Antitrust & Competition Policy Blog

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

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Saturday, January 19, 2008

Conference: Merger Analysis in High Technology Markets

Posted by D. Daniel Sokol

In what includes an impressive list of speakers, Goerge Mason University law School will host a conference on Merger Analysis in High Technology Markets.

Friday,  Feb. 1, 2008
8:15AM-2:30PM

MERGER ANALYSIS IN HIGH TECHNOLOGY MARKETS HAZEL HALL
GMU LAW SCHOOL
ROOM 121

8:15 WELCOME THOMAS HAZLETT (GMU)

8:20: MORNING KEYNOTE DENNIS CARLTON (DOJ)

8:45: PANEL 1
MODERATOR: KEN HEYER (DOJ)
HOWARD SHELANSKI (UC BERKELEY) TECHNOLOGICAL INNOVATION AND MERGER POLICY’S THIRD ERA MICHAEL BAYE (FTC) MARKET DEFINITION IN ONLINE MARKETS
RICHARD GILBERT (UC BERKELEY) SKY WARS: THE ATTEMPTED MERGER OF DISH/ DIRECTV

10:00 BREAK

10:15 PANEL 2 MODERATOR: MICHAEL VITA (FTC)
HAL SINGER (CRITERION) & ROBERT HAHN (AEI) AN ANTITRUST ANALYSIS OF GOOGLE’S PROPOSED ACQUISITION OF DOUBLECLICK
MARY COLEMAN (LECG) NICE THEORY BUT WHERE’S THE EVIDENCE?:  THE USE OF ECONOMIC EVIDENCE TO EVALUATE VERTICAL AND CONGLOMERATE MERGERS IN THE US AND EU
LUKE FROEB (VANDERBILT) MERGERS AMONG FIRMS THAT LICENSE COMMON INTELLECTUAL PROPERTY

11:30 BREAK

11:45 PANEL 3
MODERATOR: JONATHAN BAKER (AMERICAN U)
BRUCE ABRAMSON (CRAI) ARE “ONLINE MARKETS” REAL AND RELEVANT?
THOMAS HAZLETT (GMU) ANTITRUST IN ORBIT: SOME DYNAMICS OF HORIZONTAL MERGER ANALYSIS IN THE CASE OF XM-SIRIUS
J. GREG SIDAK (GEORGETOWN) EVALUATING MARKET POWER WITH TWO-SIDED DEMAND AND PREEMPTIVE OFFERS TO DISSIPATE MONOPOLY RENT: LESSONS FOR HIGH-TECHNOLOGY INDUSTRIES FROM THE PROPOSED MERGER OF XM AND SIRIUS SATELLITE RADIO

1:00 LUNCH LUNCH KEYNOTE
KEVIN MURPHY (CHICAGO GSB)

2:30 ADJOURN

VENUE: The George Mason University School of Law, Hazel Hall, 3301 Fairfax Drive, Arlington, VA 22201 (near the Virginia Square-GMU Metro -- Orange Line).  Admission is free, but seating is limited.  To reserve your spot, please email Drew Clark: [email protected].  Parking (at market rates) is available in the GMU Foundation Bldg., 3434 Washington Boulevard.  An Arlington campus map is found here:  http://www.gmu.edu/departments/infoservices/ArlingtonMap07.pdf.

January 19, 2008 | Permalink | Comments (0) | TrackBack (0)

Friday, January 18, 2008

The Elusive Antitrust Standard on Bundling in Europe and in the United States at the Aftermath of the Microsoft Cases

Posted by D. Daniel Sokol

Nicholas Economides (NYU Stern School of Business) and Ioannis Lianos (University College London Faculty of Law) have written a very important piece on The Elusive Antitrust Standard on Bundling in Europe and in the United States at the Aftermath of the Microsoft Cases.

ABSTRACT: We analyze and contrast the US and EU antitrust standards on mixed bundling and tying. We apply our analysis to the US and EU cases against Microsoft on the issue of tying new products (Internet Explorer in the US, and Windows Media Player in the EU) with Windows as well as to cases brought in Europe and in the United States on bundling discounts. We conclude that there are differences between the EC and US antitrust law on the choice of the relevant analogy for bundled rebates (predatory price standard or foreclosure standard) and the implementation of the distinct product and coercion test for tying practices. The second important difference between the two jurisdictions concerns the interpretation of the requirement of anticompetitive foreclosure. It seems to us that in Europe, consumer detriment is found easily and it is not always a requirement for the application of Article 82, or at least that the standard of proof of a consumer detriment for tying cases is lower than in the US.


