Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, November 22, 2008

Chambers Latin America 2009 Rankings: Argentina Antitrust

Posted by D. Daniel Sokol

The Chambers Latin America 2009 rankings are out.  Below are the best law firms for Argentina.

Band 1
• Marval, O'Farrell & Mairal
• M & M Bomchil

Band 2
• Allende & Brea
• Estudio Beccar Varela
• Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (PAGBAM)

Band 3
• Bruchou, Fernández Madero & Lombardi
• Estudio O'Farrell
• Quevedo Davis

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

Friday, November 21, 2008

Rehearing Denied in Whole Foods

Posted by D. Daniel Sokol

You can find the order here.

Download reh_order.pdf

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

Does the Absence of Competition in the Market Foster Competition for the Market ? A Dynamic Approach to Aftermarkets

Posted by D. Daniel Sokol

Didier Laussel (Université de la Méditerranée - Economics) and Joana Resende (Université Catholique de Louvain - Economics) have written Does the Absence of Competition in the Market Foster Competition for the Market ? A Dynamic Approach to Aftermarkets.

ABSTRACT: In this paper, we investigate dynamic price competition when firms strategically interact in two distinct but interrelated markets : a primary market and an aftermarket, where indirect network effects arise. We set up a differential game of two-dimensional price competition and we conclude that the absence of price competition in the aftermarket (competition in the market) fosters dynamic price competition in the primary market (competition for the market). We also investigate the impact of network sizes on firms prices in the primary market concluding that, in equilibrium, larger firms have incentives to compete more fiercely for new uncolonized consumers.

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

The National Cooperative Research and Production Act

Posted by D. Daniel Sokol

John Scott of Dartmouth (Department of Economics) writes on The National Cooperative Research and Production Act.

ABSTRACT: The National Cooperative Research and Production Act reduces the potential antitrust liabilities for various types of joint ventures involving research and development, production, or standards development in order to encourage their formation and operation. The chapter focuses on whether there is a need for such protections in the case of research joint ventures and examines the controversial possibility that the Act provides unnecessary, and perhaps even too much, antitrust protection.

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

Patents of Damocles

Posted by D. Daniel Sokol

Cleslie_web Christopher Leslie of Chicago Kent College of Law continues his IP-Antitrust interface work with Patents of Damocles.

ABSTRACT: Patentees sometimes use fraudulently procured patents to secure illegal monopolies, excluding efficient competitors and raising prices to consumers. While antitrust doctrine condemns the acquisition of monopoly power through fraudulently procured patents, antitrust liability hinges on whether the monopolist actually "enforced" the patent. Despite the critical importance of the definition of patent enforcement for antitrust law, no scholarship or commentary exists that addresses what conduct constitutes patent enforcement. Without explanation, lower courts have narrowly defined patent enforcement to mean either filing an infringement lawsuit or explicitly threatening to do so. This Article explains how monopolists with fraudulently procured patents have exploited this narrow conception of patent enforcement in order to effectively exclude competitors without triggering antitrust scrutiny.

This Article argues that whenever a monopolist exercises the exclusionary power of a patent, it is in fact effectively enforcing the patent for antitrust purposes. The Article concludes that courts must broaden their conception of "patent enforcement" to include, depending on context, publicly flaunting one's patent, publicly stating a general intent to sue infringers, accusing competitors of infringement, threatening competitors' business partners, and licensing activities. Courts currently do not consider these actions to ever constitute patent enforcement. As a result, the current interpretation of the enforcement requirement for antitrust purposes renders patent fraud cost-beneficial. Absent antitrust liability, it is rational for a monopolist to commit fraud on the PTO, maintain the patent as an ever-present threat, and simply not actively enforce it. These are not incentives that either patent law or antitrust law should create. Expanding the definition of patent enforcement will close the loophole that currently allows firms to acquire and exercise illegal monopoly power through the acquisition of fraudulently procured patents.

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

Thursday, November 20, 2008

Innovation, Integration and Product Proliferation - Empirical Evidence for the Agri-Food Industry

Posted by D. Daniel Sokol

Kostas Karantininis (Department of Economics and Natural Resources. The Royal Veterinary and Agricultural University (KVL)-Denmark), Johannes Sauer (University of Bonn), and William Hartley Furtan discuss Innovation, Integration and Product Proliferation - Empirical Evidence for the Agri-Food Industry in their latest paper.

