Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, November 24, 2007

Vertical Separation v. Independent Downstream Entry in the Spanish Electricity Network: An Experimental Approach

Posted by D. Daniel Sokol

With the winter freeze soon approaching, it is time to consider how to create a more efficient electric sector. In their paper Vertical Separation v. Independent Downstream Entry in the Spanish Electricity Network: An Experimental Approach, Aitor Ciarreta (Universidad del País Vasco), Enrique Fatas (University of Valencia), Nikolaos Georgantzís (University Jaume I of Castellon) and Carlos Gutierrez-Hita (University Miguel Hernández) undertake some interesting modeling work to arrive at a more efficient market design.

ABSTRACT: We present experimental results from a series of sessions organized using the Power Market simulator; a software designed to realistically replicate the Spanish Electricity Market. In the experiments reported here we compare the status quo to two alternative treatments which represent alternative market structures. In one of them, labeled as vertical separation, we assume that power generating firms and electricity distributors-end suppliers belong to separate business groups. In the second, we study the effect of entry by independent end-suppliers. Both alternative scenarios dominate the status quo in terms of market efficiency, whereas the latter of them dominates the former.

November 24, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, November 23, 2007

I Love Competition on Black Friday

Posted by D. Daniel Sokol

I love competition.  Perhaps a truism but when firms compete on price and quality, consumers win out.  Because of two children under the age of two years, I often am up at odd hours.  This morning I did the 5 minute drive to our closest Wal-Mart and came back with some excellent deals on electronics.  You cannot beat Wal-Mart's prices, especially on their holiday loss-leaders.  I arrived at the store at 4:55am.  The loss leaders were  available as of 5am.  The parking lot was totally full.  To think that my big holiday purchases were done by 5:03am is a great feeling.  Like many other consumers, I was a winner this morning.

November 23, 2007 | Permalink | Comments (0) | TrackBack (0)

European Commission Conference on Market Definitions and "Like Products"

Posted by D. Daniel Sokol

Trainees and officials from four Directorates-General of the European Commission – Competition, Internal Market and Services, Taxation and Custom Union, and Trade – are jointly organizing a workshop to take place on 14 December 2007 at the European Commission (Berlaymont building, 7th floor) from 9h30 to 12h30. The theme of the workshop is market definitions and "like products" in competition law, internal market law, tax law and trade law.

The workshop will be chaired by Mr. Stefan AMARASINHA (DG Trade and World Trade Institute) and will be structured as follows:

(1) an introductory lectio magistralis delivered by Professor Jacques BOURGEOIS (College of Europe and WilmerHale LLP)

(2) separate group work on an assigned case; a specialist from each DG will chair and provide guidance to each of the four groups: - Mr. Stefan AMARASINHA, DG Trade - Mr. Jan FOLTMAR, DG Taxation and Customs Union - Dr. Oliver KOCH, DG Competition - Mr. Peter SMITH, DG Internal Market and Services

(3) Final panel discussions where the Commission officials will play the role of rapporteurs of the four groups Berlaymont building, 7th floor. European Commission. 200, rue de la Loi/Wetstraat. Brussels métro: Schuman. Free of charges. Please register at: workshop4dg@gmail.com.

November 23, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 22, 2007

Patching Together what Works in the Fight Against Hard-Core Cartels: Carrots, Sticks, Custody and Leniency

Posted by D. Daniel Sokol

What is not to like about a paper with a long and ambitious title of Variable Geometry Europe - Patching Together what Works in the Fight Against Hard-Core Cartels: Carrots, Sticks, Custody and Leniency by Patrick Dunphy of the European Corporate Governance Institute (ECGI), University of Bonn - Institute for Trade and Commercial Law.

ABSTRACT: The issue of fighting cartel-behaviour in the European Community has been continually addressed both by the European Commission and National Competition Authorities. Concerted practices in corporate governance pursuant to Article 81 EC, continue to be a major problem to the promotion of a competitive Common Market.

This paper aims to analyse these efforts in terms of their effectiveness, and efficiency. By way of viewing select EU Member States anti-cartel provisions, and comparing these to their intra-EC as well as to their U.S. pendants, differences as to the efficiency and the effectiveness of the analysed policies should become evident to the reader. Explicitly, the relevant U.K., U.S., German and French provisions are reviewed.

