Antitrust & Competition Policy Blog

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

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Saturday, May 19, 2007

World Bank/Financial Times $20,000 Essay Competition on Private Sector Development

Posted by D. Daniel Sokol

The International Finance Corporation of the World Bank and the Financial Times are holding their second annual essay competition. The theme for this year's competition is "Private Sector Development: Creating Markets, Transforming Lives."   In previous work, I have argued that antitrust is a policy tool to promote the theme of this year's essay.   

There will be six awards in this year's competition:

Gold Award US$20,000
2 Silver Awards, each US$10,000
3 Bronze Awards, each US$5,000

May 19, 2007 | Permalink | Comments (1) | TrackBack (0)

The Story of Alcoa: The Enduring Questions of Market Power, Conduct, and Remedy in Monopolization Cases

Posted by D. Daniel Sokol

With the possible Alocoa/Alcan merger in the news recently, I thought it might be interesting to review some recent scholarship that reexamines the original Alcoa antitrust case, which is one of the most important in US antitrust history.  Spencer Waller of Loyola University Chicago School of Law recently completed a historical analysis of the case for the forthcoming Antitrust Stories (Eleanor Fox and Dan Crane, eds.) entitled The Story of Alcoa: The Enduring Questions of Market Power, Conduct, and Remedy in Monopolization Cases.

ABSTRACT: This chapter from the forthcoming Antitrust Stories book deals with United States v. Aluminum Company of America which remains one of the standard chestnuts of American antitrust law. It appears in one form or another in virtually every antitrust law casebook and industrial organization economics textbook. Alcoa represents a lens in which we see what we want to see in the area of unilateral conduct, a reasonably efficient and innovative firm that created an entire industry or an aggressive monopolist preserving its position through a web of carefully constructed entry barriers including exclusive contracts, participation in international cartels, relentless expansion, and complete vertical integration. This chapter reviews the history of aluminum, its commercialization in the late 19th century, the colorful cast of players, and the many legal issues that led to nearly fifty years of government antitrust enforcement efforts against Alcoa. Alcoa became one of the first cases to crystallize thinking about Section 2 of the Sherman Act and the hard questions about how to define a market, what conduct of a monopolist should be prohibited, and what remedy should be imposed to best restore competition, questions that all continue to be debated today.

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

Friday, May 18, 2007

UNCTAD and the Emergence of Global Antitrust

Posted by D. Daniel Sokol

Ioannis Lianos of University College London has a new article on UNCTAD and the Emergence of Global Antitrust entitled The Contribution of the United Nations to the Emergence of Global Antitrust Law.  Given the increasingly high profile role of the ICN, some wonder if UNCTAD even serves a purpose in competition policy.  Ioannis has a thoughtful response.

ABSTRACT: This Article examines the contribution of the United Nations Conference on Trade and Development (UNCTAD) to the emergence of an international framework for antitrust. It is the first systematic analysis of UNCTAD’s contribution to international antitrust since the 1980s—when the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices (the Set) was adopted. The Set still constitutes the only universally applicable instrument in the area of antitrust and its validity has been constantly reaffirmed by international conferences organized by UNCTAD, the most recent one being held in 2005. However, the Set’s existence has also been shadowed: first, by its weak legal effect and, second, by the emergence of new international fora for competition policy, such as the Word Trade Organization and the International Competition Network (ICN). This Article re-examines the legal effects of the Set, taking into account the evolution of the legal and political context of global antitrust; the adoption of a significant number of international, regional, and bilateral trade agreements containing various aspects of competition law provisions; and numerous antitrust cooperation agreements. It concludes that even if it is unlikely that the Set produces, by itself, any binding effect, it may eventually contribute to the emergence of a customary international norm against restrictive business practices. Nor is the importance of UNCTAD’s Set limited to the issue of its legal effect; by providing a balanced approach to the relationship between competition law and the specific needs of developing countries, the Set may provide a model for a future international agreement on antitrust that could address the interests of both developed and developing countries.
Download un_antitrust_final.pdf

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

Thursday, May 17, 2007

Market Definition: Use and Abuse

Posted by D. Daniel Sokol

Dennis Carlton of the University of Chicago Graduate School of Business (currently on leave as the Deputy Assistant Attorney General for Economic Analysis at the Department of Justice) makes an important point about market definition, a key tool of antitrust analysis- - it has its limitations.  In the current issue of Competition Policy International, Carlton provides a very insightful article entitled Market Definition: Use and Abuse.

