Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, September 6, 2008

Regional Competition Policy in Africa

Posted by D. Daniel Sokol

According to news reports, "Southern African Development Community (SADC) member states have adopted a land-mark competition policy that is expected to shape regional investment and trade across the 14-member grouping, the organization said this week after a two-day meeting which was held in Gaborone this week." 

Outside of the EU, regional competition policy has been of only limited success for a combination of a lack of capacity and larger political-economy issues.

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

Friday, September 5, 2008

Chicago Roundtable on ‘FTC at 100: Into Our Second Century’

Posted by D. Daniel Sokol

According to the FTC press release, the second roundtable on the FTC at 100 will be held in Chicago on Thursday, September 25, 2008 at the Searle Center at Northwestern University School of Law, located at Wieboldt Hall, 340 East Superior Street, Chicago, IL. Pre-registration is not required. A full agenda for the roundtable, including a list of panelists, can be found on the FTC’s Web site here.

According to the press release, "The roundtable will focus on the agency’s deployment of resources in its pursuit of its competition and consumer protection missions, including the use of enforcement and other available tools, as well as the effectiveness of the agency in pursuing its core missions."

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

Changes in Brazilian Merger Control

Posted by D. Daniel Sokol

Brosenberg Barbara Rosenberg (FGV Law and Barbosa, Müssnich & Aragão) has alerted me that changes are afoot in the Brazilian competition policy system.  She writes that CADE, ultimate authority for competition related matters in Brazil, has just approved a Resolution (Resolution CADE nº 49/2008) which alters the proceeding and the notification form for merger submissions. The new form has been released, but an English version is not yet available. It is possible to anticipate, in any case, that the new form will require some more detailed information on transactions and companies involved.

One of the main changes is that submissions will now be made electronically. The authorities have developed a specific software for the submissions to be filed online. Within 2 days as of the online submission, applicants will be required to file a printed version with the Secretariat of Economic Law of the Ministry of Justice (SDE) as well as electronic copies of appendixes recorded on CDs or DVDs.

The new system, however, will be implemented only after the SDE issues an applicable corresponding regulation. There will be a migration period of 4 months during which the printed submissions based on the old notification form will still be accepted.

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

Thursday, September 4, 2008

Factors Influencing the Magnitude of Cartel Overcharges:. An Empirical Analysis of the US Market

Posted by D. Daniel Sokol

Yuliya Bolotova (University of Idaho Agricultural Economics and Rural Sociology), John Connor (Purdue University Agricultural and Applied Economics), and Douglas J. Miller (University of Missouri Economics) have developed some insights on Factors Influencing the Magnitude of Cartel Overcharges:. An Empirical Analysis of the US Market.

ABSTRACT: Using the overcharge estimates for 333 cartel episodes, we evaluate the effect of cartel characteristics and changes in the market and legal environment on the magnitude of overcharges imposed by private cartels in the United States and other geographic markets as early as the eighteenth century. The median overcharge attained by cartels represented in our sample is 18 percent of selling price. International cartels imposed higher overcharges than domestic cartels. Longer cartel episodes generated higher overcharges. Overcharges achieved in the United States and European markets were lower than overcharges imposed in the Asian markets and in the rest of the world. Overcharges tended to decline as antitrust enforcement became stricter. Higher overcharges were associated with markets where cartels had high market shares and with markets characterized by high levels of fixed costs.

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

The New Substantive Test in the EC Merger Regulation - Bridging the Gap between Economics and Law?

Posted by D. Daniel Sokol

Giorgio Monti of LSE's Law Department provides some thoughts on The New Substantive Test in the EC Merger Regulation - Bridging the Gap between Economics and Law?

