Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, September 5, 2009

Developments in Pakistan's Competition Law and Policy

Posted by D. Daniel Sokol

According to news reports, Khalid Aziz Mirza is out from his job as chairman of the Competition Commission of Pakistan.

September 7 update: It looks like he is back, according to the latest news reports from Pakistan because the sacking went against proper procedure.  Also, he was actually doing a good job.

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

Friday, September 4, 2009

Google and the Proper Antitrust Scrutiny of Orphan Books

Posted by D. Daniel Sokol

Jerry A. Hausman, Massachusetts Institute of Technology (MIT) - Department of Economics, and J. Gregory Sidak, Tilburg University - Faculty of Law, Criterion Economics, L.L.C. analyze the major issues in Google and the Proper Antitrust Scrutiny of Orphan Books.

ABSTRACT: We examine the consumer-welfare implications of Google’s project to scan a large proportion of the world’s books into digital form and to make these works accessible to consumers through Google Book Search (GBS). In response to a class action alleging copyright infringement, Google has agreed to a settlement with the plaintiffs, which include the Authors Guild and the Association of American Publishers. A federal district court must approve the settlement for it to take effect. Various individuals and organizations have advocated modification or rejection of the settlement, based in part on concerns regarding Google’s claimed ability to exercise market power. The Antitrust Division has confirmed that it is investigating the settlement. We address concerns of Professor Randal Picker and others, especially concerns over the increased access to 'orphan books,' which are books that retain their copyright but for which the copyright holders are unknown or cannot be found. The increased accessibility of orphan books under GBS involves the creation of a new product, which entails large gains in consumer welfare. We consider it unlikely that Google could exercise market power over orphan books. We consider it remote that the static efficiency losses claimed by critics of the settlement could outweigh the consumer welfare gains from the creation of a valuable new service for expanding access to orphan books. We therefore conclude that neither antitrust intervention nor price regulation of access to orphan books under GBS would be justified on economic grounds.

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

The Changing Business Model of Law Firms - With Thoughts on Antitrust Practices

Posted by D. Daniel Sokol

With fewer offers emerging from US law firms and associate cuts still underway, is antitrust still a hot area area of practice?  On the one hand, merger activity is down.  On the other hand, there is a low threshold to trigger interest from DOJ and FTC as the new leadership teams figure out what to do (though no big cases yet on mergers or conduct have emerged).  Is antitrust doing relatively well relative to other fields?  Is follow on private class action cartel work keeping people busy or has Tombly had a big effect?  Feel free to post thoughts, even anonymously. 

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

Intellectual Property and Standard Setting

Posted by D. Daniel Sokol

Bruce H. Kobayashi and Joshua D. Wright (both of George Mason University Law School) discuss Intellectual Property and Standard Setting.

ABSTRACT: This Chapter, forthcoming in the ABA Handbook on the Antitrust Aspects of Standards Setting (2010) provides an analytical overview of the antitrust issues involving intellectual property and standard setting including, but not limited to, patent holdup, royalty stacking, refusals to license, and patent pools.

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

Thursday, September 3, 2009

The Quest for Appropriate Remedies in the Microsoft Antitrust EU Cases: A Comparative Appraisal

Posted by D. Daniel Sokol

Nic Economides (NYU - Stern School of Business) and Ioannis Lianos (UCL Law) have an interesting new piece on The Quest for Appropriate Remedies in the Microsoft Antitrust EU Cases: A Comparative Appraisal.