ABSTRACT: Market definition is a crude though sometimes useful tool for identifying market power. The ambiguity in what analysts mean by market power (price above marginal cost, or excess profits) cannot be resolved by market share. When used to analyze a merger or U.S. Sherman Act Section 2 case, it is not just the level of market shares, but also the changes in market shares that are relevant to calculate whether any increase in market power occurs. Despite this, in Section 2 cases courts often use market definition to figure out whether market power exists, a question that can be especially problematic to answer by using market definition. In Section 2 cases, the full antitrust analysis is difficult because any increase in market power typically has to be weighed against any benefits of the alleged bad act. The procedure for defining a market in a merger case or Section 2 case can be rigorously described, but the information required to implement the procedure is typically unavailable. Few analysts (or courts) follow the rigorous procedure in either merger or Section 2 cases. Instead, most markets are defined with some guidance from theory and some qualitative knowledge. Econometric studies using market definition may be helpful both in testing various definitions and in understanding the economic consequences of either the merger or the bad act.

My view is that the definition of a market and the use of market shares and changes in market shares are at best crude first steps to begin an analysis. I would use them to eliminate frivolous antitrust cases when shares are low, but would use them cautiously for anything else. Their usefulness in Section 2 cases is especially weak. Despite their limitations, when they can be used to eliminate frivolous antitrust cases, that use can contribute enormous value to society.

May 17, 2007 | Permalink | Comments (0) | TrackBack (0)

Antitrust and Supermarkets

Posted by D. Daniel Sokol

The FTC Bureau of Economics will host a conference on antitrust and supermarkets.  You can download the agenda here (hat tip to Josh Wright at Truth on the Market from brining the conference to my attention).

A Conference on Grocery Store Antitrust: Historical Retrospective & Current Developments -  May 24, 2007

8:30 a.m
Registration, 601 New Jersey Avenue NW Conference Center

9:00 a.m.
Introduction, “Can Antitrust Be Forward Looking?”

Michael Salinger (FTC Bureau of Economics)

9:15 a.m.
Broad Overview

1. Historical Perspective: Paul Ellickson (Duke)
2. International Perspective: Benoit Durand (UK Competition Commission) and David Parker (Frontier Economics)

10:15 a.m.
Morning Break

10:30 a.m.
Panel, “Merger Objectives and Merger Review”
Chair:  Michael Salinger (FTC Bureau of Economics)
Members:  James Fishkin (Dechert LLP)
Dave Sheffman (LECG)
Dan O’Brien (Department of Justice)

12:00 p.m.
Keynote Lunchtime Address, “The Role of Intellectual Leadership in Competition Policy”

FTC Commissioner William Kovacic

1:30 p.m.
Academic Paper Presentations on Retail Competition

Moderator: Dan Hosken (FTC Bureau of Economics)

1. “Internet Grocery Pricing and Growth Strategies”
David Bell (Wharton)
Discussant: Catherine Tucker (MIT Sloan)

2. “National and Local Pricing in UK Supermarkets”
Jon Seaton (Loughborough University)
Discussant: Raphael Thomadsen (UCLA)

2:30 p.m.
Afternoon Break

2:45 p.m.
Academic Paper Presentations on Change/Dynamics in the Retail Industry
Moderator:  Chris Adams (FTC Bureau of Economics)

1. “The Diffusion of Wal-Mart and Economies of Density”
Thomas Holmes (Minnesota)
Discussant: Brett Wendling (FTC Bureau of Economics)

2. “The Dynamics of Retail Oligopoly”
Arie Beresteanu (Duke)
Discussant: Adam Copeland (Bureau of Economic Analysis)

3:45 p.m.
Panel, “Can Antitrust Be Forward Looking?”
Chair:  Michael Salinger (FTC Bureau of Economics)
Members:  Dennis Carlton (Department of Justice)
Joe Simons (Paul Weiss)
Tim Brennan (UMBC)

4:30 p.m.
Close

May 17, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 16, 2007

TOP 10 Most Downloaded Papers for Antitrust Law & Policy

Posted by D. Daniel Sokol

These are the Top 10 most downloaded new SSRN papers of Antitrust Law and Policy from March 17, 2007 to May 16, 2007.