January 18, 2008 | Permalink | Comments (0) | TrackBack (0)

Book Party for EC Private Antitrust Enforcement : Decentralised Application of EC Competition Law by National Courts

Posted by D. Daniel Sokol

Hart Publishing, the European University Institute and the Centre for European Policy Studies (CEPS)
request the pleasure of your company at a book launch and a reception to celebrate the publication of

EC Private Antitrust Enforcement: Decentralised Application of EC Competition Law by National Courts

by
Assimakis Komninos

1 Place du Congrès
1000 Brussels
Tel: +32 (0)2 229 39 11
Wednesday
27th February 2008
12.30 – 15.00
Speakers: Claus-Dieter Ehlermann, Walter van Gerven, Ian S. Forrester, Laurence Idot, Emil Paulis
RSVP by February 15th 2007
[email protected]

January 18, 2008 | Permalink | Comments (0) | TrackBack (0)

Thursday, January 17, 2008

Giving the German Cartel Office the Power of Divestiture - The Conformity of the Reform with Constitutional Law

Posted by D. Daniel Sokol

Christoph Engel of the Max Planck Institute for Research on Collective Goods has suggested some reforms of German competition policy in his paper Giving the German Cartel Office the Power of Divestiture - The Conformity of the Reform with Constitutional Law.

ABSTRACT: Triggered by the concentration process in the electricity and gas markets, the land of Hesse proposes to give the German cartel office power to divest dominant firms or oligopolies if this is necessary to restore competition. The paper shows that the reform would be in line with constitutional law, and with freedom of property in particular. Depending on how divestiture is brought about, it would interfere with this basic freedom. It would however not amount to taking. In practice, the main effect would be through bargaining between the divested company and the cartel office. This poses problems under rule of law, but these problems are not insurmountable. The main justification for the reform is the almost total failure of interventions to combat the abuse of dominant positions. In the US, divestiture has not always been successful. But close scrutiny of the American experiences demonstrates that the tool is sufficiently effective to meet the constitutional standard. If divestiture is brought about by forcing the firm to sell entities or assets, the necessary compensation comes from the price it receives from the buyer.   

January 17, 2008 | Permalink | Comments (0) | TrackBack (0)

Members of Caricom Competition Commission Announced

Posted by D. Daniel Sokol

The members and backgrounds of the new members of Caricom Competition Commission are available here.

January 17, 2008 | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 16, 2008

Price Squeezes and the Supreme Court

Posted by D. Daniel Sokol

Following up on my earlier post regarding recent analysis of the 9th circuit linkLine Communications case, below is the abstract for an amicus brief by economics and law professors supporting certification before the Supreme Court.

ABSTRACT: The linkLine price squeeze case from the Ninth Circuit is the most important antitrust case that the Supreme Court could take during the Fall 2007 Term. Amici are professors and scholars in law and economics who have taught, or have conducted research on, antitrust law and the economics of industrial organization. They include 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.

We agree with the petitioners that the Ninth Circuit has generated an inescapable conflict among circuits, and that the Ninth Circuit's opinion below is incompatible with this Court's reasoning in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 S. Ct. 1069 (2007), and Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993). We agree with Judge Gould's dissent in linkLine that Trinko “takes the issues of wholesale pricing out of the case,” such that the plaintiffs' only possible remaining theory of harm would be predatory pricing at the retail level—which the plaintiffs did not allege. linkLine Commc'ns Inc. v. Pac. Bell Tel. Co. d/b/a/ AT&T Cal., Inc., No. 05-56023, 2007 U.S. App. LEXIS 21719, at *28-29 (9th Cir. Sept. 11, 2007) (Gould, J., dissenting). We also agree with Judge Ginsburg's opinion for the D.C. Circuit in Covad Communications Co. v. Bell Atlantic Corp., 398 F.3d 666 (D.C. Cir. 2005), which in turn embraces the conclusion of the Areeda-Hovenkamp treatise that “‘it makes no sense to prohibit a predatory price squeeze in circumstances where the integrated monopolist is free to refuse to deal.'” Id. at 673-74 (quoting 3A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 767c3, at 129-30 (2d ed. 2002)). The existence of a rule like linkLine has a pervasive impact on business behavior that, at the margin, affects competition and consumers. This deleterious effect extends beyond the telecommunications industry to affect all firms that do business in the Ninth Circuit. These reasons justify granting certiorari in linkLine and reversing the Ninth Circuit's decision.

In our minds, an even larger reason than those described above makes it imperative that the Court take this case. The Ninth Circuit's decision in linkLine implicates the normative foundation of modern Sherman Act jurisprudence: that antitrust law exists to advance consumer welfare. We have three points to make.

