Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, December 29, 2007

The Genesis of Cartel Investigations: Some Insights from Examining the Dynamic Interrelationships between U.S. Civil and Criminal Antitrust Investigations

Posted by D. Daniel Sokol

Vivek_ghosal Vivek Ghosal of Georgia Tech (School of Economics) has written the fascinating The Genesis of Cartel Investigations: Some Insights from Examining the Dynamic Interrelationships between U.S. Civil and Criminal Antitrust Investigations.  The article has important policy implications regarding cartel detection.

ABSTRACT: The U.S. Department of Justice has prosecuted over 1600 criminal antitrust (price-fixing and related) cases since 1970. Yet we know precious little about the true genesis of these investigations. This paper uses the vector-autoregression methodology to examine the dynamic interrelationships between the various criminal and civil antitrust enforcement variables. A key result is that the number of criminal prosecutions increases in the years immediately following an increase in the number of civil cases, suggesting that merger reviews and other civil investigations may alert the antitrust authorities to criminal antitrust activities. To the best of my knowledge, this is the first econometric analysis that demonstrates the quantitative size of this effect and the time lags in the relationship. Other findings include important dynamic interrelationships between grand jury investigations, the number of individuals and corporations prosecuted, and criminal cases, indicating that information unearthed during a given criminal investigation and prosecution often reveals information about other conspiracies leading to future investigations and prosecutions. Finally, the number of criminal cases prosecuted increases following an economic downturn. We relate this increase to the literature, which points to cartel instability during economic downturns.

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

Friday, December 28, 2007

Experts' Guide to the Best Antitrust Articles and Books of 2007

Posted by Shubha Ghosh and D. Daniel Sokol

This year we are starting the tradition of assembling a group of experts to pick the best antitrust scholarship of the year.  We have two categories- best book and best article.  We construe both of these categories liberally.  By article we mean something published as an accepted paper or working paper in 2007 including essays, articles and book chapters.  By book we include anything that is hardback or softback- edited volume, treatise, monograph, government report, or textbook.  If trees died in the publication process, we count it.

To assist us in the selection process, we called upon an All-Star cast of competition law and economics specialists from around the world.  Our All-Stars include (in alphabetical order):

Stephen Calkins, Wayne State University Law School
John Connor, Purdue University Department of Agricultural Economics
Einer Elhauge, Harvard Law School
Michal Gal, University of Haifa Faculty of Law
Alberto Heimler, Italian Competition Authority (Autorita Garante della Concorrenza e del Mercato)
Geoff Manne, Lewis and Clark Law School
Ioannis Lianos, University College London Faculty of Law*
Nicolas Petit, University of Liege Faculty of Law
John Vickers, University of Oxford Faculty of Economics
Josh Wright, George Mason University Law School

* Ioannis picked three articles in lieu of one article and one book.

The picks are available in the document below.  Enjoy!

Download antitrust_picks_word_version1.2.doc

December 28, 2007 | Permalink | Comments (0) | TrackBack (1)

Thursday, December 27, 2007

The Political Economy of Antitrust

Posted by D. Daniel Sokol

Out this year is a new and excellent book edited by Vivek Ghosal of Georgia Tech's School of Economics titled  The Political Economy of Antitrust.

Contents include:

Chapter 1:  Issues in Antitrust Enforcement,  Vivek Ghosal (Georgia Institute of Technology), Joseph Harrington (Johns Hopkins University) and Johan Stennek (Research Institute for Industrial Economics, Stockholm). Chapter 2:  Remembrance of Things Past: Antitrust, Ideology, and the Development of Industrial Economics.  Stephen Martin (Purdue University). Chapter 3:  The Impact of the Corporate Leniency Program on Cartel Formation and the Cartel Price Path.  Joe Chen (University of Tokyo) and Joseph Harrington (Johns Hopkins University). Chapter 4:  Optimal Fines in the Era of Whistleblowers: Should Price Fixers Still go to Prison   Paolo Buccirossi (Laboratory of Economics, Antitrust and Regulation, Rome) and Giancarlo Spagnolo (Stockholm School of Economics). Chapter 5:  Instruments for Cartel Deterrence, and Conflicts of Interests.  Cecile Aubert (Universite Paris IX Dauphine). Chapter 6:  Lessons for Competition Policy from the Vitamins Cartel.  William Kovacic (George Washington University), Robert Marshall (Pennsylvania State University), Leslie Marx (Duke University) and Matthew Raiff (Bates White). Chapter 7:  Effectiveness of Antitrust Sanctions on Modern International Cartels  John Connor (Purdue University). Chapter 8:  The Economics of Tacit Collusion in Merger Analysis.  Marc Ivaldi, Bruno Jullien, Patrick Rey, Paul Seabright and Jean Tirole (University of Toulouse). Chapter 9:  The Economics and Politics of International Merger Enforcement: A Case Study of the GE/Honeywell Merger.  Jay Pil Choi (Michigan State University). Chapter 10:  The Political Economy of EU Merger Control: Small versus Large Member State Interests.  Henrik Horn (Institute for International Economic Studies, Stockholm) and Johan Stennek (Research Institute for Industrial Economics, Stockholm). Chapter 11:  A Consumers  Surplus Defense in Merger Control.  Sven-Olof Fridolfsson (Research Institute for Industrial Economics, Stockholm). Chapter 12:  EU Merger Remedies: A Preliminary Empirical Assessment.  Tomaso Duso (Humboldt University and WZB), Klaus Gugler (University of Vienna) and Burcin Yurtoglu (University of Vienna). Chapter 13:  The Significant Impediment of Effective Competition Test in the New European Merger Regulation: In Theory and Practice.  Jerome Foncel (GREMARS, University of Lille), Marc Ivaldi (University of Toulouse) and Valerie Rabassa (DG Competition, European Commission). Chapter 14:  Vertical Restraints and the Effects of Upstream Horizontal Mergers.  Luke Froeb (Vanderbilt University), Steven Schantz (Vanderbilt University) and Gregory Werden (U.S. Department of Justice). Chapter 15:  Political Stabilization by an Independent Regulator.  Antoine Faure-Grimaud (London School of Economics) and David Martimort (University of Toulouse). Chapter 16:  Saving Section 2: Reframing U.S. Monopolization Law.  Timothy Brennan (University of Maryland, Baltimore). Chapter 17:  Private Antitrust Litigation: Procompetitive or Anticompetitive   Preston McAfee (California Institute of Technology), Hugo Mialon (Emory University) and Sue Mialon (University of North Dakota). Chapter 18:  Antitrust in Open Economies.  Joseph Francois (Tinbergen Institute) Henrik Horn (Institute for International Economic Studies, Stockholm).

December 27, 2007 | Permalink | Comments (0) | TrackBack (0)

Imperfect Legal Unbundling of Monopolistic Bottlenecks

Posted by D. Daniel Sokol

Addressing issues of how to best increase competition in liberalized utilities is a rather difficult undertaking.  Felix Höffler of the Max Planck Institute of Research on Collective Goods and Sebastian Kranz of University of Bonn Department of Economics may have an answer- "consumers may benefit most from legal unbundling with strong regulation and parts of ownership given to a minority outside shareholder."  Read their paper Imperfect Legal Unbundling of Monopolistic Bottlenecks for more details.

ABSTRACT: We study an industry with a monopolistic bottleneck (e.g. a transmission network) supplying an essential input to several downstream firms. Under legal unbundling the bottleneck must be operated by a legally independent upstream firm, which may be partly or fully owned by an incumbent active in downstream markets. Access prices are regulated but the upstream firm can perform non-tariff discrimination. Under perfect legal unbundling the upstream firm maximizes only own profits; with imperfections it considers to some extend also the profits of its downstream mother. We find that reducing imperfections in legal unbundling (keeping ownership fixed) generally increases total output. Increasing the incumbent's ownership share increases total output if imperfections are sufficiently small, otherwise the effects are ambiguous. Surprisingly, higher ownership shares of the downstream incumbent may sometimes lead to lower degrees of imperfections. Our analysis suggests that consumers may benefit most from legal unbundling with strong regulation and parts of ownership given to a minority outside shareholder.

December 27, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 26, 2007

OECD Competition Division Openings in Mexico City

Posted by D. Daniel Sokol

The OECD has announced hiring needs of two competition specialists to be based in Mexico City.  Details are available here.  Below are some highlights from the posting.

  • TWO PROJECT POSTS – FIXED TERM APPOINTMENTS OF ONE TO TWO YEARS (with possibility of extension)
  • We are looking for two Senior Experts with substantial experience in competition policy analysis, regulation and the application of competition policy to regulations. As part of a co-operative project between the OECD and the Mexican government, they will be key members of a 12-person team of experts associated with Mexico’s independent competition authority, the Federal Competition Commission (CFC). The team will work directly with the Chairman of the CFC to develop proposals to eliminate unnecessary restrictions of competition in various laws and regulations. The CFC’s proposals will be at the core of a Presidential effort to develop new policies to increase the competitiveness of the Mexican economy. A variety of sectors will be covered.
  • In addition, the Senior Experts will be responsible for using their experience to revise, update and improve the OECD’s Competition Assessment Toolkit, an important element of the Competition Committee’s programme of work. They will also prepare reports for relevant OECD committees.
  • The staff members will be based at the OECD Center in Mexico City under the supervision of the Paris-based Head of Competition Division (http://www.oecd.org/competition) in the Directorate for Financial and Enterprise Affairs (DAF).

