Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, January 24, 2009

TOP 5 Most Downloaded New Papers for Antitrust in the Past Two Months (November 24, 2008 - January 23, 2009)

Posted by D. Daniel Sokol

The most downloaded newly posted antitrust papers on SSRN for antitrust law (November 24, 2008 to January 23, 2009) are:

Rank|Downloads|Title|Author|Affiliation

1. 168       New Antitrust Realism
Maurice E. Stucke,
University of Tennessee College of Law

2. 145       Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition
Joseph Farrell, Carl Shapiro,
University of California, Berkeley - Department of Economics, University of California, Berkeley - Economic Analysis & Policy Group

3. 139       Twombly, Pleading Rules, and the Regulation of Court Access
Robert G. Bone,
Boston University School of Law

4. 118       Change and Continuity in International Antitrust Under an Obama Administration
D. Daniel Sokol,
University of Florida - Levin College of Law

5. 113       The Relevance of Behavioural Economics in Antitrust
Christoph Engel,
Max Planck Institute for Research on Collective Goods

January 24, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, January 23, 2009

Auctions with Positive Synergies: Experimental Evidence

Posted by D. Daniel Sokol

YuenLeng Chow, National University of Singapore  (Real Estate) and  Abdullah Yavas, Pennsylvania State University (Business Administration) discuss Auctions with Positive Synergies: Experimental Evidence.

ABSTRACT: In a standard auction, bidders bid more aggressively when the number of bidders increases. However, Krishna and Rosenthal (1996, Games and Economic Behavior) show that when bidders have multiple-unit demand that generates positive synergies, bidders bid less aggressively as the number of bidders increases. The first objective of this paper is to offer experimental evidence on this seemingly counter-intuitive theoretical prediction. Following the model of Krishna and Rosenthal, we design a simultaneous second-price sealed-bid auction for two objects with two types of bidders: single-object and multiple-object demand bidders. Our results show that bidders bid less aggressively with increased competition. The second objective is to investigate the effect of offering global bidders the option of bidding for both objects as a package as well as submitting individual bids for each object. Controlling for bidders' valuat! ions, we find that offering this option to global bidders increases allocative efficiency and sellers' revenue.

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

Monopoly Power: Use, Proof, and Relationship to Anticompetitive Effects in Section 2 Cases

Posted by D. Daniel Sokol

Monopoly Power: Use, Proof, and Relationship to Anticompetitive Effects in Section 2 Cases is the new work by Thomas J. Klotz of the FTC.

ABSTRACT: This paper reviews relevant case law, scholarship, and presentations at the Federal Trade Commission/Department of Justice Hearings on Section 2 of the Sherman Act to examine the definition of monopoly power, evidence that demonstrates the existence of monopoly power, and conclusions that can be drawn from particular types of evidence. Section II considers the legal and economic definitions of monopoly power and the relationship between monopoly power and market power. Section III examines categories of evidence that courts have used to determine whether a firm possesses monopoly power, including market definition and market share, profitability, and direct evidence of the exercise of monopoly power. The discussion identifies the limitations of these types of evidence. Given those limitations, Sections IV and V present a framework for assessing whether a firm possesses monopoly power based on market share and the presence of anticompetitive effects. Section IV discusses the ability to draw conclusions based on a firm’s market share; it suggests a rebuttable presumption that a firm with less than a 50% share of a properly defined relevant market lacks monopoly power. Section V discusses the inferences that may be supported by a demonstration of actual or likely anticompetitive effects and a causal link between the challenged conduct and anticompetitive harm; it urges recognition of the potential of such evidence to establish the presence of monopoly power. Finally, Section VI summarizes the conclusions.

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

Competitive Advantage And Competition Policy In Developing Countries

Posted by D. Daniel Sokol

Now available in paperback is Competitive Advantage And Competition Policy In Developing Countries, edited by  Paul Cook, Director, Centre on Regulation and Competition (CRC), University of Manchester, UK, Raul Fabella, Professor of Economics and Dean, School of Economics, University of the Philippines and Cassey Lee, Associate Professor of Industrial Economics, Nottingham University Business School, University of Nottingham (Malaysia Campus), Malaysia.

