Antitrust & Competition Policy Blog

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

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Saturday, March 31, 2007

Settlements in U.S. v. SBC Communications and U.S. v. Verizon Communications Approved

Posted by D. Daniel Sokol

The U.S. District Court for the District of Columbia  approved settlements in U.S. v. SBC Communications and U.S. v. Verizon Communications after Tunney Act review.  Hat tip to Bill Schur of the ABA Antitrust Telecom Section listserve for providing the documents.  You can download the opinion and final judgment below:
Download TunneyAct_Op_March2007.pdf and Download Tunney_Final_Judgmnt_March2007.pdf

A DOJ Antitrust statement by Tom Barnett is available here.

March 31, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, March 30, 2007

Competition, Regulation and Development Research Forum

Posted by D. Daniel Sokol

For those who did not travel to India for “Political Economy Constraints in Developing Countries: A Research Symposium,” part of the CUTS Competition, Regulation and Development Research Forum, you can watch a webcast of the conference here. My co-author Michael Nicholson presented our paper Technical Assistance for Law and Economics: An Empirical Analysis in Antitrust/Competition PolicyEleanor Fox of NYU, Simon Evenett of University of St. Gallen and Joseph Hur of the Korean FTC provided comments on the paper.

March 30, 2007 | Permalink | Comments (0) | TrackBack (0)

Competition and Net Neutrality

Posted by D. Daniel Sokol

One critical area of competition policy is that of competition advocacy regarding legislation and regulation.  While we typically think of competition advocacy as an antitrust agency function, non-government stakeholders can also play an important role in highlighting the competitive effects of legislation and regulation.  One of the hot button issues in the antitrust and technology interface is that of net neutrality.  A number of highly regarding economists recently posted their statement on net neutrality at the  AEI Brooking Joint Center on Regulation.

Economists' Statement on Network Neutrality Policy

William J. Baumol, Martin Cave, Peter Cramton, Robert W. Hahn, Thomas W. Hazlett, Paul L. Joskow, Alfred E. Kahn, Robert E. Litan, John Mayo, Patrick A. Messerlin, Bruce M. Owen, Robert S. Pindyck, Vernon L. Smith, Scott Wallsten, Leonard Waverman, Lawrence J. White.

Network neutrality is a policy proposal that would regulate how network providers manage and price the use of their networks. Congress has introduced several bills on network neutrality. Proposed legislation generally would mandate that Internet service providers exercise no control over the content that flows over their lines and would bar providers from charging particular services more than others for preferentially faster access to the Internet. These proposals must be considered carefully in light of the underlying economics. Our basic concern is that most proposals aimed at implementing net neutrality are likely to do more harm than good.

March 30, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, March 29, 2007

Crane on Antitrust Antifederalism

Posted by D. Daniel Sokol

Next month Chicago Loyola hosts the 2007 Loyola Antitrust Colloquium.  One of the real treats of the conference will be to hear Daniel Crane's presentation of his forthcoming article Antitrust Antifederalism

Abstract: U.S. antitrust law has been profoundly influenced by a historical aversion to direct federal superintendence of corporations. This ideological impulse began with Antifederalist opposition to Madison's proposal to grant Congress a general incorporation power and carried over to the Progressive Era where it defeated a proposed corporate regulatory model of antitrust. The antitrust antifederalist impulse thus enabled the rise of the competing crime-tort model, in which antitrust law creates a freestanding norm of industrial competition rather than a regulatory apparatus for policing the capital-concentrating effects of incorporation statutes. As it has interacted with the general features of the U.S. civil litigation apparatus, this crime-tort conceptualization has produced a variety of pathologies including an excessive focus on locating a “bad act” rather than specifying appropriate corporate structure; delegation of adjudicatory decision-making to generalist judges and juries rather than industrial policy specialists; the predominance of private enforcement over public enforcement; extension of antitrust law to non-corporate subjects, particularly the working class; and interference with federal competition policy by parochially interested state regulators. The one major exception to antitrust antifederalism's continuing dominance - the pre-merger notification system adopted in 1976 - reveals the advantages of the corporate regulatory model and suggests some steps that could be taken to rationalize the institutional structure of antitrust law.

March 29, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 28, 2007

US vs. EU merger regimes: US is more predictable and tougher on strong dominance and oligopoly cases

Posted by D. Daniel Sokol

I recently covered US vs. EU merger control systems in my international and comparative antitrust class.  A cross Atlantic team of scholars has compared the two systems with interesting results in a paper entitled Comparing Merger Policies: The European Union versus the United States.

Abstract: Merger regulation affects large transactions in the market for corporate control in both the European Union (EU) and the United States (US). This paper compares the merger enforcement policies of the two regions using descriptions of the merger investigations prepared by the staff of the EU and the Federal Trade Commission. The policies are found to share a common foundation with substantial weight being placed on both the market structure characteristics and the likelihood of effective entry.
US enforcement was broader-based in that it scrutinized markets that might be characterized as raising oligopoly, unilateral, and dominant firm concerns, while the EU policy focused largely on market dominance. Neither regime is found to be stricter in all circumstances, since the market and firm characteristics impact the enforcement decisions differently. However, we find that the regime is more predictable (given our measures of the explanatory variables), tougher on strong dominance cases and oligopoly cases, but more permissive on weak dominance cases.