ABSTRACT: The 2004 EC Merger Regulation (ECMR) adopted the substantial impediment of effective competition test, and abandoned the earlier standard that required proof of dominance as a necessary element to intervene in a merger. It is said that this reform was necessary because the dominance test failed to catch unilateral effects absent dominance, so there was a 'gap' in the ECMR. This paper argues that the decision to amend the ECMR was unnecessary. From an economic perspective because the dominance standard was sufficiently flexible to address all anticompetitive mergers. Economists' concerns about merger control (in both the US and EC) was that authorities focused on a structural assessment premised upon market definition and market concentration and failed to give sufficient attention to other means to test for anticompetitive effects in a more direct manner. Economists' support for the new test is that it would place a focus on these other methods for identifying anticompetitive effects. From a legal perspective, it seems that the major motivation for reform was to divorce merger control from the abuse of dominance doctrine in Article 82, so that the two legal provisions would develop independently, the latter only applicable to manifestations of significant market power. Accordingly the view that there was a 'gap' in the dominance test is inaccurate, and lawyers and economists supported the reform for different reasons. This misunderstanding might explain why the Horizontal Merger Guidelines designed to indicate how the new standard applies are insufficiently precise. In an endeavour to offer some precision, the paper reviews a number of decisions and suggests that the Commission applies four distinct theories of harm, but the first major decision applying the new standard is worrying because the Commission appears to regulate the market rather than remove an impediment of competition caused by the merger, with the risk that the new standard is so loose that it allows the Commission to address questions of industrial policy through the ECMR.

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

Progress and Uncertainty: The Development and Implementation of a Unified Competition Regime in the People's Republic of China

Posted by D. Daniel Sokol

Nicholas Cramer (affiliation unknown) has posted a work on Progress and Uncertainty: The Development and Implementation of a Unified Competition Regime in the People's Republic of China.

ABSTRACT: China's new Anti-Monopoly Law (AML), over two decades in the making, was finally enacted on August 30, 2007 and on August 1, 2008 will replace the disparate and ineffective competition regime currently in place. Legislators invited the input of a wide array of domestic and foreign legal experts and business interests, as well as Chinese government agencies of all levels. While the new law borrows much of its wording from the competition law of the European Union and United States, it also retains unmistakably Chinese characteristics.

In addition to unifying existing prohibitions against a range of abusive trade practices, the AML consolidates the enforcement apparatus and strengthens the regulatory framework for both public and private domestic monopolistic acts. The new system reflects a range of divergent policy goals that combine protectionist sentiment with the desire to promote competition even at significant political cost. While the AML may lead to genuine progress, it could also easily serve as a means of perpetuating discriminatory treatment and an ineffective weapon against abuses by State-owned enterprises, administrators and trade unions.

The prospects for effective and equitable enforcement of the new system will require the time to develop a body of jurisprudence on competition law, the fortitude to combat regional administrative abuses and the passage of sound implementing measures to fill in gaps in the upcoming law. The AML has achieved the initial goal of establishing a solid foundation for Chinese competition policy, but fulfilling the promise of this historic step will only be possible through a massive and continued effort by a great many dedicated people over the course of many years. However, considering the economic progress and governmental reform China has achieved over the last generation, the demonstration of such will and capability are well within its reach.

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

Wednesday, September 3, 2008

Mergers in Auctions with an Incumbent Advantage

Posted by D. Daniel Sokol

Luke Froeb (Vanderbilt University - Owen Graduate School of Management), Mikhael Shor (Vanderbilt University - Owen Graduate School of Management) and Steven Tschantz (Vanderbilt University - Department of Mathematics) have a fascinating paper out on Mergers in Auctions with an Incumbent Advantage.

ABSTRACT:  When the winner of one auction gains a cost advantage in the next, bids reflect not only the value of winning the auction, but also the value of gaining an incumbent advantage in future auctions. If a larger firm's advantage derives from a cost or product advantage, it has a greater chance of holding onto incumbency status which, in turn, increases the value it places on gaining incumbency. As a consequence, larger firms bid more aggressively than their smaller rivals, where "size" is measured by the probability of winning. In this environment, mergers eliminate competition among the merged firms but they also change bidding behavior by both merging and non-merging firms. Computational experiments suggest that the scope for pro-competitive mergers is much wider than in auctions without an incumbent advantage. In particular, mergers among smaller firms are likely to be pro-competitive because they tend to create better losers, i.e., firms who bid more aggressively but still lose a large part of the time.

