Antitrust & Competition Policy Blog

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

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Saturday, June 16, 2007

Symposium on Buyer Power

Posted by D. Daniel Sokol

In many supply chains, recent times have witnessed a fundamental shift in the locus of power held by participating institutions with increasing power being acquired by those institutions closest to consumers (i.e., buyer power). This shift has profound implications for competition policy and antitrust law. Because prior policy and law has largely assumed suppliers hold the balance of power, growing buyer power has the potential to fundamentally reshape thinking. Rather than monopolization as a cornerstone concern, buyer power leads one to contemplate concerns surrounding monopsony and disproportionate bargaining power. Other changes are also likely with the field only beginning to address these formally. AAI's multidisciplinary invitational symposium focuses on new thinking surrounding buyer power:

• How should buyer power be identified and characterized?
• Under what circumstances should the possession and exercise of buyer power be restrained by antitrust intervention?
• Does the antitrust community need to reevaluate its current approach to vertical relationships and conduct?

The AAI Symposium on buyer power, June 20, 2007, will include presentations by eminent legal, economic, and marketing experts will be followed by a two-hour facilitated discussion with papers being published by The Antitrust Bulletin.

Bert Foer                                  
American Antitrust Institute      
[email protected]      
Phone: (202) 276-6002               

Greg Gundlach
University of North Florida
[email protected]
Phone: (904) 620-1341

PROGRAM

Welcome
Greg Gundlach, AAI Senior Fellow; Interim Chairperson, Department of Marketing & Logistics and Visiting Eminent Scholar, Coggin College of Business, University of North Florida

Overview: “Mr. Magoo Visits Wal-Mart”
Bert Foer, President, American Antitrust Institute

PERSPECTIVES FROM ECONOMICS
Defining Buyer Power
Zhiqi Chen, Professor, Department of Economics, Carleton University and Co-Editor, Journal of Economics & Management Strategy

The Economics of Buyer Power
Robert Taylor, Professor of Agricultural Economics, Auburn University

Horizontal Competition, Vertical Competition and Market Power
Robert Steiner, AAI Senior Fellow; Economist, Robert L. Steiner Consulting

PERSPECTIVES FROM BUSINESS THEORY
Buyer Power in the U.K. Groceries Market Paul W. Dobson, Professor of Competition Economics, The
Business School, Loughborough University, U.K.; AAI Advisory Board

A Marketing Perspective on Buyer Power
John R. Nevin, Grainger Wisconsin Distinguished Professor and Executive Director, Grainger Center for Supply Chain Management and Executive Director, Center for Brand and Product Management, University of Wisconsin

An Introduction to S-D Logic: A Relevant Framework for Antitrust Theory?
Robert Lusch, Lisle and Roslyn Payne Professor of Marketing and Department Head, Department of Marketing, Eller College of Management, University of Arizona

Kelli Frias-Gutierrez, Doctoral Candidate, Eller College of Management, University of Arizona

Luncheon
Introduction
Robert Skitol, Drinker Biddle & Reath, LLP, AAI Director

Speaker: “Buyer Power in the Evolving Global Supply Chain”Barry C. Lynn, Senior Fellow, New America Foundation; Author of End of the Line: The Rise and Coming Fall of the Global Corporation

BUYER POWER IN ANTITRUST
Buyer Power Discrimination
Peter Carstensen, George H. Young-Bascom Professor of Law, University of Wisconsin Law School; AAI Advisory Board

Buyer Power in Pickett v. Tyson
C. Robert Taylor, Alfa Eminent Scholar (Distinguished University Professor) in Agricultural Economics and Public Policy, College of Agriculture, Auburn University

What Happened in the Weyerhauser Case
Michael Haglund, Haglund Kelley Horngren Jones & Wilder, and Counsel to Ross-Simmons

The Weyerhaeuser Rule and Antitrust Policy
John Kirkwood, Associate Professor of Law, Seattle University School of Law, AAI Advisory Board

Facilitated Discussion lead by Bert Foer and Greg Gundlach

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

Friday, June 15, 2007

More on the Antitrust/IP Interface- This Time in Europe

Posted by D. Daniel Sokol

While we wait for the Microsoft ruling in the EU, a team from Cleary Gottlieb in Brussels asks Are Article 82 EC and Intellectual Property Interoperable? The State of the Law Pending the Judgment in Microsoft v. Commission in the latest issue of Competition Policy International.

ABSTRACT: The objectives of intellectual property rights (IPR) and competition law are essentially the same: both promote innovation to the benefit of consumers. IPRs are, however blunt instruments that strike the right balance in general, but in exceptional individual situations may not achieve (and may sometimes even obstruct) the innovation policy goal. Competition law is a useful tool to redress the balance in these situations, and the European Commission and EC courts have recognized that in exceptional cases the exercise of IPRs may infringe competition law. This article examines the extent to which Article 82 EC restricts the use of IPRs, pending the judgment of the CFI in Case T-201/04, Microsoft v. Commission.

June 15, 2007 | Permalink | Comments (2) | TrackBack (0)

Wednesday, June 13, 2007

Holding Innovation to an Antitrust Standard

Posted by D. Daniel Sokol

Rich_small Richard Gilbert of Berkeley, who helped to shape Antitrust-IP policy in the 1990s, has a new article in the most recent issue of Competition Policy International titled Holding Innovation to an Antitrust Standard.

