Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, August 11, 2007

Competition Policy in the Global Economy

Posted by D. Daniel Sokol

Spencer Waller of Loyola University Chicago School of Law has just uploaded a free online casebook on Competition Policy in the Global Economy.

As Spencer explains:

In general, it examines how the United States and other jurisdictions regulate competition among firms which do business abroad. This will include how competition policy regulates individuals and firms located outside the United States in their competition with United States firms as well as the rules governing United States firms. These materials are intended for use in a U.S. style law school class or seminar and designed to provide the base knowledge necessary to engage in sophisticated research in the field and to produce a research based paper of 20-25 pages in length. By necessity, these materials are in English and have primarily a United States focus. The value of an on-line casebook in this field goes beyond the merely the cost savings and convenience. It is also an opportunity for a collaborative exercise that will allow for the creation of a more in-depth and creative set of materials that can be done in traditional hard cover format. Use of the casebook for educational purposes with attribution is available on a royalty-free basis under a Creative Commons Attribution-Share Alike 3.0 United States License, available at http://creativecommons.org/licenses/by-sa/3.0/us/... I therefore invite any competition law teacher or scholar to submit additional chapters on other competition law topics or jurisdictions not covered in these materials for inclusion in future iterations of these materials.

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

Friday, August 10, 2007

Newest Issue of Antitrust Source

Posted by D. Daniel Sokol

The latest issue of the ABA Antitrust Section's Antitrust Source is now available.

August 10, 2007 | Permalink | Comments (0) | TrackBack (0)

Economic Development, Poverty, and Antitrust: The Other Path

Posted by D. Daniel Sokol

Fox Eleanor Fox of NYU Law School has a fascinating new article about the role of antitrust in economic development, Economic Development, Poverty, and Antitrust: The Other Path.

ABSTRACT: Antitrust law is a multi-faceted discipline. It guards against certain creations and misuses of economic power. It facilitates the functioning of markets. Sometimes it pries open closed markets, wresting them from public and crony control. In some jurisdictions it empowers David to compete against Goliath. In others, it shields David from being trampled by Goliath. In matters of antitrust, protection of the weak from the powerful is a refrain most loudly heard in connection with the asserted needs of developing countries.

Meanwhile, in developed countries, it is often insisted that antitrust is only “for efficiency,” defined as aggregate wealth and applied with the assumption that markets increase aggregate wealth. Developing countries retort that antitrust for developing countries must also address concerns of distribution and power. Developed countries rejoin that global efficiency demands that laws converge, and laws should converge toward that of the developed world, lest they protect inefficiencies, drive prices up, and increase risks of arbitrary enforcement power, defeating the promise of markets.

This article wrestles with this tension. It argues that antitrust should not be used to protect David from Goliath, but it may be used to empower David against Goliath. The article suggests factors, principles, queries and strategies that may help developing countries in their quest for an antitrust law that is fair and efficient for them.

August 10, 2007 | Permalink | Comments (1) | TrackBack (0)

Thursday, August 9, 2007

The Argentine Competition Law and its Enforcement

Posted by D. Daniel Sokol

Coloma1 A wonderful working paper (for my forthcoming edited book) by German Coloma of Universidad de CEMA titled The Argentine Competition Law and its Enforcement examines the complexities of Argentine competition policy.  It is a detailed and thorough analysis. More importantly, for those that cannot read Spanish, it is the first such English language treatment.

ABSTRACT: This article analyzes the basic characteristics of the Argentine competition law and the way in which it has been enforced in several important antitrust cases. We begin with a section that introduces the evolution of the law, followed by another section about the basic economic and legal principles underlying that law. The rest of the article describes the enforcement of the law, in a number of cases that involve collusive practices, exclusionary practices, vertical restraints, abuses of dominant position, and mergers.

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

Wednesday, August 8, 2007

The Customer is Sometimes Right: The Role of Customer Views in Merger Investigations

Posted by D. Daniel Sokol

Following scholarship by DOJ's Ken Heyer on listening to customers in merger investigations, Darren S. Tucker, Scott L. Reiter, and Kevin L. Yingling write on similar issues with specific application to two of the most important merger decisions in recent years, both of which resulted in losses by the US antitrust agencies- Arch Coal (FTC) and Oracle (DOJ).  The new article, forthcoming in the Journal of Competition Law and Economics is The Customer is Sometimes Right: The Role of Customer Views in Merger Investigations.

