clayton Acts; (3) confer on FTC exclusive jurisdiction to resolve civil cases that arise under the Sherman and Clayton Acts; and, (4) replace oral evidentiary hearings with paper hearings.

September 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, August 29, 2014

Identifying Benchmarks for Applying Non-Discrimination in Frand

Dennis W. Carlton, University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER) and Allan Shampine, Compass Lexecon are Identifying Benchmarks for Applying Non-Discrimination in Frand.

ABSTRACT: Standard setting organizations have for many years asked members to commit to license patents essential to use of standards on Fair, Reasonable and Non-discriminatory, or FRAND, terms. Previous work has shown how standard setting that incorporates patents can lead to complicated situations in which the patent owner, sometimes in collaboration with rival firms, can exploit the market power that is created by being designated a standard essential patent, but that the non-discriminatory provision of FRAND can be interpreted so as to mitigate the inefficiencies that can result when patent owners try to exploit their market power conferred by the standard setting process. This paper discusses the availability of appropriate benchmarks for implementing the non-discriminatory provision and shows how even when license terms for patents are not set in advance, FRAND terms can protect members of an SSO and that this protection can be implemented by using various benchmarks.

August 29, 2014 | Permalink | Comments (0) | TrackBack (0)

The CR4 Index and the Interval Estimation of the Herfindahl-Hirschman Index: An Empirical Comparison

Maurizio Naldi, University of Rome II and Marta Flamini, Universita Telematica Internazionale (UNINETTUNO) provide The CR4 Index and the Interval Estimation of the Herfindahl-Hirschman Index: An Empirical Comparison.

ABSTRACT: Concentration indices are employed to measure the level of competition within an industry. Among the several indices proposed in the literature, the Herfindahl-Hirschman Index (HHI) and the Four-firm concentration ratio (CR4) are among the most established. However, the HHI requires the market shares of all market players to be known, while the CR4 requires just the top four. In order to investigate whether we can always use the CR4 in place of the HHI, we have compared the indices resulting from a selected group of datasets. This preliminary analysis shows that the relationship between the CR4 and the HHI may not be monotonic, so that the CR4 does not preserve the order relationship established through the HHI.

August 29, 2014 | Permalink | Comments (0) | TrackBack (0)

Posted Prices and Bargaining: The Case of Monopoly

Stephen P. King, Monash University - Department of Economics; Centre for International Finance and Regulation (CIFR); Economic Regulation Authority of Western Australia (ERA) and Demitra Patras, Monash University - Department of Economics have a new paper on Posted Prices and Bargaining: The Case of Monopoly.

ABSTRACT: If buyers can choose to initiate bargaining with a seller, how does this alter the price that the seller 'posts' in the market? And does the option of bargaining raise or lower expected welfare?
This paper develops a simple model to answer these questions. With a single seller, the potential for bargaining raises the profit maximising posted price. In part, as has been noted in related literature, this reflects the role of the posted price as a fall-back option if bargaining fails. However, our model highlights a separate effect. When the choice to bargain is endogenous, a seller will raise the posted price to encourage buyers to bargain. The posted price not only exceeds the monopoly price, it can be higher than the price a seller would set if he knew in advance that all buyers would bargain. Further, the posted price can  change discontinuously in exogenous parameters such as the buyers' distribution of bargaining costs.  While we assume efficient bargaining, the welfare consequences are ambiguous.

August 29, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, August 28, 2014

Competition Law and Policy in the EU and UK (5th Edition)

BARRY J RODGER (University of Strathclyde) and and ANGUS MACCULLOCH (University of Lancaster) have published Competition Law and Policy in the EU and UK (5th Edition).

Download Competition Law Policy Flyer Revised_hres

Competition Law and Policy in the EU and UK provides a focused guide to the main provisions and policies at issue in the EU and UK, including topics such as enforcement, abuse of dominance, anti-competitive agreements, cartels, mergers, and market investigations.

The book’s contents are tailored to cover all major topics in competition law teaching, and the authors’ clear and accessible writing style offers an engaging and easy to follow overview of the subject for course use. The fifth edition provides a full update for this well-established title, presenting and contextualising the impact of key cases, as well as changes to enforcement practice, and at a legislative and institutional level. There are new, separate chapters in this edition on private enforcement and UK market investigations to reflect the increasing significance of these key areas of competition law practice.

Competition Law and Policy in the EU and UK

integrates useful pedagogical features to help clarify topics and reinforce important points:

chapter overviews and summaries highlight the key points to take away from each chapter to structure student learning

discussion questions facilitate self-testing and seminar discussions of the major issues covered in each chapter, to help reinforce understanding of these topics

further reading lists additional resources in order to guide research and develop subject knowledge

a new glossary provides succinct explanations of competition law terminology, ideal for those studying the topic for the first time

Clear, focused and student-friendly, this title offers a comprehensive resource for students taking competition law courses, and is supported online by updates to the law offered on Angus MacCulloch’s blog, Who’s Competing: whoscompeting. wordpress.com

August 28, 2014 | Permalink | Comments (0) | TrackBack (0)

Ex-officio cartel investigations and the use of screens to detect cartels

The OECD has published Ex-officio cartel investigations and the use of screens to detect cartels.

Fighting cartels remains a top priority for competition authorities since cartels are secretive in nature and cartelists take good care in concealing their illegal activities.

Cartel enforcement can therefore be extremely challenging for competition authorities who most of the times can only react after receiving complaints by competitors and customers or applications by participants to a cartel for leniency or amnesty.

