Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, April 4, 2009

The Cartel Project – Website Launched

Posted by D. Daniel Sokol

In coming months long-awaited and at times controversial legislation criminalising serious cartel conduct will be passed by the Australian Parliament.  I am writing to bring to your attention an important research project led by the University of Melbourne Law School on this major development. Funded by the Australian Research Council, this interdisciplinary empirical project will investigate

1. how and why criminalisation of serious cartel conduct has become bipartisan policy in Australia;
2. assess the likely impact of criminalisation on deterrence and compliance with the law by business;
3. compare criminalisation policy and enforcement overseas in countries like the United States and the United Kingdom;
4. make recommendations about the practical implementation of the criminal regime; and
5. draw broader conclusions about regulatory reform processes, the reasons for business compliance with the law, and the most effective approaches to enforcing business regulation generally.

The people involved in the research Project are Associate Professor Caron Beaton-Wells and Associate Professor Christine Parker from the Melbourne Law School, Associate Professor Fiona Haines from the University of Melbourne’s School of Social and Political Sciences and Professor David Round of the University of South Australia’s Centre for Regulation and Market Analysis. The Research Assistant is Janette Nankivell.



The website for the project has just been launched. To find out more, visit http://www.cartel.law.unimelb.edu.au.

 

April 4, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, April 3, 2009

The Darker Side of the Moon: Assessment of Excessive Pricing and Proposal for a Post-Entry Price-Cut Benchmark

Posted by D. Daniel Sokol

Ariel Ezrachi
of University of Oxford's Faculty of Law and David Gilo of Tel Aviv University Law School address The Darker Side of the Moon: Assessment of Excessive Pricing and Proposal for a Post-Entry Price-Cut Benchmark.

ABSTRACT: This paper explores the main grounds commonly used to justify non-intervention in antitrust cases of alleged excessive pricing. In doing so it questions the weight attributed to some of these grounds. While acknowledging the difficulties at stake, the discussion focuses on one of the grounds for non-intervention - the complexity of evaluating whether a price is excessive. It examines the practical challenges in establishing excessiveness and puts forward a proposal for a post-entry price-cut benchmark which may facilitate the finding of excessive pricing. The benchmark is based on the evaluation of the difference between the price a dominant firm had charged before entry of new firms onto its market, and the price that prevailed after such entry. In discussing the proposal, we highlight the advantages and disadvantages of such a benchmark. We explain why competition agencies have refrained from using this benchmark and consider how such a benchmark could be used by private litigants in national courts.

April 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Vertical Competition, Horizontal Competition and Market Power

Posted by D. Daniel Sokol

Robert Steiner analyzes Vertical Competition, Horizontal Competition and Market Power in the Antitrust Bulletin.

ABSTRACT: Buyer power is the subject of this special issue. Buyer power is one of a series of interrelated vertical and horizontal competitive forces at different stages that together determine market power. Horizontal competition takes place between firms at the same stage and vertical competition between firms at successive stages. Buyer power is exercised in vertical upstream competition and seller power in vertical downstream competition.

In the industry to be analyzed, consumer goods manufacturers buy from suppliers and sell to retailers who resell to household consumers. Unfortunately, horizontal and vertical competition (where its existence has been acknowledged) have been probed separately using different economic tools--competition theory in the first instance and bargaining theory in the second. This article develops a unified theoretical framework to estimate market power in consumer goods industries with differentiated products. It integrates horizontal and vertical competition into a common analysis in which the two forms of competition are shown to be positively correlated in a chicken and egg relationship.

April 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Patents, Property and Competition Policy

Posted by D. Daniel Sokol

Herberthovenkampphp Herb Hovenkamp,University of Iowa College of Law has posted Patents, Property and Competition Policy.

