Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, August 8, 2009

The Pharmaceutical Industry Antitrust Handbook

Posted by D. Daniel Sokol

Cover Image

The Pharmaceutical Industry Antitrust Handbook 

BOOK ABSTRACT: With pharmaceuticals representing such an important part of the nation's economy and the health care sector, competition in the pharmaceutical industry is crucial to provide the best quality drugs for the lowest possible price. Antitrust enforcement plays a key role in ensuring competition in this industry. 

Written for the antitrust and pharmaceutical communities, the Pharmaceutical Industry Handbook is intended to provide comprehensive guidance about the analysis of the most important antitrust questions faced today by pharmaceutical companies and participants in related health care industries.

 

Product Details: 5030537
Regular Price: $179.00
AT Section Member Price: $154.00
©2009
6 x 9 -  

August 8, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, August 7, 2009

Chinese Merger Control: Patterns and Implications

Posted by D. Daniel Sokol

Xinzhu Zhang, Chinese Academy of Social Sciences - Research Center for Regulation and Competition, and Vanessa Yanhua Zhang, LECG analyze Chinese Merger Control: Patterns and Implications.

ABSTRACT: China’s Anti-Monopoly Law has been effective since August 1, 2008. Even though the enforcement authorities tend to build their capacity progressively, China has already seen three milestone case decisions in the past year: InBev/Anheuser-Busch, Coca-Cola/Huiyuan, and Mitsubishi Rayon/Lucite. In this paper, we attempt to elaborate the background of each case and provide in-depth analysis. In particular, we explore the common characteristics of the cases, the economic theories on which the merger control authority has relied in their merger decisions and the patterns regarding China’s merger policy.

August 7, 2009 | Permalink | Comments (0) | TrackBack (0)

A Tale of the Google Book Settlement and the Public Interest: Conclusions On The Competitive Elements

Posted by D. Daniel Sokol


“A Tale of the Google Book Settlement and the Public Interest:
Conclusions On The Competitive Elements”

Tuesday, August 11, 2009
12:00 – 2:00 pm
The National Press Club, Washington, D.C.



A debate is brewing over the competitive implications of Google’s book search settlement deal with book publishers and authors. Some believe the deal has the potential to revolutionize access to information online by expanding access to vast volumes of books, while others are concerned about potential effects on competition.

CCIA has assembled a group of leading experts for a discussion of these key competitive elements. David Balto will present and discuss a paper, recently released by the American Constitution Society, entitled “The Earth is Not Flat: The Public Interest and the Google Book Search Settlement: A Reply to Grimmelmann.” Professor James Grimmelman, author of “The Google Book Search Settlement: Ends, Means, and the Future of Books” and “The Google Book Search Settlement: Questions Remain,” will join a respondents panel to offer his review of Balto’s arguments and the merits of the deal.

12:00 PM        Registration and Boxed Lunch

12:10 PM        Presentation


David Balto, Senior Fellow, Center for American Progress


12:40 PM        Panel Discussion


Ed Black, President and CEO, CCIA (moderator)

David Balto, Senior Fellow, Center for American Progress
Professor James Grimmelmann, Associate Professor, New York Law School

Jonathan Band, Counsel, Library Copyright Alliance    

2:00 PM        Adjournment

 

Space is limited. Please send questions or RSVPs to Danielle Yates at [email protected] or 202-783-0070. Register at http://www.ccianet.org.

About CCIA: CCIA is a nonprofit membership organization dedicated to innovation and enhancing society's access to information and communications. CCIA promotes open markets, open systems, open networks and full, fair and open competition in the computer, telecommunications and Internet industries.

Boxed lunch will be served. This is a widely attended event, in compliance with congressional ethics rules.

August 7, 2009 | Permalink | Comments (0) | TrackBack (0)

Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits

Posted by D. Daniel Sokol

Oliver Budzinski (Environmental and Business Economics - University of Southern Denmark) explores Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits.

ABSTRACT: Naturally, competition policy is based on competition economics made applicable in terms of law and its enforcement. Within the different branches of competition economics, modern industrial economics, or more precisely game-theoretic oligopoly theory, has become the dominating paradigm both in the U.S. (since the 1990s Post-Chicago movement) and in the EU (so-called more economic approach in the 2000s). This contribution reviews the state of the art in antitrust-oriented modern industrial economics and, in particular, critically discusses open questions and possible limits of basing antitrust on modern industrial economics. In doing so, it provides some hints how to escape current enforcement problems in industrial economics-based competition policy on both sides of the Atlantic. In particular, the paper advocates a change of the way modern industrial economics is used in competition policy: instead of more and more case-by-cases analyses, the insights from modern industrial economics should be used to design better competition rules.

