Antitrust & Competition Policy Blog

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

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Saturday, June 9, 2007

OECD Remedies and Sanctions in Abuse of Dominance Cases

Posted by D. Daniel Sokol

The newly re-designed OECD competition policy website includes the newly declassified discussion on  Remedies and Sanctions in Abuse of Dominance Cases.  For those looking for a state of the art cross country comparison of different approaches of how agencies approach these issues across jurisdictions, this is the place to start any discussion.   

ABSTRACT: This roundtable addressed the potential objectives of remedies and sanctions, general suggestions for designing effective remedies, specific types of remedies and sanctions along with their strengths and weaknesses, and the remedies and sanctions applied in recent abuse of dominance cases.

June 9, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, June 8, 2007

EU Non-horizontal Merger Guideline Comments Available

Posted by D. Daniel Sokol

DG Comp has posted 30 comments on the Draft Commission Guidelines on the assessment of non-horizontal mergers under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings.  You can find the comments here.

June 8, 2007 | Permalink | Comments (0) | TrackBack (0)

Supreme Court and Antitrust: A Historical Analysis

Posted by D. Daniel Sokol

Lewis Grossman, a professor of legal history at American University Washington College of Law has a fascinating piece on the antitrust appellate history of lawyer James Coolidge Carter (1828-1905) in a working paper titled "The Benefits and Evils of Competition": James Coolidge Carter's Supreme Court Advocacy.

ABSTRACT: James Coolidge Carter (1828-1905) was perhaps the most respected appellate advocate in the country at the end of the nineteenth century. He argued approximately three dozen matters before the Supreme Court, including some of the most significant cases of the Gilded Age. This essay, prepared for a forthcoming festschrift in honor of Morton Horwitz to be published by Harvard University Press, focuses on Carter's advocacy in three Supreme Court cases: U.S. v. Trans-Missouri Freight Association (1897) and U.S. v. Joint Traffic Association (1898), a pair of important early interpretations of the Sherman Antitrust Act, and Smyth v. Ames (1898), the decision that established substantive due process limits on legislative rate-setting. As a lawyer for the railroads in these matters, Carter voiced seemingly inconsistent views regarding the beneficence of the free market. One the one hand, his arguments in the antitrust cases were premised on the assertion that rate wars destructive to railroads inevitably arose in the absence of regulation. On the other hand, in Smyth, he maintained that a freely competitive system invariably resulted in railroad rates that were fair to shippers. While Carter obviously shaped his arguments to serve the particular needs of his clients, this tension also reflected an authentic ambivalence about the benefits of competition shared by many elite Gilded Age thinkers. Carter's briefs were representative of a political economy that emphasized both classical free market principles and the limits on those principles necessitated by late-nineteenth-century developments.

June 8, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, June 7, 2007

Did the Canadian Newspaper Acquisitions Raise Prices for Consumers

Posted by D. Daniel Sokol

Oftentimes with merger control, we may question how accurately antitrust can be when it is forward looking.  A new working paper by Ambarish Chandra of the Sauder School of Business of the University of British Columbia and Allan Collard-Wexler of the Stern School of Business of New York University examines the effects of a series of mergers in the Canadian newspaper industry to determine potential anti-competitive effects of consolidation.  It is titled Did the Canadian Newspaper Acquisitions Raise Prices for Consumers.

ABSTRACT: In the late 1990s, the Canadian newspaper industry underwent rapid consolidation with a few conglomerates controlling the vast majority of daily papers. Over a 4 year period, about three-fourths of Canada's daily newspapers changed ownership. While the issue received considerable attention and criticism at the time, the concerns were mostly about diversity of opinion. We have not found any study examining the straightforward economic implications of such a large scale realignment in this important industry.

We examine the effect of this consolidation on observable variables relating to consumer welfare. Specifically, we analyze prices for both circulation and advertising, as well as study the extent to which concentration increased using county level circulation data. Our results do not support the notion that greater concentration led to the abuse of market power in the form of higher prices. In fact, our results suggest that newspapers with changed ownership and those in the dominant chains had either lower price increases or greater price declines after the merger, compared with the other papers