First, any rule of price-squeeze liability that threatens liability based on the claim that the difference between a firm's upstream and downstream prices leaves downstream rivals insufficient margin substitutes a rule of competitor welfare for consumer welfare.

Second, properly understood, a price squeeze is a regulatory issue, which makes sense only as a rule of price regulation in an industry already subject to duties to deal and to control by institutionally competent regulators. Attempting to implement regulatory policy through section 2 of the Sherman Act is ill-advised, both because it makes no sense for courts to re-regulate deregulated or lightly regulated industries, and because courts lack the institutional competence to implement regulation.

Third, the Ninth Circuit's rule is of pressing concern precisely because it will deter efficiency-enhancing conduct and competitive pricing. Vertical integration and partial integration are ubiquitous, and firms need to be able to make decisions about such integration without the threat of liability. Vertically integrated firms likewise need to be free to cut retail prices (as long as the prices are not predatory) without concern for rivals—the point of Brooke Group. Moreover, the Ninth Circuit's standard is so vague and open-ended that it creates uncertainty and invites litigation; it also permits imposition of liability based on apparently subjective evaluation of disputed and hard-to-prove facts, which will lead to a substantial risk of false positives.

 

January 16, 2008 | Permalink | Comments (0) | TrackBack (0)

AAI Annual National Conference and 10th Anniversary Celebration

Posted by D. Daniel Sokol

AAI Annual National Conference and 10th Anniversary Celebration
June 19, 2008

Registration Date: February 01, 2008  -  June 17, 2008

Location: National Press Club Ballroom
529 14th St. NW, 13th Floor Washington, DC 20045

The American Antitrust Institute will celebrate its 10th year during its annual national conference on June 19, 2008 at the National Press Club in Washington, D.C. This year, the conference will focus on the presentation of AAI's Transition Report on Competition Policy for the next Administration. The report will articulate the public policy agenda of AAI while providing the next Administration with specific suggestions for legislation and enforcement priorities. Industry-leading experts will present draft chapters of the report on topics including:

-The Role of Concentration and Market Power

-Merger Policy

-Monopoly and Monopolization

-Verticality in the Economic System

-Buyer Power Issues -Improving the FTC

-Improving the DOJ Antitrust Division

-Private Enforcement in the Antitrust System

-The Role of Competition Policy in Selected Key Industries (Petroleum, Electricity, Pharmaceutical, and Agriculture)

The conference includes a 10th Anniversary Celebration luncheon, at which the Jerry S Cohen Award for Antitrust Scholarship and the AAI Antitrust Achievement Award will be presented.

January 16, 2008 | Permalink | Comments (0) | TrackBack (0)

Happy 50th Birthday to the Bundeskartellamt and the German Act Against Restraints of Competition

Posted by D. Daniel Sokol

Yesterday in Berlin the Bundeskartellamt celebrated its 50th Anniversary in style with a conference.  I was able to find the remarks of Tom Barnett here.

January 16, 2008 | Permalink | Comments (0) | TrackBack (0)

The 'Cut and Paste' of Article 82 of the EC Treaty in Israel: Conditions for a Successful Transplant

Posted by D. Daniel Sokol

Michal Gal of the University of Haifa Law School has just posed what is a fascinating article on the effectiveness of legal transplant of antitrust in Israel titled The 'Cut and Paste' of Article 82 of the EC Treaty in Israel: Conditions for a Successful Transplant.

ABSTRACT: A bit over a decade ago the Israeli competition law was amended. The legislator simply 'cut and paste' Article 82 of the Treaty of Rome, which prohibits the abuse of dominance, into the Israeli Competition Act. The question this article addresses is whether the copying of Article 82 has been a Trojan horse - in that its adoption into brought in doctrines and legal rules which did not serve well Israeli competition law, or whether it served as a racing horse, in that it move forward the Israeli law of abuse. The answer, I suggest, is a hybrid horse. Nonetheless, a few years of exercise on the local racetrack have strengthened its racing abilities by acclimatizing it to the special conditions of the new legal environment. The article uses the Israeli experience as a case study and reaches some interesting conclusions with regard to the conditions necessary for a successful legal transplant.

January 16, 2008 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 15, 2008

Commentary on LinkLine Communications

Posted by D. Daniel Sokol

GCP has a number of interesting articles on the implications of the LinkLine Communications case including ones by David Olsky, Jonathan Rubin, Thomas P. Brown, Jonathan Jacobson & Valentina Rucker, and William Baumol et al.