ABSTRACT: The decision to regulate involves the identification of markets where simple assignment of property rights is not sufficient to ensure satisfactory competitive results, usually because some type of market failure obtains. By contrast, if property rights are well defined when they are initially created and can subsequently be traded to some reasonably competitive equilibrium, then regulation is thought not to be necessary. In such cases the antitrust laws have a significant role to play in ensuring that the market can be as competitive as free trading allows. One problem with the patent system is that it has neither significant ongoing regulation nor a clear and effective initial assignment of property rights that serves to make the market perform competitively. One could attempt to correct this system either by defining the initial assignment of property rights more clearly or else by imposing more elaborate regulation that continued through the period subsequent to patent issuance and perhaps even for the remainder of a patent's enforcement life.

In the past half century we have come to think of patents less as a species of "monopoly" and more like a kind of "property." But this revised conception of patents as property rather than monopoly remains incomplete in significant ways. While "property" is rhetorically much less threatening than "monopoly," that is so because traditional property rights come with built in limitations that serve to discipline the power to exclude - namely, boundaries and priority rules that define the extent of ownership and give notice to non-owners. Patent law has become "property" without either. Indeed, many of the opportunities for anti-competitive behavior in the area of patents can be traced back to the twin problems that boundaries are not clear and priority, and thus ownership, is so difficult to determine. This suggests an increased role for either post-issuance antitrust or regulation.

April 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, April 2, 2009

Concentrated Media is Something We Can't Ignore: A Response to Speaker Pelosi

Posted by D. Daniel Sokol

Stuckemaurice

Maurice Stucke of the University of Tennessee Law School explains that Concentrated Media is Something We Can't Ignore: A Response to Speaker Pelosi.

ABSTRACT: This essay briefly responds to a request that the U.S. Department of Justice should give San Francisco Bay Area newspapers more leeway under the federal antitrust laws to merge or consolidate their business operations. The essay agrees with House Speaker Nancy Pelosi's concerns that a strong, free, and independent press is vital to our democracy and in informing our citizens, especially news organizations that devote resources to gathering news. As the essay explains, the antidote is not to weaken the antitrust laws to enable large media conglomerates to become even bigger. Instead, the health of the marketplace of ideas depends on the antitrust laws to preserve divergent and competing voices.

April 2, 2009 | Permalink | Comments (0) | TrackBack (0)

On the Measurement of Market Power in the Banking Industry

Posted by D. Daniel Sokol

Manthos Delis (University of Ioannina Department of Economics), Christos Staikouras (Athens Universtiy of Economics and Business, Greece) and Panagiotis Varlagas provide their thoughts On the Measurement of Market Power in the Banking Industry.

ABSTRACT: This paper compares the estimates of the two most widely used non-structural models for market power measurement in banking, namely the conduct parameter method and the revenue test, as applied to a panel of Greek banks over the period 1993-2004. We also propose a dynamic reformulation of these models within a panel data context, in order to address possible statistical problems associated with the dynamic nature of bank-level data. The results suggest that both static methods provide lower estimates of market power relative to their dynamic counterparts. Therefore, the inclusion of some dynamics in the models, even though it increased estimation complexity, helped to reveal some collusive behavior of banks.

April 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Patents in Motion: The Troubling Implications of the N-Data Settlement

Posted by D. Daniel Sokol

Anne Layne-Farrar (LECG) suggests all is not well with the FTC in Patents in Motion: The Troubling Implications of the N-Data Settlement.

ABSTRACT: A little over a year ago, in January 2008, the Federal Trade Commission (“FTC”) announced a settlement with Negotiated Data Solutions (“N-Data”) regarding the firm’s patent licensing practices in relation to the Ethernet standard for computer networking. That announcement has prompted a number of responses, both positive and negative, not so much because of the specifics of the case but rather because of the broader questions it raised. I highlight a few of these questions below, along with their broader policy implications.

April 2, 2009 | Permalink | Comments (0) | TrackBack (0)

The Effects of Retail Regulations on Prices: Evidence from the Loi Galland

Posted by D. Daniel Sokol

Pierre Biscourp (ENSAE), Xavier Boutin (INSEE and CREST-LEI), and Thibaud Verge (CREST-LEI) describe  The Effects of Retail Regulations on Prices: Evidence from the Loi Galland.