ABSTRACT: Antitrust enforcement officials and practitioners generally agree that customers should have a prominent role in the merger review process. The question of the appropriate level of reliance that competition authorities and courts should give to customer testimony has been the subject of considerable debate since the Arch Coal and Oracle decisions. This paper contains a comprehensive< discussion of the use of customer testimony throughout the U.S. merger review process, from the initial merger notification filing to injunction proceedings in federal court. We discuss the benefits from and problems with the use of customer testimony, including how these problems have led to litigation losses for the U.S. antitrust authorities. What is the appropriate role of customer testimony and when is it most probative? We contend that customers can provide investigators and judges with information regarding several relevant issues in an acquisition, including industry structure, geographic and product demand substitution, and acceptance of potential market entrants. In contrast, customers will have considerably less information relevant to the likelihood of entry, the extent of any merger-specific efficiencies, and the validity of a failing firm defense. They will almost never be qualified to offer legal conclusions, such as the proper market definition or likely competitive effects of a proposed merger. We conclude that courts have generally remained consistent in their reliance on customer testimony, including in the Arch< Coal and Oracle cases, and that customer testimony, despite its limitations, should and will continue to be important at each stage of the merger review process.

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

Competition Policy/Antitrust Chapters in Free Trade Agreements

Posted by D. Daniel Sokol

Sokold For a change, I am posting on my own work.  A few months ago I presented a paper for the Chicaog Kent Law School conference on Latin American Law and Development.  I produced a paper in which I note that in many ways, the extensive talk about the role of antitrust in international trade is just talk.  These chapters in trade agreements lack dispute settlement and hence, the commitments are not binding.  I title my paper Why is this Chapter Different from All the Others? An Examination of Why Countries Enter into Non-Enforceable Competition Policy Chapters in Free Trade Agreements.

ABSTRACT:  There has been an explosion in the past 10-15 years of bilateral and regional free trade agreements in Latin America (together preferential free trade agreements or “PTAs”). The purpose of PTAs is to increase trade, regulatory and investment liberalization. As trade liberalization requires more than just a reduction of tariffs, PTAs include “chapters” in a number of areas of domestic regulation. These chapters that address domestic regulation, create binding commitments to liberalize domestic regulation that may impact foreign trade. Among chapters that address domestic regulation, many of the Latin American PTAs include a chapter on antitrust/competition policy. Until now, the effectiveness of such chapters has remained unanswered. This article undertakes the first empirical analysis of Latin American antitrust/competition policy chapters in PTAs.

To understand the dynamics of PTAs, this article begins with some context of Latin American development. First, the article provides an overview of the process of liberalization in Latin America. It then describes how domestic antitrust fits within Latin American liberalization. Thereafter, it describes the limits of domestic antitrust in Latin America. The article then describes competition policy chapters within Latin American PTAs. The standard practice in PTAs is to create binding commitments that have third party adjudication for potential disputes. The choice of international institutions, such as PTAs, is based on the perception of the relative strength of PTAs over purely domestic approaches. A comparison of the institutional alternatives to PTAs illustrates that this perception is not born out by the facts. This article finds that antitrust chapters within PTAs go against the standard practice of binding commitments. Competition policy chapters, unlike other chapters of the same trade agreement, lack binding dispute settlement. All Latin American PTAs lack dispute settlement for core antitrust issues of mergers, collusive agreements and monopolization within the competition policy chapters. This departure from the standard PTA practice is more striking given that other chapters in the same trade agreement have binding dispute resolution. These other chapters include some competition element to them, such as services and intellectual property. The remainder of the paper explores the dynamics of these chapters, including why PTAs treat antitrust differently from other areas of domestic regulation.

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

Tuesday, August 7, 2007

Unfit to Be Tied: An Analysis of Trident v. Independent Ink

Posted by D. Daniel Sokol

Nalebuffb Barry Nalebuff of Yale's School of Management always has something interesting to write.  In his most recent working paper, Unfit to Be Tied: An Analysis of Trident v. Independent Ink, he analyzes how to address tied sales by a firm with a patent.  He argues that a per se rule for tying  in such cases is valid.