January 15, 2008 | Permalink | Comments (0) | TrackBack (0)

Mergers in Regulated Industries: Electricity

Posted by D. Daniel Sokol

Carlton Dennis Carlton of the University of Chicago Graduate School of Business and DOJ Antitrust Division discusses Mergers in Regulated Industries: Electricity in his latest working paper.

ABSTRACT: Mergers in any industry can raise complicated questions about the elimination of competition and the achievement of efficiencies. Mergers in regulated industries such as electricity raise even more complicated issues as the analyst needs to grapple with the constraining effects of regulation, multiple levels of regulation, the ability to evade regulation, and the desire for efficiency. This paper discusses the electricity industry in general and one particular electricity merger that the U.S. Department of Justice (DOJ) recently analyzed, in order to draw several lessons about the promotion of competition through electricity mergers in the United States. The purpose is to stimulate discussion with European counterparts to see what, if anything, Europe can learn from the U.S. experience with electricity mergers and regulations.

January 15, 2008 | Permalink | Comments (0) | TrackBack (1)

The European Floodgate Has Opened- European Commission Initiates Two New Antitrust Investigations Against Microsoft

Posted by D. Daniel Sokol

No doubt emboldened from its success in the CFI's judgment against Microsoft in September, the Commission has gone on the offensive again against Microsoft by initiating two new investigations.  According to the press release, "The first case where proceedings have been opened is in the field of interoperability in relation to a complaint by the European Committee for Interoperable Systems (ECIS). The second area where proceedings have been opened is in the field of tying of separate software products following inter alia a complaint by Opera."

January 15, 2008 | Permalink | Comments (0) | TrackBack (0)

Monday, January 14, 2008

FTC DC Circuit Brief on Whole Foods is Out

Posted by D. Daniel Sokol

The FTC brief is out.  Hat tip to David Balto.

Download ftc_openingappealbrief_public.pdf

January 14, 2008 | Permalink | Comments (0) | TrackBack (0)

Most Presidential Hopefuls Antitrust Moderates

Posted by D. Daniel Sokol

According to a Reuters news analysis, Most Presidential Hopefuls Antitrust Moderates.  I guess they did not read the John Edwards antitrust manifesto submitted a few months ago to AAI, which suggests Edwards' populist agenda would return antitrust to its populist roots.  Strangely, Edwards, Giuliani and Romney are not mentioned in this story.

January 14, 2008 | Permalink | Comments (1) | TrackBack (0)

Merger Review: How Much of Industry is Affected in an International Perspective?

Posted by D. Daniel Sokol

I like the paper Merger Review: How Much of Industry is Affected in an International Perspective? by Jan De Loecker (NYU Stern School of Business) Jozef Konings (Catholic University of Leuven Department of Economics) and Patrick Van Cayseele (Catholic University of Leuven Department of Economics) for its interesting approach.

ABSTRACT: The paper develops a methodological framework for quantifying the impact of merger control regulations. While most countries have different criteria in terms of sales, market shares or combinations of the above, and while listing an inventory of these criteria is easy, such an exercise does not provide an answer regarding their impact on the market for corporate control. A methodology is developed to compare empirically the percentage of firms affected in an industry in a country by the "clearing in advance" regulation. By comparing industries and countries, we are able to provide an indication of the impact of merger regulations for a large number of industries in Europe. As such we provide a first indication of the tightness of ex ante merger review.

January 14, 2008 | Permalink | Comments (0) | TrackBack (0)

Sunday, January 13, 2008

Legal Unbundling Can Be a Golden Mean between Vertical Integration and Separation

Posted by D. Daniel Sokol

Felix Hoffler (Max Planck Institute of Research on Collective Goods) and Sebastian Kranz (University of Bonn Department of Economics) discuss Legal Unbundling Can Be a Golden Mean between Vertical Integration and Separation.

ABSTRACT: We study an industry in which an upstream monopolist supplies an essential input at a regulated price to several downstream firms. Legal unbundling means that a downstream firm owns the upstream firm, but this upstream firm is legally independent and maximizes its own upstream profits. We allow for non-tariff discrimination by the upstream firm and show that under quite general conditions legal unbundling yields (weakly) higher quantities in the downstream market than vertical separation and integration. Therefore, typically, consumer surplus will be largest under legal unbundling. Outcomes under legal unbundling are still advantageous when we allow for discriminatory capacity investments, investments into marginal cost reduction and investments into network reliability. If access prices are unregulated, however, legal unbundling may be quite undesirable.

January 13, 2008 | Permalink | Comments (0) | TrackBack (0)