ABSTRACT: The Microsoft cases in the United States and in Europe have been influential in determining the contours of the substantive liability standards for dominant firms in US antitrust law and in EC Competition law. The competition law remedies that were adopted, following the finding of liability, seem, however, to constitute the main measure for the “success” of the case(s). An important disagreement exists between those arguing that the remedies put in place failed to address the roots of the competition law violation identified in the liability decision and others who advance the view that the remedies were far-reaching and that their alleged failure demonstrates the weakness of the liability claim. This study evaluates these claims by examining the variety of remedies that were finally imposed in the European Microsoft cases, from a comparative perspective. The study begins with a discussion of the roots of the Microsoft issues in Europe and the consequent choice of a remedial approach by the Commission and the Court. It then explores the effectiveness of the remedies in achieving the aims that were set. The non-consideration of the structural remedy in the European case and the pros and cons of developing such a remedy in the future are briefly discussed before more emphasis is put on alternative remedies (competition and non-competition law ones) that have been suggested in the literature. The study concludes by discussing the fit between the remedy and the theory of consumer harm that led to the finding of liability and questions a total dissociation between the two. We believe that it is important to think seriously about potential remedies before litigation begins. However, we do not require an ex ante identification of an appropriate remedy by the plaintiffs, since this could lead to underenforcement or overenforcement.

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

Screening and Merger Activity

Posted by D. Daniel Sokol

Albert Banal-Estanol (City University of London); Paul Heidhues (University of Bonn); Rainer Nitsche (European School of Management and Technology); and Jo Seldeslachts (Wissenschaftszentrum Berlin) explain Screening and Merger Activity.

ABSTRACT: In our paper targets, by setting a reserve price, screen acquirers on their (expected) ability to generate merger specific synergies. Both empirical evidence and many common merger models suggest that the difference between high- and low-synergy mergers becomes smaller during booms. This implies that the target’s opportunity cost for sorting out relatively less fitting acquirers increases and hence targets screen less tightly during booms, which leads to a hike in merger activity. Our screening mechanism not only predicts that merger activity is intense during economic booms and subdued during recessions but is also consistent with other stylized facts about takeovers and generates novel testable predictions.

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

Firm entry, product repositioning and welfare

Posted by D. Daniel Sokol

Eleftherios Zacharias (Athens University - Econ) has posted Firm entry, product repositioning and welfare.

ABSTRACT: We show that the entry of a second firm in a horizontally differentiated market (ala Hotelling) may harm consumers as prices increase and consumer's surplus possibly decrease. We first derive the price and the consumer's surplus of a monopoly which is located at the center of the market. When a second firm enters the market the first firm repositions and the two firms locate at their equilibrium points. Although competition adds to variety and increases consumer's surplus, the post entry increase in price may outweigh the gains from extra variety and make consumers worse off.

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

Vertical Restraints in EC Competition Law: New Dynamics

Posted by D. Daniel Sokol

University College London (UCL) is pleased to invite you to a 2 day-Conference

Vertical Restraints in EC Competition Law: New Dynamics

Tuesday 13 & Wednesday 14 October 2009
9:00 - 19:30 (day one), 9:00 - 13.30 (day two)
in the UCL Central Campus, Gower Street, London WC1


EC competition law on vertical restraints has marked the beginning of the process of transformation of EC competition law in the late 1990s, in particular because of the adoption of a more compatible to neoclassical economic theory approach. Almost ten years since the adoption of Regulation 2790/99 and the vertical restraints guidelines, the European Commission has initiated a revision process and published some proposals at this respect. The aim of this conference would be (a) to understand the process of the reform of EC competition law on verticals, (b) to provide some useful comparative insights, by looking to the most recent developments in US antitrust law on verticals as well as the most recent competition law practice in some Member States’ and selected jurisdictions and (c) to critically assess the proposals of the European Commission, by confronting them to recent economic theory and to legal practice.

The conference is of particular importance to the UCL community as it will honour Valentine Korah, professor emeritus of competition law at UCL and visiting professor to a number of leading academic institutions around the world. Professor Korah is an authority in EC competition law on vertical restraints and has published the leading monographs and commentaries on this topic.
Read about Professor Valentine Korah

The conference will explore the topics of:

  • General aspects of the reform of Vertical Restraints   
  • A retrospective and prospective of the vertical restraints reform
  • Internet distribution and vertical restraints
  • Tying/bundling
  • Resale Price Maintenance
  • Exclusive territories and parallel trade
  • Vertical restraints and the rise of retailer power: competition law and alternatives
  • Vertical restraints in national competition laws and international convergence

The conference gathers leading competition law academics and practitioners in the field of vertical restraints and, more generally, distribution practices from different jurisdictions. It would be particularly appealing to in house lawyers, private practitioners, academics, competition authorities’ officials and post-graduate students.