More rarely, competition authorities take proactive actions to identify firms which are potentially involved in a cartel conspiracy, or markets which may be affected by cartelisation. These proactive cartel detection tools involve the analysis of observable economic data and firm behaviour, systematic monitoring of media, tracking of firms & individuals to detect behaviour which is inconsistent with a healthy competitive process. Discussing the balance between proactive and reactive detection and particular detection methods may benefit competition authorities evaluating their anti-cartel detection and enforcement policies. 

The OECD Competition Committee discussed Ex officio cartel investigations and the use of screens to detect cartels in October 2013 so as to explore the various screening methods used by agencies and their successful experiences with the implementation of such screens in case enforcement. 

‌‌ 

DOWNLOADS - MEETING DOCUMENTS
Full set of documents (pdf) including an executive summary with key findings, the background note, expert papers, over 25 contributions from participants and a detailed summary of the discussion. 

Key papers and presentations

Background Note by the Secretariat English | Français   

Rosa Abrantes-Metz US Global Economics Group Paper | PPT

David Gilo Israel Antitrust Authority PPT

William Kovacic George Washington University Paper | PPT

Maarten Pieter Schinkel University of Amsterdam Paper | PPT

August 28, 2014 | Permalink | Comments (0) | TrackBack (0)

Competition with Targeted Product Design: Price, Variety, and Welfare

Miguel Gonzalez‐Maestre, University of Murcia, Faculty of Business and Economics, Department of Economic Analysis and Luis M. Granero, Universitat de Valencia explore Competition with Targeted Product Design: Price, Variety, and Welfare

ABSTRACT: We consider the price and welfare effects of competition in targeted product design, in the context of the Salop circle model. With an exogenous number of firms, we show that under reasonable conditions price-increasing competition takes place, for intermediate levels of the number of firms. In turn, this effect is associated with the possibility of lower consumer welfare, as a result of increased competition. With endogenous firm entry, an interesting insight from our analysis is that an increase in market size or a technological progress that reduces entry costs both might reduce consumers’ welfare.

August 28, 2014 | Permalink | Comments (0) | TrackBack (0)

Competition and Bank Risk: The Effect of Securitization and Bank Capital

David Marques-Ibanez, European Central Bank (ECB), Yener Altunbas, University of Wales, Bangor, and Michiel Van Leuvensteijn, APG Asset Management analyze Competition and Bank Risk: The Effect of Securitization and Bank Capital.

ABSTRACT: We find that the increased use of securitisation activity in the banking sector prior to the 2007-2009 crisis augmented the effect of competition on realised bank risk (i.e. more intense competition and greater use of securitisation is correlated with higher levels of realised risk) during the crisis. In contrast, higher levels of capital did not buffer the impact of competition on realised risk. It follows that cooperation between supervisory and competition authorities is warranted to account for the stability implications of financial innovation and capital regulation.

August 28, 2014 | Permalink | Comments (0) | TrackBack (0)

Damages Claims for Breach of Competition Law in Spain

Fernando Cachafeiro, University of Coruna discusses Damages Claims for Breach of Competition Law in Spain.

ABSTRACT: The paper analyses current case law on antitrust damages claims in Spain. It compares existing national rules with draft rules enacted by the European Commission. The study of Spanish jurisprudence shows that there is substantial agreement on a number of relevant issues, such as the effects of final decisions by the national competition authority; the right to full compensation which includes actual loss and loss of profit; the availability of and requirements for the passing-on defence; the dates that determine the start of the limitation periods; or consumer associations’ standing to sue.

There are also major discrepancies: there is no rebuttable presumption of damages in cartel cases; some inconsistencies in determining the value of the loss of profit may arise; interest is paid from the date of the claim; joint and several liability is difficult to find; and the limitation period is one year, among others.

The alignment of Spanish Tort Law with the European Commission proposals can be accomplished by the mere action of Spanish courts when given the opportunity to resolve damages claims for the breach of Competition Law. The Ebro Foods judgement, where the Supreme Court substantially endorsed the European Commission’s doctrine on the passing-on defence, is a good example of this way of thinking. On other occasions, however, Spanish particularities have a solid legal base and thus significant legal amendments will be required.

August 28, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 27, 2014

What Extraterritorial Application of Competition Law Means for MNCs

Michael Ristaniemi University of Turku - Faculty of Law describes What Extraterritorial Application of Competition Law Means for MNCs.

ABSTRACT: Several competition law regimes around the world, including the EU and the USA, have adopted rules allowing their respective authorities to apply domestic competition law to activities occurring outside of their territory’s borders. This paradigm presents a clear challenge especially to multinational corporations ("MNCs") that operate on an international scale and which consequently must concurrently adhere to the rules and regulations of several – and potentially conflicting – jurisdictions in their business operations. Moreover, competition law can be and frequently is used as a tool for furthering a single region’s goals in international trade and politics. One visible avenue of doing so is by applying competition laws on an extraterritorial basis. Last, the coherence of jurisprudence itself is damaged by allowing competing legal doctrines to apply simultaneously within a single jurisdiction as they would, should a foreign nation’s competition laws be applied extraterritorially. All of this effectively constitutes a barrier to trade, which hits MNCs hardest in the form of legal uncertainty, increased costs and added administrative burden.

The author studies the legitimacy and breadth of extraterritorial application of competition law and discusses its main implications for MNCs as well as suggests a potential way forward in the form of increased regional cooperation between competition authorities and legislators.

August 27, 2014 | Permalink | Comments (0) | TrackBack (0)