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 23, 2008

Senior Lecturer on Competition Policy Needed

Posted by D. Daniel Sokol

The European Institute of Public Administration is looking for a Senior Lecturer on Competition Policy.

We welcome applications from persons with professional experience from the European Institutions or Member State administrations, and from persons with a more academic or research background.

Job Profile:

Duties will mainly consist of:

* developing and conducting training activities, primarily targeting policy makers and civil servants, and carrying out consultancy;
    * delivering lectures, presentations and briefings;
    * acquiring new contracts and research projects and the management thereof;
    * applied research and publications.

Requirements:

* University degree and postgraduate studies in economics or law, with a very good knowledge of EU matters in general and, in particular, competition policy (state aid and/or anti-trust), regulated sectors or Community policies in sectors such as agriculture or transport;
    * At least eight years of relevant professional experience in public administration, consultancy or an academic environment;
    * Very good knowledge of the relevant literature;
    * Well developed capacity to carry out research as evidenced by publications in reputable journals;
* Practical experience in the implementation of the relevant law and policies at Community, national and/or sub-national level;
* Clear, effective and concise communication and presentation skills, with a particular focus on lecturing, training and offering advice;
* Fluency (speaking and writing) in one of the working languages of the Institute (English, French) and understanding of the other are essential. A working knowledge of other European languages will be considered an asset;
    * Demonstrated excellent analytical and organisational skills;
    * Experience in project management will also be considered an advantage;
    * Excellent PC and internet skills, in particular the use of PowerPoint;
    * Experience in and affinity for working with people from different cultural backgrounds;
    * Willingness and ability to travel;
    * Willingness and ability to meet annual financial targets;
    * Preferably the nationality of one of the EU/EEA Member States or one of the Candidate Countries.

Conditions of Employment:

The offered grade and salary level will be in line with the requirements of the function and will also depend on the qualifications and experience of the selected candidate.

The successful candidate will initially be offered a one-year contract with the option of renewal and the possibility of a permanent contract subject to the criteria in EIPA's Conditions of Employment.

Interviews are expected to take place during the second half of 2008.

Vacancy Number: V0097
Deadline: 14/Sep/2008
Send applications written in English or French, including a comprehensive curriculum vitae, motivation letter and quoting vacancy number V0097
by email or post mail for the attention of:
An M. Cazaerck
O.L. Vrouweplein 22
P.O. Box 1229
Maastricht 6201 BE
Netherlands
i.vansintfiet@eipa-nl.com

Further information can be obtained from:
Dr Phedon Nicolaides
E-mail: p.nicolaides@eipa-nl.com
Tel: +31 43 3296 234

August 23, 2008 | Permalink | Comments (0) | TrackBack (0)

Friday, August 22, 2008

US v. Microsoft: Ten Years Later

Posted by D. Daniel Sokol

US v. Microsoft:  Ten Years Later
Conference at Harvard Law School
September 12 and 13, 2008
Conference website: 

http://cyber.law.harvard.edu/node/4517


Ten years have passed since the U.S. Department of Justice and 20 states filed their landmark antitrust case against Microsoft and the trial of the lawsuit began in federal district court in Washington,
D.C.  This major conference will look back over the last decade and explore the lasting lessons and deeper meanings of the case for Microsoft, for the software and technology industries, and for
antitrust law and enforcement.

United States v. Microsoft: 10 Years Later, will be held Friday and Saturday, September 12-13, 2008, in Austin Hall at Harvard Law School.  Sponsored by the Law School?s Cyberlaw Clinic and the Berkman Center for Internet & Society, this conference is the first retrospective to examine the lawsuit and its aftermath from the perspective of many of the participants in the original case and trial, as well as leading legal and economic academics. Conference presenters include, among others:

    * David Boies, Partner, Boies, Schiller & Flexner
    * Brad Smith, Sr. VP and General Counsel, Microsoft Corp.
    * David Heiner,  VP and Deputy General Counsel, Microsoft
    * Jonathan Zittrain, Professor of Law, Harvard Law School
    * Franklin Fisher, Professor Emeritus, MIT
    * Edward Felten, Professor of Computer Science and Public Affairs,
Princeton University
    * Douglas Melamed, Wilmer Hale, Washington, DC
    * Tim Bresnahan, Chair, Dept. of Economics, Stanford University
    * Harry First, Professor, New York University School of Law
    * Andy Gavil, Professor, Howard University School of Law
    * John Lopatka, Professor, Penn State Dickinson School of Law
    * William Page, Professor, University of Florida Levin College of Law
    * Rajiv Chandrasekaran, Washington Post
    * Joe Nocera, author and columnist, New York Times
    * John Wilke, Wall Street Journal