Download the brochure for this conference

PROGRAMME:

DAY ONE


8:30 Registration

9:00 Welcome: Dr Ioannis Lianos, UCL

SESSION I: ARTICLE 81 AND GENERAL ASPECTS OF THE REFORM
Chair: Philip Collins (OFT)
Speakers: The Scope of Article 81(1) Ioannis Lianos (UCL)
The Scope of Article 81(3) Giorgio Monti (LSE)
The other verticals: relation with Article 82 jurisprudence John Kallaugher (Latham & Watkins, UCL)
The other verticals: motor vehicle regulation Gregory Pelecanos (Ballas, Pelecanos & Associates)

10:40 BREAK

11:00 SESSION II: ROUNDTABLE A RETROSPECTIVE AND PROSPECTIVE OF THE VERTICAL RESTRAINTS REFORM
Chair: Sir Christopher Bellamy (Linklaters LLP)
Participants: Prof. Valentine Korah (UCL)
Philip Lowe (European Commission, DG Comp.)
Ian Forrester QC (White & Case)
Dr Bill Kovacic (Federal Trade Commission)
Prof. Richard Whish (King’s College London)

12:30 SESSION III: INTERNET DISTRIBUTION AND VERTICAL RESTRAINTS
Chair: Prof. Richard Whish (King’s College London)
Speakers: Denis Waelbroeck (Ashurst, Free University of Brussels)
Stephen Kinsella (Sidley Austin)
Discussants: Andrea Appella (News Corp.)
Antonio Bavasso (Allen & Overy, UCL)

13:30 LUNCH Announcement of the Valentine Korah Prize in Competition Law
Dr Ioannis Lianos (UCL) Ian Forrester QC (White & Case LLP)

14:15 SESSION IV: TYING / BUNDLING
Chair: Judge Nicholas Forwood (European Court of First Instance)
Speakers: Prof. Einer Elhauge (Harvard University)
Dr Jorge Padilla (LECG)
Dr Damien Neven (Chief Economist, European Commission)
Discussants: Dr Cristina Caffarra (CRA International)
Prof. Dan Crane (University of Michigan School of Law, Ann Arbor)

16:00 BREAK

16:15 SESSION V: ROUNDTABLE: RESALE PRICE MAINTENANCE Chair: Prof. Valentine Korah (UCL) Participants: Luc Peeperkorn (European Commission, DG Comp.)
Warren Grimes (Southwestern University)
Alison Jones (Kings College London)
Discussants: Aidan Robertson (Brick Court Chambers)
Thibaud Verge (CREST-LEI (Paris))

17:45 SESSION VI: ROUNDTABLE EXCLUSIVE TERRITORIES AND PARALLEL TRADE
Chair: Professor Brenda Sufrin (University of Bristol)
Speakers: Eric Gippini Fournier (European Commission) tbc
Dr Assimakis Komninos (White & Case LLP, UCL)
Dr Jose Luis Buendia (Garrigues LLP)
Discussants: Dr Christopher Stothers (Milbank, Tweed, Hadley and McCloy LLP & UCL)
Oke Odudu (University of Cambridge)

19:15 DRINKS RECEPTION

DAY TWO 9:30 SESSION VII: ROUNDTABLE VERTICAL RESTRAINTS AND THE RISE OF RETAILER POWER: COMPETITION LAW AND ALTERNATIVES
Chair: Peter Freeman (UK Competition Commission)
Participants: Michael Waterson (Warwick Business School)
Irving Scher (Greenberg Traurig, LLP) Ariel Ezrachi (Oxford)
Discussant: Ioannis Lianos (UCL)