ABSTRACT: In 1997, a new legislation banning below-invoice retail prices came into force in France. Individually negotiated discounts could no longer be passed on to consumers, which is equivalent to allowing industry-wide price floors. The anti-competitive effects of such practices are well-known. The elimination of intra-brand competition is expected to lead to a sharp increase in the retail prices. Using CPI raw data, we find evidence supporting this claim. The modification or revocation of the existing legislation (as it has been done in Ireland in December 2005) would then be expected to reduce retail prices.

April 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 1, 2009

Anti-Competitive Effects of Resale-Below-Cost Laws

Posted by D. Daniel Sokol

Marie-Laure Allain (Department of Economics, Ecole Polytechnique) and Claire Chambolle (Department of Economics, Ecole Polytechnique) describe the Anti-Competitive Effects of Resale-Below-Cost Laws.

ABSTRACT: We show that resale-below-cost laws enable producers to impose industry-wide price-floors to retailers. This mechanism suppresses downstream competition but also and more surprisingly dampens upstream competition, leading to higher prices and lower welfare. Price-floor may be more profitable for producers than resale price maintenance contracts and, when a resale price maintenance restraint may have ambiguous effect on welfare, price-floors are always welfare damaging. Retailers' buyer power appears as a key for a price-floor to work out.

April 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Abuse of dominant position case in China

posted by Shubha Ghosh

From Paul Jones, prominent Toronto attorney:

The refusal of the Coca-Cola merger with Huiyuan juice two weeks ago has been extensively covered in the news inside and outside China.

 Less well covered has the development of private actions, in part because none of them of made it to the stage of being heard on the merits. But they are developing. According to a story today in Caijing the Beijing Dongcheng District People’s Court (the area just east of the Forbidden City) accepted a suit brought against China Mobile Group and China Mobile Communications Corporation for abuse of dominant market position with respect to their various packages for mobile telephones:

(Article in Chinese) http://www.caijing.com.cn/2009-03-31/110130848.html

 It appears from the article that the plaintiff, an existing customer of one of the defendants, is complaining that he is being charged more than new customers for the service. He says this violates Articles 17(5)and (6) of the AML. Article 17(5) prohibits tie-in sales and other unreasonable transactions and Article 17(6) prohibits price discrimination. Both require that the conduct be without justification or that the defendant not be competing on the merits (没有正当理由). When the plaintiff signed up he was charged a monthly service fee of 50 yuan ($7.32 USD at today’s rate) which he continues to pay. Since then China Mobile has launched other service plans without the monthly fee.

 The defendants are said to have more than 70% of the market for mobile services.

 This case is similar to a suit launched against China Netcom, an internet service provider, for discriminatory pricing based on the type of residence permits (户口- Hukou) that people carry. That suit sounds like it may have a better a chance of success than this one. That case was accepted by the court last September (see http://news.xinhuanet.com/fortune/2008-09/20/content_10082021.htm in Chinese).

Paul Jones      Пол  Джоунс

Barrister , Solicitor & Trade-mark Agent

 Jones & Co.

365 Bay Street, 2nd Floor

Toronto, Ontario

Canada M5H 2V1

E-mail : pjones@jonesco-law.ca

NEW Web Site: www.jonesco-law.ca

April 1, 2009 | Permalink | Comments (1) | TrackBack (0)

OECD Job Opening in the Competition Division – Deadline for applications is 4 April, 2009

Posted by D. Daniel Sokol

The OECD is looking for a young lawyer or an economist with expertise in competition law enforcement and policy. S/he will be supporting senior lawyers and economists of the OECD Competition Division in the organisation of discussions between senior officials on cutting edge issues of competition law and policy, helping with the research and drafting of analytical reports and editing and supervising the production of related publications. S/he will also support the capacity building activities of the OECD Competition Division throughout the world. S/he will assist with the organisation of meetings and other events relating to competition policy in OECD member and non-member countries. The person will work under the supervision of the senior lawyers and economists responsible for the work of OECD Competition Committee and its Working Parties.

Fore more details, please check HERE (reference number 3067).

