Antitrust & Competition Policy Blog

International Antitrust in a World Without a Center - Conference Registration is Now Open

Posted by D. Daniel Sokol

Back to the front

On June 18, the American Antitrust Institute will host its 10th annual conference at the National Press Club in Washington, DC. This year's conference is titled "International Antitrust in a World Without a Center" and will focus on international challenges facing the antitrust community.

The AAI is honored to host Mario Monti, former European commissioner for competition and now president of the Universita Commerciale Luigi Bocconi in Milan, and John Fingleton, the chief executive officer of the U.K. Office of Fair Trading, as speakers on the June 18 program.

Registration is available here.

8:30a.m.	Welcome and Introduction – The Ballroom Albert A. Foer, President, American Antitrust Institute
9:00a.m.	Keynote Address: Antitrust in International Economic Context Mario Monti, President of the Universita Commerciale Luigi Bocconi, Milan; former European Commissioner for Competition
9:30a.m.	The Evolution of Comparative Antitrust as a Discipline Moderator: Howard A. Shelanski, Director, Berkeley Center for Law & Technology John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom Stephen Martin, Professor of Economics, the Krannert School of Management, Purdue University
10:45a.m.	Break
11:00a.m.	Breakout Sessions   Asia—A Progress Report Moderator: Russell Pittman, Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice.  Wu Hanhong, School of Economics, Renmin University of China, Bejing Hiromitsu Miyakawa, Attorney at Law, Jones Day. Japan   The International Meltdown and Antitrust Moderator: Thomas Greaney, Professor of Law and Director, Center for Health Law Studies at Saint Louis University School of Law Lawrence E. Mitchell, Theodore Rinehart Professor of Business Law, George Washington University Paul Nihoul, Professor of Law, the University of Louvain, Belgium Arthur Wilmarth, Professor of Law, George Washington University   Private Enforcement: Adding to the Complexity? Moderator: Michal Gal, Professor of Law, University of Haifa Law School, Israel Michael Hausfeld, Partner, Hausfeld LLP Franz Jürgen Säcker, Director, Institute for German and European Business, Competition and Regulation Law, Free University Berlin Karl Meessen, Co-editor, Wirtschaft uind Wettbewerb (monthly journal of German and European Competition law)   Bridging the Trade-Competition Gap Moderator: Douglas E. Rosenthal, Partner, Washington Office of Constantine|Cannon Shanker A. Singham, Partner, Squire Sanders & Dempsey LLP Daniel Sokol, Assistant Professor, Levin College of Law, University of Florida
12:00p.m.	Break
12:15p.m.	Luncheon– The Ballroom    Presentation of the Fifth Annual Jerry S. Cohen Award   Presentation of the AAI Antitrust Achievement Award to Eleanor M. Fox Ilene Gotts, Partner, Wachtell, Lipton, Rosen & Katz John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom
2:15p.m.	Breakout Sessions   International Cartels Moderator: Gary R. Spratling, Partner, Gibson, Dunn & Crutcher John M. Connor, Professor of Industrial Economics, Purdue University Ewoud Sakkers, DG- Comp., Head of Cartels Unit Charles Wright, Partner, Siskinds, LLP   Can Section 5 and Article 82 Converge? Presentation of Paper: Ryan Marth, Attorney, Robins, Kaplan, Miller & Ciresi L.L.P. Thomas Miller, Partner, Robins, Kaplan, Miller & Ciresi L.L.P   Comments by: William Kovacic, Commissioner, Federal Trade Commission Rudolph J.R. Peritz, Professor and Director, IProgress Project, New York Law School   Centralizing Merger Controls Moderator: Ilene Gotts, Partner, Wachtell, Lipton, Rosen & Katz Ronald A. Stern, Vice President and Senior Competition Counsel, General Electric Company Yoshizumi Tojo, Faculty of Law and Politics, Rikkyo University, Japan   Coordination Between ICN, OECD, UNCTAD, WTO, etc.: Do We Need a Summit? Moderator: Daniel Sokol, Assistant Professor, Levin College of Law, University of Florida Shyam Khemani, Economist, Micra Sheridan Scott, Partner, Bennet Jones LLP, Canada Randy Tritell, Director, Office of International Affairs, Federal Trade Commission
3:30p.m.	Antitrust in a World without a Center – Roundtable Discussion Moderator: Eleanor Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom William Kovacic, Commissioner, Federal Trade Commission Mario Monti, President of the Universita Commerciale Luigi Bocconi, Milan; former European Commissioner for Competition Sheridan Scott, Partner, Bennet Jones LLP, Canada
4:30p.m.	Closing Remarks

Competition, the Crisis and the Road to Recovery

Posted by D. Daniel Sokol

Neelie Kroes, European Commissioner for Competition Policy, recently gave a speech on Competition, the Crisis and the Road to Recovery.

