Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, July 21, 2007

Is There a Role for Market Definition and Dominance in an Effects-Based Approach?

Posted by D. Daniel Sokol

Emanuela Arezzo, a Research Fellow at Luiss University - School of Law in Italy takes a contrarian view to the importance of increased economic analysis/effects based approach in EU competition policy in her working paper Is There a Role for Market Definition and Dominance in an Effects-Based Approach?

ABSTRACT: As the old millennium was coming to an end, European Competition law began a massive  reform project aimed at modernizing each and every of its constituent parts. As well known, this ambitious project started with the introduction of Regulation n. 2790/1999 on vertical restraints, and its accompanying Guidelines, it followed with the Guidelines on horizontal cooperation agreements, and made all its way up till the review of the Merger Regulation.

The underlying leitmotif of these reforms has been to introduce a more economics-oriented approach to the assessment of competition cases. In practice, these reforms have resulted in a progressive erosion of per se rules in favour of the more flexible rule of reason which leaves the floor open to case by case considerations and seems better suited to take into account the appropriate circumstances (especially of economic nature) of the controversy at issue.

The turn has come now for abuses of a dominant position to go under review to determine the extent it should conform to the new mainstream trend which calls for a more substantive recourse to economics insights into the assessment of unilateral practices.

As we are about to see, European Commission's (and European competition authorities' in general) treatment of abuse cases has attracted a good deal of criticism for being rather formalistic and rigid and hence inapt to sufficiently take into consideration the economic circumstances of the cases, in particular to weigh the anticompetitive effects apparently caused by the conduct against the likely positive pro-competitive (or, more precisely, pro-consumer) efficiencies which, in the end, could tilt the balance and reverse an initial finding of abuse.

In order to do justice to these points of criticism, the European Commission has drafted a Discussion Paper on the application of Article 82 to exclusionary abuses and has called for open discussion on it. Unfortunately, the document, mainly because of its guideline style, is rather confusing and obscure. A coherent suggestion for a new approach, however, can be more easily inferred by reference to the report presented by the Economic Advisory Group for Competition Policy (hereinafter EAGCP) which the Commission has surely considered in the course of preparing its Discussion Paper.

The effects-based approach (so called to differentiate itself from the current formalistic one) apparently carries a strong economic imprint and seems aimed at correcting the early methodology adopted by European agencies and courts by introducing two substantive changes. On the one hand, the competition authorities would be asked to prove, with strong economics-based analysis and studies, the anticompetitive harm produced by the presumably abusive conduct. This with specific regard to the ultimate effect that the practice will assert on consumer welfare. On the other hand, because it is extremely complex to discern the pro- from the anti-competitive aspects within the same conduct and, as economists strongly assert, pro-competitive effects can also arise from a unilateral conduct adopted by a dominant firm, the new approach would grant defendants the faculty to plead an efficiency defense against a finding of abuse.

This change would appear, at least at a first glance, in line with the assessment of agreements in restraint of competition under Article 81 and would make the overall assessment of competition law cases uniform. Nonetheless, as I will try to demonstrate, such alignment with current assessment of (horizontal or vertical) agreements between firms is nor welcome or desirable.

July 21, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, July 20, 2007

Retail Payments and Card Use in the Netherlands: Pricing, Scale, and Antitrust

Posted by D. Daniel Sokol

Payment systems is a very interesting antitrust topic and one that I am spending more time thinking about as I plan to teach payment systems in the spring semester.  The excellent Competition Policy International had a special issue devoted to antitrust issues in payment systems.  One of the articles, by Dutchman Wilko Bolt, focuses on antitrust issues in payment systems in the Netherlands, called Retail Payments and Card Use in the Netherlands: Pricing, Scale, and Antitrust.

ABSTRACT: Efficient payment systems are essential components of well-functioning economies and financial markets, facilitating the exchange of goods, services, and assets. The speed and ease with which payments can be processed and executed will in general affect economic activities, output, and price levels. Therefore it is important that payment systems satisfy some basic principles of economic efficiency. The payment landscape is changing rapidly, with the fast growth of credit and debit card payment systems in many developed economies as perhaps one of the most striking examples. Data from a 2004 paper by Zinman show that in the United States alone, in 2002, consumers used their debit and credit cards in 33.4 billion transactions to charge around USD 2.3 trillion in total. Furthermore, data from Krueger's 2001 paper and the Bank for International Settlements (BIS) illustrate that in ten industrial countries the use of debit and credit cards rose from over nine billion transactions in 1987 to about 51 billion transactions in 2002. In particular, in the Netherlands, the enormous upswing in the usage of debit cards has been the main driver for the rapid developments in non-cash payments. Debit card payments in the Netherlands exceeded EUR 56 billion in 2004 (more than 12 percent of GDP) with a volume of around 1.25 billion debit card transactions (50 times higher than in 1990), and they are still growing rapidly.