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

The Law and Economics of Price Discrimination in Modern Economies: Time for Reconciliation?

Posted by D. Daniel Sokol

Daniel J. Gifford (University of Minnesota - Law School) and Robert T. Kudrle (University of Minnesota Public Policy) provide their analysis of The Law and Economics of Price Discrimination in Modern Economies: Time for Reconciliation?

ABSTRACT: This paper examines the forms, goals, and results of price discrimination. It reviews various economic analyses and critiques of the three Pigovian types of price discrimination. It observes that economists' traditional concern with aggregate welfare has not, until recently, been accompanied by a similar concern by lawyers. Until the late twentieth century lawyers tended to focus on "fairness" instead. These different concerns have impeded mutual understanding, as have the various meanings that lawyers and economists have attributed to such basic terms as "monopoly power," "market power" and "competition" in the price discrimination context.

The paper examines the principal laws of the United States and the European Union that deal with price discrimination, focusing especially on the Robinson-Patman Act and Article 82(c) of the Treaty Establishing the European Union. The paper compares the operation of these two provisions, finding superficial resemblances but significant differences in practice. While the Robinson-Patman Act was designed to prevent powerful buyers from forcing price concessions from often weak producers to the detriment of small buyers, enforcement of Article 82(c) is directed differently. Although the language of Article 82(c) suggests that it is designed to protect purchasers-for-resale from discrimination by their suppliers, the European Commission employs Article 82(c) to protect competitors from aggressive pricing by dominant (generally producer) firms. The paper also examines the developing law on loyalty rebates on both sides of the Atlantic, again finding that the approaches of the two jurisdictions differ significantly, at least as exemplified by the most recent cases. It distinguishes between loyalty rebates offered by the seller of a single product and those offered by a multi-product seller. The paper's main message is that price discrimination is an essential element in an effectively competitive economy and should be treated that way under the law.

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

Antitrust Practitioner Survey - Please Take It!

Posted by D. Daniel Sokol

Back to the Front from a Previous Posting

I am conducting a survey of non-government antitrust practitioners (including practitioners with law firms and in-house) who undertake antitrust work in the United States to better understand how antitrust law shapes compliance. Because of the empirical gap in our knowledge about behavior outside of court cases, this survey has important policy and research implications. Please take 8-12 minutes to fill out this survey.

Updated on August 7

If you are a non-government practitioner (with a law firm or in-house) who has an antitrust  practice in the United States, I ask that you take this survey.  The more responses that I can collect, the larger the survey population and the more meaningful the results will be.

Click Here to take survey

Updated on September 3
This sort of survey has never been undertaken on such a scale.  Particularly given a transition to a new President this coming year, this survey has potentially important ramifications.  Please take some time out of your busy schedule to take the survey.  If I get lots more responses, I promise to stop posting these reminders.

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

McCain vs. Obama on Antitrust

Posted by D. Daniel Sokol

The American Antitrust Institute has prepared a comparison by the issue of McCain and Obama antitrust positions.

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

Tuesday, September 2, 2008

Howard Stern and Unilateral Effects: Lessons From the XM-Sirius Satellite Radio Merger

Posted by D. Daniel Sokol

Howard Stern and Unilateral Effects: Lessons From the XM-Sirius Satellite Radio Merger

Wednesday, September 10, 2008

This program will examine the antitrust issues surrounding the XM-Sirius satellite radio merger and debate the implications of the Department of Justice's analysis as set forth in the agency's closing statement issued on March 24, 2008. The panel will examine key factual and legal issues including:
The basis and legal ramifications of DOJ's finding that the parties were not significant competitors in certain segments of the satellite radio business Market definition issues affecting the DOJ's analysis of the retail channel
The role of efficiencies in DOJ's analysis
The impact of future technological developments in DOJ's analysis
The panel will use this discussion as a basis to predict the impact of this case on future unilateral effects challenges, and on merger enforcement trends in general.