ABSTRACT: Several antitrust cases have involved allegations of anticompetitive innovation or product design and some plaintiffs and antitrust scholars have argued that investment in research and development that excludes competition can have predatory effects similar to predatory pricing. This article analyzes several tests for predatory innovation, including the rule of reason based on total and consumer welfare and profit sacrifice tests. All of these tests are likely to produce false positives that chill incentives for beneficial investments in research and development. Most courts that have considered allegations of anticompetitive innovation, including the appellate court in U.S. v. Microsoft, have concluded that innovation is not anticompetitive if it has plausible efficiencies. This is close to a test of whether innovation is a sham. While a sham test may fail to identify innovations that harm competition, that risk is acceptable given the high cost of penalizing beneficial innovation.

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

Competition, Regulation and Development

Posted by D. Daniel Sokol

CUTS has released a policy paper that summarizes the papers presented at its conference in March on Competition, Regulation and Development. 

According to CUTS, the common factor across almost all developing countries is market  friendly reforms, which go hand in hand with market failures. To undertake market reforms, most of developing countries have adopted competition and regulatory laws. But mere adoption of these laws will not work unless appropriate institutional mechanisms for enforcement and review is put in place. For this the value of  "political will" is very important. Equally important is the creation of culture of competition, and the simultaneous involvement of the consumers in the entire process to successfully leverage the advantages of market based competition. In this context it is very necessary to design sound and robust competition and regulatory policies that goes beyond being `business friendly' to being stakeholder friendly.  It should explicitly recognize and incorporate consumer interests and unambiguously include advocacy as a tool for promoting awareness among consumers. However, on account of weak institutional foundations this task is not easy with problems getting compounded.

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

Tuesday, June 12, 2007

Antitrust Oral History Project

Posted by D. Daniel Sokol

The  ABA Section of Antitrust Law Oral History Task Force has uploaded the first batch of interviews to the ABA Antitrust Section website.  The purpose of this project is to document the perspectives and memories of those who have figured prominently in the development of US antitrust law.  The first group of interviewees include:   

 *  Michael F. Brockmeyer, Former Chair, National Association of Attorneys General Multi-State Task Force;
*  Terry Calvani, Former Chairman and Commissioner, Federal Trade Commission;
*  Chief Judge Douglas H. Ginsburg of the United States Court of Appeals for the District of Columbia Circuit, Former Assistant Attorney General for Antitrust, US Department of Justice;
*  Thomas E. Kauper, Former Assistant Attorney General for Antitrust, US Department of Justice;
*  Robert M. Langer, Former Chair, National Association of Attorneys General Multi-State Task Force;
*  Thomas B. Leary, Former Commissioner, Federal Trade Commission;
*  Janet L. McDavid, Former Chair, ABA Section of Antitrust Law, 1999-2000;
*  Harry M. Reasoner, Former Chair, ABA Section of Antitrust Law, 1989-1990; and,
*  Edwin M. Zimmerman, Former Assistant Attorney General for Antitrust, US Department of Justice.


June 12, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, June 11, 2007

WSJ on Mexican Competition

Posted by D. Daniel Sokol

Over at the WSJ, one of my favorite columnists Mary O'Grady discusses the importance of competition in Mexico generally with the recent Mexican Supreme Court decision on media competition.  While I think that O'Grady generally gets it right about the importance of competition to Mexico's economic development, she ignores entirely the role that the Comisión Federal de Competencia (CFC) plays in antitrust enforcement in creating a pro-competitive environment in Mexico.  This oversight is not warranted.  The CFC has been one of Latin America's antitrust success stories and under its Chairman Eduardo Perez Motta it increasingly is focusing its enforcement and competition advocacy in regulated industries-- those that have had significant state ownership and/or heavy state regulation. 

June 11, 2007 | Permalink | Comments (1) | TrackBack (0)

Reinvigorating Horizontal Merger Enforcement

Posted by D. Daniel Sokol

In what I think is the most important paper on mergers so far this year, Jonathan Baker of American University and Carl Shapiro of Berkeley describe the shift in merger enforcement and argue for a reinvigorated merger enforcement in the United States.  The paper is titled Reinvigorating Horizontal Merger Enforcement.

ABSTRACT: The past forty years have witnessed a remarkable transformation in horizontal merger enforcement in the United States. With no change in the underlying statute, the Clayton Act, the weight given to market concentration by the federal courts and by the federal antitrust agencies has declined dramatically. Instead, increasing weight has been given to three arguments often made by merging firms in their defense: entry, expansion and efficiencies. We document this shift and provide examples where courts have approved highly concentrating mergers based on limited evidence of entry and expansion. We show using merger enforcement data and a survey we conducted of merger practitioners that the decline in antitrust enforcement is ongoing, especially at the current Justice Department. We then argue in favor of reinvigorating horizontal merger enforcement by partially restoring the structural presumption and by requiring strong evidence to overcome the government's prima facie case. We propose several routes by which the government can establish its prima facie case, distinguishing between cases involving coordinated vs. unilateral anti-competitive effects.

June 11, 2007 | Permalink | Comments (0) | TrackBack (0)