July 20, 2007 | Permalink | Comments (1) | TrackBack (0)

Fordham Annual Conference on International Antitrust Law & Policy

Posted by D. Daniel Sokol

The most important international antitrust conference of the year, the Fordham Annual Conference on International Antitrust Law & Policy, has posted its agenda and registration materials.  This year is the 34th annual conference.  The agenda is below:

Date(s): 09.27.07 | Thu - 09.28.07 | Fri
Time: 9:00 a.m. - 6:00 p.m.
Location: Pope Auditorium, Fordham University  

Thursday, September 27

8:00 a.m. Registration & Continental Breakfast 

SESSION 1

9:00 a.m.
Introductory Remarks
Barry E. Hawk, Director, FCLI and Skadden, Arps, Slate, Meagher & Flom LLP

Convergence, Conflict, and Comity: The Search for Coherence in International Competition Policy
Hon. Deborah Platt Majoras, Chairman, U. S. Federal Trade Commission

Discussion
A. Paul Victor, Dewey Ballantine LLP (Presider); John Fingleton, Chief Executive Officer, UK Office of Fair Trading; Joe Sims, Jones Day

10:30 a.m. Break

SESSION 2

10:50 a.m.
Conglomerate Mergers and Vertical Mergers – A U. S. Perspective
Hon. J. Thomas Rosch, Commissioner, U. S. Federal Trade Commission

Conglomerate Mergers and Vertical Mergers – A European  Perspective
Carles Esteva-Mosso, Head of Merger Policy Unit, Directorate General for Competition, European Commission

Discussion
Ilene K. Gotts, Wachtell, Lipton, Rosen & Katz (Presider); Gerald F. Masoudi, Deputy Assistant Attorney, Antitrust Division, U. S. Department of Justice; Gerwin Van Gerven, Linklaters

1:00 p.m. Lunch 

SESSION 3

2:30 p.m.
Vertical Integration: Unbundling in the Energy Sector
Neelie Kroes, Commissioner of Competition, European Commission

Discussion
Stephen Kinsella, Sidley Austin LLP (Presider); Carlos Lapuerta, Principal, The Brattle Group; Abel  M. Mateus, President, Autoridade da Concorrência Portugal; Christian Stoffaës, Vice President, International Relations Department, Electricité de France; Peter Taylor, General Counsel, New Zealand Commerce Commission; Markus Wagemann, Head of Department, German Federal Cartel Office

6:00 p.m. Reception 

Friday, September 28

SESSION 4

9:00 a.m.
Remedies and Sanctions for Unlawful Unilateral Conduct – Roundtable
Andreas Reindl, Fordham Law School (Presider); Rafael Allendesalazar, Martínez Lage & Asociados; Stephen M. Axinn, Axinn, Veltrop & Harkrider LLP;  Hon. Thomas O. Barnett, Assistant Attorney General, Antitrust Division, U. S. Department of Justice; Hon. Denise L. Cote, Southern District of New York; Ian Forrester, White & Case LLP; Bruno Lasserre, President, Conseil de la Concurrence; Philip Lowe, Director General, Directorate General for Competition, European Commission; Prof. Howard A. Shelanski, School of Law – Boalt Hall, University of California, Berkeley; David L. Walsh, Vice President & Assistant General Counsel, IBM Corporation

12:45 p.m. Lunch

SESSION 5

2:15 p.m.
Oligopolies and Competition Law
Hon. Frédéric Jenny, French Cour de Cassation (Presider); Peter Freeman, Chairman, UK Competition Commission; Stefano Grassani, Pavia e Ansaldo Studio Legale;  Prof. Thomas E. Kauper, University of Michigan Law School; Damien Neven, Chief Economist, Directorate for Competition, European Commission; David Scheffman, Director, LEGC

6:00 p.m. Close of Conference

July 20, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 19, 2007

The FTC is Looking for a Healthcare Antitrust Lawyer

Posted by D. Daniel Sokol

Details are available here.

Also on the topic on Antitrust and Helath Care, make sure to sign up for the Antitrust in Healthcare conference co-sponsored by American Bar Association's Health Law Section and Section of Antitrust Law.