11:00 BREAK

11:15 Session VIII: Vertical restraints in national competition laws and international convergence (roundtable discussion)
Chair: Prof. Frederic Jenny (Cour de Cassation, Office of Fair Trading, OCDE Competition Committee, UCL) tbc
Participants: UK experience on verticals Mark Clough (Addleshaw Goddard)
Vertical restraints in France Laurence Idot (University of Paris II Panthéon Assas)
Vertical restraints in Germany Florian Wagner von Papp (UCL)
Vertical restraints around the world: A comparative perspective Daniel Sokol (University of Florida Levin College of Law)
International aspects on vertical restraints Maher Dabbah (Queen Mary, University of London)

13:15 END OF CONFERENCE

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

Can the PRC’s New Anti-Monopoly Law Stop Monopolistic Activities: Let the PRC’s Telecommunications Industry Tell You the Answer

Posted by D. Daniel Sokol

Grace Li, University of Technology, Sydney explores Can the PRC’s New Anti-Monopoly Law Stop Monopolistic Activities: Let the PRC’s Telecommunications Industry Tell You the Answer.

ABSTRACT: A new PRC Anti-Monopoly Law (AML) was enacted on August 30, 2007 and took effect on August 1, 2008. The new AML is a milestone in Chinese economic policy. It will reorganise the competition paradigm in many Chinese domestic sectors. PRC’s telecommunications sector had undergone a number of major reforms in the past two decades. These reforms include one fundamental regulatory restructuring and three significant market reorganisations. As a result, the PRC telecommunications industry has developed by an astonishingly fast speed. In May 2008, the PRC State Council initiated a large telecommunications reform in both regulatory domain and market restructure. This reform has created a mega-telecommunications regulator, and merged six telecommunications players into three giant operators. All these were done 3 months prior to the country’s AML become effective. Against this background, this paper studies the new AML and its various provisions in relation to antimonopoly and anti-competitive conducts and attempts to validate those provisions against the recent PRC telecommunications reform. Part 1 provides an introduction of the telecommunications industry in China, including its regulatory framework and its market arrangement. Part 2 studies the 13-year long law making history of the new AML and highlights some of the major aspects of this act. Part 3 analyses the recent telecommunications reform in China. Part 4 analyses the interplay between the AML and the recent telecommunications reform. In conclusion, the paper argues that the recent telecommunications reform constitutes an administrative monopolistic conduct in the telecommunications market, which clearly breached provisions set in chapter 5 of the AML. As a result, the AML is unlikely to effectively foster competition in China’s telecom industry. Moreover, if this situation is not addressed by the PRC government in a timely manner, it would undermine the sustainability of the telecommunications industry and challenge the effectiveness of the AML.

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

Wednesday, September 2, 2009

Pros and Cons of 'Backing Winners' in Innovation Policy

Posted by D. Daniel Sokol

Seung-gyu Jo, Vrije Universiteit Amsterdam discusses the Pros and Cons of 'Backing Winners' in Innovation Policy.

ABSTRACT: In the economics profession there is a fierce debate whether industrial and innovation policy should be targeted to specific sectors or firms. This paper discusses the welfare effects of such targeted policies from the perspective of strategic game theory of the firm. A theoretical case for picking winners through a preferential innovative policy is discussed in a third-market international trade model, which is shown to hold without evoking retaliation from foreign competitors. However, in practice information uncertainties remain a concern. The question whether in this case 'backing winners' is a wise policy option depends on the characteristics of the information asymmetries and on the extent the government is able to design selection procedures which minimize the transaction costs that may be caused from the market participants' opportunistic behavior.

September 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Measuring the price responsiveness of gasoline demand

Posted by D. Daniel Sokol

Richard Blundell (University College London-Econ), Joel Horowitz (Northwestern) and Matthias Parey (Institute for Fiscal Studies) have a paper on Measuring the price responsiveness of gasoline demand.

