Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, March 8, 2008

Price Discrimination Bans on Dominant Firms

Posted by D. Daniel Sokol

A new paper Price Discrimination Bans on Dominant Firms by Jan Bouckaert (University of Antwerp - Department of Economics), Hans Degryse (Tilburg University - CentER) and Theon van Dijk (affiliation unknown) suggests that static analysis will look different from dynamic analysis of price discrimination bans.

ABSTRACT: Competition authorities and regulatory agencies sometimes impose pricing restrictions on firms with substantial market power - the dominant firms. We analyze the welfare effects of a ban on behaviour-based price discrimination in a two-period setting where the market displays a competitive and a sheltered segment. A ban on higher-prices-to-sheltered-consumers decreases prices in the sheltered segment, relaxes competition in the competitive segment, increases the rival's profits, and may harm the dominant firm's profits. We show that a ban on higher-prices-to-sheltered-consumers increases the dominant firm's share of the first-period market. A ban on lower-prices-to-rival's-customers decreases prices in the competitive segment, lowers the rival's profits, and augments the consumer surplus. In particular, while second-period competition is relaxed by a ban on lower-prices-to-rival's-customers, first-period competition is intensified substantially, which leads to lower prices on-average over the two periods. Our findings indicate that a dynamic two-period analysis may lead to conclusions opposite to those drawn from a static one-period analysis.

March 8, 2008 | Permalink | Comments (0) | TrackBack (0)

Friday, March 7, 2008

Spanish Competition Agency (CNC) Begins a Cartel Leniency Program

Posted by D. Daniel Sokol

Continuing a global trend, Spain's CNC has begun a cartel leniency program.  Let's hope that this will increase the number of cartels discivered.

March 7, 2008 | Permalink | Comments (0) | TrackBack (0)

Supranational Agency: A Solution for Conflict in International Mergers?

Posted by D. Daniel Sokol

Poonam Mehra of the University of Hamburg - Institute of Law and Economics develops a theoretical model to suggest transfer payments across countries in international antitrust merger control in Supranational Agency: A Solution for Conflict in International Mergers?

ABSTRACT: Conflict between national antitrust or competition laws is likely to increase with the increase in global integration. In this paper we develop a two-country, three-firm model to analyze the possibilities of conflict between national antitrust authorities, using the welfare criteria. We show that if countries maximize their national welfare there is a likelihood of conflict resulting at times in obstruction of welfare-enhancing mergers. We show that shifting to either a global welfare or consumer surplus standard can resolve conflicts but may not always lead to an efficient outcome. To achieve efficiency, transfer payments are required. We argue that there is a scope for institutions like WTO to assume the role of supranational authority in cross border merger cases.

March 7, 2008 | Permalink | Comments (0) | TrackBack (0)

Defining Markets that Involve Multi-Sided Platform Businesses: An Empirical Framework with an Application to Google's Purchase of DoubleClick

Posted by D. Daniel Sokol

Michael D. Noel of the University of California, San Diego Department of Economics and David Evans of LECG and University College London Faculty of Law address Defining Markets that Involve Multi-Sided Platform Businesses: An Empirical Framework with an Application to Google's Purchase of DoubleClick.

ABSTRACT: A multi-sided platform (MSP) serves as an intermediary for two or more groups of customers who are linked by indirect network effects. Recent research has found that MSPs are significant in many industries and that some standard economic results - such as the Lerner Index - do not apply to them, in material ways, without some significant modification to take linkages between the multiple sides into account. This article extends several key tools used for the analysis of mergers to situations in which one or more of the suppliers are MSPs. It shows that the application of traditional tools to mergers involving MSPs results in biases the direction of which depends on the particular tool being used and other conditions. It also extends these tools to the analysis of the merger of MSPs. The techniques are illustrated with an application to an acquisition by Google in the online advertising industry.