Please join our panel of experts for a lively discussion of these issues. To register for this Teleseminar/Audio Webcast, Please go to: http://www.abanet.org/cle/programs/t08hsu1.html

Program Moderator: Jim R. Wade, Partner, Haynes and Boone, LLP

Program Faculty: David L. Meyer, Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice, Ketan P. Jhaveri, Senior Associate, Simpson Thacher & Bartlett LLP, Charles E. Biggio, Partner, Wilson, Sonsini,Goodrich & Rosati, J. Gregory Sidak, Criterion Economics, LLC

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

CUTS: A Report of the Proceedings of the Global Partnership for Development Conference

Posted by D. Daniel Sokol

CUTS has uploaded to its website the proceedings of its  International Conference on Global Partnership for Development. More than 500 participants, including about 120 from different parts of the world took part in it. 

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

A Political Economy Model of Merger Policy in International Markets

Posted by D. Daniel Sokol

Massimo Motta and Michele Ruta, both of the European University Institute - Economics Department have created A Political Economy Model of Merger Policy in International Markets.

ABSTRACT: This paper looks at the political economy of merger policy under autarky and in international markets. We assume that merger policy is decided by antitrust authorities (whose objective is to maximize welfare) but can be influenced by governments, which are subject to lobbying by the firms (be they insiders or outsiders to the merger). We argue that political economy distortions may explain some of the recently observed merger policy conflicts between authorities and politicians, as well as between institutions belonging to different countries. We illustrate our analysis with applications motivated by recent merger cases, which have been widely debated in the international press.

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

Monday, September 1, 2008

Competition Policy in Poland

Posted by D. Daniel Sokol

Małgorzata Krasnodębska-Tomkiel (Office of Competition and Consumer Protection, Poland) provides an overview of Competition Policy in Poland.

ABSTRACT: Poland created a post-communist competition law system in 1990. The system is based on a public enforcement agency named the Office for Competition and Consumer Protection which is part of a governmental administration. The President heads the OCCP and is the sole decision maker with regards to restrictive practices and undertakings’ concentrations in Poland. According to the law, the OCCP’s President is appointed by Poland’s Prime Minister. Competition decisions adopted by the OCCP can be appealed to the specialized civil court named the Court for Competition and Consumer Protection.

The Polish government is responsible for the creation and enforcement of competition policy in Poland. Its aims and priorities are established in the official document, Competition Policy. According to Polish competition law, the President of the OCCP drafts a revised version of this document every two to three years and presents it to the government for the approval. For instance, the strategy of Polish competition policy for 2008 to 2010 is presented in Competition Policy for 2008-2010 and was approved by the government in July 2008. The scope of the Competition Policy Report is much wider than the authority of the OCCP because it also covers issues connected with the activities of the national sector-specific regulatory bodies (e.g., the telecommunications and energy regulators). No sector of the economy is excluded. The impact of EC competition policy and legislation as well as other international competition fora (such as the Organization for Economic Cooperation and Development) are also taken into account in the Report.

The strategic aims of the Competition Policy Report (e.g., counteracting restrictive practices, promotion of competition in the post-monopolistic sectors of economy, deregulation, and competition advocacy) have been priorities for the past several years. What makes the most recent version different is its intention to develop and use more appropriate tools to pursue and achieve these goals. Both Polish and international experiences provide a good starting point for further reflection and formulation of strategy for the future.

September 1, 2008 | Permalink | Comments (0) | TrackBack (0)

Sunday, August 31, 2008

Technical Monitoring and Verification Services to Support Antitrust Investigations in the IT Sector (Budget: € 9.000.000)

Posted by D. Daniel Sokol

The European Commission has a call to tender for Technical Monitoring and Verification Services to Support Antitrust Investigations in the IT Sector (Budget: € 9.000.000).

From the Commission tender specifications:

In the context of its investigation and compliance enforcement work in the IT industry concerning, in particular, Microsoft, the Commission requires expert consultancy services in order to establish technical facts, for example relating to the state of technical documentation embodying interoperability information for communication protocol technology as established by the Commission's 24 March 2004 Decision in Case COMP.37792 (Microsoft).

August 31, 2008 | Permalink | Comments (0) | TrackBack (0)