August 7, 2009 | Permalink | Comments (0) | TrackBack (0)

Are European Commission Fines Excessive?

Posted by D. Daniel Sokol

Yes they are, according to a new paper by the International Chamber of Commerce.

August 7, 2009 | Permalink | Comments (0) | TrackBack (0)

Regulatory Specialization, Judicial Discretion, and the Evolution of Legal Constraints on Anticompetitive Practices: An Empirical Analysis

Posted by D. Daniel Sokol

Reza Rajabiun, York University provides thoughts on Regulatory Specialization, Judicial Discretion, and the Evolution of Legal Constraints on Anticompetitive Practices: An Empirical Analysis.

ABSTRACT: The role of private enforcers in the implementation of laws against anticompetitive practices remains a subject of considerable controversy in both developed and developing countries. The economic approach to the analysis of crime and punishment suggests that private rights of action can complement the information and incentives of public agents in the identification and deterrence of costly market behavior. This paper studies the complementarities between public and private enforcement mechanisms from an empirical perspective. Long term data on case filings, bureaucratic resources, and judicial outcomes from the United States reveal that mixed regimes allow for specialization of tasks between public and private enforcers. The analysis further documents how judicial discretion under the rule-of-reason approach can limit the predictability and credibility of rules against anticompetitive practices in mixed regimes.

August 7, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, August 6, 2009

First mover advantage in a dynamic duopoly with spillover

Posted by D. Daniel Sokol

Gianluca Femminis (DISCE, Università Cattolica) and Gianmaria Martini (Università di Bergamo) explore First mover advantage in a dynamic duopoly with spillover.

ABSTRACT: We present a dynamic duopoly model of technical innovation where R&D costs decrease exogenously with time, and inter-firm knowledge spillover lowers the second comer's R&D cost. The spillover effect only becomes available after a disclosure lag. These features allow us to identify a new type of equilibrium: the leader delays investment until the R&D cost is low enough that the follower finds it optimal to invest as soon as he can benefit from the spillover. This equilibrium is subgame perfect over a wide range of parameters, and raises several interesting implications. First, in our new equilibrium the time delay between the two R&D investments is realistically short. Second, while the presence of a spillover favors the second mover, this benefit is not enough to rule out a first mover advantage. Indeed, the first mover advantage survives whenever technical progress is sufficiently fast and the disclosure! lag is relatively long. Third, in case of a major innovation our equilibrium implies under--investment, which requires a substantial public intervention in favour of the investment activity.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Remove "Interim" From the Title - Aitken Gets 5 Year Appointment

Posted by D. Daniel Sokol

In a well deserved promotion, Melanie Aitken has been appointed for a five year term to head Canada's Competition Bureau.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Complementing Substitutes: Bundling, Compatibility, and Entry

Posted by D. Daniel Sokol

Emanuela Carbonara, University of Bologna - Department of Economics, Giuseppe Dari-Mattiacci, University of Amsterdam - Amsterdam Center for Law and Economics (ACLE),
Francesco Parisi, University of Minnesota - Law School, and Matteo Alvisi, University of Bologna - Department of Economics write on Complementing Substitutes: Bundling, Compatibility, and Entry.

ABSTRACT: In this paper we study price competition, equilibrium market configurations and entry when firms compete in vertically-di¤erentiated markets producing complementary goods. We consider two complements and start from a con…guration where the market for one complement is a duopoly, whereas the other is a monopoly. In such framework, when products are highly di¤erentiated, the low-quality duopolist is always pushed out. We then allow for competition between complements on both sides of the market: one of the duopolists starts to produce also the other complement and decides whether to offer its two products as a bundle or to allow consumers to combine them with complements from other producers. We prove that this strategy always allows the low-quality duopolist to stay in the market, no matter if the duopolist producing both complements is the high or the low-quality one. Moreover, this strategy always increases consumer surplus, even when the duopolist sells the two complements only as a bundle.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Access v. Efficiency: Reflections on the Consequences of Twombly and Iqbal

Posted by D. Daniel Sokol

Arthur R. Miller (NYU Law) explores Access v. Efficiency: Reflections on the Consequences of Twombly and Iqbal.