March 7, 2008 | Permalink | Comments (0) | TrackBack (0)

Thursday, March 6, 2008

Latest Developments on the Chinese Anti-Monopoly Law

Posted by D. Daniel Sokol

With the ICN meeting in Kyoto just a month away in which unilateral conduct will be a topic, we have some new developments on the Chinese Anti-monopoly Law (AML) courtesy of Paul Jones of Jones & Co.  According to Jones:

  • In China the full legislature, the National People’s Congress, meets every March. During the rest of the year only the Standing Committee meets. The meetings started yesterday and as part of a “preparatory” meeting (called the CPPCC National Committee), Li Yuguang, the Deputy Director of the State Intellectual Property Office (“SIPO”) gave a speech.
  • In the speech he stated that since 2005 China has suffered significant trade losses because of the barriers posed by foreign intellectual property rights. He is referring primarily to licenses for technical standards, I believe, but the articles below do not make that clear. One of the remedies that he called for are the intellectual property rights regulations under China’s new Anti-Monopoly (Antitrust or Competition) Law.

For those of you who read Mandarin, see here and here.

March 6, 2008 | Permalink | Comments (0) | TrackBack (0)

Market Definition in Online Markets

Posted by D. Daniel Sokol

Michael Baye, the Director of the FTC's Bureau of Economics has some great slides on Market Definition in Online Markets.

March 6, 2008 | Permalink | Comments (0) | TrackBack (0)

Benefits from Private Antitrust Enforcement: An Analysis of Forty Cases

Posted by D. Daniel Sokol

In what is an important addition to antitrust scholarship, Josh Paul Davis, University of San Francisco - School of Law and Robert  H. Lande, University of Baltimore Law School have written Benefits from Private Antitrust Enforcement: An Analysis of Forty Cases.

ABSTRACT: The goal of this Report is to take a first step toward providing an empirical basis for assessing whether private enforcement of the antitrust laws is serving its intended purposes and is in the public interest. To do this the Report assembles, aggregates, and analyzes information about forty of the largest recent successful private antitrust cases. This information includes, inter alia, the amount of money each action recovered, what proportion of the money was recovered from foreign entities, whether the private litigation was preceded by government action, the attorneys' fees awarded to plaintiffs' counsel, on whose behalf money was recovered (direct purchasers, indirect purchasers, or a competitor), and the kind of claim the plaintiffs asserted (rule of reason, per se, or a combination of the two). The article also compares the amounts collected from all antitrust violations together, and also from cases that also resulted in criminal penalties, to the total of all criminal antitrust fines imposed during the same period by the U.S. Department of Justice. This information is then used to help formulate policy conclusions about the desirability and efficacy of private enforcement of the antitrust laws.

March 6, 2008 | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 5, 2008

PhD Student Conference This Week at The Interdisciplinary Centre for Competition Law and Policy

Posted by D. Daniel Sokol

This week will be the first ever international PhD student conference at the Queen Mary, University of London Interdisciplinary Centre for Competition Law and Policy.  The schedule of papers is available here.

March 5, 2008 | Permalink | Comments (0) | TrackBack (0)

Shyam Khemani Joins MICRA

Posted by D. Daniel Sokol

As the Global Competition Review reported yesterday, Shyam Khemani has joined consulting firm MICRA.   Shyam retired last month from the World Bank, where he was the competition policy specialist.  Shyam has done much good work over the years in promoting competition policy around the developing world and he will be missed in his World Bank role.  I had a chance to chat with him most recently last month at the DOJ/FTC Workshop on International Technical Assistance (see my papers on antitrust technical assistance here and here).

March 5, 2008 | Permalink | Comments (0) | TrackBack (0)

Implementing the Hypothetical Monopolist SSNIP Test with Multi-Product Firms

Posted by D. Daniel Sokol

Serge Moresi, Steven Salop, and John Woodbury describe how to implement the hypothetical monopolist SSNIP test for market definition in the context of merger cases where firms produce multiple differentiated products in their paper from the current issue of the Antitrust Source, Implementing the Hypothetical Monopolist SSNIP Test with Multi-Product Firms.

March 5, 2008 | Permalink | Comments (0) | TrackBack (0)

Winner of Tenth Annual Law Student Writing Competition of the ABA Section of Antitrust Law is My Research Assistant

Posted by D. Daniel Sokol

I am pleased to announce that my research assistant, John Henry Kilper, has won first prize in the Tenth Annual Law Student Writing Competition of the ABA Section of Antitrust Law.  John won the award for his article A Bundle of Trouble: An Analysis of How the Lower Courts Have Handled Bundled Discounts Since LePage's Inc. v. 3M, 72 Mo. L. Rev. 1363 (2007).