BOOK ABSTRACT: Contents: Preface Part I: Competition Policy and Development Part II: Experience with Competition Policy Part III: Competition and Competitive Advantage Index Contributors: P. Cook, K. Dawar, J. Ewert, R. Fabella, T. Hartzenberg, J. Henderson, K. Kampel, C. Lee, G. Mendes de Paula, J.S. Metcalfe, S. Raihan, R. Ramlogan, Y. Uchida, E. Yonnedi

Competitive markets are now established in most successful economies but the question of what competition is and what it means for policy in developing countries is often overlooked. This book provides a refreshing and critical examination of the issues relating to market competition and competition policy.

The book discusses competition from different theoretical perspectives and examines the implications these viewpoints have for policy. The contributors assess competitiveness in domestic markets and the impact of foreign competition. They also review the experiences of a range of countries in developing competition policy and examine both the strengths and weaknesses of these policies.

Written in a non-technical manner, Competitive Advantage and Competition Policy in Developing Countries is addressed to policymakers, as well as academics, concerned with regulation and competition. It will also be of interest to regulators in dedicated agencies such as utility regulators, competition agencies and those dealing with regulatory impact assessment.

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

Thursday, January 22, 2009

It's Official - Varney to Head DOJ Antitrust

Posted by D. Daniel Sokol

I just read the press release (no link).

The following announcements were made today: Christine Varney, Assistant Attorney General for Antitrust

Varney has extensive experience in antitrust issues. Through her time both inside and outside of government, she has worked to foster vigorous competition and has led the way in taking new approaches and utilizing newer theories, particularly in technology markets. While an FTC Commissioner, Varney pioneered the application of innovation market theory analysis to transactions in both electronic high technology and biotechnology.  She also focused her efforts on healthcare issues, vigorously enforcing the antitrust laws in that industry, while also encouraging the government agencies to be more receptive to innovative delivery modes and models.  She is the author of an important antitrust opinion In the Matter of International Conference Interpreters, in which she concluded that certain practices were in fact price and non-price restraints. Her approach was hailed as both practical and innovative.  Varney has won recognition from several leading commentators including Global Competition Review, Chambers USA, and International Who' Who of Competition Lawyers.  She is cited as a one of the "Super Lawyers" of Washington DC in 2008.  Varney received her J.D., from Georgetown University Law Center in 1986; her M.P.A. from Syracuse University in 1978; and her B.A. fromThe State University of New York , University at Albany in1977.

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

FTC Announces Agendas for First Two Resale Price Maintenance Workshops

Posted by D. Daniel Sokol

According to the press release:

RPM typically involves an agreement between a manufacturer and retailer setting the prices at which the retailer will resell the manufacturer’s goods to consumers. If the agreement requires the retailer to sell the goods only at or above prices established by the manufacturer, it is said to be minimum RPM. On the other hand, if the agreement requires the retailer to sell the products only at or below the price established by the manufacturer, it is said to be maximum RPM. Among other things, the workshops will examine when and where particular market facts or conditions make it more or less likely that the use of RPM will be procompetitive or neutral, and when or whether such RPM may harm competition and consumers.

The February 17 workshop will focus on Theories of Economic Benefits. It will begin at 10 am, with welcoming remarks by FTC Commissioner Pamela Jones Harbour, followed by a panelist presentation on various economic theories supporting claims that the use of RPM enhances competition and benefits consumers. The panel will be moderated by Daniel P. O’Brien, an economist in the Commission’s Bureau of Economics, and will be followed by a moderated discussion between the panelists and discussants, members of academia, industry representatives, and the public.

The February 19 workshop will focus on Theories of Economic Harms. It also will begin at 10 am, and will explore the various economic theories supporting claims that the use of RPM harms competition and consumers. Daniel P. O’Brien also will moderate this panel, which again will be followed by a discussion of the issue by members of academia and industry with the panelists. Both workshop sessions provide time for members of the public to ask questions.

The FTC’s resale price maintenance workshop is free and open to the public. Pre-registration is helpful but not required. All attendees must present a valid photo ID for admission to the agency’s Headquarters building, which is located at 600 Pennsylvania Ave, NW. To pre-register, please send your name, affiliation, and contact information to RPMworkshop@ftc.gov. The hearings will be accessible to people with disabilities. Anyone needing a related accommodation should contact Carrie McGlothlin at the FTC at 202-326-3388 or cmcglothlin@ftc.gov. Such requests should include a detailed description of the accommodations needed and contact information if more information is needed. Please provide advance notice of accommodation needs.

