Antitrust & Competition Policy Blog

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

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Saturday, June 2, 2007

Economics of Antitrust: Complex Issues In a Dynamic Economy

Posted by D. Daniel Sokol

The antitrust economics team at NERA has just released a new edited book on various antitrust economics issues entitled Economics of Antitrust: Complex Issues In a Dynamic Economy.  The sixteen chapters cover a wide variety of topics including bundled discounts, refusals to deal, price squeezes, patent settlement agreements, early termination fees, auction theory, non-price competition, ownership and control, the design of surveys for relevant market definition, after-markets, multiple dimensions of market power, misidentified costs, cartels, not for profit firms, overcharges, and proving causation in damages.

June 2, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, June 1, 2007

Sullivan and Grimes Win Award for Best Antitrust Scholarship

Posted by D. Daniel Sokol

The American Antitrust Institute has announced that Southwestern Law School professors Lawrence A. Sullivan and Warren S. Grimes have won the 2007 Jerry S. Cohen Award for Antitrust Scholarship for their treatise Antitrust Law: An Integrated Handbook (2d edition, 2006).   Runners up were Robert Lande and John Conner for their article How High Do Cartels Raise Prices: Implications for Optimal Cartel Fines, Tulane L. Rev. (2006) and C. Scott Hemphill for Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U.L. Rev. 1553 (2006).

June 1, 2007 | Permalink | Comments (0) | TrackBack (0)

Recent Evolutions in Antitrust Enforcement: A Comparative Perspective

Posted by D. Daniel Sokol

With the ICN annual meeting this week, I have been thinking quite a bit about comparative antitrust.  Alberto Heimler of the Italian Competition Authority has a well thought out analysis of various trends in EU enforcement (and he should given his active involvement in European, OECD and ICN efforts) in a new article entitled Recent Evolutions in Antitrust Enforcement: A Comparative Perspective.

ABSTRACT: There are many philosophies of antitrust enforcement in the world, but in recent years we are witnessing greater and greater convergence. At the first ICN conference in Naples in 2002, Giuseppe Tesauro, then Chairman of the Italian Competition Authority, discussing the then ongoing debate on the test to apply in merger control, whether dominance or substantial lessening of competition, said “the Atlantic Ocean is not a one way street.” What he meant was that the Sherman Act of 1890, the EC merger regulation of 1989, the Italian law of 1990, and the Romanian law of 1997, all have something to say to the world and a message to deliver.

There have been important developments in European antitrust enforcement since the 1960s. The original philosophy of EC antitrust originates from the ordoliberal German tradition which already in the 1920s had distinguished “impediment competition” (to be prohibited), such as predatory pricing, loyalty rebates and boycotts, from “performance competition” which included all conduct that made a firm’s product more attractive to consumers (to be favored). The ordoliberal tradition was mostly based on form. Indeed for many years antitrust enforcement in the EC meant applying article 81, paragraph 3, on notified agreements and on developing form-based block exemption regulations. The introduction of the merger regulation in 1989, and the emphasis on economic analysis that it brought with it, started to move the Commission away from form-based to effects-based enforcement. The communication on the relevant market was issued in 1997; the new block exemption on vertical restraints in 1999. Economic analysis is now playing an increasing role in interpreting the substantive antitrust provisions.

June 1, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, May 31, 2007

The Empirics of Antitrust in Two-Sided Markets

Posted by D. Daniel Sokol

Marc Rysman of Boston University - Department of Economics has a new article that appears in Competition Policy International on two sided markets, an issue that has received an increasing amunt of attention, such as with payments systems (which I am teaching for the first time this coming spring) or computer software.  His article is entitled The Empirics of Antitrust in Two-Sided Markets.

ABSTRACT: Recent theoretical research on the implications of two-sided markets is gaining recognition for its implications inantitrust. However, the role of empirical analysis in antitrust cases for two-sided markets has been unexplored thus far. Empirical tools of economics are playing an increasingly large role in antitrust litigation. At the same time, there have been several recent attempts to bring empirical analysis to two-sided markets. To the extent that this empirical work on two-sided markets bares similarities to common empirical tools of antitrust, it can provide a template for how the empirics of antitrust cases will proceed in two-sided markets.

This paper studies several issues in which empirical contributions can impact antitrust in the context of two-sided markets. For each issue, I discuss recent empirical research that exemplifies my point. The first issue I discuss is the implementation of market simulations. Market simulations have an important role in determining relevant markets and the price effects of horizontal coordination.

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

25 Years Later - Does the FTAIA Matter?

Posted by D. Daniel Sokol

Huffman In a post Empagran world and with AMC recommendations on international antitrust, how does (and how should) the Foreign Trade Antitrust Improvements Act matter?  Max Huffman of the University of Cincinnati - College of Law provides a historical retrospective in his forthcoming article A Retrospective on Twenty-Five Years of the Foreign Trade Antitrust Improvements Act.

ABSTRACT: Now twenty-five years after the Foreign Trade Antitrust Improvements Act (FTAIA) was enacted as part of the Export Trading Company Act of 1982, the once-ignored statute has come fully into the fore. The FTAIA is inelegantly phrased; its opaque language has resulted in further confusion in an area of the law that was already confused and unsettled. The FTAIA is nonetheless massively important. Commentators and judges uniformly have noted the explosion in cross-border implications of U.S. antitrust enforcement. Since the mid-1990s, when the FTAIA was resurrected by foreign plaintiffs seeking the protection of U.S. antitrust laws and plaintiff-friendly procedures, numerous suits seeking billions of dollars in damages for harm suffered world-wide have been filed and consolidated into multi-district litigation proceedings. Litigation has occurred in federal courts at all levels, with the Supreme Court finally addressing the FTAIA directly in 2004 in F. Hoffman-LaRoche Ltd. v. Empagran S.A. And recently, the Antitrust Modernization Commission has considered the statute, declining to recommend it be amended, but noting the need for further clarity.