As the top prize winner in the competition, John has been invited to Washington, D.C., where he will receive his prize during the ABA Section of Antitrust Law's Spring Meeting, March 26-28, 2008.

March 5, 2008 | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 4, 2008

Federal Trade Commission Bureau of Economics Speaker Series

Posted by D. Daniel Sokol

Date

Speaker/Paper/Host

Feb. 7 Ben Atkinson
(Competition Bureau Canada)
“Price Cycling”
NJ Avenue Conference Center Room B
Feb. 21 Robert Clark
(HEC)
"Market Structure and the Diffusion of Electronic Banking”
NJ Avenue Conference Center Room B
Feb. 28 Kim Sau Chung
(University of Minnesota)
“Loopholes”
Mar. 6 CANCELLED
Bob Hall
(Stanford University)
“The Incentive to Start New Companies: Evidence from Venture Capital”
NJ Avenue Conference Center Room A
Mar. 13 Rachel Soloveichik
(Bureau of Economic Analysis)
“Family Transfers in Rural Mexico, An Application to Risk Sharing and Labor Supply Elasticity”
NJ Avenue Conference Center Room A
Mar. 27 Jeff Prince
(Cornell University)
Measuring Welfare and the Effects of Regulation in a Government-Created Market: The Case of Medicare Part D Plans
NJ Avenue Conference Center Room A
Apr. 10 Chris Garmon
(Federal Trade Commission)
"An Empirical Test of Bargaining Theory: Major League Baseball's Rule IV Draft"
NJ Avenue Conference Center Room B
Apr. 17 Joe Farrell
(Berkeley)
“What Is (or Isn’t) the Competitive Process?”
Apr. 24 Emily Oster
(University of Chicago)
“Routes of Infection: Exports and HIV Incidence in Sub-Saharan Africa”
NJ Avenue Conference Center Room B
May 1 Philip Leslie
(Stanford University)
NJ Avenue Conference Center Room C
May 8 Claudio Lucarelli
(Cornell University)
NJ Avenue Conference Center Room B
May 15 Frank Wolak
(Stanford University)
May 29 Greg Crawford
(FCC)
NJ Room 4100

Unless otherwise noted, all seminars will take place on Thursdays at 2:30pm in the ground floor Conference Center located at 601 New Jersey Ave. NW. No prior security clearance is necessary except for the seminars held in room 4100. Address inquiries to Chris Adams (CADAMS@ftc.gov) or Tammy John (tjohn@ftc.gov).

March 4, 2008 | Permalink | Comments (0) | TrackBack (0)

More FTC Senior Departures

Posted by D. Daniel Sokol

Another week, another significant set of government departures-- the end of an administration tends to have this effect.  Jeff Schmidt, the Director of the FTC's Bureau of Competition is rumored to be leaving for Linklaters while the FTC's Deputy GC, John Graubert , has joined Covington.

March 4, 2008 | Permalink | Comments (0) | TrackBack (0)

An Examination of the Efficiency, Foreclosure, and Collusion Rationales for Vertical Takeovers

Posted by D. Daniel Sokol

Jaideep Shenoy, Georgia State University - Department of Finance, suggests that vertical integration is not anti-competitive in his paper An Examination of the Efficiency, Foreclosure, and Collusion Rationales for Vertical Takeovers.

ABSTRACT: We investigate the efficiency, foreclosure, and collusion rationales for a large sample of vertical takeovers. The efficiency rationale posits that vertical integration prevents future holdup between non-integrated suppliers and customers. In contrast, the foreclosure and collusion rationales suggest that vertical integration harms competition. To distinguish between these hypotheses, we examine the announcement period wealth effects of the merging firms, acquirer rivals, target rivals, and corporate customers. Our results suggest that firms alter their vertical boundaries in a manner that is consistent with the efficiency rationale. Our tests do not find evidence supportive of the anti-competitive rationales for vertical integration.

March 4, 2008 | Permalink | Comments (0) | TrackBack (0)

Monday, March 3, 2008

Materials on European Community Law of Competition

Posted by D. Daniel Sokol

This past month, Oxford University Press released the 2008 edition of Bellamy & Child: Materials on European Community Law of Competition.