ABSTRACT: This paper develops a new method for estimating the demand function for gasoline and the deadweight loss due to an increase in the gasoline tax. The method is also applicable to other goods. The method uses shape restrictions derived from economic theory to improve the precision of a nonparametric estimate of the demand function. Using data from the U.S. National Household Travel Survey, we show that the restrictions are consistent with the data on gasoline demand and remove the anomalous behavior of a standard nonparametric estimator. Our approach provides new insights about the price responsiveness of gasoline demand and the way responses vary across the income distribution. We reject constant elasticity models and find that price responses vary non-monotonically with income. In particular, we find that low- and high-income consumers are less responsive to changes in gasoline prices than are middle-income consumers.

September 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Price and welfare effects of a pharmaceutical substitution reform

Posted by D. Daniel Sokol

David Granlund (Department of Economics, Umeå University) explain Price and welfare effects of a pharmaceutical substitution reform.

ABSTRACT: The price effects of the Swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in Sweden in 1997—2007. The price reduction due to the reform was estimated to average 10% and was found to be significantly larger for brand name pharmaceuticals than for generics. The results also imply that the reform amplified the effect of generic entry has on brand-name prices by a factor of ten. Results of a demand-estimation imply that the price reductions increased total pharmaceutical consumption by 8% and consumer welfare by SEK 2.7 billion annually.

September 2, 2009 | Permalink | Comments (0) | TrackBack (0)

A Comparative Analysis of Antitrust Law Regimes: Designing Better Institutions for Deciding Antitrust Issues

Posted by D. Daniel Sokol

It's still not too late to sign up and attend the ABA Antitrust Section Chicago Loyola Conference titled A Comparative Analysis of Antitrust Law Regimes: Designing Better Institutions for Deciding Antitrust Issues.

The ABA Section of Antitrust Law, in conjunction with the Institute for Consumer Antitrust Studies at Loyola University Chicago School of Law, is assembling a first-rate group of leading scholars, current and former enforcement officials, and practitioners to examine the different institutional frameworks for implementing competition law and policy. The institutional frameworks applied by each jurisdiction may be of even greater significance than the substance of the rules they apply, but has received far less attention. The discussion to date of the institutions of antitrust and competition policy has been far less robust than the discussion of the liability rules and other topics in the competition law field.

This conference signals a renewed focus on institutional concerns and seeks to approach this critical issue from a comparative perspective, drawing on the wisdom of key enforcers, observers, and participants from the principal competition jurisdictions from around the world including the United States, the European Union, Canada, Japan, Australia, and others. Among other things, the conference will:

  • Identify and offer a comparative analysis of the frameworks adopted in different jurisdictions for the investigation, review, and adjudication of antitrust issues
  • Analyze the causes and consequences of these differences
  • Consider how the different frameworks operate in theory and practice in reaching sound decisions in an fair and efficient manner
  • Evaluate the need and nature for improvements including both incremental change and sweeping overhauls of the institutions and procedures now in place

The conference will begin with a keynote talk from FTC Commissioner William Kovacic, followed by a series of panels, tentatively scheduled as follows:

Panel 1: Analyzing Competition Regimes

The first panel will focus on the principal models for competition enforcement that have been adopted in various jurisdictions and will discuss the origins of the different approaches to decision-making. Questions to be addressed include: Who makes the ultimate decisions regarding liability and remedy: specialized decision-makers or courts of general jurisdiction? Who decides the facts: specialist courts, generalist courts, sectoral regulators, or competition enforcement agencies? How does the law on the books differ from the law in action in terms of competition law enforcement and institutional arrangements? Are the differences between the principal competition jurisdictions a function of deliberate policy decisions, cultural mores, historical events, or other factors? How do the different approaches reflect other concerns and values such as market integration, protection of domestic producers, empowerment of minority populations, protection of privacy, safety, and the environmental, and other concerns?

