Antitrust & Competition Policy Blog

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

Saturday, August 4, 2007

The Story of Broadcast Music Inc. v. Columbia Broadcasting System

Posted by D. Daniel Sokol

Calkins Another item to add to the summer reading list is the very interesting tale that Stephen Calkins of Wayne State tells of the story behind Broadcast Music Inc. v. Columbia Broadcasting System for the Eleanor Fox and Dan Crane edited Antitrust Stories (out soon by West Publishing).

ABSTRACT:  In his chapter in the forthcoming book Antitrust Stories (Foundation Press, Eleanor Fox and Dan Crane editors), Steve Calkins relates the saga that included the landmark Broadcast Music case. It's a great story peopled with colorful characters and one in which amicii, both in Broadcast Music and in a predecessor case, may have helped cause the litigation to have lasting impact.

August 4, 2007 | Permalink | Comments (1) | TrackBack (0)

Friday, August 3, 2007

Law and Society Panel on Market Access

Posted by Shubha Ghosh

Professor Peter Carstensen of The University of Wisconsin Law School organized an interesting panel at the Law and Society meeting in Berlin last week.  Entitled "Market Access, Intellectual Property Rights, and Competition Policy Approaches," the panel consisted of papers by Brett Frischmann of Loyola Chicago Law School (visiitng in the Fall in Fordham Law School), Marina Lao of Seton Hall Law School (a Fulbright Scholar in Munich for the 07-08 AY), Peter Carstensen, and myself.   There was some discussion of Leegin and of contractual restrictions on post-sale use as well as of broaders themes of competition policy as uniting intellectual property and antitrust.  For a sample, here is an audiofile of my presentation:  Download lawsoc72507carstpanel.WMA

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

Chinese Anti-monopoly Law to be Passed Soon?

Posted by D. Daniel Sokol

We have heard for the last few years that the passage of the Chinese Anti-monopoly law is imminent.  However, this time it may actually be true, according to a report in today's (HT Paul Jones).  If passage is soon, a priority for enforcement of the law should be a focus on the anti-competitive effects of state owned enterprises.  The ICN recently addressed the issue of SOEs in its report that the unilateral conduct working group presented in Moscow at the ICN annual meeting.    

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

Should Antitrust Consent Decrees Regulate Post-Merger Pricing?

Posted by D. Daniel Sokol

Remedies are one of the most challenging issues in antitrust.  Within the area of merger remedies, a new working paper, Should Antitrust Consent Decrees Regulate Post-Merger Pricing?, by Greg Sidak and  Farrell Malone of Georgetown University Law Center that is forthcoming in the Journal of Competition Law & Economics offers a new twist on the issues of merger remedies specific to the regulation of price.

ABSTRACT: Competitors proposing to merge sometimes propose price regulation in a consent decree as a condition of receiving merger approval. Antitrust enforcement agencies in the United States have been reluctant to use such price-regulating decrees, as they suffer from practical problems in implementation. It is less recognized, however, that the use of consent decrees to regulate post-merger prices may be unlawful. Such decrees exceed the scope of antitrust law and blur the distinction between the legislative power to regulate prices and the executive power to enforce the antitrust laws. Despite the willingness of merging parties to accept price regulation in consent decrees, economic and constitutional considerations counsel against antitrust enforcement agencies adopting this practice.

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

Thursday, August 2, 2007

Consumer Surplus as the Appropriate Standard for Antitrust Enforcement

Posted by D. Daniel Sokol

Pittman A number of important articles have appeared in recent years that discuss the appropriate standard for antitrust enforcement.  In a new and interesting contribution, Russell Pittman of the Department of Justice argues for a consumer surplus standard rather than a total welfare standard in his paper Consumer Surplus as the Appropriate Standard for Antitrust Enforcement.  Download consumersurplus.doc

ABSTRACT: In antitrust enforcement as in cost-benefit analysis, neoclassical economics may be interpreted as arguing for the use of a “total welfare” standard whose implementation treats transfers as welfare-neutral. Several recent papers call for antitrust agencies to move in the direction of this version of a total welfare standard for enforcement. However, as Williamson (1968) noted, horizontal mergers typically result in transfers that may greatly exceed in magnitude any deadweight loss or efficiency gain, so that a decision to ignore transfers may be quite important.  I argue that such transfers are likely overall to be quite regressive, and thus that a consumer surplus standard rather than a total welfare standard may be appropriate for antitrust.  Two common arguments against this standard – that most mergers are in markets for intermediate goods, and that a consumer welfare standard implies a tolerance for monopsony – are examined and found wanting.  I argue in addition that, even if a total welfare standard is used, both the finance literature on merger outcomes and the structure of the U.S. enforcement agencies suggest that the use of a consumer surplus standard by the agencies is more likely to achieve that goal.

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

Wednesday, August 1, 2007

Time to Rethink Merger Policy?

Posted by D. Daniel Sokol

Jgs_3 Jiordi Gual of the University of Navarra - IESE Business School asks some critical questions of current US and EU merger policy in his provacative paper Time to Rethink Merger Policy?

ABSTRACT: This paper provides a critical analysis of some of the key features of merger policy as understood and practiced in leading jurisdictions such as the European Community and the United States. It focuses first on a discussion of the gradual move of merger policy towards the examination of unilateral effects. The critical appraisal of this process is based on the practical and theoretical shortcomings of the economic models that underlie the growing prominence of unilateral effects as the key anticompetitive factor arising from a proposed merger. The paper stresses that even if unilateral effects were to lead to an increase in the conventional measures of anticompetitive performance (such as markups), it is not clear that this implies less competitive behavior for many of the most relevant industries in today's advanced economies. Finally, the paper also examines the relation between competition and welfare, and argues that even if competition does indeed diminish due to a merger, it is not a straightforward conclusion that this is not good in terms of economic welfare when the incentives to innovate and the dynamic welfare gains that arise from new products and production processes are taken fully into consideration.