Rank, Paper Title, Author and Affiliation

Economists' Statement on Network Neutrality Policy
William J. Baumol, Martin E. Cave, Robert E. Litan, Robert E. Litan, Peter Cramton, Robert W. Hahn, Thomas W. Hazlett, Paul L. Joskow, Alfred E. Kahn, John W. Mayo, Patrick A. Messerlin, Bruce Owen, Robert S. Pindyck, Vernon Smith, Scott J. Wallsten, Leonard Waverman, Lawrence J. White, Scott Savage, New York University - Stern School of Business - Berkley Center for Entrepreneurial Studies, University of Warwick - Warwick Business School, Ewing Marion Kauffman Foundation, AEI-Brookings Joint Center for Regulatory Studies, University of Maryland - Department of Economics, AEI-Brookings Joint Center for Regulatory Studies - General, George Mason University, Massachusetts Institute of Technology (MIT) - Department of Economics, National Economic Research Associates Inc. (NERA), Georgetown University - Robert Emmett McDonough School of Business, Institut d'Etudes Politiques de Paris - Center for International Studies (CERI), Stanford Institute for Economic Policy Research (SIEPR), Massachusetts Institute of Technology (MIT) - Sloan School of Management, George Mason University - Interdisciplinary Center for Economic Science (ICES), AEI-Brookings Joint Center for Regulatory Studies - General, London Business School, New York University - Department of Economics, University of Colorado at Boulder - Department of Economics,

Expert Declaration of J. Gregory Sidak Concerning the Competitive Consequences of the Proposed Merger of Sirius Satellite Radio, Inc. and XM Satellite Radio, Inc.
J. Gregory Sidak, Georgetown University Law Center,

A New Balance between IP and Antitrust
Mark A. Lemley, Stanford Law School,

Drug Patent Settlements Between Rivals: A Survey
C. Scott Hemphill, Columbia University - Columbia Law School,

Priceless? The Competitive Costs of Credit Card Merchant Restraints
Adam Levitin, Georgetown University - Law Center,

Comparing Merger Policies: The European Union versus the United States
Mats Bergman, Malcolm B. Coate, Maria Jakobsson, Shawn W. Ulrick, University of Umea - Department of Economics, U.S. Federal Trade Commission (FTC), Stockholm University - Department of Economics, U.S. Federal Trade Commission (FTC),

Priceless? The Social Costs of Credit Card Merchant Restraints
Adam Levitin, Georgetown University - Law Center,

Behavioral Economists at the Gate: Antitrust in the 21st Century
Maurice E. Stucke, U.S. Department of Justice - Antitrust Division,

China's Competition Policy Reforms: The Antimonopoly Law and Beyond
Bruce Owen, Su Sun, Wentong Zheng, Stanford Institute for Economic Policy Research (SIEPR), Economists Incorporated, Stanford University - Department of Economics, and

10  Mandating Access to Telecom and the Internet: The Hidden Side of Trinko
Daniel F. Spulber, Christopher S. Yoo, Northwestern University - Kellogg School of Management, Vanderbilt University - School of Law.

May 16, 2007 | Permalink | Comments (0) | TrackBack (0)

FTC v. Equitable

Posted by D. Daniel Sokol

Judge Schwab has dismissed the FTC injunction request for the Equitable Resources/Dominion Peoples merger.  The opinion is available below.