Schedule:  The conference will be held Friday, September 12, 2008, from 2:00 p.m. to 6:00 p.m., followed by a reception for all attendees from 6:00 p.m. to 7:15 p.m., and on Saturday, September 13, 2008, from 8:00 a.m. to 6:00 p.m.

Space for the conference is limited and early registrations are encouraged.

To Register:

http://www.events.harvard.edu/profile/form/index.cfm?PKformID=0x34217a0c

Regular registration is $75, Student registration is $25.

August 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Recent Developments in EC and UK Competition Law

Posted by D. Daniel Sokol

Kings College London will host a series of lectures by Professor Richard Whish.  All lectures will be held from 18.00 to 20.00 at the Strand Campus at King's College London. Room K2.31 (formerly 2C) on the first floor of the main building.

9 October 2008       Articles 81 & 82
16 October 2008     Articles 81 & 82 (continued)
23 October 2008     The EC Merger Regulation and Procedural Issues
30 October 2008     UK Competition Law: Competition Act 1998
6 November 2008   UK Competition Law: Competition Act 1998 (ctd)/ Enterprise Act 2002

Details are available here.

August 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Collusion in a One-Period Insurance Market with Adverse Selection

Posted by D. Daniel Sokol

Alexander Alegría and Carlos Manuel Willington, Universidad Alberto Hurtado - ILADES provide a case study in a Collusion in a One-Period Insurance Market with Adverse Selection regarding the Chilean insurance sector.

ABSTRACT: We show how collusive outcomes may occur in equilibrium in a one-period competitive insurance market characterized by adverse selection. We build on the Inderst and Wambach (2001) model and assume that insurees must pay a minimum premium, which is a common feature in many health systems. In this setup we show that there is a range of equilibria, from the zero profit one in which low-risks implicitly subsidize high risks, to one where firms obtain profits with both types of consumers. Moreover, we show that rents only partially dissipate if we assume free entry.

Along these equilibria, high risks always obtain full insurance while the low risks coverage decreases as the firms' profits increase. Recently the Chilean antitrust authority accused the largest five private health insurers of collusion after they had reduced the coverage offered and, as a result, significantly raised their profits. Our model is consistent with this accusation.

August 22, 2008 | Permalink | Comments (0) | TrackBack (0)

Thursday, August 21, 2008

Regulatory Policy and the Reverse Cellophane Fallacy

Posted by D. Daniel Sokol

Debra J. Aron (LECG) and David E. Burnstein (LECG) discuss Regulatory Policy and the Reverse Cellophane Fallacy in the telecom context in their latest working paper.

ABSTRACT: A central concern of antitrust analysis is determining whether or not a firm possesses significant market power. The trend in the US and many other countries toward liberalized regulation or deregulation of telecommunications providers has been accompanied by the application of these antitrust concepts and principles to assessment of market power of regulated companies. Regulators are not inclined to deregulate markets without assurance that the incumbent's purported market power would be checked by competition. While economic principles of antitrust analysis certainly apply to the regulated setting, a proper economic analysis of whether a regulated firm has - or more accurately, would in the absence of regulation, have - market power is a significantly different exercise, however, from a typical market power analysis of an unregulated firm.

In this paper we show that applying the usual tools of market power analysis to firms in regulated industries can lead to predictably erroneous outcomes. Specifically, assessing whether a firm has market power by conducting the "small but significant non-transitory increase in price ("SSNIP") test in a regulated industry would lead to the reverse of what is referred to in the antitrust literature as the "cellophane fallacy." The cellophane fallacy occurs when assessing the market power of a monopolist by applying the SSNIP at the monopoly price. Because a monopolist will rationally increase price to a point where other goods or services become substitutable, the test would lead analysts to find more substitutability (broader product markets) than is warranted, and erroneously infer a lack of market power. In the regulated setting, prices that are set by regulatory fiat at below-cost levels would cause the opposite error: what we term the "reverse cellophane fallacy." The uneconomically low prices cause other services to appear to be weaker substitutes than they are and therefore lead to improperly narrow market definitions and erroneous inferences of market power. This in turn leads to a self-perpetuating nature of regulation, in which regulators insist on finding that the incumbent lacks market power before deregulating prices, while the artificially restricted prices lead to an erroneous inference of market power.