May 31, 2007 | Permalink | Comments (0) | TrackBack (1)

Wednesday, May 30, 2007

Court Slams FTC as Western-Giant Merger Allowed to Proceed

Posted by D. Daniel Sokol

The district court for the district of New Mexico just came out with a decision in the Western-Giant proposed merger, which the FTC attempted to block.  The case is available below.
Download opinion.pdf

Key language from the opinion (which I suspect that the FTC will not appeal) includes the following:

By acquiring Giant’s New Mexico refining, terminaling, and marketing assets, Western will not be eliminating an important restraint on its ability to raise prices and increase margins. Other firms can replace the competitive void -- if any -- left by Giant’s elimination. Western’s position in relatively concentrated markets does not significantly increase the likelihood that Western has achieved, or will be able to exercise, market power, either in coordination with other firms or unilaterally... The effect of the merger will not likely be to increase prices. Entry is likely if prices move up, and withdrawal is likely if prices move down... The merger will not dramatically increase concentration in the relevant market.

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

Ten Things to do About Patent Holdup of Standards (and One Not to Do)

Posted by D. Daniel Sokol

Another interesting paper on issues of competition in IP is worth a read.  Mark Lemley of Stanford Law School has written Ten Things to do About Patent Holdup of Standards (and One Not To).

ABSTRACT: Congress, the courts, scholars, and the press have focused more and more attention on what is shaping up to be the central public policy problem in intellectual property law today: the problem of holdup by patent owners, particularly but not exclusively in the context of standard setting. I will suggest ten things we might do to deal with this problem, and at least one thing we probably ought not to do.

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

Tuesday, May 29, 2007

Antitrust Enforcement in the Electricity and Gas Industries

Posted by D. Daniel Sokol

Regulated industries present particularly difficult problems for antitrust because in addition of the usual questions of when and how to intervene, antitrust must also ask whether to leave intervention to promote competition to sector regulators over antitrust enforcers.  François Lévêque of the Ecole des Mines de Paris - Centre d'Economie Industrielle (CERNA) discusses these issues in his paper Antitrust Enforcement in the Electricity and Gas Industries: Problems and Solutions for the EU.

ABSTRACT: Antitrust enforcement in the electricity and gas industries raises specific problems that call for specific solutions. Among the issues: How can the anticompetitive effects of mergers be assessed in a changing regulatory environment? Should long-term agreements in energy purchasing be prohibited? What are the benefits of preventive action such as competition advocacy and market surveillance committees? Should Article 82 (a) of the EC Treaty be used to curb excessive pricing?

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

Monday, May 28, 2007

Kovacic on Single Firm Conduct

Posted by D. Daniel Sokol

Kovacic_oval_146x183 FTC Commissioner Bill Kovacic provides a nuanced and informative understanding of the evolution of U.S. antitrust in the area of monopolization in "The Intellectual DNA of Modern U.S. Competition Law for Dominant Firm Conduct: The Chicago/Harvard Double Helix," which appears in the 2007 Columbia Buisiness Law Review.  In a departure from previous work, Kovacic stresses that we should recast antitrust history from a Chicago/Post-Chicago dialectic to oen that utilizes a Chicago/Harvard "double helix."  Kovacic describes this double helix as follows:

Two closely related presumptions embedded in the Chicago/Harvard double helix stand out. First, the double helix assumes that overinclusive applications of antitrust law to control dominant firm conduct pose greater hazards to economic performance than underinclusive applications. This presumption assumes that the likelihood that entry and adaptability by competitors, customers, and suppliers more often than not will blunt dominant firm efforts to exercise market power...

The second critical presumption of the Chicago/Harvard double helix is grounded in concerns about institutional design and capacity. To understand the Chicago/Harvard concern with the implementation of antitrust policy is to see how perceptions about the quality of institutional design and capacity have affected substantive outcomes in U.S. antitrust law and policy. The permissiveness of the Chicago/Harvard approach to dominant firms, including the emphasis on administrable rules that tend to exculpate, hinges crucially upon doubts about the capabilities of enforcement agencies and courts and antipathy toward what is posited to be an unduly expansive system of private rights of action. Through the lens of the Chicago/Harvard double helix, Post-Chicago scholars often falter because they make unduly hopeful assumptions about the capacity of the key implementing institutions of the antitrust system to apply the insights of Post-Chicago analysis skillfully.253 By this view, non-interventionist presumptions are endorsed not because they inevitably make sound assumptions about the harms of specific forms of business behavior, but instead because they make more accurate assumptions about the limitations of courts and enforcement agencies.254 (pp. 70-72).

Download CBLR_2007_Kovacic_Final_Version.pdf

May 28, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, May 27, 2007

Report on the Seventh Annual Trans-Atlantic Antitrust Dialogue

Posted by D. Daniel Sokol

A summary of the proceedings of the Seventh Annual Trans-Atlantic Antitrust Dialogue held by the Competition Law Forum of the British Institute of International and Comparative Law on 1 to 2 May 2007 are now available.

On the topic of BIICL, it is in the process of searching for a new Director to run the institute.  The Institute, the UK’s leading centre for the advancement of the understanding and practical application of international law, will celebrate its 50th Anniversary in 2008. The present Director, Professor Gillian Triggs, will be returning to Australia shortly to take up the post of Dean of the Law School at the University of Sydney, and the Institute is now seeking a dynamic individual with global vision as her successor.

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