Download us_v_equitable_opinion.pdf

May 16, 2007 | Permalink | Comments (0) | TrackBack (0)

Welfare Standards, Substantive Tests, and Efficiency Considerations in Merger Policy

Posted by D. Daniel Sokol

The latest issue issue of the Journal of Competition Law and Economics has a fascinating article by An Renckens of the University of Antwerp Department of Economics entitled Welfare Standards, Substantive Tests, and Efficiency Considerations in Merger Policy: Defining the Efficiency Defense

ABSTRACT: For several years already, the efficiency defense (and its incorporation in the law) has been a much debated issue in merger policy. When discussing the introduction of an efficiency defense in merger control, it is important to define clearly its content and interpretation. However, different approaches to the concept of efficiency defense exist in the literature, and it is not always clear which jurisdictions apply an efficiency defense. Therefore, to improve communication and comparison between jurisdictions, it would be useful to reach agreement on the exact content of an efficiency defense. This paper proposes to define the efficiency defense along two dimensions: a conceptual one—related to the welfare standard—and a procedural one—related to the application of the substantive test. The main conclusion of this paper is that the concept of efficiency defense can only be appropriately applied under a total welfare standard and if efficiencies can be directly balanced against the anticompetitive effects of mergers on a case-by-case basis. Using this definition, only in Canada and Australia (formal review process) would an efficiency defense exist.

May 16, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 15, 2007

Reflections on GMU/Microsoft Conference on the Law and Economics of Innovation

Posted by D. Daniel Sokol

Over at Truth on the Market, Geoff Manne and Josh Wright have a nice summary of what appears to have been the best Antitrust-IP conference of the year-- the GMU/Microsoft Conference on the Law and Economics of Innovation.

May 15, 2007 | Permalink | Comments (0) | TrackBack (0)

Conference on the Reform of EC and Greek Competition Law

Posted by D. Daniel Sokol

The Institute of Studies in Competition Law and Policy (IMEDIPA) will be hosting a conference in Athens, Greece entitled The Reform of EC and Greek Competition Law.  This is IMEDIPA's first conference. IMEDIPA's objective is to act as a forum for competition law and  policy in the Eastern Mediterranean and the Black Sea region. Many countries in this geographical region have recently begun to enforce competition law, after signing association agreements with the EU.  IMEDIPA plans several activities for the near future, such as a prize competition for the  best paper on competition law and policy in this region (the prize will be 1000 euros) and a conference next year on the interaction between IP and competition in transition and developing economies.

Speakers for the June conference include:

L. Athanassiou: Hellenic Competition Commission, Faculty of Law, University of Athens
A. Bavasso: Allen & Overy LL.P, Faculty of Laws, University College London
L. Boix-Alonso: European Commission
V. Christianos: Hellenic Competition Commission, Faculty of Law, University of Athens
T. Christoforou: Legal Service, European Commission
Ch. Chrysanthakis: Hellenic Competition Commission, Faculty of Law, University of Athens
E. David: Advocate, Paris
A. Dritsa: Kyriakidis Georgopoulos & Daniolos Issaias Law Firm
I. Dryllerakis: Dryllerakis and Associates Law Firm
N. Economides: Stern School of Business, New York University
F. Etro: Department of Economics, University of Milan
N. Farantouris: International & European Studies Department, University of Piraeus
P. Fotis: Hellenic Competition Commission
K. Fountoukakos: Herbert Smith LL.P
D. Geradin: Tilburg University, Global Competition Law Center, College of Europe, Bruges
Ch. Gortsos: Hellenic Banking Association, Panteion University
V. Hadjiioannou: Kyriakidis Georgopoulos & Daniolos Issaias Law Firm
V. Hatzopoulos: Faculty of law, Democritus University of Thrace
L. Idot: Faculty of Law, University of Paris I Sorbonne
F. Jenny: Cour de Cassation, Office of Fair Trading, ESSEC Business School
J. Kallaugher: Latham & Watkins LL.P, Faculty of Laws, University College London
A. Kanellopoulou: Titan AE
V. Karayannis: Hellenic Competition Commission
Y. Katsoulacos: Athens University of Economics and Business
E. Kinini: Hadjiprodromou - Triantaphillou & Partners Law Firm
I. Kokkoris: Office of Fair Trading, Durham University, King’s College London, City University
A. Komninos: White and Case LL.P
V. Korah: Faculty of Laws, University College London
N. Kosmidis: Tzouganatos and Associates Law Firm
L. Kotsiris: Faculty of Law, Aristotle University of Thessaloniki
R. Kovar: Robert Schuman University of Strasbourg
J-Ph. Kovar: Robert Schuman University of Strasbourg
I. Lianos: Faculty of Laws, University College London, CEIPI, Robert Schuman University of Strasbourg
G. Loriot: DG Competition, European Commission
Ph. Marsden: Competition Law Forum, British Institute of International and Comparative Law
M. Mastromanolis: Faculty of Law, University of Athens
P. Mavroidis: School of Law, Columbia University, Faculty of Law, University of Neuchatel
V. Mertikopoulou: Hellenic Competition Commission
A. Mikroulea: Faculty of Law, University of Athens
K. Mylonopoulos: ENYEK, Legal Service, Greek Ministry of Foreign Affairs
L. Nteka: Hellenic Competition Commission
J. Padilla: LECG
N. Papadonikolaki: PRP Law Firm
A. Papadopoulos: Hellenic Competition Commission
P. Papandropoulos: Chief economist office, European Commission
D. Paxinos: Athens Bar Association
E. Perakis: Faculty of Law, University of Athens
A. Roussos: University of Piraeus, Rokas & Partners Law Firm
A. Sinanioti: Hellenic Competition Commission, Faculty of Law, University of Piraeus
E. Soufleros: Faculty of Law, University of Athens
I. Stavropoulos: Stavropoulos & Partners Law Firm
A. Stratakis: Van Bael & Bellis
M. Thomadakis: Hellenic Energy Regulator
M. Tierno-Centella: DG Competition, European Commission
G. Triantafyllakis: Faculty of Law, Democritus University of Thrace
T. Tridimas: Centre for Commercial Law Studies, Queen Mary University of London
D. Tzouganatos: Faculty of Law, University of Athens, Eurobank
D. Ulph: School of Economics and Finance, University of St Andrews
K. Vainanidis: Panagopoulos Vainanidis Schina Economou Law Firm
S. Vasileiou: Hellenic Competition Commission
N. Vettas: Athens University of Economics and Business
M. Vilaras: European Court of First Instance
D. Waelbroeck: Ashurst, Faculty of Law, University of Brussels, College of Europe, Bruges
A. Zemplinerova: Prague School of Economics, CERGE-EI
N. Zevgolis: Hellenic Competition Commission

