Antitrust & Competition Policy Blog

Competition Law and the Maritime Sector

Posted by D. Daniel Sokol

THE LONDON SHIPPING LAW CENTRE AT UCL
WELCOMES MEMBERS AND THEIR COLLEAGUES TO THE TENTH MONTHLY EVENT IN THE
 2008 – 2009 EVENTS PROGRAMME
 
Competition Law and the Maritime Sector
1st July 2009, 4.30pm

On 1 July 2008 the European Commission adopted the “Guidelines on the application of competition rules to the maritime sector”.  One year on, how have the Guidelines worked in practice?  In this difficult economic climate, have they helped or hindered the maritime sector to assess agreements and activities to ensure compliance with the competition rules?

This seminar will address these questions and consider how companies can successfully “self assess” their agreements and activities.
 
Chairperson - Marjorie Holmes - Reed Smith

Keynote speaker - Hubert de Broca - DG Competition, the European Commission.  

Panellists:
Paolo Palmigiano - the BT Group
Lesley Davey - Reed Smith
Philip Wareham - Holman Fenwick Willan
Matthew Levitt - Lovells

Wednesday 1st July 2009 4.00pm for 4.30pm
Venue: Reed Smith LLP, The Broadgate Tower, 20 Primrose Street, London EC2A 2RS

For further details and bookings please contact the Centre’s office on 020 7679 1512 or e-mail to: shipping@ucl.ac.uk ;  Director’s e-mail – a.sheppard@ucl.ac.uk;  tel: 020 7679 1434;   

Accredited for 2CPD hours   – Non-LSLC members - £50.00  - The Solicitors Regulation Authority’s Ref. is  IU/UCL

SEE THE LSLC WEBSITE FOR MORE INFORMATION:
http://www.london-shipping-law.com

2009 Chambers USA Rankings Now Out

Posted by D. Daniel Sokol

It is finally out - the Chambers USA 2009 Antitrust Rankings.  No doubt most of us will receive a series of client alerts about how well people did.

Today I will focus on the top DC firms.  Chambers ranked 25 DC firms in antitrust.  Here are their grades:

Band 1
Arnold & Porter LLP
Cleary Gottlieb Steen & Hamilton LLP
Jones Day
WilmerHale

Band 2
Howrey LLP
Kirkland & Ellis LLP
O'Melveny & Myers LLP
Weil, Gotshal & Manges LLP

  
Band 3
Freshfields Bruckhaus Deringer LLP
Gibson, Dunn & Crutcher LLP
Hogan & Hartson LLP
Latham & Watkins LLP
Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates

Band 4
Boies, Schiller & Flexner LLP
Crowell & Moring LLP
Dechert LLP
Hunton & Williams LLP
Mayer Brown LLP
McDermott Will & Emery LLP
Paul, Weiss, Rifkind, Wharton & Garrison LLP
White & Case LLP
Wilson Sonsini Goodrich & Rosati

Band 5
Kaye Scholer LLP
King & Spalding LLP
Morgan, Lewis & Bockius LLP

Simulating the Dynamic Effects of Horizontal Mergers: U.S. Airlines

Posted by D. Daniel Sokol

C. Lanier Benkard (Stanford - Business), Aaron Bodoh-Creed (Stanford - Econ) and John Lazarev (Stanford) undertake some interesting work regarding Simulating the Dynamic Effects of Horizontal Mergers: U.S. Airlines.

ABSTRACT: We propose a new method for studying the medium and long run dynamic effects of horizontal mergers. Our method builds on the two-step estimator of Bajari, Benkard, and Levin (2007). Policy functions are estimated on historical pre-merger data, and then future industry outcomes are simulated both with and without the proposed merger. Using data for 2003-2007, we apply our model to two recently proposed airline mergers. In our airline entry model, an airline’s entry/exit decisions are made jointly across routes, and depend on features of its own route network as well as the networks of the other airlines. The model allows for city-specific profitability shocks that affect all routes out of a given city, as well as route-specific shocks. We find that the model fits the data very well. Empirical conclusions in the paper are preliminary.

Is This Promoting Competition?

Posted by D. Daniel Sokol

I just read a news story on Microsoft from CNET that begins:

• Reacting to antitrust concerns expressed by European regulators, Microsoft plans to offer a version in Europe that has the browser removed. Computer makers would then have the option to add the browser back in, ship another browser or ship multiple browsers, according to a confidential memo that was sent to PC makers and seen by CNET News.

Wow.  The article explains how the lack of a browser makes things really complicated for consumers.