ABSTRACT: While mergers, both horizontal and vertical, have been shaping the landscape of the agri-food industry in Europe, the implications of the changing market structure on the level of innovation has not been studied yet. In this paper we deal with the link between innovation and market structure using the empirical example of the Danish agri-food industry. The purpose of this paper is two-fold. First we test for the importance of vertical integration on innovation. While there exist several studies on this linkage, to our knowledge, this is the first that deals with the agri-food industry. Secondly, we examine both product proliferation and innovation. To our knowledge, there are no other similar studies that examine both aspects using the same data set. We follow the hypothesis put forward by Armour and Teece (1980) that vertical integration enhances technological innovation, mainly because vertical integration may r! esolve hold-up problems. Our paper is related also to recent work by Weiss and Witkopp (2005) on the German food industry, although their work is mostly related to the role of the retail sector. We are able to examine both innovation (measured as investment on R&D) as well as product proliferation (measured as number of new products). We also examine the effects of network relationships and the importance of countervailing power. We use data from an extensive survey of 444 Danish firms over two years, 2000 and 2005 to estimate two different models: a bootstrapped zero-inflated Poisson regression and a robust Heckman sample selection model. The results verify the hypotheses formulated for both models with various degrees of significance.

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

European Commission's Pharmaceutical Sector Inquiry

Posted by D. Daniel Sokol

The University of Liege Institute for European Legal Studies and the Facultés Universitaires Saint-Louis Centre Innovation Propriété Intellectuelle are hosting a conference on the European Commission's Pharmaceutical Sector Inquiry on January 14, 2009 in Brussels.

Download halfday_conference_on_the_commissions_pharma_sector_inquiry_programme_and_registration_form_14_january_2009.pdf

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

Are Prices Really Affected By Mergers?

Posted by D. Daniel Sokol

Xavier Boutin (CREST-INSEE) and Lionel Janin (DGTPE and CREST-LEI) ask Are Prices Really Affected By Mergers?

ABSTRACT: During the 80s, several empirical studies have shown a positive correlation between concentration, prices and profits. It is well known that these estimates all suffer from simultaneity bias: market structure and prices are affected by common factors, some of which are not observable, which rules out any causal interpretation of cross-sectional correlations.

Mergers are an interesting instrument to identify the (static) impact of concentration on prices, since they induce breaks in strategic interactions between actors. The few ex post studies on mergers that are currently available are difficult to generalize, because they pertain to specific markets. This study looks more systematically to selling prices in 63 sectors observed between 1989 and 2002.

The approach that has been chosen is a difference in differences approach, applied to price movements around mergers. The rate of inflation in a sector where a merger has occurred is compared to a counterfactual. In a simple framework, in line with previous studies (McCabe 2002), this counterfactual would be built as the mean of inflation rates in other sectors. This paper focuses on more relevant estimates, provided by a factor model.

This methodology allows tracking the profile of prices around mergers. We separate mergers between French firms and mergers between other European firms controlled by European authorities (and thus assumed to have affected the common market). We also distinguish mergers having led to an in-depth inquiry by competition authorities (« phase 2 ») and those benefiting from a shorter procedure (« phase 1 »). We observe an acceleration of price movements around the most important of French mergers, but not for the ones authorized under phase 1. We also observe a break in price movements for mergers between foreign firms examined by the European Commission, generally in the other direction.

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

Consumer Welfare and Market Structure in a Model of Competition between Open Source and Proprietary Software

Posted by D. Daniel Sokol

Alexia Gaudeul (University of Norwich Economics) has a new paper on Consumer Welfare and Market Structure in a Model of Competition between Open Source and Proprietary Software.

ABSTRACT: I consider a Vickrey-Salop model of spatial product differentiation with quasi-linear utility functions and contrast two modes of production, the proprietary model where entrepreneurs sell software to the users, and the open source model where users participate in software development. I show that the OS model of production may be more efficient from the point of view of welfare than the proprietary model, but that an OS industry is vulnerable to entry by entrepreneurs while a proprietary industry can resist entry by OS projects. A mixed industry where OS and proprietary development methods coexist may exhibit large OS projects cohabiting with more specialized proprietary projects, and is more efficient than the proprietary model of production from the point of view of welfare.

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

Wednesday, November 19, 2008

Merger Policy to Promote 'Global Players'? A Simple Model

Posted by D. Daniel Sokol

Andreas Haufler, University of Munich - Seminar for Economic Policy and Søren Bo Nielsen, Copenhagen Business School have a new paper on Merger Policy to Promote 'Global Players'? A Simple Model.