Antitrust Transitions

Posted by D. Daniel Sokol

Spencer Waller of Chicago Loyola Law School and Jennifer Woods of Chicago Loyola Law School review the Antitrust Section of the American Bar Association and the American Antitrust Institute reports for the Obama Administration in Antitrust Transitions.

ABSTRACT: Antitrust enforcement is entering a period of transition in the United States. The election of Barack Obama as President and his executive branch, regulatory, and judicial appointments will have importance consequences for antitrust law and enforcement, although most observers believe that these changes will be relatively modest both substantively and in comparison to matters of banking reform and economic stimulus.

As part of that process of change, there has been no shortage of advice offered to first the Obama transition team, and now the Administration, about how to handle competition policy going forward. Two of the more substantial efforts in this regard come from well established antitrust groups with very different perspectives and memberships. Both the Antitrust Section of the American Bar Association and the American Antitrust Institute have offered sophisticated lengthy public advice to the new Administration on how best to proceed in the competition law field. The reports are very different in nature and reflect the different nature of the institutions that prepared them. This essay takes a brief look at the transition reports offered by each organization and the vision they would offer the new Administration.

Margin Squeeze Abuses: The EU Perspective

Posted by D. Daniel Sokol

Cecilio Madero (European Commission, DG Competition), Iratxe Gurpegui Ballesteros (European Commission, DG Competition) & Ana Malheiro (European Commission, DG Competition) describe Margin Squeeze Abuses: The EU Perspective.

ABSTRACT: In the recent years, the European Commission (“Commission”) and National Competition Authorities have devoted a great deal of their attention to the enforcement of Article 82 of the EC Treaty and the equivalent provisions at the national level. Among the various forms of abuses investigated, margin squeeze allegations have clearly been a priority in the decisional practice of the authorities, with a large number of those decisions relating to the telecoms sector.

The Google Book Search Settlement: A New Orphan-Works Monopoly?

Posted by D. Daniel Sokol

Randy Picker of the University of Chicago Law School has just posted The Google Book Search Settlement: A New Orphan-Works Monopoly?

This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world’s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers. The October, 2008 settlement agreement for those suits will create an important new copyright collective and will legitimate broad-scale online access to United States books registered before early January, 2009.

The settlement agreement is exceeding complex but I have focused on three issues that raise antitrust and competition policy concerns. First, the agreement calls for Google to act as agent for rights holders in setting the price of online access to consumers. Google is tasked with developing a pricing algorithm that will maximize revenues for each of those works. Direct competition among rights holders would push prices towards some measure of costs and would not be designed to maximize revenues. As I think that that level of direct coordination of prices is unlikely to mimic what would result in competition, I have real doubts about whether the consumer access pricing provision would survive a challenge under Section 1 of the Sherman Act.

Second, and much more centrally to the settlement agreement, the opt out class action will make it possible for Google to include orphan works in its book search service. Orphan works are works as to which the rightsholder can’t be identified or found. That means that a firm like Google can’t contract with an orphan holder directly to include his or her work in the service and that would result in large numbers of missing works. The opt out mechanism - which shifts the default from copyright’s usual out to the class action’s in - brings these works into the settlement.

But the settlement agreement also creates market power through this mechanism. Absent the lawsuit and the settlement, active rights holders could contract directly with Google, but it is hard to get large-scale contracting to take place and there is, again, no way to contract with orphan holders. The opt out class action then is the vehicle for large-scale collective action by active rights holders. Active rights holders have little incentive to compete with themselves by granting multiple licenses of their works or of the orphan works. Plus under the terms of the settlement agreement, active rights holders benefit directly from the revenues attributable to orphan works used in GBS.