HT: Bill Page

The Theory of Regulatory Competition and Competition Law

Posted by D. Daniel Sokol

Wolfgang Kerber, Philipps University Marburg - Department of Business Administration and Economics explains The Theory of Regulatory Competition and Competition Law.

ABSTRACT:  The governance of competition on global markets is an open policy question (lack of international competition policy). In this paper, it is analyzed to what extent different types of regulatory competition, which in other regulatory contexts (as, e.g., corporate law) can be beneficial, might also be a solution in competition law (instead of seeking harmonisation and centralization). In a first step, it is demonstrated why regulatory competition of competition laws can only be beneficial under very spe-cial circumstances and should therefore be generally avoided. However, yardstick competition as one specific type of regulatory competition, which promotes innovation and mutual learning in regard to competition law rules and practices, might be so valuable that a fairly decentralised multi-level system of competition laws might be recommended. Therefore, in a second step, the basic elements of a global multi-level system of competition laws are presented, which allows for decentralised experimen-tation with new possibilities for protecting competition (laboratory federalism). Some conclusions are drawn for the International Competition Network (ICN).

The Cardboard Box Cartel Case: Was All the Fuss Warranted?

Posted by D. Daniel Sokol

Caron Beaton-Wells (University of Melbourne Law School) and Neil Brydges (University of Melbourne Law School) explore The Cardboard Box Cartel Case: Was All the Fuss Warranted?

ABSTRACT: The ACCC's legal action for price fixing against the giant cardboard box company, Visy, and its billionaire owner, Richard Pratt, has captivated the media. This article investigates the significance of the case from a competition law enforcement perspective, examining various aspects of the Federal Court?s decision with respect to penalties, the implications of the case for the proposal to criminalise serious cartel conduct, and insights arising from the litigation by ?victims? of the cartel in relation to private enforcement of the competition provisions of the Trade Practices Act.

Resale Price Maintenance and Interlocking Relationships

Posted by D. Daniel Sokol

Patrick Rey (Toulouse - Econ) and Thibaud Vergé (CREST-LEI) explain Resale Price Maintenance and Interlocking Relationships.

ABSTRACT: An often expressed idea to motivate the per se illegality of RPM is that it can limit interbrand as well as intrabrand competition. This paper analyzes this argument in a context where manufacturers and retailers enter into interlocking relationships. It is shown that, even as part of purely bilateral vertical contracts, RPM indeed limits the exercise of both inter- and intra-brand competition and can generate industry-wide monopoly pricing. The final impact on prices depends on the extent of potential competition at either level as well as on the manufacturers’ and retailers’ influence in determining the terms of the contracts. Our analysis sheds a new light on ongoing legal developments and is supported by recent empirical studies.

Competition Policy and Intellectual Property

Posted by D. Daniel Sokol

David Vaver (Oxford - Law), Marcel Boyer (University of Montreal - Econ), and Michael Trebilcock (Torinto - Law) have edited a new book Competition Policy and Intellectual Property.

BOOK ABSTRACT: Competition Policy and Intellectual Property explores the role of competition policy and intellectual property rights in promoting an efficient and innovative economy. The book contains a collection of papers and commentaries by leading Canadian and international authorities, stemming from a symposium organized by the Competition Bureau in co-operation with the Canadian Intellectual Property Office, and the Micro-economic Policy Analysis and Marketplace Framework Policy branches of Industry Canada. Given recent developments such as the rise of authorized generic pharmaceuticals, and the rapid advancements in communications technology, many concerns have emerged about whether the customary methods of licensing intellectual property rights remain the most efficient mechanisms for disseminating intellectual property and encouraging its creation. The papers and commentaries contained in this book reflect an intensive evaluation of these concerns and endeavour to find the right balance between creating incentives for innovation and the encouragement of vigorous competition in the marketplace.

Summary Table of Contents

Introduction
David Vaver, Marcel Boyer, and Michael Trebilcock

1. EXTENSION OF INTELLECTUAL PROPERTY RIGHTS
Teresa Scassa

COMMENTARY
Ejan Mackaay
Michael Meurer

2. TYING AND INTELLECTUAL PROPERTY
Edward M. Iacobucci and Ralph A. Winter

COMMENTARY
Timothy J. Brennan
Richard Corley and Navin Joneja

3. THE EFFECTS OF AUTHORIZED GENERICS ON CANADIAN DRUG PRICES
Paul Grootendorst

COMMENTARY
Aidan Hollis

4. COMPULSORY LICENSING
Abraham Hollander

COMMENTARY
Donald McFetridge
E. Richard Gold

5. AN EVALUATION OF COLLECTIVE COPYRIGHT MANAGEMENT IN CANADA
Jacques Robert

COMMENTARY
Paul Audley
Ariel Katz

The Single Entity Battle Continues: American Needle and the Seventh Circuit’s Hybrid Approach

Posted by D. Daniel Sokol

Gabe Feldman (Tulane Law) discusses The Single Entity Battle Continues: American Needle and the Seventh Circuit’s Hybrid Approach.