April 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Bocconi University in Milan is Looking to hire a junior professor in Antitrust/Competition Law

Posted by D. Daniel Sokol

BOCCONI UNIVERSITY
Milan, Italy Angelo Sraffa Department of Law
Assistant Professor Positions

The Angelo Sraffa Department of Law of Bocconi University, Milan (Italy) - http://www.unibocconi.eu - invites applications for two positions at the junior faculty level in the area of Business Law. This year there will be a special emphasis in the areas of Italian and European Corporate law Antitrust law, and Financial law. JOB

DESCRIPTION: Contracts will be running for up to six years (subject to renewal after 3 years). Excellent performance in research and teaching may lead to a tenured position of Associate Professor at the end of that period. Knowledge of Italian is required. Responsibilities include teaching, both in English and in Italian and, most importantly, productivity in research. The appointed persons are expected to conduct major research projects and publish in international journals.

JOB QUALIFICATIONS: Applicants should have a Ph.D. (in Law preferred) and/or an LLM and should have demonstrated strong potential in research and some significant experience in teaching. Compensation and teaching load will be competitive with other European Law Schools. The annual teaching load is 105 hours. Direct individual research funding is granted every year. Furthermore, Bocconi University has recently introduced new criteria to reward faculty members who publish in top international journals. APPLICATION

PROCEDURE: Application packages (full CV; samples of research; two letters of reference; teaching evaluation results, if available) should be sent via e-mail with attachments (Word and PDF preferred) to: Email: MAILTO:recruiting@unibocconi.it Applications should be received by April 30, 2009 (preferably earlier).

April 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Ecuador's New Competition Regime

Posted by D. Daniel Sokol

Ecuador has a new competition regime, utilizing the Andean Community's competition policy Decision 608.

Download DECRETO EJECUTIVO 1614-APLICACIÓN DECISIÓN 608-COMPETENCIA

April 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 31, 2009

The Intersection of Antitrust, Patents, and FDA Law: The TriCor Litigation

Posted by D. Daniel Sokol

Epstein

Richard Epstein of the University of Chicago Law School describes The Intersection of Antitrust, Patents, and FDA Law: The TriCor Litigation.

ABSTRACT: The purpose of this brief essay is to address the interconnections among three important areas of law: antitrust, patents, and FDA regulation. Each of these presents formidable difficulties in its own right. The integration of any two areas of law is always vexed. The interconnections among three different bodies of law of vital relevance to the pharmaceutical industry present a still more formidable challenge. The easiest approach starts with an outline of the antitrust, into which I shall first integrate the patent law, thereafter turning to the rules governing FDA approved drugs.

In order to focus the inquiry I will talk about the TriCor litigation in which Abbott Labs was sued on three fronts: by downstream retailers, generic competitors, and state attorneys general. The three cases raise much the same substantive issues, even though each group has its own distinctive damage claim. The litigation has clear importance because TriCor generates over a billion dollars in sales each year. The stakes are high. It is worth noting that the retailer piece of the litigation was recently settled for $184 million.

March 31, 2009 | Permalink | Comments (0) | TrackBack (0)

Competition Law, Cartel Enforcement & Leniency Program

Posted by D. Daniel Sokol

Danilo Sama (LUISS "Guido Carli" University of Rome) provides insights into Competition Law, Cartel Enforcement & Leniency Program.

ABSTRACT: The present assessment focuses the attention on the antitrust action in detecting and fighting oligopolistic collusion, analyzing the development of the innovative and modern leniency policy. Following the examination of the main conditions and reasons for cartel stability and sustainability, our attempt is to comprehend under which circumstances leniency program represents a functional and successful tool for preventing the formation of anti-competitive agreements. The problem statement that follows is therefore: how can Law&Economics approach help competition authorities to achieve and realize this form of enforcement?

March 31, 2009 | Permalink | Comments (0) | TrackBack (0)

UK Competition Commissions Appoints New Members

Posted by D. Daniel Sokol

The UK Competition Commission has appointed new members according to a press release.

Robin Aaronson has been appointed as a reporting panel member from 1 April 2009 to 31 March 2017. Robin is an economist specializing in competition policy. In the 1980s he was senior economic adviser to the Monopolies and Mergers Commission. Subsequently, he has worked as a consultant in the field, as a partner at Coopers and Lybrand and later at LECG.