ABSTRACT: We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyse under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we allow for multiple mergers and analyse whether national mergers, international mergers or no mergers will be the equilibrium market structure when the firms' decisions to merge are either taken non-cooperatively or cooperatively.

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

FTC Announces Agenda for Roundtable on Follow-on Biologic Drugs

Posted by D. Daniel Sokol

FTC ROUNDTABLE ON
FOLLOW-ON BIOLOGIC DRUGS:
FRAMEWORK FOR COMPETITION AND CONTINUED INNOVATION

Tentative Agenda
November 21, 2008
Federal Trade Commission
600 Pennsylvania Avenue, N.W., Room HQ 432
Washington, D.C. 20580

8:30 - 8:45 Welcoming Remarks: FTC Commissioner Pamela Jones Harbour,

8:45 - 9:00 Opening Remarks: Rachel Behrman, FDA,
“How Do Biologic Drugs Differ from Small Molecule Drugs?”

9:00 - 10:30 Likely Market Effects of Follow-On Biologic (FOB) Drug
Competition
Moderators: Michael Wroblewski and Elizabeth Jex, Attorneys, FTC, Bureau of
Competition, Office of Policy and Coordination and Mergers I

9:05 - 9:20 Background Presentation: Paul Heldman, Senior Health Policy
Analyst, Potomac Research, “Overview of Biologic Drug Markets”

9:20 - 10:30 Participant Discussion
Discussion Topics: Participants will discuss the price and market share effects of entry
by both biosimilar and biogeneric (i.e., substitutable and interchangeable with the
referenced product) drug products. They also will discuss the likely competitive effects
Follow-on Biologic (FOB) drug products will have on reimbursement by private and
public (e.g., Medicare Part B) payers.
Roundtable Participants:
• Alexis Ahlstrom, MPH, Director, Avalere Health LLC
• Rachel E. Behrman, MD, MPH, Director, Office of Critical Path Programs,
Office of the Commissioner, Food and Drug Administration
• Steven B. Brugger, MBA, Chief Operating Officer, Momenta Pharmaceuticals,
Inc.
• Ted Buckley, PhD, Director, Economic Policy, Biotechnology Industry
Organization
• David Golding, Executive Vice President for Specialty Pharmacy Services, CVS
Caremark
• Henry C. Grabowski, PhD, Professor, Duke University
• Paul Heldman, Senior Health Policy Analyst, Potomac Research
• John Lane, Vice President, Biologics, Hospira, Inc.
• Mateja Urlep, R. Ph, MS, Head Global Marketing & Medical,
Biopharmaceuticals, Sandoz International
-2-

10:30 - 10:45 Morning Break

10:45 - 12:00 Likely Competitive Effects of Reference Product Regulatory
Exclusivity
Moderators: Michael Wroblewski, Attorney, FTC, Bureau of Competition, Office
of Policy and Coordination, and Christopher Garmon, FTC, Bureau of Economics

10:45 - 10:55 Background Presentation: Linda Horton, Hogan & Hartson, “The
European Experience with Follow-On Biologic Legislation”

10:55 - 12:00 Participant Discussion
Discussion Topics: The participants will discuss the economic model to assess the pros
and cons of any regulatory exclusivity period provided to referenced products from both
the innovator firms’ and FOB applicants’ perspectives. In particular, panelists will
discuss issues of recoupment and innovation in relation to the time periods preventing
FOB competitors from seeking regulatory approval. Panelists also will explore the pros
and cons of varying the length of any regulatory exclusivity period based on whether an
FOB entrant is a biogeneric or biosimilar product and other ways to encourage
innovation.
Roundtable Participants:
• Alexis Ahlstrom, MPH, Director, Avalere Health LLC
• Geoffrey Allan, PhD, President and CEO, Insmed Inc
• Alex M. Brill, Research Fellow, American Enterprise Institute
• Linda Horton, Partner, Hogan & Hartson
• David Golding, Executive Vice President for Specialty Pharmacy Services, CVS
Caremark
• Henry C. Grabowski, PhD, Professor, Duke University
• Paul Heldman, Senior Health Policy Analyst, Potomac Research
• Audrey Phillips, PhD, Executive Director of Biopharmaceutical Public Policy and
Advocacy, Johnson & Johnson
• Mateja Urlep, R. Ph, MS, Head Global Marketing & Medical,
Biopharmaceuticals, Sandoz International