ABSTRACT: In Illinois Tool Works and Trident v. Independent Ink, the Supreme Court overturned its longstanding per se rule against tied sales by a firm with a patent. Henceforth, market power will have to be demonstrated, whether or not the firm has a patent. Upon such demonstration, a tied sales contract will still be a per se antitrust violation. Our review of the case raises the question of why firms engage in tied sales and what is the antitrust issue. While the courts have focused on the leverage of market power, this case suggests a different concern: with complementary goods (such as a printer and ink), tying is used to engage in price discrimination via metering. The antitrust issue is that consumers will be harmed because the firm, by metering, is able to be a more effective monopolist and thereby extract more of the consumer surplus. And while perfect price discrimination may be efficient, there is no presumption that more imperfect price discrimination improves efficiency. As for the legitimate objectives, such as risk sharing, they can be met via direct metering. This suggests the wisdom of maintaining the per se rule against tied contracts when market power has been demonstrated.

August 7, 2007 | Permalink | Comments (4) | TrackBack (0)

Monday, August 6, 2007

Will Negotiating Teams From the Same Firm Compete Against One Another?

Posted by Luke Froeb

The FTC ruled that a merger between two hospitals in Evanston reduced competition and raised prices to managed care organizations (MCO's). To see how such a merger could affect price, consult your favorite managerial economics textbook:

Click here for more

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

Introducing Guest Blogger Luke Froeb

Posted by D. Daniel Sokol

Froeb Antitrust and Competition Policy Law Prof Blog is happy to announce that Luke Froeb, William and Margaret Oehmig Associate Professor of Management at Vanderbilt University's Owen Graduate School of Management, will be guest blogging with us.  Luke is one of the most influential antitrust economics scholars in the United States.  In addition to his significant and prolific scholarship (available in detail here), Luke has been active at the highest levels of antitrust policy.  From 2003-05, he served as the Director of the Bureau of Economics at the Federal Trade Commission.  Luke is no stranger to blogging as he is one of the contributors at Management R&D.  Luke's antitrust related posts on his blog will get cross posted on this blog.   

 

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

Competition Policy at the Canadian Law and Economics Association Annual Meeting

Posted by D. Daniel Sokol

Next month both Shubha and I are off to the University of Toronto Faculty of Law for the annual meeting of the Canadian Law and Economics Association.  There will be three sessions on competition policy and a keynote address by competition policy expert Michael Trebilcock.

Competition Law and Policy I
Elina Cruz and Sebastian Zarate, Single European Telecommunications Market From A Competition Policy and Regulatory Perspective.  Analysis of the British and Spanish Cases

Daniel Sokol, Why is this Chapter Different From All the Others? An Examination of Why Countries Enter Into Non-enforceable Competition Policy Chapters in Free Trade Agreements

Competition Law and Policy II
Daniel Sokol and Kyle Stiegert, Long Term Advisers and Capacity Building in Competition Policy

Volkan Cetinkaya, Minimum Advertised Price and Resale Price Maintenance

Michal S. Gal, Below-Cost Price Alignment: Meeting or Beating Competition

Competition Law and Policy III
Doug West and Andrew Eckert, Exclusive Dealing in On-Premise Sales of Beer in Edmonton

Filomena Chirico, Ilse van der Haar, Pierre Larouche, Net Neutrality and European Law

Hamid Fazeman, Rules of Privatization and Globalization in Iran


August 7 Update

One additional panel will have an antitrust paper at the CLEA meeting.  Mark D. Bauer of Stetson University College of Law will be presenting in the session "Additional Topics I" on Macy's 2005 acquisition of May Department Stores.

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

Sunday, August 5, 2007

Competition Policy and Railway Investment in Australia

Posted by D. Daniel Sokol

The appropriate role for antitrust varies across regulated sectors.  A new working paper on the Austrlian railroad sector, Competition Policy and Railway Investment in Australia, by Nick Wills-Johnson of Curtin Business School sheds light on how competition policy affects investment in the sector.

ABSTRACT: This project sought to examine the impacts of National Competition Policy (NCP) on investment in Australian general freight and passenger railways, and more generally to assess the rationale underlying NCP and related economic reforms applied to Australian railways. It does not appear that NCP and related reforms have yet had a negative impact on investment. Indeed, vertical separation may have improved investment, at least that being sourced from the public sector. However, there are some intrinsic issues associated with the application of economic regulation which could in the future retard investment, and with the predominantly public sector origin of much of recent investment. In particular, the case for economic reform seems to be weakly made: there are few rents of the type economic regulation can moderate in the logistics chains served by rail in Australia, and there seems only limited scope for sustainable competition in the above-rail task.

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