Phillip Evans has been appointed as a reporting panel member from 1 April 2009 to 31 March 2017. He is an independent consultant on consumer, competition and trade issues and a senior consultant to Fipra International. He is a visiting fellow at Oxford University’s Said Business School Centre for Corporate Reputation.

Simon Evenett
has been appointed as a reporting panel member from 1 April 2009 to 31 March 2017. Simon is Professor of International Trade & Economic Development, University of St Gallen, Switzerland. He is also Programme Director of the International Trade and Regional Economics Programme of the Centre of Economic Policy Research. His research interests include national and international cartels, cross-border mergers and acquisitions, and the pros and cons of international norms on competition law and policy.

Roger Finbow has been appointed as a reporting panel member from 1 May 2009 to 30 April 2017. Roger has been a partner of international solicitors Ashurst LLP since 1984 and retires on 30 April 2009. The last five years have been spent as Managing Partner of the Corporate Department. He specializes in competition law and is the joint author of UK Merger Control Law and Practice.

John Longworth has been appointed as a reporting panel member from 1 April 2009 to 31 March 2017. Originally a scientist, John has been in business for 25 years holding board and senior positions in the Corporate Group, Tesco and Asda. He was economic spokesman for the CBI, and a non-executive director of the York Foundation Hospitals Trust. He was a Health & Safety Commissioner for six years and has held many other public and non-executive positions.

Robin Mason has been appointed as a reporting panel member and a specialist member on the Communications Act Panel from 1 September 2009 to 31 August 2017. Professor Mason is currently the Eric Roll Professor of Economics and Head of Economics at the University of Southampton, where he is director of the Centre for Research in the Information Economy. He joins the University of Exeter as Professor of Economics in September 2009. He is a fellow of the CEPR and associate editor of the Journal of Industrial Economics. He has acted as adviser to Ofcom; and the Prime Minister of Mauritius on competition policy. He has published widely in the economics of information and industrial organization.

Tony Morris has been appointed as a reporting panel member from 1 September 2009 to 31 August 2017. He is a solicitor with over 30 years’ experience of UK and EU competition law. He has spent the past 24 years as a partner in the city firm of Linklaters specializing in the control of cartels and mergers and the conduct of industry competition inquiries.

Stephen Oram has been appointed as a reporting panel member and a specialist member on both the Communications Act and Newspaper Panels from 1 April 2009 to 31 March 2017. Stephen worked for 28 years at director level in the regional and national newspaper industry and as a Chief Executive of daily, weekly and free regional newspapers. He was Director of the Newspaper Publishers Association for ten years. Currently he is Executive Chairman of the London Press Club, non-executive Chairman of a national newspaper advertising consumer protection scheme and National Secretary of the Western Front Association.

Edward Smith
has been appointed as a reporting panel member from 1 April 2009 to 31 March 2017. A former senior partner and Global Assurance COO and Strategy Chairman of PricewaterhouseCoopers, he now enjoys a portfolio of board roles in Education, Transport, sport, thought leadership and the environment and sustainable development. He is Chairman of WWF-UK, Deputy Chairman of the Higher Education Funding Council for England, and a Member of Council and Treasurer of Chatham House. He joined the board of the Department for Transport on 1 January 2009.

Tony Stoller CBE has been appointed as a reporting panel member and a specialist member on both the Communications Act and Newspaper Panels from 1 April 2009 to 31 March 2017. He was Chief Executive of the Radio Authority until it was subsumed into Ofcom in 2003 when he then helped set up the new regulator. He was also formerly a Managing Director of the department store Tyrell and Green, and a principal director of the John Lewis Partnership. He is currently Deputy Chair of the Joseph Rowntree Foundation, Chair of the Committee of Reference for F&C Asset Management’s Stewardship Funds, Editor of The Friends Quarterly, and a member of the Freedom of Information Tribunal.