12:00-1:00 Lunch Break

1:00-2:00 Biotechnology Patent Issues
Moderators: Suzanne Michel, Assistant Director, FTC Bureau of Competition,
Office of Policy and Coordination, and Suzanne Drennon, Attorney, FTC Bureau of
Competition, Office of Policy and Coordination

1:00 - 2:00 Participant Discussion
Discussion Topics: The participants will discuss the interaction between patents
claiming biotechnology products and regulatory exclusivity periods. The panelists will
discuss whether there are differences between biotechnology patents and small molecule
patents relating to (1) claim drafting and PTO approval processes; and (2) trends
regarding judicial review. They also will discuss whether regulatory exclusivity and
patent rights affect innovator firm and FOB applicant needs for business planning
certainty.
Roundtable Participants
• Alisa Harbin, Head Corporate Intellectual Property, Novartis International AG
• Esther Kepplinger, Director, Patent Operations, Wilson Sonsini Goodrich &
Rosati
• Jeffrey P. Kushan, Partner, Sidley Austin LLP
• Bruce A. Leicher, Senior Vice President and General Counsel, Momenta
Pharmaceuticals, Inc.
• David Manspeizer, VP Intellectual Property & Associate General Counsel, Wyeth
• Doug Norman, General Patent Counsel, Eli Lilly and Company
• Naomi Pearce, IP Director and Counsel, Hospira, Inc.
• Rochelle Seide, Senior Counsel, Schwegman, Lundberg & Woessner

2:00 - 2:45: Likely Competitive Effects of Follow-on Biologic Regulatory Incentives
Moderators: Michael Wroblewski and Elizabeth Jex, Attorneys, FTC, Bureau of
Competition, Office of Policy and Coordination and Mergers I

2:00 - 2:45: Participant Discussion
Discussion Topics: Participants will discuss whether there is a need to provide
regulatory incentives for the filing of FOB applications. The participants will examine
the effects of using a marketing exclusivity period for FOB products similar to the one
provided generic applicants under the Hatch-Waxman Act. They also will discuss
whether such incentives are necessary to encourage the development of biogeneric FOB
products.
Roundtable Participants
• Geoffrey Allan, PhD, President and CEO, Insmed, Inc.
• Aaron Barkoff, PhD, Partner, McDonnell Boehnen Hulbert & Berghoff LLP
• Marc A. Goshko, Executive Director Legal Affairs, TEVA Pharmaceuticals,
North America
• Doug Norman, General Patent Counsel, Eli Lilly and Company
• William B. Schultz, Partner, Zuckerman Spaeder LLP
• Bryan Zielinski, Assistant General Counsel, Intellectual Property, Pfizer

2:45 - 3:00 Afternoon Break

3:00 - 5:00: Patent Dispute Resolution Processes
Moderators: Michael Wroblewski and Suzanne Drennon, Attorneys, FTC, Bureau
of Competition, Office of Policy and Coordination

3:00 - 3:15 Presentation of Biotechnology Patent Portfolio Case Study: Rochelle
Seide, Senior Counsel, Schwegman, Lundberg & Woessner

3:15 - 5:00 Participant Discussion
Discussion Topics: The participants will discuss the need for, and the likely competitive
effects of, different ways to structure a process to resolve patent disputes between
innovator firms and FOB applicants prior to FDA approval of FOB products. The
participants will use the Case Study to focus on: (1) when to start such a process; (2) how
and to whom such notifications will be provided; and (3) what patents to be included in
such a process (including patents obtained after such a process has begun).
Roundtable Participants
• Ken Dow, Assistant Patent Counsel, Johnson & Johnson
• Elaine Blais, Partner, Goodwin Proctor LLP, outside patent counsel to TEVA
Pharmaceuticals, North America
• Alisa Harbin, Head Corporate Intellectual Property, Novartis International AG
• Bruce A. Leicher, Senior Vice President and General Counsel, Momenta
Pharmaceuticals, Inc.
• Esther Kepplinger, Director, Patent Operations, Wilson Sonsini Goodrich &
Rosati
• Daniel A. Kracov, Partner, Arnold & Porter LLP
• Jeffrey P. Kushan, Partner, Sidley Austin LLP
• David Manspeizer, VP Intellectual Property & Associate General Counsel, Wyeth
• Hans Sauer, Associate General Counsel, Intellecutal Property, BIO
• Rochelle Seide, Senior Counsel, Schwegman, Lundberg & Woessner
• William B. Shultz, Partner, Zuckerman Spaeder LLP
• Christine J. Siwik, Partner, Rakoczy Molino Mazzochi Siwik LLP