Panel 2: Analyzing Competition Law Outcomes

The second panel will focus on the outputs of the different frameworks and enforcement regimes under study. Among other things, the panel will consider whether the various decision-making processes are fair, transparent, predictable, and contribute to an appropriate range of rulings and remedies. Are the regimes appropriate models for other jurisdictions or are they unsuited for jurisdictions that have different substantive objectives? Are differing enforcement regimes necessary for merger and non-merger matters or private versus governmental enforcement?

Panel 3: Comparative Institutional Analysis and Competition Law

In the final panel the panelists will focus on the insights of comparative institutional analysis as applied to the enforcement of competition law. What combination of markets, politics, courts, and bureaucracies are appropriate for the principal competition jurisdictions around the world and what are the common ground, trends, and limitations to aligning those interests in the future?

Each of the panels will be focused on the papers presented by their authors. The other panel participants and conference speakers will offer comments and insights on those papers based on their experience in their own systems and interactions with other jurisdictions. The conference will be structured as a roundtable event with ample opportunity for participants to share ideas and perspectives.

The conference will begin at 9:30 a.m. on Friday September 11, 2009 in the ceremonial courtroom on the 10th floor of the Loyola University Chicago Law Center which is located at 25 E. Pearson, Chicago, IL (corner of Wabash and Pearson). The papers from the conference will be published in a special symposium issue of the Loyola University Chicago Law Journal to be published in early 2010.

We look forward to welcoming you to Chicago, home of the ABA, the Institute for Consumer Antitrust Studies, and Loyola University Chicago School of Law, and engaging with you and your peers in a productive and enjoyable exploration of these challenging issues.



Melanie L. Aitken
Competition Bureau Canada
Gatineau, Quebec, Canada
Conference Co-Chair

Spencer Weber Waller
Loyola University Chicago School of Law
Chicago, IL
Conference Co-Chair


A Comparative Analysis of Antitrust Law Regimes: Designing Better Institutions for Deciding Antitrust Issues
Loyola University Chicago School of Law
Chicago, IL
September 11, 2009

Joint program co-sponsored by the ABA Section of Antitrust Law and Loyola University Chicago School of Law, Institute for Consumer Antitrust Studies

8:20 a.m.
Registration and Continental Breakfast

8:50 a.m. – 9:00 a.m.
Welcome and Introductions
Spencer Weber Waller, Loyola University Chicago School of Law, Chicago, IL

9:00 a.m. – 10:30 a.m.
Session I – A Comparative Analysis of Different Regimes
Moderator: Jonathan M. Jacobson, Wilson Sonsini Goodrich & Rosati, New York
Speakers:
David S. Evans, LECG, Boston, MA
Eleanor M. Fox, New York University School of Law, New York, NY
Michael J. Trebilock, University of Toronto, Toronto, Canada
10:30 a.m. – 10:45 a.m. Break
10:45 a.m. – 12:15 p.m.
Session II – Strengths and Weaknesses/Relative Effectiveness of these Different Frameworks
Moderator: Thomas O. Barnett, Covington & Burling LLP, Washington, DC
Speakers:
Anu Bradford, University of Chicago Law School, Chicago, IL
Allan Fels, The Australia and New Zealand School of Government, Carlton, Australia
Michal Gal, Haifa University, Haifa, Israel
Calvin S. Goldman, Blake Cassels & Graydon LLP, Toronto, Canada
*Mitsuo Matsushita, Sekei University, Tokyo, Japan

12:15 p.m. – 1:00 p.m.
Lunch

1:00 p.m. – 1:45 p.m.
Introduction
Melanie L. Aitken, Commissioner, Canadian Competition Bureau, Gatineau, Canada
Keynote Speaker:
William E. Kovacic, Commissioner, Federal Trade Commission, Washington, DC