We can mitigate the market power that will otherwise arise through the settlement by expanding the number of rights licenses available under the settlement agreement. Qualified firms should have the power to embrace the going-forward provisions of the settlement agreement. We typically find it hard to control prices directly and instead look to foster competition to control prices. Non-profits are unlikely to match up well with the overall terms of the settlement agreement, which is a share-the-revenues deal. But we should take the additional step of unbundling the orphan works deal from the overall settlement agreement and create a separate license to use those works. All of that will undoubtedly add more complexity to what is already a large piece of work, and it may make sense to push out the new licenses to the future. That would mean ensuring now that the court retains jurisdiction to do that and/or giving the new Registry created in the settlement the power to do this sort of licensing.

Third, there is a risk that approval by the court of the settlement could cause antitrust immunities to attach to the arrangements created by the settlement agreement. As it is highly unlikely that the fairness hearing will undertake a meaningful antitrust analysis of those arrangements, if the district court approves the settlement, the court should include a clause - call this a no Noerr clause - in the order approving the settlement providing that no antitrust immunities attach from the court’s approval.

Justice Department Requests Extension of Microsoft Final Judgment

Posted by D. Daniel Sokol

DOJ has announced that it has extended the Microsoft Final Judgment by at least 18 months.

Update (April 17): As Jay Himes (Labaton Sucharow) reminds me:

Note as well that, in this landmark antitrust case, the DOJ's enforcement authority over all substantive parts of the Final Judgment other than the communications protocol provision (section III.E) in fact ended in November 2007.  The only enforcers with responsibility for the non-III.E sections are the States, and that condition will continue until May 2011.  This includes management of the Technical Committee so that, as to all non-III.E sections, the New York Group of States oversees the TC.  On section III.E, the New York Group, together with the DOJ, co-oversee the TC. 

 

That is the result of the Court's Jan. 2008 ruling extending the Final Judgments on behalf of the States over the opposition of both Microsoft and the DOJ as amicus. 

Beef Up Your Competitor: A Model of Advertising Cooperation Between Internet Search Engines

Posted by D. Daniel Sokol

Geza Sapi (DIW Berlin - Economics) and Irina Suleymanova (DIW Berlin - Economics) write on Beef Up Your Competitor: A Model of Advertising Cooperation Between Internet Search Engines.

ABSTRACT: We propose a duopoly model of competition between internet search engines endowed with different technologies and study the effects of an agreement where the more advanced firm shares its technology with the inferior one. We show that the superior firm enters the agreement only if it results in a large enough increase in demand for advertising space at the competing firm and a relatively small improvement of the competitor's search quality. Although the superior firm gains market share, the agreement is beneficial for the inferior firm, as the later firm's additional revenues from a higher advertising demand outweigh its losses due to a smaller user pool. The cooperation is likely to be in line with the advertisers' interests and to be detrimental to users' welfare.

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Entry Barriers, Competition, and Technology Adoption

Posted by D. Daniel Sokol

Lei Fang (Federal Reserve Bank of Atlanta) discusses Entry Barriers, Competition, and Technology Adoption.

ABSTRACT: There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in total factor productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a new model to link entry barriers and technology adoption. In the model, higher barriers to entry effectively reduce entry threat, and lower entry threat leads to adoption of less productive technologies. The paper demonstrates that technology adopted in the economy with entry threats is at least as good as the technology adopted in the economy without entry threats. Moreover, the paper presents numerical simulations that suggest entry barriers could be a quantitatively important reason for cross-country differences in TFP and are more harmful to productivity in the countries with monopolists facing inelastic demand.

Competition in the Financial Sector: Overview of Competition Policies

Posted by D. Daniel Sokol

Stijn Claessens (IMF) describes Competition in the Financial Sector: Overview of Competition Policies.