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

The Wisdom of Using the "Unfair Method of Competition" Prong of Section 5

Posted by D. Daniel Sokol

ABSTRACT: The basic question I am addressing concerns the wisdom of using the "unfair method of competition" prong of Section 5 of the Federal Trade Commission Act to prohibit conduct that does not violate the Sherman Act or the other antitrust statues (the Clayton Act and the Robinson-Patman Act, all of which are collectively referred to herein as the "antitrust laws"). I will address that question as a policy matter.

I do not address the question whether Section 5 can, as a matter of law, properly be construed to give the Federal Trade Commission ("Commission") the authority to prohibit such conduct. Even though the statute can be so construed, the Commission must still resolve the policy question whether it is wise to do so. In the first place, Section 5 was enacted more than 90 years ago, long before the current understanding of the requirements of sound competition policy. Moreover, the Commission has, and does and should use, discretion not to press its authority to the limit by bringing all of the cases that it has statutory authority to bring. Thus, the issue whether Section 5 should be used to prohibit conduct that does not violate the antitrust laws is properly addressed as a policy question.

 

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

Merger Control in Brazil: Maturity

Posted by D. Daniel Sokol

Mauro Grinberg and Natália Felix of Barcellos Tucunduva Advogados walk through the merger process in Brazil in Merger Control in Brazil: Maturity.

Download brazil_merger_control_20082009.pdf

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

Tuesday, November 18, 2008

Rethinking the Tunney Act: A Model for Judicial Review of Antitrust Consent Decrees

Posted by D. Daniel Sokol

Lawrence Frankel of DOJ Antitrust has an interesting piece on Rethinking the Tunney Act: A Model for Judicial Review of Antitrust Consent Decrees.

ABSTRACT:For more than thirty years, the Tunney Act - which governs the judicial review of antitrust consent decrees proposed by the U.S. Department of Justice Antitrust Division - has been a source of controversy, due largely to the open-ended nature of the statute and the ambiguities inherent in it. Judicial and congressional attempts to clarify the Act, while helpful, have failed to provide clear guidance to district courts. However, by examining the Act's text and legislative history, the policy objectives the Act can usefully serve, and the costs of various review options, and by bearing in mind both practical and constitutional limitations as well as analogous administrative law principles, it is possible to design a procedural and substantive model for judicial review of antitrust consent decrees that advances, rather than hinders, effective antitrust enforcement.

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

The Case for Antitrust Civil Penalties

Posted by D. Daniel Sokol

First Harry First of NYU Law School makes The Case for Antitrust Civil Penalties.

ABSTRACT: Federal antitrust law currently lacks one potentially useful remedy - civil penalties. Civil penalties are not novel, of course. They are used in other areas of federal economic regulation, in antitrust enforcement in other countries (particularly in Europe), and in a number of state antitrust systems. They have occasionally been proposed for U.S. antitrust law, although the Antitrust Modernization Commission and current federal enforcers have dismissed the idea.

In this paper I review what constitutes a civil penalty; describe the use of civil penalties by the European Commission, the states, and the FTC; and discuss the three potential remedial functions of civil penalties. I then argue for adding civil penalties to federal antitrust law, but my proposal is a limited one. I would add civil fines (but not other civil penalties), only for Section 2 cases (but not for Section 1 cases, despite some instances where they might be useful), and only for two types of monopolization - cases of systemic conduct, like Microsoft, and cases where there is no economic justification for the defendant's monopolizing conduct, for example, fraud on the Patent Office. I also propose that civil fining authority be given both to the Justice Department and the FTC, and that the civil fines not be paid to the Treasury, but be recycled to the agencies to support their enforcement budgets.

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

Under Threat: Competition in the Automotive Service Aftermarket

Posted by D. Daniel Sokol

Norman Hawker of Haworth College of Business, Western Michigan University writes on Under Threat: Competition in the Automotive Service Aftermarket.