1:45 p.m. – 3:30 p.m.
Session III-- Comparative Institutional Analysis and Competition Law
Moderator: Spencer Weber Waller, Loyola University Chicago School of Law, Chicago, IL
Speakers:
Damien Geradin, Howrey LLP, Brussels, Belgium
Neil K. Komesar, University of Wisconsin Law School, Madison, WI
Howard Shelanski, Deputy Director, Bureau of Economics, Federal Trade Commission, Washington, DC
D. Daniel Sokol, University of Florida, Gainesville, FL

3:30 p.m.
Conclusion
*Materials submitted by Mr. Matsushita who is unable to participate.

September 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Airline Market Power and Intertemporal Price Dispersion

Posted by D. Daniel Sokol

Alberto A. Gaggero (University of Valle d'Aosta) and Claudio A. Piga (Dept of Economics, Loughborough University) discuss Airline Market Power and Intertemporal Price Dispersion.

ABSTRACT: This paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the UK and the Republic of Ireland. Price dispersion is measured by a number of inequality indexes, calculated using fares posted on the Internet at specific days before takeoff. We find a negative correlation between market dominance and price dispersion; thus competition appears to hinder the airlines' ability to price discriminate to exploit consumers' heterogeneity in booking time preferences. Moreover, in the Christmas and Easter periods of high demand, fares are less dispersed, possibly because airlines target a less heterogenous set of consumers.

September 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 1, 2009

Empirical analysis of buyer power

Posted by D. Daniel Sokol

Walter Beckert (Birkbeck College, University of London - Econ) provides an Empirical analysis of buyer power.

ABSTRACT: This paper provides a comprehensive econometric framework for the empirical analysis of buyer power. It encompasses the two main features of pricing schemes in business-to-business relationships: nonlinear price schedules and bargaining over rents. Disentangling them is critical to the empirical identification of buyer power. Testable predictions from the theoretical analysis are delineated, and a pragmatic empirical methodology is presented. It is readily implementable on the basis of transaction data, routinely collected by antitrust authorities. The empirical framework is illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and for heterogeneity across buyers and sellers.

September 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Mobile Call Termination

Posted by D. Daniel Sokol

Mark Armstrong, University College London - Department of Economics and Julian Wright, National University of Singapore - Department of Economics analyze Mobile Call Termination.

ABSTRACT: We analyse charges levied by mobile telephone networks to deliver calls. We integrate two literatures: one analysing calls from the fixed network, where predicted unregulated termination charges are too high, and one analysing calls from rival mobile networks, where predicted charges are too low. In practice, however, networks adopt uniform charges for terminating both kinds of traffic, as do regulators. We show how incorporating wholesale arbitrage and demand-side substitution helps to reconcile theory with practice. In our framework, the unregulated charge is uniform and typically lies between the efficient and monopoly benchmarks. There remains a rationale for regulation, albeit reduced.

September 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Mickey Mouse to Acquire Iron Man

Posted by D. Daniel Sokol

Today's big news is that Disney has a deal to acquire Marvel.  Expect more deals as others in the industry react.  This should be fun for the enforcers as these are politically sensitive deals that go beyond mere antitrust analysis.

September 1, 2009 | Permalink | Comments (0) | TrackBack (0)

An Administrable and Efficient Legal Standard for Refusals to Deal and Price Squeezes by an Unregulated, Vertically Integrated Monopolist

Posted by D. Daniel Sokol

Steve Salop (Georgetown Law) has a very interesting piece, An Administrable and Efficient Legal Standard for Refusals to Deal and Price Squeezes by an Unregulated, Vertically Integrated Monopolist.

ABSTRACT: This paper formulates a rigorous rule of reason legal standard under Section 2 of the Sherman Act for refusals to deal and price squeezes undertaken by an unregulated, vertically integrated monopolist against actual or potential competitors. This rule of reason standard is administrable by the courts and the monopolist. It takes into account the direct effects on consumers, as well as the longer run effects on the innovation and investment incentives of both the monopolist and its would-be competitors. In this way, the legal standard protects consumers and the competitive process on which a successful market economy is based.