Description: This fully up-to-date volume of European Community Law competition materials includes all of the relevant legislation, Commission Notices and Guidelines, including industry sector specific legislation, notices and guidelines and extensive coverage of the rules on State Aids. It will provide a one-stop resource for competition and antitrust practitioners worldwide.

Designed with busy practitioners in mind, as a new feature it has footnotes immediately below individual recitals and articles where comment is required, for ease of use. These footnotes include the original OJ notes, editorial notes regarding amendments, and as a major enhancement, thorough pinpoint references to specific paragraphs where relevant commentary can be found in the new, sixth edition of Bellamy & Child: European Community Law of Competition.

March 3, 2008 | Permalink | Comments (0) | TrackBack (0)

Improving Critical Loss Analysis

Posted by D. Daniel Sokol

Joseph Farrell and Carl Shapiro (both of Berkeley- Economics Department and Haas School of Business respectively) offer two new tests using Critical Loss Analysis to determine if a candidate group of products contains enough substitutes to form a market in their brief paper Improving Critical Loss Analysis.

March 3, 2008 | Permalink | Comments (0) | TrackBack (0)

DOJ Antitrust Division Economic Analysis Group Spring Lecture Series

Posted by D. Daniel Sokol

March 11
(Tues 2-3:30pm)
Fan Zhang
EAG
Dynamic Contract Breach

March 18
(Tues 2-3:30pm)
Michal Gal
Haifa and Georgetown
Competition Law in Small Economies

April 1
(Tues 2-3:30pm)
Julie Mortimer
Harvard
The Effects of Full-Line Forcing Contracts (with Justin Ho and Kate Ho)

April 8
(Tues 2-3:30pm)
Chad Syverson
Chicago
Vertical Integration and Production: Some Plant-Level Evidence (with Ali Hortaçsu)

April 16
(Wed 2-3:30pm)
Joe Farrell
UC Berkeley
How, and Whether, to Define a Market (with Carl Shapiro)
[Note this is a Wednesday.]

April 30
(Wed 2-3:30pm)
Phillip Leslie
Stanford
Nearly Optimal Pricing for Multiproduct Firms (with Chenghuan Sean Chu and Alan Sorensen) [Note this is a Wednesday.]

May 6
(Tues 2-3:30pm)
F. Andrew Hanssen
EAG and Montana State
Vertical Integration During the Hollywood Studio Era: A Transaction Costs Explanation

May 14
(Wed 2-3:30pm)
Frank Wolak
Stanford
To be determined
[Note this is a Wednesday.]

May 20
(Tues 2-3:30pm)
Nisvan Erkal
Melbourne
Scarcity of Ideas and Options to Invest in R&D (with Suzanne Scotchmer)

June 3
(Tues 2-3:30pm)
Michael Whinston
Northwestern
Sequential Merger Review (with Volker Nocke)

Early seminars take place in the Bicentennial Building at 600 E Street NW.
Later seminars will take place in the Liberty Square Building at 450 5th Street NW.
For further information, contact Patrick Greenlee at 202-307-3745 or patrick.greenlee@usdoj.gov.

March 3, 2008 | Permalink | Comments (0) | TrackBack (0)

Sunday, March 2, 2008

Market Concentration in the Antitrust Analysis of Horizontal Mergers

Posted by D. Daniel Sokol

Jbaker Jonathan Baker of American University's Washington College of Law provides an important contribution to this literature in his piece Market Concentration in the Antitrust Analysis of Horizontal Mergers by providing one stop shopping for those looking to better understand the literature of market concentration issues.

ABSTRACT: This handbook chapter will appear in Antitrust Law & Economics (Keith Hylton, ed. forthcoming 2009). It describes the role of market concentration in the legal framework for the antitrust review of horizontal mergers and evaluates the extent to which modern economic analysis supports a role for concentration in that review. The chapter examines market definition, the predicate for measuring market shares and market concentration, and the role of market shares and concentration in the analysis of the coordinated and unilateral competitive effects of merger. The central issue considered is when and how market shares, and market concentration statistics derived from them, form an appropriate basis for presuming harm to competition from merger.

March 2, 2008 | Permalink | Comments (0) | TrackBack (0)