We test this hypothesis empirically by examining the relationship between a price-regulated service (local telephone service), and the regulated price in a sample of "markets" (incumbent exchange service areas) in a single state in the U.S. in 2004. We employ a probit regression to evaluate whether, and to what extent, a regulated incumbent's retail prices affect wireline competitive entry after controlling for the effect of the size of service area and the costs of service. We find an independent, statistically significant positive effect of the incumbent's retail price on competitor penetration, all else equal. Our findings indicate that the relative absence of competitive activity in rural areas should not be interpreted as evidence that the incumbent would be able to exercise market power in the absence of price regulation. Rather, a proper competitive analysis must control for, and eliminate the potential errors of inference caused by, the regulated retail price structure.

August 21, 2008 | Permalink | Comments (0) | TrackBack (0)

Four Lessons from the Whole Foods Case

Posted by D. Daniel Sokol

Thom Lambert of the University of Missouri offers Four Lessons from the Whole Foods Case.

ABSTRACT: This article examines the recent district court decision rejecting a Federal Trade Commission (FTC) challenge to the proposed merger of organic grocers Whole Foods and Wild Oats. The article contends that the district court was right to reject the FTC's challenge and identifies four principles that should guide future merger investigations: (1) "hot documents" defining the market, demonstrating apparent motivation, or predicting effects should be ignored; (2) unique distribution channels should not be deemed "markets" unless they significantly reduce transaction costs; (3) merger analysis should better account for business trends and productive efficiencies; and (4) the deck should not be stacked so heavily in the favor of the FTC.

August 21, 2008 | Permalink | Comments (0) | TrackBack (0)

Highlights of China’s New Antimonopoly Law

Posted by D. Daniel Sokol

Xiaoye Wang (Chinese Academy of Social Sciences) provides us with Highlights of China’s New Antimonopoly Law.

ABSTRACT: After more than a decade of discussions, debates, and drafting, China adopted its Antimonopoly Law on August 30, 2007, and the law took effect on August 1, 2008.

Like other antirust regimes, the Chinese AML essentially provides the prohibition of monopoly agreements, the prohibition of abuse of a dominant position, and merger control. Additionally, there is also a prohibition of administrative monopoly in chapter 5, since the most serious restrictions to competition in China come from governments themselves.

From the perspective of substantive law, in this article I give a brief overview of the three pillars. In the last section, I discuss the challenges of enforcing the Law.

August 21, 2008 | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 20, 2008

Changing the Presumption of When to Regulate: The Rationale of Canadian Telecommunications Reform

Posted by D. Daniel Sokol

Lawson A. W. Hunter (Stikeman Elliot), Philippe Gauvin (Regulatory Affairs, Bell Canada) and David Krause (Economic Analysis, Bell Canada) have published Changing the Presumption of When to Regulate: The Rationale of Canadian Telecommunications Reform.

ABSTRACT: In a dynamic environment such as the telecommunications industry, it becomes increasingly difficult to consistently determine and enforce optimal regulatory responses. To improve the rigor and responsiveness of the regulator, the regulatory process should contain four elements: (i) the regulator should have a clear policy framework with an emphasis on reliance upon market forces to the maximum extent feasible; (ii) the regulator should be subject to a standards-based, legally binding test; (iii) there should be an advocate for market forces; and (iv) there should be regular and frequent external reviews. Recent changes to the regulatory process for the Canadian telecommunications industry have incorporated all four of these elements. These changes should limit the regulatory process' ability to impede the benefits that Canadians receive from continuing technological innovation and increasing competitiveness of the telecommunications industry.

August 20, 2008 | Permalink | Comments (0) | TrackBack (0)

Resale Price Maintenance and its Alleged Efficiencies

Posted by D. Daniel Sokol

Lucas Peeperkorn (DG Comp) has written Resale Price Maintenance and its Alleged Efficiencies.