ABSTRACT: In Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, the Supreme Court discarded a half century’s worth of settled doctrine regarding pleading—the key to access to the federal courts—starting anew with a heightened standard that threatens to leave many plaintiffs out in the cold. Twombly and Iqbal ushered in “plausibility” pleading and effectively retired “notice” pleading as the operable standard of Federal Rule of Civil Procedure 8(a)(2). No longer is the role of the complaint merely to give notice of the plaintiff’s claim to enable the defendant to answer; rather, the complaint now must present sufficient factual allegations to give rise to a plausible inference of wrongdoing. This change bodes poorly for plaintiffs’ access to the federal courts and may have a ripple effect on the entire civil justice system.

The debate over the proper role of pleading in contemporary litigation has exploded since Twombly and Iqbal, with motions to dismiss based on those cases now the procedural device du jour. On one side, the defense bar and major corporations praise the advent of plausibility pleading, claiming that it is long overdue and necessary to protect defendants from alleged widespread frivolous and abusive litigation, conserve judicial resources, and protect American industry and governmental entities from the high costs of discovery and trial. Arrayed against that view are the plaintiffs’ bar and civil rights and consumer groups who argue that plausibility pleading not only will weed out frivolous claims but also will terminate meritorious cases prematurely, further erode the right to a meaningful day in court and the right to jury trial, and increase the burden on small plaintiffs asserting claims against well-funded defendants. Although Twombly and Iqbal have provided new fuel for a long simmering fire, the current controversy is merely the most recent manifestation of a decades-old ideological debate over what is the higher litigation value: access to the federal courts or efficiency and economy in disposing of claims.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Justice Department and USDA to Hold Public Workshops to Explore Competition Issues in the Agriculture Industry

Posted by D. Daniel Sokol

According to the DOJ press release there will be a series of conferences.  I hope that DOJ takes my previous advice and begins each panel by asking each panelist who has paid for their testimony.  There needs to be more transparency in the process and I believe that law firms and academics need to disclose any financial ties they have that might influence their testimony:

Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced today that the Department of Justice and the U.S. Department of Agriculture (USDA) will hold joint public workshops to explore competition issues affecting the agriculture industry in the 21st century and the appropriate role for antitrust and regulatory enforcement in that industry. These are the first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry.

The joint Department of Justice/USDA workshops will address the dynamics of competition in agriculture markets including, among other issues, buyer power (also known as monopsony) and vertical integration. They will examine legal doctrines and jurisprudence and current economic learning, and will provide an opportunity for farmers, ranchers, consumer groups, processors, the agribusinesses, and other interested parties to provide examples of potentially anticompetitive conduct. The workshops will also provide an opportunity for discussion for any concerns about the application of the antitrust laws to the agricultural industry.

The goals of the workshops are to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with real-world experience in the agriculture sector.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Exclusive Dealing and Large Distributors

Posted by D. Daniel Sokol

Ryoko Oki (Graduate School of Economics, University of Tokyo) and Noriyuki Yanagawa (Faculty of Economics, University of Tokyo) analyze Exclusive Dealing and Large Distributors.

ABSTRACT: A seminal work by Fumagalli and Motta (2006) explored that an incumbent manufacturer cannot deter an entry by exclusive dealing contract with distributors. This paper extends the flamework of Fumagalli and Motta and examines a situation in which an incumbent distributor tries to deter an entry of efficient distributor by exclusive dealing contracts with manufacturers. The result of this paper is quite opposite to that of Fumagalli and Motta. The exclusion can be successful. It is an unique equilibrium. In this sence, the effects of exclusive dealing depends on the mareket stiructure. Moreover, we extend our model with an entrant even in upstream. It may decrease the possibility of exclusion but may promote the inefficient vertical relation between the entrants.

August 6, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 5, 2009

It Has Arrived!

Posted by D. Daniel Sokol

I have word from the publisher that my edited book is now out in print.

Eleanor Fox (NYU - Law) and Daniel Sokol (University of Florida - Law, me) are editors of Latin American Competition Law and Policy.  The book is an excellent collection of work from top academics and practitioners and covers many critical issues involving competition law and policy in the region.  You can download the table of contents here.

BOOK ABSTRACT: This book offers an unparalleled analysis of the emerging law and economics of competition policy in Latin America. Nearly all Latin American countries now have competition laws and agencies to enforce them. Yet these laws and agencies are relatively young. The relative youth of Latin American competition agencies and the institutional and political environment in which they operate limit the ability of agencies to address anti-competitive conduct effectively. Competition policy is a tool to overcome anti-market traditions in Latin America. Effective competition policy is critical to assisting in the growth of Latin American economies and their global competitiveness, and to improving the welfare of domestic consumers. This book provides new region-specific insights into how better to achieve these aims.

