Antitrust & Competition Policy Blog

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

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Monday, May 4, 2009

Protectionist Threats Against Cross-Border Mergers: Unexplored Avenues to Strengthen the Effectiveness of Article 21 ECMR

Posted by D. Daniel Sokol

Damien Gerard of the University of Louvain explains Protectionist Threats Against Cross-Border Mergers: Unexplored Avenues to Strengthen the Effectiveness of Article 21 ECMR.

ABSTRACT: In recent months, the European Commission has faced a surge in protectionist moves by Member States designed to protect national companies from foreign acquirers. To resist those attempts, it has relied on a relatively peculiar yet theoretically powerful tool: Article 21 of the EC Merger Regulation (ECMR). That provision allows the Commission to vet State measures against the "general principles and other provisions of Community law" and to act swiftly against Member States, in a way compatible with the requirements of business life. This article undertakes a systematic analysis of the handful cases in which the Commission has formally resorted to Article 21 ECMR to date, including the Endesa saga, and shares insights at the Commission's conduct of its inquiries into State measures interfering with concentrations of a Community dimension. Hence, it attempts to summarize the law on Article 21 ECMR as its stands today. Eventually, it concludes that the Commission's enforcement record has been rather mixed so far. Still, it considers that Article 21 ECMR carries unexploited potential, which can be derived from the procedural features built into that provision and from an observed evolution in the Commission's view as to the type of State measures falling within its scope. In turn, the article presents in details those avenues likely to strengthen the effectiveness of Article 21 ECMR, notably by means of various analogies with the law on state aids and a combined application of Article 21 ECMR and the principle of effectiveness to a hypothetical takeover case.

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

Antitrust Economics 101

Posted by D. Daniel Sokol

Our friends at Competition Policy International have asked that we highlight what looks like it will be a great opportunity - Antitrust Economics 101 with Josh Wright of George Mason Law School.

I would like to invite you to join us for the CPI Learning Center’s next interactive web seminar, “Antitrust Economics 101” presented by Professor Joshua Wright. This course is a three-part series taking place over consecutive weeks.


Session One, “Demand” will take place on Wednesday, May 13 at 12 pm E.S.T.

Session 2 (Supply and Cost) and Session 3 (Examples and Applications) will take place on the following Wednesdays, also at Noon E.S.T.

In the context of modern antitrust litigation, Professor Wright will focus on the key economic concepts underlying modern antitrust law, such as demand, substitution and income effects, elasticity, optimal pricing, price discrimination, supply, cost, consumer and producer surplus, cartel formation, and critical loss analysis. 

This course is especially recommended for those who need or want a solid knowledge of the economics that drive antitrust analysis and decisions.  It will also be useful for those who would like to brush up on economic concepts. Although not just for lawyers, Professor Wright’s course has significant professional and practical content for attorneys practicing in the antitrust and competition policy arenas, both domestically and abroad.      



This series will be presented over CPI’s Global Learning Platform which delivers lectures globally in real time. The only technology required is a computer with a flash player and a telephone.

To register: visit our website at https://www.competitionpolicyinternational.com/course_main.html. The fee for all three classes, with CLE credit, is $355; without CLE credit the cost is $129. Discounts for multiple users from the same organization and courtesy admissions for competition authorities are available.

This course is approved for CLE in PA, as CPI is an Approved Provider of Distance Learning Courses in PA. CLE credit is also available to New York attorneys, and has been applied for in additional states including Illinois and California. For complete information regarding discounts and the availability of CLE credit, special registration needs, or for any other questions, contact us at LearningCenter@competitionpolicyinternational.com.  

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

FTC Announces Agendas for Resale Price Maintenance Workshops in May

Posted by D. Daniel Sokol

According to an FTC announcement, the agenda has been set for the next round of RPM workshops:

Panels will focus on the history of the practice, empirical evidence on the effects of RPM, and how it should be analyzed under the antitrust laws. The agendas, which are posted on the Commission’s Web site at http://www.ftc.gov/opp/workshops/rpm/, outline the schedule for the two events, which will be held at FTC Headquarters in Washington, DC, on May 20 and 21, 2009.

RPM typically involves an agreement between a manufacturer and retailer setting the prices at which the retailer will resell the manufacturer’s goods to consumers. If the agreement requires the retailer to sell the goods only at or above prices established by the manufacturer, it is called minimum RPM. On the other hand, if the agreement requires the retailer to sell the products only at or below the price established by the manufacturer, it is said to be maximum RPM.

Last October, the Commission announced it would hold a series of public workshops in early 2009 to examine, for the purposes of enforcing Section 1 of the Sherman Act and Section 5 of the FTC Act, how to best distinguish between uses of RPM that benefit consumers and those that do not.

The May workshops will be comprised of three panels, two on May 20, and one on May 21. The first panel will be moderated by Pauline Ippolito, Acting Director of the FTC’s Bureau of Economics, and will examine empirical evidence on the effects of RPM. Specifically, it will review existing empirical studies of RPM, or studies of other vertical restraints that might inform the thinking on RPM. The panel also will explore potential future research in light of possible testable hypotheses underlying the competitive effects of RPM.