ABSTRACT: The recent opinion of the US Supreme Court in the Leegin case, which overturned a century-long policy in the US of treating resale price maintenance (RPM) as a per se restriction of competition, is also stirring debate on the other side of the Atlantic and raises the question whether this should have relevance for EC competition policy. Answering such a question requires first, the current treatment of RPM in the EU to be assessed and secondly, the likely positive and negative effects of RPM to be critically assessed.

In this article I will therefore first discuss the current treatment of RPM in the EU and how it differs from the US per se approach. The main part of the article discusses the possible negative and, in particular, positive effects for consumers that may result from RPM as identified in the Leegin case.

August 20, 2008 | Permalink | Comments (0) | TrackBack (0)

Evolving Technologies and Standards Regulation

Posted by D. Daniel Sokol

Luis M.B. Cabral, Leonard N. Stern School of Business - Department of Economics and David J. Salant, Columbia University - Columbia Institute for Tele Information, discuss Evolving Technologies and Standards Regulation in their latest working paper.

ABSTRACT: Spectrum regulation necessarily involves some regulation of the technology that licensees can use. One commonly stated assertion is that a mandated single standard, the solution followed by the EU for 2G wireless, is a successful model for spectrum regulation. We argue that a single standard leads to a free riding problem, and thus to a significant decrease in marginal incentives for R&D investment. In this context, keeping two separate standards may be a necessary evil to sustain a high level of R&D expenditures. We also provide conditions such that a non-standardization equilibrium is better for consumers and for society as a whole.

August 20, 2008 | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 19, 2008

Lights and Shadows in the Modernization of Spanish Merger Review

Posted by D. Daniel Sokol

Francisco Marcos and Albert Sánchez demystify Lights and Shadows in the Modernization of Spanish Merger Review.

ABSTRACT: Almost a year ago, and after substantial debate and a long legislative process, the reform of Spanish competition regulation was completed. The new Competition Act, which came into force on September 1, 2007, supersedes the previous Act of 1989 and significantly transforms the Spanish system for the defence of competition. As this article shows the new Competition Act has aligned the Spanish and the European merger review procedures almost completely. Substantial reform in the institutional and procedural framework will enhance the review process, which is now more flexible (simplified procedures, market testing) and grants the parties significant leeway for a proactive intervention in the process (pre-notification contacts, remedies negotiation). However, the reform has not overcome all the perceived shortages of the system. Keeping the market share threshold may result in an over-reaching MR system in some cases, as well as unnecessary burdens and costs to companies, particularly in foreign-to-foreign transactions. Allowing for political review for reasons unrelated to competition generates uncertainty and leaves the door open to substantial interference in certain high-profile cases (particularly where national champions might be involved). Nonetheless, the modernization and fine-tuning of the Spanish MR system is to be welcomed, even if there still may be room for further improvement.

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

Antitrust Implications of Aftermarkets

Posted by D. Daniel Sokol

Joseph P. Bauer (Notre Dame Law) has some thoughts on the Antitrust Implications of Aftermarkets.

ABSTRACT: Firms which sell or lease a product or service often want to extend their sales into a second market - often called the aftermarket. Thus, a manufacturer of razors also wants to sell replacement blades; a manufacturer of automobiles also wants to sell replacement parts; and the manufacturer of a photocopying machine also wants to provide repair or maintenance services for its machines. While many of these attempts to extend upstream market power into the secondary product market may have pro-competitive justifications and effects, other instances of this behavior may reduce consumer welfare by raising prices, reducing innovation or limiting consumer choice. Several of the categories of potentially anti-competitive behavior, which are used generally to analyze conduct under the antitrust laws - tying arrangements, monopolization and attempts to monopolize - are applicable to the analysis of aftermarkets. This paper identifies a variety of examples of aftermarket restraints; considers their competitive impact; and then discusses the application of traditional antitrust analysis to this phenomenon.

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

Sense and Nonsense of Rules on Proof in Cartel Cases: How to Reconcile a More Economics-Based Approach to Competition Law with More Attention for Rules on Proof?