August 5, 2009 | Permalink | Comments (0) | TrackBack (0)

Cournot Competition on a Network of Markets and Firms

Posted by D. Daniel Sokol

Rahmi Ilkiliç (Maastricht University) has written on Cournot Competition on a Network of Markets and Firms.

ABSTRACT: Suppose markets and firms are connected in a bi-partite network, where firms can only supply to the markets they are connected to. Firms compete a la Cournot and decide how much to supply to each market they have a link with. We assume that markets have linear demand functions and firms have convex quadratic cost functions. We show there exists a unique equilibrium in any given network of firms and markets. We provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure.

August 5, 2009 | Permalink | Comments (0) | TrackBack (0)

On cost restrictions in spatial competition models with heterogeneous firms

Posted by D. Daniel Sokol

Marco Alderighi (Econ - University of Valle d'Aost) and Claudio A. Piga (Econ - Loughborough University) provide thoughts On cost restrictions in spatial competition models with heterogeneous firms.

ABSTRACT: This paper investigates the properties of two types of cost restrictions that guarantee the existence of an equilibrium in pure strategies in Bayesian spatial competition models with heterogenous firms.

August 5, 2009 | Permalink | Comments (0) | TrackBack (0)

Cases In European Competition Policy, The Economic Analysis

Posted by D. Daniel Sokol

Coming out soon an edited volume by Bruce Lyons (East Anglia) on Cases In European Competition Policy, The Economic Analysis.

BOOK ABSTRACT: Competition between firms is usually the most effective way of delivering economic efficiency and what consumers want. However, there is a balance to be struck. Firms must not be over-regulated and so hampered in their development of innovative products and new strategies to compete for customers. Nor must they be completely free to satisfy a natural preference for monopoly, which would give them higher profits and a quieter life. The economic role of competition policy (control of anticompetitive agreements, mergers and abusive practices) is to maintain this balance, and an effective policy requires a nuanced understanding of the economics of industrial organization. Cases in European Competition Policy demonstrates how economics is used (and sometimes abused) in competition cases in practical competition policy across Europe. Each chapter summarizes a real case investigated by the European Commission or a national authority, and provides a critique of key aspects of the economic analysis.BOOK CONTENTS: List of figures; List of tables; List of contributors; Preface; Introduction: the transformation of competition policy in Europe Bruce Lyons; Part I. Anticompetitive Behaviour by Firms with Market Power: Introduction; Section 1. Abuse of a Dominant Position: 1. Michelin II: the treatment of rebates Massimo Motta; 2. Interoperability and market foreclosure in the European Microsoft case Kai-Uwe Kühn and John Van Reenen; Section 2. Market Investigations: 3. Mobile call termination in the UK: a competitive bottleneck? Mark Armstrong and Julian Wright; 4. Relationship between buyer and seller power in retailing: UK supermarkets (2000) Paul Dobson; Part II. Agreements Between Firms: Introduction; Section 1. Cartels: 5. The graphite electrodes cartel: fines which deter? Morten Hviid and Andreas Stephan; 6. Assessment of damages in the district heating pipe cartel Peter Møllgaard; Section 2. Other Horizontal Agreements: 7. Interchange fees in payment card systems: price remedies in a two-sided market Jean-Charles Rochet; 8. The orders and rules of British horseracing: anticompetitive agreements or good governance of a multi-sided sport? Bruce Lyons; Section 3. Vertical Agreements: 9. Efficiency enhancing or anticompetitive vertical restraints? Selective and exclusive car distribution in Europe Frank Verboven; 10. Beer – the ties that bind Michael Waterson; 11. Parallel trade of prescription medicines: the Glaxo dual pricing case Patrick Rey and James Venit; Part III. Mergers: Introduction; Section 1. Measurement of Unilateral Effects: 12. A merger in the insurance industry: much easier to measure unilateral effects than expected Christian Gollier and Marc Ivaldi; 13. Merger simulations of unilateral effects: what can we learn from the UK brewing industry? Margaret Slade; Section 2. Coordinated Effects: 14. The ups and downs of the doctrine of collective dominance: sing game theory for merger policy Eliana Garces-Tolon, Damien Neven and Paul Seabright; 15. Capacity constraints and irreversible investments: defending against collective dominance in UPM Kymmene/Norske Skog/Haindl Kai-Uwe Kühn and John Van Reenen; Section 3. Vertical and Conglomerate Effects: 16. Vertical effects between natural gas and electricity production: the Neste/IVO merger in Finland Rune Stenbacka; 17. Horizontal, vertical and conglomerate effects: the GE/Honeywell merger in the EU Xavier Vives and Gianandrea Staffiero; Index.