ABSTRACT: Competition in the financial sector, as in other sectors, matters for allocative, productive, and dynamic efficiency. Theory suggests, however, that unfettered competition is not necessarily best given the special features of financial services. The author discusses these analytical complications before reviewing how to assess competition in the financial sector and its determinants. It is shown that competitiveness varies greatly across countries, in perhaps surprising ways, and that it is not driven by financial system concentration. Rather, systems with greater foreign entry and fewer entry and activity restrictions tend to be more competitive, confirming that contestability—the lack of barriers to entry and exit—determines effective competition. The author then analyzes how competition policy in the financial sector has generally been conducted and how changes in competition in the financial services industries should affect competition policy going forward. In part based on comparison with other industries, the author provides some suggestions on how competition policy in the financial sector could be better approached as well as what institutional arrangements best fit a modern view of competition policy in the sector. The specific competition challenges for developing countries is also highlighted. The author concludes that practices today fall far short of the need for better competition policy in the financial sector.

Let Us Put Markets to the Service of the Good Society

Posted by D. Daniel Sokol

An op-ed piece in the Financial Times on Tuesday suggests the need to make a break from Chicago School economics.  Among the points raised are, "From the world of high finance to the local high street, regulators have created a model of competition that eliminates competitors. Conservatives need new models of antitrust law to encourage genuine competition across the economy."

HT - Russ Pittman

More Firms, More Competition: Is it Certain? The Case of the Fourth Operator in France's Mobile Telephony

Posted by D. Daniel Sokol

Louis de Mesnard, University of Burgundy asks, More Firms, More Competition: Is it Certain? The Case of the Fourth Operator in France's Mobile Telephony.

ABSTRACT: The French government plans to authorize a fourth operator to enter the country’s mobile phone market alongside Orange, SFR and Bouygues Telecom. While the French government sees this as a way to foster competition, this paper predicts the move will prove a disappointment. Three points are examined. 1) If the operators are in four-way Cournot competition, minimizing the total profit fails to maximize the consumer surplus and the total surplus; the most realistic price fall is only of 1.11% compared to three-way Cournot competition. 2) The overall incentives for forming a monopoly are positive; when the fourth operator’s costs are high, there will be no move from a three-way Cournot competition to a monopolistic cartel of four because Orange experiences negative incentives; there will be no move from a monopolistic cartel of three to a monopolistic cartel of four. 3) Moving from fourway Cournot competition to a partial cartel formed by Orange, SFR and Bouygues Telecom is unlikely; when the fourth operator enters a market dominated by the monopolistic cartel of Orange, SFR and Bouygues Telecom, these three operators will not continue forming a cartel; excluding the fourth operator from the monopolistic cartel of four is also losing; the cartel formed by SFR, Bouygues Telecom and the fourth operator is never credible either.

Maintaining Tacit Collusion in Repeated Ascending Auctions

Posted by D. Daniel Sokol

Owen R. Phillips (University of Wyoming - Economics) and Dale J. Menkhaus (University of Wyoming) provide us with the conditions of Maintaining Tacit Collusion in Repeated Ascending Auctions.

ABSTRACT: In a repeated two‐stage game, identical goods are produced and then sold through an ascending auction. Baseline market structures are created in the laboratory with a fixed number of units sold, and either two or four buyers bid as each unit is offered for sale. Bidding rings develop in both auction environments. Three “seller‐active” market structures are created in which sellers individually and repeatedly decide how many units to produce and bring to an auction. Auction designs have two or four sellers and two or four buyers. Bidding rings develop in two‐buyer markets but falter because sellers reduce production sufficiently to destabilize the ring. Bids rise to the equilibrium at the intersection of supply and demand. Prices are higher when there are four buyers. Sellers can tacitly coordinate through the advance production decision.

Competition, Monopoly, and Aftermarkets

Posted by D. Daniel Sokol

Dennis W. Carlton (University of Chicago - Graduate School of Business) and Michael Waldman (Cornell - Johnson School of Business) address Competition, Monopoly, and Aftermarkets.

ABSTRACT: Consider a durable goods producer that has the option of monopolizing an aftermarket such as repair for its own product. An important question is whether such monopolization reduces welfare? We show that the answer to this question is frequently no. In particular, we explore three models that illustrate various ways in which aftermarket monopolization can reduce inefficiencies and thus increase social welfare and frequently also consumer welfare. Our article shows that efficiency enhancing aftermarket monopolization may be much more common than previous literature suggests.

Detection of Anticompetitive Horizontal Mergers

Posted by D. Daniel Sokol

Kai Hüschelrath (Centre for European Economic Research (ZEW)), has developed a method of Detection of Anticompetitive Horizontal Mergers.

