Antitrust & Competition Policy Blog

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

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Saturday, March 24, 2007

DOJ/FTC Single-Firm Conduct Hearings to Continue on March 28 and 29

Posted by D. Daniel Sokol

The hearings on the most difficult antitrust topic continue in DC.

March 28 Sessions                  

           The Objectives and Goals of Remedies in Section 2 Cases (9:30 A.M.–12:00 P.M.):      

Robert W. Crandall is a senior fellow in economic studies at the Brookings Institution.

David A. Heiner is the vice president and deputy general counsel for antitrust at Microsoft Corporation.

Per Hellström is chief of Unit C-3 at the European Commission’s Directorate General for Competition.

Abbott (Tad) Lipsky is a partner at Latham & Watkins LLP and a former Deputy Assistant Attorney General at the Department of Justice’s Antitrust Division.

Structural Versus Conduct Remedies (1:30 P.M.–4:30 P.M.):                   

Richard A. Epstein is the James Parker Hall distinguished service professor of law, faculty director for curriculum, and the director of the law and economics program at the University of Chicago Law School.

Franklin M. Fisher is the Jane Berkowitz Carlton and Dennis William Carlton professor of microeconomics, Emeritus, at the Massachusetts Institute of Technology.

Andrew Joskow is senior vice president of NERA Economic Consulting and a former Deputy Assistant Attorney General at the Department of Justice’s Antitrust Division.

Dietrich Kleemann is the head of the task force on ex post assessment of merger decisions at the European Commission’s Directorate General for Competition.

John Thorne is senior vice president and deputy general counsel at Verizon.             

March 29 Session   

           Remedy in the Face of Technological Change (9:30 A.M.–12:30 P.M.):

Michael Cunningham is general counsel at Red Hat Inc.

Renata B. Hesse is a partner at Wilson Sonsini Goodrich & Rosati.

Marina Lao is a professor of law at Seton Hall Law School.

William H. Page is the Marshall M. Criser eminent scholar at the University of Florida’s Levin College of Law.

Howard A. Shelanski is an associate dean and a professor of law at the University of California, Berkeley, Boalt Hall, and the director of the Berkeley Center for Law & Technology.

March 24, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, March 23, 2007

Hong Kong to Introduce Competition Law

Posted by D. Daniel Sokol

Yesterday, the Global Competition Review reported (password required) that Hong Kong likely will introduce a competition law.   The Report on public consultation on the way forward for Hong Kong's competition policy (available here) lays out a blueprint for the law including its rationale, functions and answers to key questions.

I think that the possible introduction of a competition law in Hong Kong and the recent adoption of a competition law in Singapore tells us something very important about the role of competition policy in the global economy.  These two jurisdictions often top various lists of the most market oriented economies in the world.  These jurisdictions also tend to be among the most trade open economies.  Yet, even in both of these jurisdictions, there is a sense that there is a need to create an agency to combat monopoly power and coordinated anti-competitive practices because the market cannot self correct easily against such practices.  The Singaporean competition law contains exemptions for state owned enterprises from the law.  My hope is that Hong Kong does not follow this approach.  Public restraints of competition may in fact be worse than private restraints because once such legislation/regulation is introduced, it becomes far more difficult to eliminate such anti-competitive conduct due to public choice problems.

My own thoughts on international antitrust can be found here.

March 23, 2007 | Permalink | Comments (1) | TrackBack (0)

Thursday, March 22, 2007

Outsourcing Retail Category Management

Posted by D. Daniel Sokol

Yesterday during one of my frequent trips to the supermarket, I thought of category management.  Looking for some new antitrust scholarship in this area, I found Category Captainship: Outsourcing Retail Category Management by Mumin Kurtulus, a professor in the Operations Management group at Vanderbilt’s Owen School of Management and Beril Toktay, a professor of Operations Management at the College of Management of Georgia Tech.

Abstract: Retailers in the consumer goods industry often rely on a leading manufacturer for category management, a form of manufacturer-retailer collaboration referred to as category captainship. There are reported success stories about category captainship, but also a growing debate about its potential for anti-competitive practices by category captains. Motivated by conflicting viewpoints, the goal of our research is to deepen our understanding of the consequences of such collaboration initiatives between the retailer and only one of its manufacturers. To this end, we develop a game theoretic model of two competing manufacturers selling through one retailer that captures the basic tradeoffs of using category captains for category management. We consider two scenarios that are in line with traditional retail category management and category captainship. In the first scenario, the retailer is responsible for managing the category and determines retail prices and assortment. In the second scenario, we assume that the retailer delegates part or all retail category management decisions to one of the manufacturers in return for a target category profit, and implements its recommendations. We compare these two scenarios to investigate the impact of the transition on all stakeholders in the supply chain. We conclude with design recommendations on the scope and structure of category captainship.