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

Tuesday, July 31, 2007

An Anti-Monopoly Law for China – Scaling the Walls of Protectionist Government Restraints

Posted by D. Daniel Sokol

Eleanor_foxGovernment restraints are under-explored among US antitrust scholars.  I am finishing off a draft of an article on this issue myself but more on that at a later posting.  Eleanor Fox of NYU Law School, whose path-blazing work on international antitrust helped to promote this area of scholarship, recently uploaded a forthcoming essay for the Antitrust Law Journal titled An Anti-Monopoly Law for China – Scaling the Walls of Protectionist Government Restraints.  This is an essay worth reading because the implications of government restraints on competition extend far beyond China.

ABSTRACT: Most nations deal with abusive government restraints and abusive private restraints by different instruments of law. This essay demonstrates, however, the integral nature of public and private protectionist restraints. It provides examples of integrated analysis in the United States, the European Union, and the World Trade Organization. It argues that a Chinese effort to address administrative economic abuses in its competition law would be progressive and helpful to the Chinese economy, especially in the absence of a Chinese “Commerce Clause.” Also, it argues for fuller coverage of state-owned monopolies. SOEs and provincial and local protectionist restraints are among China's most significant obstacles to realizing the benefits of markets.

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

New Competition Law Center at George Washington University

Posted by D. Daniel Sokol

With Bill Kovacic leading the fight against anti-competitive conduct at the FTC as a Commissioner, George Washington University Law School has not been particularly active in antitrust scholarship in the last few years while Georgetown and George Mason law schools have hosted a number of excellent conferences.  However, thanks to George Washington Law alum and plaintiff's attorney Michael D. Hausfeld of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., on July 10, 2007, a United States District Court judge granted a motion to award a portion of a class-action settlement in the case of Diamond Chemical Company, Inc. v. Akzo Nobel Chemicals B.V. and Atofina Chemicals, Inc, et al. to George Washington University Law School to endow a Center for Competition Law.  This is a a $5.1 million Cy Pres award.  See details in the press release here.  No director for the Center has yet been announced.  I wonder if this center will be as plaintiff friendly in its programming as the Institute for Consumer Antitrust Studies at the Loyola University Chicago School of Law run by Spencer Waller.  On Spencer, if you have not yet read his Thurman Arnold: A Biography (NYU Press, 2005), this would make for excellent summer reading.

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

Ninth Annual Sedona Conference on Antitrust Law & Litigation

Posted by D. Daniel Sokol

The excellent 9th Annual Sedona Conference on Antitrust Law and Litigation, to be held October 25-26 at the Sedona Hilton Resort & Spa. This annual retreat has become a high point on the antitrust community calendar -- a chance to engage in meaningful dialog with leading lawyers, judges and scholars. To maintain the quality of this unique experience, the organizers limit registration to 40 but strive for the widest possible diversity within that small group.   Details are below.

Download sedona20antitrust20conference20press20release.pdf

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

Monday, July 30, 2007

Antitrust Analysis of Sports Leagues

Posted by D. Daniel Sokol

Gregory_pelnar With Barry Bonds approaching Hank Aaron's all time home run record in baseball, I thought this might be a good time to think about antitrust in sports more generally.  One recent contribution to the field is that of Gregory Penlar, a VP at economic consulting firm Lexecon.  His study is Antitrust Analysis of Sports Leagues: Part 1 - What is a Sports League and How are They Analyzed Under the Antitrust Laws.

ABSTRACT: This paper is the first of a four-part series on the antitrust analysis of sports leagues. It presents a brief history of the major North American sports leagues, discusses significant differences between leagues, reviews the cartel, joint venture, and natural monopoly theories of sports leagues, summarizes the antitrust laws (and their exemptions), discusses the steps involved in conducting per se and rule of reason analyses, and describes the types of economic evidence used to conduct an antitrust analysis of a sports league.

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

Sunday, July 29, 2007

What to Do About Unilateral Refusals to License?

Posted by D. Daniel Sokol

Jeffrey K. MacKie-Mason, Arthur W. Burks Professor of Information and Computer Science at the University of Michigan, takes the position in his new working paper What to Do About Unilateral Refusals to License? that policy makers should take economics more seriously in how they think about antitrust/IP and the issue of unilateral refusals to license, particularly in statutory language.  I wonder if in part the problem is that some courts do not understand the complex economics of innovation.

ABSTRACT: There are well-known circumstances under which unilateral refusals to license will cause harm to competition, that is, will lower consumer welfare. However, when the strategy is profitable, refusals to license also increase the returns to intellectual property, and thus limitations on them will reduce the incentives for firms to invest in innovation. The optimal balance between innovation incentives and protection against static monopoly harm is not knowable to any reasonable degree of precision. Economists may be able to identify some special cases in which the desired rule is unambiguously knowable, but these cases will be few.

Given a policy or legal rule, economists can help interpret and apply the rule. Analysis of recent legal statements on the treatment of refusals to license shows that some of the current confusion and frustration in this area can be attributed to failure to formulate the rules in terms of the economic purposes of the underlying statutes. Some attempts to delineate a boundary between cases in which intellectual property protection is absolute and those in which antitrust restrictions may be imposed are based on logical or semantic distinctions that are not related to the economic issues. These attempts will fail to resolve the confusion.

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