ABSTRACT: The paper develops a four-step framework to detect anticompetitive horizontal mergers. In the first step, an estimate of the impact of the merger on the market price needs to be derived. Subsequent, the second step of the framework has to assess whether such a predicted price increase would be sustainable post-merger. The third step needs to assess whether the identified efficiencies are substantial enough to at least hold the premerger price level. Finally, the fourth step has to consider the effects of a horizontal merger on other competition variables such as product variety, marketing as well as R&D post-merger.

Diminishing Enforcement: Negative Effects for Deterrence of Mistaken Settlements and Misguided Competition Promotion and Advocacy

Posted by D. Daniel Sokol

Francisco Marcos of Instituto de Empresa Business School (and a judge of the Tribunal de Defensa de la Competencia de la Comunidad de Madrid) discusses Diminishing Enforcement: Negative Effects for Deterrence of Mistaken Settlements and Misguided Competition Promotion and Advocacy in his latest paper.

ABSTRACT: Competition policy is conceived to preserve and promote free market competition. It can be fleshed out through a mix of tools that are used to further consumer and social welfare through preserving and promoting the efficient functioning of markets. In different countries, courts, administrative authorities and governments themselves play different roles in the execution of competition policy and in the fulfilment of its goals.

On the one hand, competition policy uses prohibitions of anticompetitive actions and merger control as a legal instrument to fight or prevent market restraints by private agents. Public and private competition law enforcement leading to sanctions and/or actions for damages (i.e. the 'regular' enforcement of competition law) is the main manifestation of competition policy.

However, relatively recent developments have increased the number of tools in the shed of competition law enforcement. It has gone past 'regular' enforcement and currently also foresees settlements as a tool to introduce flexibility in the prosecution of competition violations. Settlements are conceived as procedural devices in public antitrust enforcement that provide a shortcut to allow for the speedy conclusion of inquiries and administrative proceedings in those cases that would be costly and inefficient to pursue. If properly used, recourse to settlements may allow competition authorities to save costs and resources in pursuing risky proceedings with an uncertain outcome. From that perspective, the effects of antitrust settlements may seem socially valuable. However, an often overlooked effect is that settlements may also dilute the deterrent effect of 'regular' enforcement. A similar reasoning or discussion underlies the objectives and operation of leniency programs (another of the relatively recent tools for competition enforcement, at least in most EU member States), although several striking differences exist between leniency and competition settlements.

On the other hand, softer new tools have also been developed. Under the headings of competition promotion and competition advocacy a variable set of instruments are created for competition authorities to create and spread the culture of free market competition in areas that have traditionally been exempted from market forces or competition. Advocacy is mainly targeted towards anticompetitive governmental regulations, whilst promotion is aimed at easing and favouring the rooting of competition policy in sectors that for whatever reason have suffered entry barriers and anticompetitive restrictions in the past.

This article criticizes certain uses, mistaken or misguided, of settlements, advocacy and promotion. These are two very different settings in which the deterrent feature of competition authorities' enforcement actions may suffer a deathly blow. Paradoxically, if wrongly used, both may endanger the deterrent principle upon which competition law and policy are built. The basic point of departure is that the new tools might be diminishing the effectiveness of 'regular' competition law enforcement-which shall not be left in the shed to rust.

“I’m not sure there’s going to be a dramatic change in the FTC’s agenda going forward.”

Posted by D. Daniel Sokol

In an interview with the Wall Street Journal, Richard Feinstein, the new incoming head of the Bureau of Competition at the FTC had some nice quotes:

• “I’m not sure there’s going to be a dramatic change in the FTC’s agenda going forward.”

• “I imagine continuity is largely what we’ll have.”

The Neal Report and the Crisis in Antitrust

Posted by D. Daniel Sokol

The ever prolific Herb Hovenkamp, University of Iowa College of Law, addresses The Neal Report and the Crisis in Antitrust.