You can download the conference brochure below.
Download Greece_Programme_Final_English.pdf

May 15, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, May 14, 2007

Grant Opportunities for Antitrust Scholars

Posted by D. Daniel Sokol

This is a reminder that the National Science Foundation's summer deadline for grants in the Social and Economic Sciences August deadline is fast approaching.   Of most relevance to academics looking for funding on antitrust issues are the grants in Economics and  Law and Social Sciences

May 14, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, May 13, 2007

Economics in EU Competition Law

Posted by D. Daniel Sokol

Damien Neven, on academic leave while he serves as the chief economist of DG Competition, has a fascinating new article that appears in volume 21:48 of Economic Policy titled Competition Economics and Antitrust in Europe.  Could it be that the rise of economic consulting firms in the EU has led to greater norm diffusion of an economics based competition culture and increased economic analysis of both DG Comp and national agency level economic thinking?  If so, we owe NERA, LECG, CRA, RBB and others a debt of gratitude.

ABSTRACT: This paper aims to assess the influence that economic analysis has had on competition policy in the European Union over the last twenty years. Economists are increasingly used in antitrust cases; the annual turnover of the main economic consultancy firms has increased by a factor of 20 since the early 1990s and currently exceeds €20 million. This is about 15% of the aggregate fees earned on antitrust cases, a proportion close to that in the US. The economic resources mobilized by the EU Commission are, however, an order of magnitude smaller and this imbalance is a source of concern. The legal framework and the case decisions have also been influenced by economic analysis in important ways. For instance, the analysis of agreements between firms has increasingly focused on effects; the analysis of the factors that determine effective competition has become more sophisticated; the concept of collective dominance has been progressively developed in terms of the theory of collusion in repeated interactions, and quantitative methods have become more important. However, enforcement has sometimes appealed to economic reasoning in flawed or speculative ways; the paper discusses procedural reasons why this may have occurred. This paper assesses the system of evidence gathering implemented by the Commission in the light of the law and economics literature. It is concluded that while the reforms recently implemented by the Commission do address the main weaknesses of this system, they may still not allow for the most effective development of economic theory and evidence in actual cases.

May 13, 2007 | Permalink | Comments (0) | TrackBack (0)