December 26, 2007 | Permalink | Comments (0) | TrackBack (0)

Tying, Bundling, Loyalty Rebates and Exclusive Dealing in US Antitrust: What Can Australia Learn?

Posted by D. Daniel Sokol

Can the Australian competition policy regime learn lessons from its US counterpart?  So think Natasha Blycha of Monash University and John Duns of Monash University's Faculty of Law in their work Tying, Bundling, Loyalty Rebates and Exclusive Dealing in US Antitrust: What Can Australia Learn?

ABSTRACT: Despite the fact that non-price vertical restraints are part of everyday commercial life, Australian courts have had few occasions on which to assess their anti-competitiveness. Relevant US antitrust jurisprudence is, by contrast, far richer. Two Australian reform bodies have recommended that the non-price vertical restraint provisions of the Australian legislation be amended, which would bring the Australian provisions more into line with those in the United States. Whatever the fate of these reforms, US law will inevitably influence Australian developments. Accordingly, the object of this article is to analyse US jurisprudence on non-price vertical restraints in order to determine what it has to offer Australian law.

December 26, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 25, 2007

Christmas Day- Chinese Food, a Movie... and Antitrust?

Posted by D. Daniel Sokol

The Sokol tradition in the United States on Christmas day, like that of many Jews, is to go eat Chinese Food and see a movie.*  Today's movie, by request of my two year old daughter will be Alvin and the Chipmunks.  What does this have to do with antitrust?  Thinking about movies has reminded me that in the pipeline is what I believe will be an excellent book that addresses antitrust issues in the motion picture industry.  Barak Orbach of the University of Arizona Rogers College of Law is writing Reel Law:  A Legal History of the American Motion Picture Industry (Yale University Press, forthcoming).

In terms of issues of competition in Chinese food, why is it that unlike Italian food, which is equally ubiquitous  in the United States, the market for Chinese food remains so fragmented without any national chains? 

* When I lived in England as a graduate student at Oxford, not only were the movie theaters closed on Christmas Day but they were also closed the following day for Boxing Day.  Chinese restaurants were also closed on December 25 and 26, so Christmas felt particularly strange in the UK because it seemed like there was nothing to do.

December 25, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, December 24, 2007

A New Kid on the Block: Korean Competition Law, Policy, and Economics

Posted by D. Daniel Sokol

To better understand changes in Korean competition policy, Sang-Seung Yi (Professor of Economics at Seoul National University) & Youngjin Jung (partner at Yulchon) provide an overview with their article A New Kid on the Block: Korean Competition Law, Policy, and Economics.

ABSTRACT: This paper provides two authors’ perspectives on the achievements, shortcomings, controversies, and challenges ahead for Korean competition law and policy. The Korean Competition Law, formally known as the Monopoly Regulation and Fair Trade Act (MRFTA), was enacted on the last day of 1980.1 In the past quarter-century, since its establishment in 1981 as the principal enforcer of the MRFTA, the Korea Fair Trade Commission (KFTC) has achieved significant successes, especially in the area of cartel enforcement and competition advocacy. In recent years, it has accepted economic analysis as the proper basis for determining antitrust violations and has established an economic analysis unit.

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

Sunday, December 23, 2007

Competition Policy in Hong Kong: Present Conditions and Future Prospects

Posted by D. Daniel Sokol

Staff_markwilliams With a competition law in the works, Hong Kong is ripe for the sort of competition policy analysis that Mark Williams of the School of Accounting and Finance of The Hong Kong Polytechnic University undertakes in his article Competition Policy in Hong Kong: Present Conditions and Future Prospects.

ABSTRACT: Hong Kong has a reputation for being a free and open economy. Historically, the government has maintained that the economic environment is business-friendly, with a small public sector and that competition is the bedrock of sustained growth. The rule of law provides security of property rights and the light-touch regulatory environment allows the invisible hand of competition to work effectively. Unfortunately, this characterization is not an accurate representation of competition conditions in the domestic, non-traded sector of the economy. The government monopoly of the supply of land has facilitated the development of dominant, family-owned conglomerates that extract monopoly rents in many business sectors. Private monopolies in gas and electricity supply, a duopoly in the supermarket sector, tight oligopolies in port services and oil supply, and numerous well-known cartels are prominent features of the local economy. The government now recognizes that the traditional laissez-faire policy needs reconsideration and has announced that a comprehensive competition law will be promulgated. This article outlines the development of competition policy in Hong Kong and examines whether the new ordinance will effectively resolve its entrenched competition problems.

December 23, 2007 | Permalink | Comments (0) | TrackBack (1)