ABSTRACT: The Neal Report, which was commissioned by Lyndon Johnson and published in 1967, is rightfully criticized for representing the past rather than the future of antitrust. Its authors completely embraced a theory of competition and industrial organization that had dominated American economic thinking for forty years, but was just in the process of coming to an end. The structure-conduct-performance (S-C-P) paradigm that the Neal Report embodied had in fact been one of the most elegant and most tested theories of industrial organization. The theory represented the high point of structuralism in industrial organization economics, resting on the proposition that certain market structures were highly concentrated and experienced high barriers to entry, making certain types of conduct inevitable. Under the very strong Cournot assumptions of the day oligopolists simply could not avoid setting prices above costs and continuously and excessively differentiating their products. The result was high short-run profits, excessive investment in product differentiation and advertising, reluctance to cut price in order to grow market share, and general stagnation.

The Neal Report's fate lay in the fact that the S-C-P paradigm was coming under withering attack by the late 1960s. The Report's simple and uncritical acceptance of the S-C-P paradigm as gospel inspired many young academics in the United States to align themselves with the competing Stigler Report, commission by President Johnson's successor Richard M. Nixon. The conflicts that erupted largely defined the views of some of the 1970s most important antitrust scholars - namely Richard A. Posner, Robert H. Bork, and William F. Baxter.

Antitrust Summary Judgment and the Quick Look Approach

Posted by D. Daniel Sokol

Edward Brunet (Lewis & Clark Law), writes on Antitrust Summary Judgment and the Quick Look Approach.

ABSTRACT: Three methodological short cuts potentially streamline antitrust litigation. The availability of the per se approach provides a time tested way to avoid conventional trials where illegality is obvious. However, the seeming collapse of per se rules in modern antitrust cases creates a need for some type of abbreviated assessment of economic impact of alleged restraints. The quick look approach provides a means for a truncated pretrial evaluation of competitive effect. At the same time, a third potential short cut, summary judgment, appears to be readily available in antitrust cases after a period of some skepticism toward its use and appears to also interject pretrial assessment of economic effect into a case. This article first describes the quick look and antitrust summary judgment, and then explores integration of the two complementary concepts. Although I find that only a few cases grant summary judgment using the quick look, I posit that these two different short cuts are capable of efficient synergy in the same case. The paper paradoxically concludes that courts appear skeptical of the quick look's vague contours and, yet, seem willing to employ summary judgment, a similar procedure.

FTC Management Team Annouced

Posted by D. Daniel Sokol

An announcement from Lebowitz today provides details of his management team:

Rich Feinstein, Director of the Bureau of Competition.

Rich currently practices at Boies, Schiller. Some years back, he headed the health care shop under Chairman Pitofksy. Rich will start at the Commission in mid-May.

David Vladeck, Director of the Bureau of Consumer Protection.

David is the former chief litigator at Public Citizen, has advocated First Amendment and other issues before the Supreme Court, and currently runs the litigation clinic program at Georgetown Law School . He will join the Commission in June.

Joe Farrell, Director of the Bureau of Economics.

Joe is Professor of Economics and Chair of the Competition Policy Center at Berkeley . He was previously chief economist at both the FCC and the Department of Justice. Joe assumes his position on June 1st.

Susan DeSanti, Director of the Office of Policy & Planning.

Susan, currently at Sonnenschein Nath & Rosenthal, returns to this position, which she held before serving as Deputy General Counsel for Policy Studies. Notably, she also served as Senior Counsel to the Antitrust Modernization Commission. Susan returns on May 4th.

In addition, the incomparable Jeanne Bumpus will continue to lead the Office of Congressional Relations.

Competition Policy Issues in the Consumer Payments Industry

Posted by D. Daniel Sokol

Nicholas Economides (NYU - Stern School of Business) provides an interesting take on Competition Policy Issues in the Consumer Payments Industry.

ABSTRACT: We discuss the current structure of card networks that facilitate transactions between merchants and consumers. We find that presently fees for this intermediation are considerably higher than costs. This is facilitated by rules imposed by the card networks on the merchants that do not allow merchants to steer competition to cards that have lower fees. It has also been facilitated by the requirement that a merchant has to accept all cards of the same network (honor all cards rule) - recently abolished in the US, as well as by the fact that the networks set the maximum interface fee between issuing and acquiring banks. We propose the abolition of anti-steering rules so that merchants are able to pass on card holders the costs of the card they use. This will facilitate inter- and intra-network competition and will improve the competitiveness and efficiency of the market.