Roger Witcomb has been appointed as a reporting panel member and a specialist member on the Utilities Panel from 1 April 2009 to 31 March 2017. He is Chair of Governors of the University of Winchester and a non-executive director of a number of companies, including Anglian Water. He was Finance Director of National Power from 1996 to 2000, having previously been at BP and Cambridge University, where he taught economics.

March 31, 2009 | Permalink | Comments (0) | TrackBack (0)

Recent Developments in the United States, EU, and Asia at the Intersection of Antitrust and Patent Law

Posted by D. Daniel Sokol

For an overview of the intersection of antitrust and IP around the world, see Recent Developments in the United States, EU, and Asia at the Intersection of Antitrust and Patent Law by a Jones Day team of Johannes Zoettl, Sebastian Evrard, Geoffrey Oliver, J. Bruce McDonald, Steve Harris, Shinya Watanabe, Hiro Miyakawa, Peter Wang and Yizhe Zhang.  Well done.

ABSTRACT: The intersection of antitrust and intellectual property has continued to generate a great deal of controversy and is perhaps the most fertile subject area for the development of new competition law and policy. Though an overall convergence is perceptible with regard to a number of issues, differences in the laws, legal systems, and policy priorities in various jurisdictions have resulted in divergence with regard to others.

This article seeks to provide an overview of the major developments in key areas in which competition issues are implicated by the structure or use of intellectual property rights.

March 31, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, March 30, 2009

The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model

Posted by D. Daniel Sokol

Luis Santos-Pinto (University of Lausanne Faculty of Business and Economics) describes The Impact of Firm Size and Market Size Asymmetries on National Mergers in a Three-Country Model.

ABSTRACT: This paper studies the impact of firm and market size asymmetries on merger decisions. To do that I consider a model where a small and a large country compete in a third (world) market. Each of the two countries has two firms (with potentially different costs) that supply the domestic market and export to the third market. Merger decisions in the two countries are modeled as a simultaneously move game. The paper finds that firms in the large country have more incentives to merge than firms in the small country. In contrast, the government of the large country has more incentives to block a merger than the government of the small country. Thus, the model predicts that conflicts of interest between governments and firms concerning national mergers are more likely in large countries than in small ones.

March 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Generating Evidence to Guide Merger Enforcement

Posted by D. Daniel Sokol

An interesting paper by Orley Ashenfelter (Princeton - Economics), Daniel Hosken (FTC) and Matthew Weinberg (FTC) discusses Generating Evidence to Guide Merger Enforcement.

ABSTRACT: The challenge of effective merger enforcement is tremendous. U.S. antitrust agencies must, by statute, quickly forecast the competitive effects of mergers that occur in virtually every sector of the economy to determine if mergers can proceed. Surprisingly, given the complexity of the regulators task, there is remarkably little empirical evidence on the effects of mergers to guide regulators. This paper describes the necessity of retrospective analysis of past mergers in building an empirical basis for antitrust enforcement, and provides guidance on the key measurement issues researchers confront in estimating the price effects of mergers. We also describe how evidence from merger retrospectives can be used to evaluate the economic models used to predict the competitive effects of mergers.

March 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Market Sharing and Price Leadership

Posted by D. Daniel Sokol

Ante Farm (Swedish Institute for Social Research, Stockholm University) addresses Market Sharing and Price Leadership in a new working paper.

ABSTRACT: This paper proposes an alternative to the traditional model of supply and demand in markets where consumers take prices as given. Within the framework of “no side payments and partial preplay communication” firms are assumed to decide non-cooperatively on production and marketing while the market price is set by a competitive price leader, i.e. a firm preferring the lowest market price. Predictions include excess supply and a revenuemaximizing market price in markets where production precedes sales. In markets where sales precede production competitive price leadership predicts monopoly pricing but not necessarily monopoly profits if firms are “sufficiently similar”, while the presence of firms with high costs or low capacities will make it possible for the price leader, in some circumstances, to increase its market share and also its profits by reducing its price. And the threat of costly competition for market shares may reduce the market price even for identical firms.

March 30, 2009 | Permalink | Comments (0) | TrackBack (0)