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

Leniency Programs in a Multimarket Setting

Posted by D. Daniel Sokol

Cartels scholarship is a hot field.  In an addition to the growing literature in this area, Catherine  Roux and Thomas von Ungern-Sternberg, both of the University of Lausanne - Department of Economics, write about Leniency Programs in a Multimarket Setting: Amnesty Plus and Penalty Plus

ABSTRACT: We examine the effects of Amnesty Plus and Penalty Plus, influencing firms' whistle blowing incentives in one market, on their self-reporting decision in another market. Amnesty Plus and Penalty Plus are proactive US strategies which aim at triggering multiple confessions by increasing the incentives of already convicted firms to report in another market where they collude. Predictably, conditional on conviction of one cartel, Amnesty Plus and Penalty Plus strengthen firms' incentives to report the remaining cartel. However, Amnesty Plus and Penalty Plus have an ambiguous impact on firms' incentives to apply for amnesty in the first place: On the one hand, Amnesty Plus and Penalty Plus may help to sustain a cartel, otherwise reported under the EC policy. On the other hand, Amnesty Plus and Penalty Plus may induce immediate reporting of both cartels whereas only one of them would have been reported under the EC Leniency Program.

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

Merger Control: More Stringent in Europe than in the United States?

Posted by D. Daniel Sokol

Fl In a provacative paper, François Lévêque of Ecole des Mines de Paris - Centre d'Économie Industrielle (CERNA) asks Merger Control: More Stringent in Europe than in the United States?  His results are a counter-intuative and lead to some interesting questions for the next stage of research.   He finds:

The number of mergers prohibited, cleared with remedies, or abandoned by the parties each year works out at an average of 50 in the USA and 20 in Europe. When these figures are divided by the number of notifications, they produce average percentages of 2.2% and 11% respectively. Does this mean that the European Commission is more stringent than US competition authorities? No, because the notification threshold is higher in Europe than in the USA... The higher proportion of decisions with remedies in the USA is not because there are more US/US mergers than EU/EU mergers but because almost all mergers between European companies are subject to remedies by the FTC or the DoJ. What is the reason for this? This result cannot be construed as direct proof that merger control is more stringent, or more protectionist in the USA. It is possible that EU/EU mergers objectively carry more anticompetitive risks in the USA than US/US mergers in Europe. Competitive conditions may vary considerably from one geographical market to another, and transatlantic mergers are not necessarily a reflection of global markets. It is conceivable, for example, that European companies have a stronger presence in the USA than US companies in Europe. To prove or disprove that the US authorities are more interventionist would require comparing the market shares and concentration of merged companies in Europe and the USA. That is the next question to tackle.

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

Wednesday, July 18, 2007

Dennis Carlton Asks- Does Antitrust Need to be Modernized?

Posted by D. Daniel Sokol

Carlton Dennis Carlton of the University of Chicago Graduate School of Business and the current Deputy Assistant Attorney General for Economic Analysis at the Department of Justice Antitrust Division asks Does Antitrust Need to be Modernized

ABSTRACT: In 2002, Congress established the Antitrust Modernization Commission to address whether the antitrust laws needed to be changed in light of globalization and rapid technological change. This paper addresses that question. Although the basic framework of the antitrust laws is suitable to deal with current economic conditions, the paper identifies several areas where antitrust can be improved. The paper first examines whether the proper criterion for antitrust should be total or consumer surplus. Then it identifies some key issues that need to be clarified and explains how they should be clarified. Those issues include market definition, merger policy and the treatment of efficiencies, the interaction of antitrust and intellectual property, exclusionary conduct, the right of indirect purchasers to sue, and the proper allocation of responsibility between regulation and antitrust.

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

Who Are the Best Antitrust Practitioners Around the World?

Posted by D. Daniel Sokol

The Global Competition Review has the answers for the best competition lawyers from 39 countries in their annual guide of Who's Who of Competition Lawyers.

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

Tuesday, July 17, 2007

€5,000 Competition on Best Paper on Competition Policy

Posted by D. Daniel Sokol

In recent weeks the beneficial impact of promoting competition on European living standards has been called into question, as the statement above makes clear. At the last meeting of the European Council the proposed EU Reform treaty had the objective of "unfettered competition" deleted from the leading objectives of the European Union. Commentary in the Financial Times has contended that this treaty change could have significant longer-term implications for competition law and its enforcement in Europe. Moreover, and quite distinctly, the European Court of First Instance is due to hand down their verdict on the Microsoft case in September. All of these matters are likely to keep EC competition law in the news for some time and call for a balanced assessement of its effects.