ABSTRACT: Courts have long struggled to articulate a coherent or sensible approach to applying the Sherman Act to sports leagues. While Major League Baseball avoided the complications through its infamous judicial exemption from the antitrust laws, antitrust decisions involving other professional sports leagues are riddled with inconsistencies and confusion. The Seventh Circuit recently added to the morass with its decision in American Needle.

In American Needle, the plaintiff, a manufacturer and designer of sports apparel, brought an antitrust suit challenging the decision of the National Football League (“NFL”) and its teams (via NFL Properties) to enter into an exclusive licensing relationship with Reebok for the manufacture and sale of headwear bearing NFL team logos. The NFL moved for summary judgment, arguing that it was immune from Section 1 scrutiny because it functions as a single entity... [and]...sports leagues have long viewed the single entity defense as the antitrust “holy grail.”

Follow-on Biologic Drug Competition

Posted by D. Daniel Sokol

From the FTC press release:

• The Federal Trade Commission today released a report entitled “Follow-on Biologic Drug Competition”which examines whether the price of biologic drugs – products manufactured using living tissues and microorganisms – could be reduced by competition from so-called “follow-on biologics” (FOBs). FOBs are like generic drugs, but with significant differences. Biologics are increasingly used to treat arthritis, cancer, diabetes, and other diseases. No pathway currently exists for such FOBs to enter the market and compete with their pioneer counterparts. The FTC’s Report concludes that providing the U.S. Food and Drug Administration (FDA) with the authority to approve such FOBs would be an efficient way to bring these lower-priced drugs to market.

The full report is available here.

Rethinking Broadband Internet Access

Posted by D. Daniel Sokol

Daniel F. Spulber, Northwestern University - Kellogg School of Management and Christopher S. Yoo - Penn Law engage in Rethinking Broadband Internet Access.

ABSTRACT: The emergence of broadband Internet technologies, such as cable modem and digital subscriber line (DSL) systems, has reopened debates over how the Internet should be regulated. Advocates of network neutrality and open access to cable modem systems have proposed extending the regulatory regime developed to govern conventional telephone and narrowband Internet service to broadband. A critical analysis of the rationales traditionally invoked to justify the regulation of telecommunications networks - such as natural monopoly, network economic effects, vertical exclusion, and the dangers of ruinous competition - reveals that those rationales depend on empirical and theoretical preconditions that do not apply to broadband. In addition, the current policy debate treats access to networks as a unitary phenomenon that fails to take into account how different types of access requirements can affect network performance in widely divergent ways. The current debate also fails to capture how individual network elements can interact in ways that can be quite unpredictable. In this Article, Professors Spulber and Yoo analyze broadband access using a theory of network configuration based on a branch of mathematics known as graph theory, which captures the interactions between individual components that cause networks to behave as complex systems. This theory yields a five-part classification system that provides insights into the effect of different types of access on network cost, capacity, reliability, and transaction costs.

Exporting Knowledge Through Technical Assistance and Capacity Building

Posted by D. Daniel Sokol

D. Daniel Sokol of the University of Florida Levin College of Law and Kyle Stiegert of the University of Wisconsin Department of Agricultural and Applied Economics have just posted Exporting Knowledge Through Technical Assistance and Capacity Building.

ABSTRACT: With a significant increase in the number of countries with antitrust laws, technical assistance to improve the capacity of antitrust agencies has become a key priority for international antitrust aid efforts. Donors have assigned a significant amount of time and financial resources to technical assistance to raise the capacity and effectiveness of younger agencies. However, quantitative analysis of the impact of this technical assistance remains limited at best. In this article we focus on what appears to be a particularly important part of technical assistance and capacity building—the use of long term advisors (LTA) and short term interventions (STI).