August 5, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 4, 2009

Downstream merger and welfare in a bilateral oligopoly

Posted by D. Daniel Sokol

George Symeonidis (University of Essex - Economics) writes on Downstream merger and welfare in a bilateral oligopoly.

ABSTRACT: I analyse the effects of a downstream merger in a differentiated oligopoly when there is bargaining between downstream firms and upstream agents (firms or unions). Bargaining outcomes can be observable or unobservable by rivals. When competition is in quantities, upstream agents are independent and bargaining is over a uniform input price, a merger between downstream firms may raise consumer surplus and overall welfare. However, when competition is in prices or the upstream agents are not independent or bargaining is over a two-part tariff or bargaining covers both the input price and the level of output, the standard welfare results are restored: a downstream merger always reduces consumer surplus and overall welfare.

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

Competition And Access Regulation In The Telecommunications Industry With Multiple Networks

Posted by D. Daniel Sokol

Yan Liu and GuangâZhen Sun (Monash - Econ) explore Competition And Access Regulation In The Telecommunications Industry With Multiple Networks.

ABSTRACT: We develop a framework, extending the conventional duopoly model by replacing the Hotelling line with a simplex in highâ€dimension spaces, to study the competition and access regulation of multiple networks. We first characterize the competitive equilibrium when the substitutabilities of the networks are not too high, or the access charges are nearly costâ€based. We then analyse how the equilibrium market shares respond to marginal variations in the access charges under various regimes of access regulation, and thereby examine the efficiency implications of such regulation regimes. In particular, we analyze the asymmetric scenario in which some networks are incumbent and some are entrants. It is shown that some existing results of the duopoly do not extend to a multiâ€firm setting, largely because regulation of multiple networks is structurally far richer.

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

Ashcroft v. Iqbal: Taking Twombly a Step Further

Posted by D. Daniel Sokol

Caroline Mitchell & David Wallach (Jones Day) explain Ashcroft v. Iqbal: Taking Twombly a Step Further.

ABSTRACT: On May 18, 2009, in a 5-to-4 decision, the Supreme Court decided Ashcroft v. Iqbal and continued a trend of toughening federal pleading standards that started with Bell Atlantic Corp. v. Twombly. Until Iqbal,Twombly’s effect had been relatively modest because courts tended to distinguish it, often finding that its teachings applied only to antitrust cases or similar types of cases. In Iqbal, the Supreme Court rejected these attempts to circumscribe holding unequivocally that the pleading standard announced by Twombly applies to all civil actions in federal court.

This development will make it considerably more difficult for plaintiffs armed only with vague factual allegations to launch expensive litigation. At the same time, however, the advent of this new pleading standard complicates the calculus for plaintiffs and defendants alike at the pleading stage of civil cases in federal courts. These complications result in part from the difficult questions that Iqbal and Twombly left unanswered about how properly to apply the new federal pleadings standard. As a result, it may not be possible to definitively assess Iqbal’s impact until the Courts of Appeals have answered some of these questions. What is immediately clear after Iqbal, however, is that district courts have significantly more discretion to manage cases at the pleading stage, and that some cases which would have previously continued to discovery will now end with the pleadings.

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

The Competition Policy in China: Past, Present and Future

Posted by D. Daniel Sokol

Wu Hanhong of Renmin University's School of Economics explores The Competition Policy in China: Past, Present and Future.

ABSTRACT: The fundamental and in‐depth change in the economic system has been the transition from a planning economy system to a market economy system since the reform and opening‐up policy was implemented in China in 1978. It is well known that competition is the essential feature of a market economy. Without competition, a market economy will be out of the question. However, in the realistic market competition process, there is a great variety of practices of unfair competition and anti‐competitive practices, because some undertakings in market competition, in order to maximize their profits, are bound to fight against and elbow out their competitors by various means, to strive for a monopoly and obtain economic gains. If such undertakings’ acts are left to themselves and no effective measures have been taken to control and cease them, market competition and the functions of market mechanism will be impaired, economic vigor will be killed, technological innovations and technological advances hindered, and consumers’ interests damaged. The market mechanism per se cannot solve those “market failures” mentioned above, which has to be rectified through the government’s “visible hand” to keep market economy in healthy operation, and this is the very purpose of a competition policy.

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