March 28, 2007 | Permalink | Comments (1) | TrackBack (1)

Tuesday, March 27, 2007

ABA Antitrust Spring Meeting

Posted by D. Daniel Sokol

Whether for the antitrust/competition policy academic or practitioner, the ABA Antitrust Section Spring Meeting is the most important conference in the world.  If you have not yet registered, there is still time to do so.  I should also mention that the various antitrust section committees do an excellent job in terms of producing interesting and timely publications.  I wonder if there is an ABA section that produces more publications on a yearly basis

So that you do not think that I am a hypocrite, I won't be at the spring meeting because my wife has banned my travel as we await the birth of our second child in late May/early June.  Our first child arrived two weeks early, so we have been put on notice.  For the same reason, I won't be in Moscow for the ICN annual meeting.  As a result of focusing on baby issues, I have begun to think about buyer power (my own) when it comes to the market for disposable diapers in Madison.

March 27, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, March 26, 2007

Deciphering The Oral Arguments in Leegin

Posted by Shubha Ghosh

The Supreme Court heard oral arguments today, and the exchange was spirited and stimulating. The text of the oral argument can be dowloaded here:  Download 06-480.pdf  Here are some thoughts:

(1) There are four Justices clearly in favor of retaining the per se rule against minimum retail price maintenance.  Justice Breyer emphasized the historic role of limiting the use of retail price maintenance, as evidenced by the ban on fair trade in 1975, in promoting the development of the retail sector.   His questioning of Theodore Olsen, representing the petitioner Leegin, was fairly vigorous and pointed, citing a 1966 study by B.S Yamey that paralleled all of the arguments made in favor of overruling Dr. Miles.  Justices Ginsburg, Stevens, and Souter also expressed skepticism over the rule of reason treatment of minimum RPM.

(2) Justice Scalia was clearly in favor of reversing.  As is well known, he urged the grant of cert, and he questioned Robert W. Coykendall, representing the respondent Kay's Kloset, perhaps more intensely than Justice Breyer grilled the petitioner.  Justice Scalia's questioning emphasized the need for sacrificing low price for high service and the importance of that sacrifice for interbrand competition. Interestingly, Justice Stevens questioned how far one would go with that argument: would it justify a horizontal agreement among competitors in order to prevent free riding and promote quality?

(3) The votes of Justices Roberts, Kennedy, Alito, and Thomas are the most difficult to predict.  Justice Roberts questioning was the most evenhanded, challenging Mr. Olsen by pointing out the benefits of banning minimum RPM on the development of retail and challenging Mr. Coykendall by pointing out that many of the harms he identifies could be addressed through a rule of reason analysis.   Justice Kennedy expressed some skepticism with Mr. Coykendall's argument that the benefits of minimum RPM could be obtained through non-price restrictions and requirements for investment in quality and services.  He also referred to the per se approach as a cookie cutter approach in response to the respondent's similar characterization of the rule of reason.  Justice Alito's few questions, in some ways, were the most interesting.  They focused on the potentially conflicting views of large retailers, like WalMart and Target, and smaller retailers.  He asked why the larger retailers did not submit an amici supporting Dr. Miles if they were so much benefitted by Dr. Miles.   The respondent's answer was that large retailers were indifferent to the rule since they had the bargaining power to impose desirable terms on manufacturers, and it was smaller retailers who directly benefited from the per se rule.   Justices and advocates alike made references to the amici brief of Ping Golf Manufacturing Inc. which urged the reversal of Dr. Miles in order to promote competition at the retail level.

So what to predict?  With four votes solidly in favor and one against, Justices Breyer, Ginsburg, Souter, and Stevens need to win over one vote to uphold Dr. Miles.  Will Justice Kennedy prove to be the swing vote or will Chief Justice Roberts' love of precedent, super or otherwise, save Dr. Miles?   As Justice Souter stated in oral argument, the decision has the potential of changing the face of retailing in the United States.

March 26, 2007 | Permalink | Comments (0) | TrackBack (1)

Sunday, March 25, 2007

An Alternative to HHI?

Posted by D. Daniel Sokol

In my comparative and international antitrust class, we just got through two classes on comparative merger issues.  The second class focused more heavily on issues of how different jurisdictions think about market definition questions.  I was very impressed with my students' ability to engage in very difficult conceptual issues.  This coming week we shift gears to questions of monopolization and will be very fortunate to have Microsoft Deputy GC Tom Burt address our class on comparative Microsoft cases.

On the issue of market power, Jerry Hausman of MIT's economics department and Greg Sidak of Georgetown Law School have just posted a paper that is worth reading entitled Evaluating Market Power Using Competitive Benchmark Prices Rather than the Hirschman-Herfindahl Index.

Abstract: Whenever feasible, market power determinations should rest on competitive benchmark prices rather than the typical market concentration approach. Government regulators in many countries have issued guidelines on the evaluation of market power in the merger context and other areas that define relevant markets and calculate market shares—along with a summary measure of market concentration, usually the Hirschman-Herfindahl index (HHI). However, competition authorities recognize that high concentration measures are generally not a sufficient condition to infer market power. Use of other structural factors in a market often does not lead to any clearer conclusion. We show that prices that consumers pay for the product in question often offer a superior quantitative measurement that leads to a clearer conclusion than the HHI approach. Further, because prices form the basis for the evaluation of consumer welfare (consumers surplus), they also provide important information for competition authorities, whose goal is typically the protection of consumer welfare. To demonstrate our argument, we examine a decision by the Irish telecommunications regulator, ComReg, which used the EU competition guidelines and the HHI approach to determine that Ireland's two largest mobile providers, Vodafone and O2, had joint dominance and were exercising significant market power. We demonstrate how our benchmark prices approach is superior to the HHI approach.

March 25, 2007 | Permalink | Comments (0) | TrackBack (0)