I would be remiss if I did not mention Josh Wright’s substantial and important recent contributions in the analysis of competition issues in supermarkets. You can download his works here

March 22, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 21, 2007

Canadian Government to Review Country's Competition Policy

Posted by D. Daniel Sokol

According to Canadian newspaper The Globe and Mail, the Canadian government will review Canada's competition policy regime.  Given the importance of the discussions that have emerged in the US context from the Antitrust Modernization Committee, this is probably a good thing.  The Globe and Mail reports:

    [T]he government will have an “expert independent panel” do a comprehensive review of Canada's
    competition policies and report – before next year's budget – on options for future legislative
    amendments, the budget said. It cited the industry minister's policy direction to the Canadian
    Radio-television and Telecommunications Commission – instructing it to rely on market forces as
    much as possible – as a good start.

March 21, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 20, 2007

Arbitration of Antitrust Claims in the United States and Europe

Posted by D. Daniel Sokol

A new working paper suggests that antitrust arbirtration cases will tend to follow an EU rather than US law model.   The authors of the paper, Arbitration of Antitrust Claims in the United States and Europe, are Niccolo Landi and Catherine Rogers.  The paper can be downloaded here

ABSTRACT: Today, most countries have relinquished antitrust claims to the jurisdiction of arbitrators. While the expansion of arbitral competence can be seen as a global trend, it has not been an entirely uniform trend. The United States was the first country to allow international arbitrators the power to resolve statutory claims that implicate public policy, starting with securities fraud and antitrust claims, but later extending to RICO claims, claims involving patent validity and employment discrimination. In allowing these claims to go to arbitration, the U.S. Supreme Court originally suggested that the public policy interests implicated in antitrust arbitration can be safeguarded during award review, but that dicta has proven largely illusory in practice.

Meanwhile, other countries, particularly those with a civil law tradition in Europe, have been more circumspect and more circumscribed in allowing arbitration of antitrust claims in the first place, and more active in reviewing awards to ensure adherence with statutory objectives. While there is extensive commentary regarding the risks of allowing arbitration of mandatory claims, our focus in this Essay is instead on the narrower issue of the effect that different national approaches to arbitrability and award review have on competing national antitrust policies.

For many disputes, more than one antitrust regime can be applied because the extraterritorial reach of national antitrust laws of different jurisdictions overlap in international transactions. Our thesis is that, when faced with a conflict of laws question about the application of European versus American antitrust law, arbitrators will be inclined to systematically prefer European law since they know that failure to do so is more likely to result in an unenforceable award. The effects of this preference may not be enormous given noted convergences between U.S. and EU antitrust law, and it is likely be mollified in practice by skilled arbitrators who can often craft an award that is valid under both legal regimes. But there are some important areas in which U.S. and European antitrust laws produce different outcomes.

March 20, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, March 19, 2007

Boalt Hall Conference on Digital Rights Management (DRM)

Posted by Shubha Ghosh

I participated in a wonderful conference at Boalt Hall from March 9-10 on the current status and future of Digital Rights Management, a technological means to prevent the copying and distribution of digital content.   DRM has raised important issues in intellectual property (because of the passage of the Digital Millenium Copyright Act in 1998 that legally protects digital rights management) and in antitrust (because of the potential misuse of technological platforms to limit entry and competition).  The Boalt Hall Conference focused largely on consumer and competition issues raised by DRM, and there was much discussion scattered throughout the conference on Apple and the iPod technology, especially France's investigation into Apple's use of Fairplay to potentially limit competition through tying the distribution of songs to the hardware medium.  All the panels were superb, but particularly noteworthy were the panels (1) on the legal liability of SONY BMG for its software root kit that potentially harmed PC's and downloaded software and spyware without user notification and (2) on the need for legislation to mandate notice on DRM technologies.

I include here the keynote address (Download Rosch.pdf ) by FTC Commissioner Rosch  on the consumer protection and antitrust concerns raised by DRM.  His talk raised the prospect of Apple iPod potentially creating an application barrier to entry as in Microsoft.   I also include slides (Download Bechtold.pdf) of an excellent presentation by Stefan Bechtold of the Max Planck Institute on the role of competition law in regualting DRM.

The conference website which includes other materials can be linked here. 

Congratulations to Professor Pam Samuelson and the Berkeley Center for Law and Technology for such a terrific event. 

March 19, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, March 18, 2007

Competition and Innovation

Posted by D. Daniel Sokol

Richard Gilbert continues his important work in the antitrust-IP interface with a new working paper, entitled Competition and Innovation.

ABSTRACT: The Department of Justice and the Federal Trade Commission have frequently raised innovation concerns as reasons to challenge mergers. This chapter surveys the economic theories of innovation incentives and considers how the theory may inform antitrust analysis for merger investigations and other conduct that involve innovation. Competition can promote innovation by reducing the value of failing to invest in research and development. However, with non-exclusive intellectual property rights, competition can reduce innovation incentives by lowering post-innovation profits. There is some empirical support for these economic theories. The chapter concludes that economics can inform antitrust analysis for mergers and other conduct that could affect innovation, although it is important that antitrust analysis carefully consider the key factors that drive innovation incentives.

March 18, 2007 | Permalink | Comments (0) | TrackBack (0)