Antitrust & Competition Policy Blog

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

Tuesday, June 23, 2009

The Luxembourg Competition Law

Posted by D. Daniel Sokol

There are small economies and then there are small economies.  Daniel Becker (Luxembourg Competition Inspectorate) explains The Luxembourg Competition Law.

ABSTRACT: Till the end of 2004, prices of products and services had been regulated, in Luxembourg, by an office on price control, a department of the Ministry of the Economy. However, with European Regulation (EC) No 1/2003, which was enacted on December 16, 2002, competition enforcement and policy was allocated to the national EU Member States. At that time, Luxembourg was the sole European country where modern competition law, as such, did not exist. The former Act on Restrictive Business Practices dated June 17, 1970 had to be modernized.

The Luxembourg competition law was adopted on May 17, 2004 and has been operational since November 2004 when two national competition authorities were created: the Competition Inspectorate and the Competition Council. Since then, prices of products and services have been almost exclusively determined by the free interplay of market supply and demand. Maximum prices are only fixed as regards petroleum products, taxi services, and pharmaceutical products, through contract programs between the Ministry of the Economy and economic market operators, or through regulation by the Grand-Duke.

June 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, June 22, 2009

Boosting the Crisis Economy— Competition as an Ally

Posted by D. Daniel Sokol

Rainer Lindberg (Finnish Competition Authority)  explains Boosting the Crisis Economy— Competition as an Ally.

ABSTRACT: There is well-established empirical evidence that competition—spurring efficiency—promotes productivity within firms and between firms. Competition—at least in normal times—seems to be an important factor to generate productivity, innovation, and growth. As Aghion-Griffith concluded, the view that competition and entry should promote efficiency and prosperity has now become a “common wisdom” worldwide.

Currently, economies are in a recession. The situation has initiated discussion whether competition policy and its effective enforcement is at risk. Among other demands, the recession has intensified requests from certain industries in financial distress that competition policy and competition rules be loosened. Requests for subsidies are often part of industries’ proposals as well. Politicians, in turn, face a lot of pressure to choose the subsidy route or other options to “loosen” competition enforcement.

As a response, the competition authorities in many countries have declared that they will continue business as usual. Despite that, arguments remain that a loosening of the rules has already happened. This can be seen, for instance, in state aid enforcement and merger policy, where, during crisis enforcement, non-competition factors are claimed to be more important. Moreover, the dangers of protectionism have increased. At the top of the iceberg, the financial sector is a separate chapter itself. All signs indicate that financial sector will face more regulation. Basically, the financial regulators have no options in this respect. How this new regulation will reconcile with competition policy remains to be seen.

As these themes already indicate, it is extremely relevant to discuss the competition policy’s long-term future. But, it seems that those who favor competition during the crisis, like competition authorities, are easily drifting to a defensive role in the discussion. That is strange for a number of reasons, and this article argues that competition especially should be seen as an ally for the current macroeconomic stimulus tools.

June 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Economic Analysis of the Dominican Republic Competition Law

Posted by D. Daniel Sokol

Mónika Infante, (Pontificia Universidad Catolica Madre y Maestra, Dominican Republic - Law) y Fanny Solano, (Universidad Carlos III de Madrid - Law) provide an Economic Analysis of the Dominican Republic Competition Law.

ABSTRACT: After the recent enactment of General Defense Competition Law No. 42‐08, of the Dominican Republic and the culmination of a discussion process of more than a decade, it is of special relevance to perform an economic analysis of this new law, from a substantive, institutional and procedural approach. In this paper, the authors perform a comprehensive economic analysis of the new legislation, reviewing each individual section of the piece, and using as reference for the analysis the regulatory framework of the United States of America Antirust Law and the European Union Competition Law provisions.

June 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Toward a Unified Theory of Access to Local Telephone Systems

Posted by D. Daniel Sokol

Dan Spulber (Northwestern - Kellogg School of Management) and Christopher Yoo (Penn Law) have thoughts Toward a Unified Theory of Access to Local Telephone Systems.


One of the most distinctive developments in telecommunications policy over the past few decades has been the increasingly broad array of access requirements regulatory authorities have imposed on local telephone providers. In so doing, policymakers did not fully consider whether the justifications for regulating telecommunications remained valid. They also allowed each access regime to be governed by its own pricing methodology and set access prices in a way that treated each network component as if it existed in isolation. The result was a regulatory regime that was internally inconsistent, vulnerable to regulatory arbitrage, and unable to capture the interactions among network elements that give networks their distinctive character. In this Article, Professors Daniel Spulber and Christopher Yoo trace the development of these access regimes and evaluate the extent to which the emergence of competition among local telephone providers has undercut the rationales traditionally invoked to justify regulating local telephone networks (e.g., natural monopoly, network economic effects, vertical exclusion, and ruinous competition). They then apply a five-part framework for classifying different types of access that models the interactions among different network components. This framework demonstrates the impact of different types of access on network configuration, capacity, reliability, and cost. The framework also demonstrates how mandated access can increase transaction costs by forcing local telephone providers to externalize functions that would be more efficiently provided within the boundaries of the firm.

June 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Rewriting the Horizontal Merger Guidelines in the Name of Dynamic Competition

Posted by D. Daniel Sokol

J. Gregory Sidak, Criterion Economics, L.L.C., and David Teece, University of California, Berkeley - Business & Public Policy Group advocate Rewriting the Horizontal Merger Guidelines in the Name of Dynamic Competition.

ABSTRACT: We favor revision of the Horizontal Merger Guidelines. Our preliminary comments in this essay are based on a work in progress that we provisionally entitle, "Favoring Dynamic Competition over Static Competition." The eventual paper will address, in greater detail than we can explore here, how government enforcement agencies and courts would apply a more explicitly dynamic model of competition to merger analysis. We pose the following question: How must competition policy evolve if it is explicitly to favor Schumpeterian (dynamic) competition over neoclassical (static) competition? Of course, one also could ask that question with respect to intellectual property law and sector-specific regulation of network industries. We intend to do so in our eventual paper.

June 22, 2009 | Permalink | Comments (0) | TrackBack (0)