Posted by D. Daniel Sokol

Laura Parret, Tilburg Law and Economics Center (TILEC) makes Sense and Nonsense of Rules on Proof in Cartel Cases: How to Reconcile a More Economics-Based Approach to Competition Law with More Attention for Rules on Proof?

ABSTRACT: This paper suggests how to reconcile a more economics-based approach to competition law with more attention for rules on proof.

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

Monday, August 18, 2008

Perspectives on Cartel Enforcement in the United States and Brazil

Posted by D. Daniel Sokol

Tom Barnett at DOJ provides some Perspectives on Cartel Enforcement in the United States and Brazil.

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

WSJ on the Effects of Leegin

Posted by D. Daniel Sokol

Today's Wall Street Journal  has a front page story on the effects of Leegin.

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

Making the Best of a Good Situation: Modernizing State Antitrust Enforcement

Posted by D. Daniel Sokol

First Harry First of NYU Law School offers his thoughts on Making the Best of a Good Situation: Modernizing State Antitrust Enforcement.

ABSTRACT: In 2001 Congressman F. James Sensenbrenner introduced the bill that would eventually result in the Antitrust Modernization Commission. One of the three areas he suggested for review was the role of state attorneys general in enforcing antitrust laws, a concern prompted by the states' efforts in the Microsoft litigation. The AMC devoted substantial effort to this area, eventually adopting eight recommendations relating to state enforcement. None of these recommendations, however, proposed any real change in the status quo.

In this paper I first review the options that the AMC considered. I argue that the Commission did not recommend cutting back state enforcement mainly because, after examining the data, it could find little indication that state enforcement has been problematic. I next argue that the modernization of state enforcement requires an effort to improve its effectiveness, something that was apparently not on the AMC's agenda. In this part of the paper I review some of the benefits of state enforcement and suggest that the effectiveness of state enforcement could be improved through greater centralization of the enforcement effort, more enforcement planning, and increased financial resources. The increased financial resources could be obtained through an amendment to Section 4E of the Clayton Act, requiring courts to distribute to the states, for use in their enforcement efforts, part of the monetary recovery in parens patriae cases.

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

Antitrust Debate Between McCain and Obama Supporters

Posted by D. Daniel Sokol

The DC Bar will hold a debate between McCain and Obama Supporters on antitrust.  The debate will feature Jim Rill of Howrey (McCain) and Bill Kolasky of Wilmer (Obama) discussing a number of key antitrust issues.

Date/Time: Wednesday, September 24, 2008/12:15 pm – 2:00 pm
Location: The Jacob Burns Moot Court Room, The George Washington University 2000 H Street, NW (Foggy Bottom – GWU) (A limited number of telephone call-in access lines will be available on a first requester basis.) More details are available via download.

Download 92408_020839dar817.doc

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

Sunday, August 17, 2008

The Context of Chinese Industrial Policy and the Antimonopoly Law

Posted by D. Daniel Sokol

Mark Williams (Hong Kong Polytechnic University Law) writes on The Context of Chinese Industrial Policy and the Antimonopoly Law.

ABSTRACT: Some would argue that the implementation of the Antimonopoly Law is an important milestone along the road of China’s transition to a market-orientated economy in which private capital plays a pre-dominant role, just as it does in developed economies in other parts of the world.

In this scenario, the government will continue to retreat from the command economy of the past by continuing to corporatize and then privatize state-owned enterprises and will become an impartial regulator of markets, not a hands-on participatory owner. The judicial system will, in time, become more independent and robust, regulatory agencies and ministries will become benign adjudicators of enterprise conduct and market structure guiding the invisible hand of the market where imperfections intrude and mar efficiency. The consumer, not the producer, will be king and China will become the world’s leading economy, eclipsing Europe and the United States in due course given its huge population and geographic extent. The place of China in the world pecking order will be returned to its historical antecedents of two hundred years ago when China accounted for 30 percent of global gross domestic product. This is the optimists’ scenario.

But it is entirely possible that the economic transition that China has been undoubtedly undergoing for almost 30 years will not result in this outcome. The Chinese authorities would undoubtedly like to achieve the economic success predicted above but they may have a rather different process in mind to achieve that goal. This article argues that the Antimonopoly Law is actually a component part of a strategy to achieve this end.

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