In a year-long project, the International Competition Network surveyed its member antitrust agencies on antitrust technical assistance. The questionnaire contained over 1,000 questions on various aspects of technical assistance. We provide an analysis of the data using formal modeling. The most important findings from the model relate to two structural features of recipient antitrust agencies. First, recipient agencies absorb LTA and STI services best when the agency head has a rank of minister or higher and/or when agencies had prosecutorial discretion. At the heart of these agency features is the relative power position of the agency in the domestic political and economic structure of the country. Those agencies with a strong power base seem well positioned to receive the current formatted technical assistance involving LTAs and STIs. Second, bilateral donor relationships did remarkably better in helping the agencies with their strategic mission.

Natural Selection, Irrationality and Monopolistic Competition

Posted by D. Daniel Sokol

Guo Ying Luo (McMaster University- DeGroote School of Business) analyzes Natural Selection, Irrationality and Monopolistic Competition.

ABSTRACT: This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of profits; firms' outputs are randomly determined rather than generated from profit maximization problems; and firms exit the industry if their wealth is negative. It shows that without purposive profit maximization assumption, monopolistic competition still evolves in the long run. The only long run survivors are those that possess the most efficient technology, face the most favorable market conditions and produce at their profit maximizing outputs. This paper modifies and supports the classic argument for the derivation of monopolistic competition.

Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing

Posted by D. Daniel Sokol

Jan Boone, Wieland Müller, Sigrid Suetens (all Tilburg econ) write about Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing.

ABSTRACT: We report experimental results on exclusive dealing inspired by the literature on "naked exclusion". Our key findings are: First, exclusion of a more efficient entrant is a widespread phenomenon in lab markets. Second, allowing incumbents to discriminate between buyers increases exclusion rates compared to the non-discriminatory case only when payments to buyers can be offered sequentially and secretly. Third, allowing discrimination does not lead to significant decreases in costs of exclusion. Accounting for the observation that buyers are more likely to accept an exclusive deal the higher is the payment, substantially improves the fit between theoretical predictions and observed behavior.

Railway Mergers and Railway Alliances: Competition Issues and Lessons for Other Network Industries

Posted by D. Daniel Sokol

Russ Pittman (DOJ) analyzes Railway Mergers and Railway Alliances: Competition Issues and Lessons for Other Network Industries.

ABSTRACT: Freight railway enterprises in both Europe and North America are in the process of significant restructuring, with EC policy changes dictating new ownership, organization, and cooperation arrangements in Europe and a series of major mergers having already led to highly concentrated regional markets in the U.S. and Canada. Mergers, alliances, and organizational changes may raise important and complex issues regarding the level of competition facing goods shippers, with differing implications depending on the differing institutional contexts. This paper examines the competitive consequences of these developments in Europe and North America and suggests some lessons for other network industries.

Antitrust Law Enforcement: What To Do About The Current Economics Cacophony?

Posted by D. Daniel Sokol

FTC Commission Tom Rosch defends his thoughts on law and economics in antitrust in a speech titled Antitrust Law Enforcement: What To Do About The Current Economics Cacophony?

Competition agencies and global markets: the challenges ahead

Posted by D. Daniel Sokol

John Fingleton (OFT and the new head of the ICN) gave an important closing speech at the ICN conference last week.  A copy of the speech is available below. Also available is his excellent paper on Competition agencies and global markets: the challenges ahead.

Download Article Competition agencies and global markets - the challenge

Download ICN closing speech

The Contract Requirement for the Joint Venture Exceptions under Sections 44ZZRO and 44ZZRP of the Cartel Bill

Posted by D. Daniel Sokol

Brent Fisse (Melbourne Law) explains The Contract Requirement for the Joint Venture Exceptions under Sections 44ZZRO and 44ZZRP of the Cartel Bill.

ABSTRACT: The joint venture exceptions under ss 44ZZRO and 44ZZRP of the Bill require that the cartel
provision be contained in a contract, as distinct from an arrangement or understanding, except in the limited circumstances specified in s 44ZZRO(1A)(1B) and s 44ZZRP(1A)(1B) (the ‘contract proxy provisions’). This is unsatisfactory. The contract proxy provisions were included in amendments to the Bill in May 2009. The amendments were made in an attempt to respond to the extensive criticism made of the requirement of a contract for the jv exceptions.

New Masters Program Launched in Competition Policy and Regulation

Posted by D. Daniel Sokol

Universidad Adolfo Ibáñez in Chile is launching a master's program in competition policy and regulation.  As some of you know, I will be teaching next month in the competing program at the Centro de Libre Competencia UC (the "UC" stands for Universidad Católica), also in Chile.

ICN Zurich Meeting - A Review

Posted by D. Daniel Sokol

For those who could not attend the ICN meeting in Zurich this past week, this document summarizes the various outputs of the meeting.