The second panel, to be moderated by Laurel Price, Attorney Advisor to FTC Commissioner Pamela Jones Harbour, will examine the legal and business history of the use of RPM in the United States. It will explore how RPM has been treated in this country historically, as well as the legal and business management doctrines related to RPM.

The third panel, also to be moderated by Price, will examine “rule of reason analyses” after the Supreme Court’s landmark Leegin decision, and will assess guidance provided by the Leegin Court regarding the analysis of RPM.

The workshop agendas are available here (May 20) and here (May 21).

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

Market Share, R&D Cooperation, and EU Competition Policy

Posted by D. Daniel Sokol

Richard Ruble (EMLYON Business School) and Bruno Versaevel (EMLYON Business School) have written on Market Share, R&D Cooperation, and EU Competition Policy.

ABSTRACT: Current EU policy exempts horizontal R&D agreements from antitrust concerns when the combined market shares of participants are low enough. This paper argues that existing theory does not support limiting the exemption to low market shares. This is done by introducing a set of non-innovating outside firms to the standard framework to assess what link might exist between the market share of innovating firms and the product market benefits of cooperation. With R&D output choices, the market share criterion, while it rules out the most socially harmful R&D cooperation agreements, also hinders the most beneficial ones. With R&D input choices, cooperation may actually be desirable in concentrated industries, and harmful in more competitive ones. If R&D cooperation does have anti-competitive effects in product markets, it seems that these are therefore best addressed by other tools than market share criteria. 

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

Recent Developments in Concentration Control Rules under China’s Anti-Monopoly Law

Posted by D. Daniel Sokol

Jun Wei (Hogan & Hartson) has provided an analysis of Recent Developments in Concentration Control Rules under China’s Anti-Monopoly Law. Given some important merger decisions in the past few months, this piece is particularly timely.

ABSTRACT: China has been fleshing out its concentration control regime since the Anti-Monopoly Law (“AML”) took effect on August 1, 2008. Since the AML took effect, Chinese authorities have issued both formal notification guidelines and draft notification rules to establish basic procedures for filing and reviewing pre-concentration notifications in China. In addition to the formal notification guidelines and draft notification rules, two highly publicized merger decisions by China’s Ministry of Commerce (“MOFCOM”) provide some insight into China’s fledging concentration control regime. These two cases, which were met with mixed feelings around the globe, are the only two published concentration review cases to date. The first relates to InBev N.V./S.A.’s acquisition of Anheuser-Busch Companies Inc. (the InBev/AB Case), and the second pertains to the Coca-Cola Company’s proposed acquisition of Huiyuan Juice Group (the Coca-Cola/Huiyuan Case).

To date, China’s concentration control rules remain rudimentary compared with their more developed counterparts in the United States and European Union, and uncertainties surrounding the review standards and procedures abound. Though the formal notification guidelines and draft notification rules serve as a starting point for businesses to parse out how MOFCOM will deal with proposed transactions, perhaps for businesses it is more important to understand how the government will apply these rules by analyzing real cases.



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

Analyzing Horizontal Mergers: Unilateral Effects in Product-Differentiated Markets

Posted by D. Daniel Sokol

Herberthovenkampphp Herb Hovenkamp,University of Iowa College of Law has a must read piece for those looking for a clear and non-technical overview of Analyzing Horizontal Mergers: Unilateral Effects in Product-Differentiated Markets.

ABSTRACT: This essay offers a brief, non-technical exposition of the antitrust analysis of horizontal mergers in product differentiated markets where the resulting price increase is thought to be unilateral - that is, only the post-merger firm increases its prices while other firms in the market do not. More realistically, non-merging firms who are reasonably close in product space to the merging firm will also be able to increase their prices when the post-merger firm's prices rise. The unilateral effects theory is robust and has become quite conventional in merger analysis. There is certainly no reason for thinking that it involves any more conjecture than what occurs in traditional concentration-increasing merger analysis. Nevertheless, as with all predictions about mergers, we must live with a certain measure of uncertainty.

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

Sunday, May 3, 2009

MOFCOM Can Reach SOEs for Merger Control

Posted by D. Daniel Sokol

While I was busy at the Loyola Antitrust conference on Friday, I discovered via Paul Jones that MOFCOM has exerted jurisdiction for the merger between two SOEs.

As Paul explains:

On Friday, May 1, 2009 (which is a major public holiday in China) stories started to appear on an interview given by MOFCOM officials stating that the merger of two state-owned enterprises, China Unicom Co., Ltd. and China Network Communication Group Corporation on October 15, 2008 was illegal because it was not notified to MOFCOM.

News Report (in Chinese): http://tech.163.com/09/0501/10/587JON9U000915BE.html

This report is significant because the accusation makes a statement of MOFCOM¡¯s position on how Article 7 should be interpreted, and such interpretation asserts the jurisdiction of the AML over the operations of the SOEs. There have been many mergers of SOEs since the AML came into force and there will be many more, as the stated objective of the State Assets Supervision and Administration Commission (SASAC) is to significantly reduce the number of state-owned enterprises. The response of SASAC and the State Council (to which SASAC, MOFCOM and the Anti-Monopoly Committee report) will provide an indication of the current role of SOEs in China's economy.

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