September 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Do Markup Dynamics Reflect Fundamentals or Changes in Conduct?

Posted by D. Daniel Sokol

Mikael Juselius, University of Helsinki - Department of Economics, Moshe Kim, Universitat Pompeu Fabra - Faculty of Economic and Business Sciences, University of Haifa - Department of Economics, and Staffan Ringbom, Swedish School of Economics and Business Administration ask Do Markup Dynamics Reflect Fundamentals or Changes in Conduct?

ABSTRACT: Persistent shifts in equilibria are likely to arise in oligopolistic markets and may be detrimental to the measurement of conduct, related markups and intensity of competition. We develop a cointegrated VAR (vector autoregression) based approach to detect long-run changes in conduct when data are difference stationary. Importantly, we separate the components in markups which are exclusively related to long-run changes in conduct from those explained solely by fundamentals. Our approach does not require estimation of markups and conduct directly, thereby avoiding complex problems in existing methodologies related to multiple and changing equilibria. Results from applying the model to US and five major European banking sectors indicate substantially different behavior of conventional raw markups and conduct-induced markups.

September 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, August 31, 2009

Limiting Anti-Competitive Government Interventions that Benefit Special Interests

Posted by D. Daniel Sokol

Sokol D. Daniel Sokol of the University of Florida Levin College of Law (i.e., your blog editor) has a new working paper, Limiting Anti-Competitive Government Interventions that Benefit Special Interests.  It is my last foray for a while into international antitrust issues. Presently, I am finishing work on three other projects, the most exciting of which addresses antitrust decision-making and which utilizes both the survey I had many of you take last summer plus follow up qualitative interviews of Chambers ranked antitrust practitioners across the US, which I am finishing up now.  In case you are Chambers ranked in antitrust and have put off talking to me, send me an email to schedule an appointment.  I promise that the 30 minute session will be painless. 

ABSTRACT: When government regulates, it may either intentionally or unintentionally generate restraints that reduce competition (“public restraints”). Public restraints allow a business to cloak its action in government authority and to immunize it from antitrust. Private businesses may misuse the government’s grant of antitrust immunity to facilitate behavior that benefits businesses at consumers’ expense. One way is by obtaining government grants of immunity from antitrust scrutiny. This Article offers a new contribution to the extensive literature on the globalization of antitrust. The present Article focuses both on the processes of creating public restraints, as well as upon the negative impacts of these restraints. Government can exempt a company from antitrust regulation, which allows the firm unbridled discretion to monopolize and harm consumers.

The focus of this Article, the issue of government intervention in the economy and its competitive impacts, has taken on renewed importance as the global financial crisis has led countries to provide various benefits to favored companies, which may distort competition. Distorting competition may keep the world in recession longer, as countries may retaliate with new distortions of their own, creating a downward spiral for the global economy. Thus, local “solutions” may cause international problems, and require international resolutions.

This Article addresses the important domestic and international institutional dynamics of how to reduce such anti-competitive immunities. It then provides a theoretical framework to identify potential domestic and international institutional responses to public restraints and the costs and benefits of these responses. The institutional framework developed in this Article proposes both substantive policies and institutional structures that can undertake these policies. The framework builds on both new institutional economics and international organization literatures, while recognizing the difficult limitations in design and capacity that existing institutions face. Part I of this Article explores the causes and effects of public restraints. Part II analyzes the potential institutional choices to address public restraints. In Part III, this Article undertakes a case study of the current inadequacies of existing institutional solutions to the problem of government restraints. Part III then suggests a set of reforms to correct for the existing institutional shortcomings. The Conclusion suggests that a modified WTO is the least bad alternative to address international antitrust public restraints.

August 31, 2009 | Permalink | Comments (0) | TrackBack (0)