At the Conclusion of this debate, it will be argued that an effective anti-cartel regime must consist of a severe sanctioning regime complimented by a clear and concise leniency policy integrating the notion of Amnesty Plus, thus providing corporate decision makers with a clear and concise structure in corporate governance. The reader should thus acquire a good understanding of the analysed regimes, while noticing the variable geometry, which is current European Competition Law.

November 22, 2007 | Permalink | Comments (0) | TrackBack (0)

Competition Laws in Latin America and Caribbean: History, Enforcement and Amendments

Posted by D. Daniel Sokol

Juan David Gutierrez of Pontificia Universidad Javeriana in Colombia provides an excellent resource with his paper Competition Laws in Latin America and Caribbean: History, Enforcement and Amendments.

ABSTRACT: The objective of the document, written in Spanish, is to present the current competition laws in Latin America and Caribbean. Recent reforms and bills that are discussed by several Congresses of the region are also referenced. The legal background of competition laws in Latin America and Caribbean is divided in three periods of time, taking into account their issuance and effective enforcement. Due to a detailed reference to the web pages of the competition authorities, this document constitutes a guide for a first hand approach to competition law in seventeen countries of Latin America and Caribbean; likewise, the references to the legislative's web pages permit the monitoring of the amendments or the new bills that are discussed in the each national congress.

November 22, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 21, 2007

Price Squeeze Issue Pontetially Before the Supreme Court

Posted by D. Daniel Sokol

A brief for cert in Pacific Bell Telephone Co. v. linkLine Communications by a number of law professors and professors of economics (William J. Baumol, Robert H. Bork, Robert W. Crandall, George Daly, Harold Demsetz, Jeffrey A. Eisenach, Kenneth G. Elzinga, Gerald Faulhaber, Franklin M. Fisher, Charles J. Goetz, Robert Hahn, Jerry A. Hausman, Thomas M. Jorde, Robert E. Litan, Paul W. MacAvoy, J. Gregory Sidak, Pablo T. Spiller, and Daniel F. Spulber) is worth a read.

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

Tuesday, November 20, 2007

Evaluating Market Power Using Competitive Benchmark Prices Rather than the Hirschman-Herfindahl Index

Posted by D. Daniel Sokol

One of the most interesting papers of the year has to be Evaluating Market Power Using Competitive Benchmark Prices Rather than the Hirschman-Herfindahl Index by Jerry Hausman of MIT's Department of Economics and Greg Sidak of Georgetown Law Center.

ABSTRACT: Whenever feasible, market power determinations should rest on competitive benchmark prices rather than the typical market concentration approach. Government regulators in many countries have issued guidelines on the evaluation of market power in the merger context and other areas that define relevant markets and calculate market shares - along with a summary measure of market concentration, usually the Hirschman-Herfindahl index (HHI). However, competition authorities recognize that high concentration measures are generally not a sufficient condition to infer market power. Use of other structural factors in a market often does not lead to any clearer conclusion. We show that prices that consumers pay for the product in question often offer a superior quantitative measurement that leads to a clearer conclusion than the HHI approach. Further, because prices form the basis for the evaluation of consumer welfare (consumers surplus), they also provide important information for competition authorities, whose goal is typically the protection of consumer welfare. To demonstrate our argument, we examine a decision by the Irish telecommunications regulator, ComReg, which used the EU competition guidelines and the HHI approach to determine that
Ireland's two largest mobile providers, Vodafone and O2, had joint dominance and were exercising significant market power. We demonstrate how our benchmark prices approach is superior to the
HHI approach.

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

Sunday, November 18, 2007

Measuring the Rate of Return for Competition Law

Posted by D. Daniel Sokol

Paul A. Grout (Department of Economics,  University of Bristol) and Anna Zalewska (School of Management, University of Bath) offer an interesting article in Measuring the Rate of Return for Competition Law.

ABSTRACT: This paper focuses on the application and interpretation of measures of rate of return for competition law. Amongst other results, we analyse how outsourcing and similar arrangements impact the rate of profitability and show that the measurement is more volatile the greater the rate of profit (suggesting that the measures are most problematic when they are most needed). We identify and interpret the outsourcing arrangements that provide the lowest rate of profit and show that these arrangements have a close relationship to net present value. Finally, we provide suggestions to make profitability measures more informative for competition law.

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