ABSTRACT: This paper examines the access of independent service providers to the information, parts, and tools that automobile manufacturers make available to their authorized dealers. The increased use of information technology in automobiles has created opportunities for manufacturers to reduce competition faced by dealers in the market for automotive repair and maintenance. Manufacturers have economic incentives to reduce competition, including the ability to get dealers to purchase parts from the manufacturer. Independent service providers, unlike dealers, can purchase many parts from sources other than the automobile manufacturer. Reduction of competition in automotive service and repairs can be expected to result in higher prices, less convenience, and less innovation for consumers. The Motor Vehicle Right to Repair Act currently under consideration by Congress provides an imperfect solution to this problem.

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

European Competition Soft Law in European Courts: A Matter of Hard Principles?

Posted by D. Daniel Sokol

Oana Andreea Stefan provides thoughts on European Competition Soft Law in European Courts: A Matter of Hard Principles?

ABSTRACT: This article analyses whether and how competition soft law instruments are taken into consideration by the European Courts and the Advocates General. The quantitative analysis of the case-law reveals that even if arguments based on competition guidelines or notices were brought to court since the early days of European law, it is only during the last two decades that they have been taken seriously. The results of the qualitative analysis point to the fact that soft law instruments are considered by the European Courts an important and specific part of the body of European norms that they should use when deciding cases submitted for their judgment. Legal effects are recognised to these not legally binding instruments, but only when it serves the enforcement of hard, general principles of law.

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

Monday, November 17, 2008

Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers

Posted by D. Daniel Sokol

The Department of Justice has released a report, Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers, based on the November 2007 Telecom Symposium that the Division hosted.

As the executive summary concludes:

The report concludes with several proposals for further action:

  • In assessing the legality of conduct in the telecommunications industry under the antitrust laws, the Department will continue to give particular attention to the effects of convergence and increasing substitution among services.
  • To aid its ability to enforce the antitrust laws in the telecommunications industry efficiently and effectively, the Department will continue to monitor industry trends and developments. Because effective review requires reliable data, however, the Department recommends that regulators review and, where appropriate, improve the way they collect and report data to capture the effect of changes that are blurring lines between formerly distinct industry sectors.
  • Increased efforts to obtain relevant data and further refine economic analysis would advance the Department’s ability to evaluate competitive conditions. Potential subjects of future study include review of the competitive implications of bundled pricing, substitution patterns, and quality-adjusted pricing trends.

In its role as advocate for sound competition policy, the Department will continue to seek the removal of regulatory barriers that unreasonably impede competition.

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

FTC Report on Ethanol Market Concentration

Posted by D. Daniel Sokol

The FTC has released its 2008 Report on Ethanol Market Concentration.  From the FTC press release:

The Commission has issued the report, “2008 Report on Ethanol Market Concentration.” This is the Commission’s fourth annual report on the state of ethanol production in the United States, as required by the Energy Policy Act of 2005. The report concludes that the U.S. fuel ethanol market, measured on the basis of production or capacity, remains unconcentrated.

As of September 2008, 160 firms produced ethanol in the United States – a one-year increase of 57 firms. The largest ethanol producer’s share of capacity has continued to fall each year as new firms have entered the market and existing firms have added capacity. Currently, the largest producer accounts for approximately 11 percent of domestic ethanol capacity, down from 16 percent in 2007, 21 percent in 2006, 26 percent in 2005, and 41 percent in 2000.

FTC staff used three different methods to calculate concentration of the ethanol production industry. Specifically, staff calculated concentration based on the production capacity of each individual producer, on the production capacity of each producer when attributing that producer’s capacity to the firm responsible for marketing the producer’s ethanol, and on actual production rather than capacity. The report concludes that the level of concentration in ethanol production would not justify a presumption that a single firm, or a small group of firms, could wield sufficient market power to set or coordinate price or output levels. In addition, the ease of entry by new firms and the availability of ethanol imports provide additional constraints on current market participants.

             

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

Reviving Competition in Healthcare Markets: The Use of Section 5 of the FTC Act

Posted by D. Daniel Sokol

Balto We have a copy of the Section 5 of the FTC Act testimony of David Balto, Senior Fellow, Center for American Progress.

ABSTRACT: The Congress that enacted the FTC Act created Section 5 to enable the FTC to utilize its expertise to challenge practices that were not technical antitrust violations.  The FTC should begin to use those powers in a careful and prudent fashion, bringing enforcement actions that will bring significant benefits to consumers.  The FTC should start by addressing conduct involving PBMs, GPOs, and health insurers.

Download section51.dr5.doc

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