To stimulate debate on the contribution of competition law and its enforcement to European living standards and economic performance the editors of the Swiss Review of International Economic Relations (Aussenwirtshaft) are holding a paper competition. A prize of 5,000 euros will be offered to the best paper submitted to the competition. Details of the competition are attached. The submission deadline for the competition is 20 September 2007.

The competition is open to all those with a strong interest in competition law, irrespective of professional background or academic discipline.

The three judges for this competition will be Prof. Damien Neven (Chief Economist of DG Competition but here acting in a personal capacity), Prof. Jacques Bourgeois (WilmerHale and College of Europe), and Simon Evenett.  Email Simon Evenett with any questions.   

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

Muris and Parker on Competition in the Oil Industry

Posted by D. Daniel Sokol

Tim Muris and Rich Parker of O'Melveny & Myers have an excellent op-ed that appears in today's Wall Street Journal on competition in the oil industry.  They argue for less politicization of oil industry debates on energy competition and a greater emphasis on policy based on economic reality.  I agree wholeheartedly.

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

TOP 10 SSRN Papers for Journal of Antitrust: Antitrust Law & Policy, May 17, 2007 to July 16, 2007

Posted by D. Daniel Sokol

TOP 10 SSRN Papers for Journal of Antitrust: Antitrust Law & Policy, May 17, 2007 to July 16, 2007

1.  Competition Law and Copyright Misuse
John T. Cross, Peter K. Yu, University of Louisville-Louis D. Brandeis Schoolof Law, Drake University Law School

2.  The Empirics of Antitrust in Two-Sided Markets
Marc Rysman, Boston University- Department of Economics

3. What Can Antitrust Contribute to the Network Neutrality Debate?
Christopher S. Yoo, University of Pennsylvania Law School

4. Are Article 82 EC and Intellectual Property Interoperable? The State of the Law Pending the Judgment in Microsoft v. Commission
Robert O'Donoghue, Maurits Dolmans, Paul-John Loewenthal, Cleary Gottlieb Steen & Hamilton LLP -
Belgium Office, Cleary Gottlieb Steen & Hamilton LLP, Cleary Gottlieb Steen & Hamilton LLP

5. Mandated Network Neutrality and the First Amendment: Lessons from Turner and a New Approach
Moran Yemini, Author - Affiliation Unknown

6. Software Development as an Antitrust Remedy: Lessons from the Enforcement of the Microsoft Communications Protocol Licensing Requirement
William H. Page, Seldon J. Childers, University of Florida - Fredric G. Levin College of Law, University of Florida - Fredric G. Levin College of Law

7. Holding Innovation to an Antitrust Standard
Richard J. Gilbert, University of California, Berkeley - Department of Economics

8. 'The Benefits and Evils of Competition': James Coolidge Carter's Supreme Court Advocacy
Lewis A. Grossman, American University – Washington College of Law

9. Difference in Differences Analysis in Antitrust: What Does it Really Measure?
John Simpson, David Schmidt, Federal Trade Commission, Federal Trade Commission - Antitrust II

10. The Oligopolistic Pricing Problem - A Suggested Price Freeze Remedy
Guy Sagi, Netanya Academic College

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

Monday, July 16, 2007

Don Baker and the Antitrust Story of the Superior Court Trial Lawyers Case

Posted by D. Daniel Sokol

Don Baker of the firm Baker and Miller contributed a fascinating chapter to the Eleanor Fox and Dan Crane edited volume of Antitrust Stories (out soon from West) on the Superior Court Trial Lawyers Case.  Baker's piece is The Superior Court Trial Lawyers Case: A Battle on the Frontier Between Politics and Antitrust.  Baker retells the story of the FTC's enforcement action against the D.C. Superior Court Trial Lawyers, who agreed not to take further criminal indigent defendant work until they received a pay raise.

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

Sunday, July 15, 2007

Pleading Standards after Bell Atlantic v. Twombly

Posted by D. Daniel Sokol

Civil procedure expert Scott Dodson of the University of Arkansas - School of Law weighs in on Twombly in the most recent onlime compansion to the Virginia Law Review.  His piece is titled  Pleading Standards after Bell Atlantic v. Twombly.

ABSTRACT: In Bell Atlantic Corp. v. Twombly, the Supreme Court repudiated the familiar language from Conley v. Gibson, that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief. This essay critiques Bell Atlantic and discusses some of its implications for pleading claims in the future.

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