June 7, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 6, 2007

Supermarkets and Competition

Posted by D. Daniel Sokol

Today's Wall Street Journal has an interesting article on how traditional supermarkets have responded to the competitive pressures of low cost retailers (Wal-Mart).  It is an interesting read.  Wal-Mart has not been the only threat to traditional supermarkets.  There are also high end threats from the likes of Whole Foods and Wild Oats.  On this issue, the FTC has decided to try to block the merger of Whole Foods and Wild Oats.  I had assumed that this deal would not have been challenged and that the merged firm would have had to make some divestitures where there was an overlap in certain markets.  Econometric data will be key in determining the case-- think back to Staples/Office Depot, although I think that this case is a bit different.  Nevertheless, the new case should be an interesting one.  The big question here is in the market definition-- is it based on supermarkets overall (and what does "supermarkets" include) versus a more specialized market for yuppie organic foods of which we are moving from two players to only one.  This is not your traditional supermarket case (unlike the A&P and Pathmark merger).  I am a bit skeptical on anti-competitive effects on this merger because I tend to think that there may not be a separate organic market.  The econometric data will help us to determine if the FTC story is the correct one.  This FTC challenge comes in the wake of a recent FTC conference on supermarkets on May 24.

   

June 6, 2007 | Permalink | Comments (0) | TrackBack (0)

Statistics on Modern Private International Cartels, 1990-2005

Posted by D. Daniel Sokol

After receiving a number of inquiries about a post earlier this week, I am following up with posting on a new working by John Connor on cartels.  Connor has increased our understanding of international cartels probably more than any other scholar.  His latest working paper is Statistics on Modern Private International Cartels, 1990-2005 with colleague Gustav Helmers, which has important implications for both scholars and enforcers.

ABSTRACT: This report explains the principal economic and legal features of a unique set of data on 283 modern private international cartels discovered anywhere in the world from January 1990 to the end of 2005. Measured in real 2005 money, aggregate cartel sales and overcharges totaled about $1.2 trillion and $500 billion, respectively. In the early 2000s, about 35 such cartels were discovered each year. We find that global cartels comprise more than half of the sample's affected sales and are larger, longer lasting, and more injurious than other types. In the early 2000s world-wide corporate penalties stabilized at or above $2 billion per year, one-thousand times penalties in the early 1990s. More than 40% of those penalties were from settlements in private suits, and most of the rest are fines imposed by U.S. and EU antitrust authorities.

Median penalties are low: from 1.4% to 4.9% of affected sales, depending on the type of prosecution. As a proportion of damages, median fines ranged from less than 1% for EU-wide cartels to 17.6% for Canada. Private plaintiffs obtained 38% of damages from international cartelists. World wide, median real cartel penalties of all types amounted to about 20% of overcharges.

June 6, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 5, 2007

The European Commission's 2006 Guidelines on Antitrust Fines

Posted by D. Daniel Sokol

Wouter Wils has a new article in the World Competition: Law and Economics Review on antitrust fines titled The European Commission's 2006 Guidelines on Antitrust Fines: A Legal and Economic Analysis.

ABSTRACT: On 1 September 2006, the European Commission published new Guidelines on the method it will use when setting fines for undertakings that have infringed the competition rules laid down in Articles 81 and 82 of the EC Treaty. This paper discusses the questions what the purpose is of guidelines, and how foreseeable the amount of fines should be, and analyses the method set out in the new Guidelines in the light of the Commission's past practice, the case-law of the Community Courts and the theory on optimal fines.

June 5, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, June 3, 2007

Cartel Overcharges: An Empirical Analysis

Posted by D. Daniel Sokol

Yuliya A sometime collaborator and former student of John Connor, Yuliya Bolotova of the University of Idaho Agricultural Economics and Rural Sociology Department, has posted Cartel Overcharges: An Empirical Analysis, which builds upon Connor's vast and impressive work on cartels.  A key finding is that the more effective antitrust regimes tend to have lower overcharges from cartels.

ABSTRACT: Using the overcharge estimates for 406 cartel episodes, I evaluate the impact of cartel characteristics and market environment on the size of the overcharges imposed by cartels in different geographic markets and during six antitrust law regimes starting from the 18th century. I find that the average overcharge imposed by cartels in the sample is 21.88 percent with a median of 20 percent. International cartels imposed higher overcharges than domestic cartels. Overcharges imposed in the US and European markets were lower than overcharges imposed in the Asian markets and the rest of the world. Overcharges tend to decline as antitrust enforcement regimes had become stricter. As predicted by cartel theory, market structure is an important factor influencing the overcharge level. Markets where cartels have a high market share tend to have higher overcharges. If a leading firm has a high market share, the overcharges tend to decrease. As the number of cartel participants increases, the overcharges tend to fall. As cartels grow older, they manage to manipulate the market price more effectively.

June 3, 2007 | Permalink | Comments (0) | TrackBack (0)