           

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

Enforcement of Section 2 of the Sherman Act: Theory and Practice

Posted by D. Daniel Sokol

William F. Adkinson, Jr., Karen   L. Grimm, and Christopher N. Bryan of the FTC write on Enforcement of Section 2 of the Sherman Act: Theory and Practice.

ABSTRACT: This paper provides an overview of section 2 and its application to single-firm conduct, highlighting major features of section 2 enforcement activity and central policy issues facing courts and enforcers. Section I describes the elements of the primary section 2 offenses—monopolization and attempted monopolization—and the role of section 2 in antitrust enforcement. Section II describes the methods of section 2 enforcement, tracing the historical development of federal enforcement and surveying recent enforcement activity, both governmental and private. Section III provides a brief thematic overview of section 2 jurisprudence, and Section IV describes the economic theories and tools that have played an important role in section 2 analysis. Finally, Section V identifies certain recurring policy issues that were addressed at the recent Federal Trade Commission/Department of Justice Hearings on Section 2 of the Sherman Act: Single-Firm Conduct as Related to Competition [hereinafter “the hearings”]—the effort to develop clear and administrable rules and the consideration of error costs in designing rules.

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

Do Auctions and Forced Divestitures Increase Competition?

Posted by D. Daniel Sokol

Adriaan R. Soetevent (Amsterdam School of Economics, University of Amsterdam), Marco A. Haan (University of Groningen), and Pim Heijnen (Amsterdam School of Economics, University of Amsterdam) ask Do Auctions and Forced Divestitures Increase Competition?

ABSTRACT: Where markets are insufficiently competitive, governments can intervene by auctioning licenses to operate or by forcing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for high- way gasoline stations and forcing the divestiture of outlets of four majors. We evaluate this policy experiment using panel data containing detailed price information. Accounting for non-randomness of the sites are auctioned, we find that an obligation to divest lowers prices by over 2% while the auctioning of licenses without such an obligation has no discernible effect. We find no evidence for price effects on nearby competitors.

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

Building Antitrust Agency Capacity in Context

Posted by D. Daniel Sokol

Mehra_webphoto Salil Mehra, Temple University - James E. Beasley School of Law discusses Building Antitrust Agency Capacity in Context.  He responds to my piece The Future of International Antitrust and Improving Antitrust Agency Capacity.

ABSTRACT: This brief Essay provides some context to understand why the transfer of antitrust expertise from experienced regimes such as the United States to emerging enforcement institutions elsewhere will likely not be a simple exercise. A technocratic model of antitrust law suits the context of the United States because of the wide consensus on the goals of antitrust policy in the U.S.[7] But emerging antitrust regimes may not have the benefit of the same underlying consensus on methods and goals that American enforcers enjoy. As a result, technical assistance focusing on narrow questions of interpretation may elide difficult questions of first principles and institutional design in emerging antitrust regimes.

The descriptive statistics that Professor Sokol provides can help shed light on common problems with how technical assistance is provided to emerging antitrust regimes. However, as shown by the examples I will discuss, the focus on forms of technical assistance in isolation may lead to the inaccurate view that emerging antitrust regimes are part of a sterilized environment in which other issues of enforcement authority and state power in markets can be controlled. In fact, reforming or emerging antitrust regimes may confront difficult—and contested—issues involving both the methods and institutions of competition law (“rules” of the game in Sokol’s terms) and their application to achieve goals in specific cases (“play” of the game). Part I of this Essay sets forth an example of how competition law may involve different, intertwined goals, Part II provides an example of how competition law can hinge on the nature of enforcement authority, and Part III considers Professor Sokol’s findings in light of these issues.

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

Wednesday, January 21, 2009

Most Downloaded Antitrust Law Professors in the Past Year

Posted by D. Daniel Sokol

Below is the list of top 15 antitrust law professors (defined as a professor who has written at least two antitrust papers posted in the past two years) as measured by downloads on SSRN.

1. Damien Geradin (Tilburg University and College of Europe) 5953
2. David Evans (University College London and University of Chicago) 4860
3. Herb Hovenkamp (University of Iowa) 3420
4. Keith Hylton (Boston University) 2515
5. Spencer Waller (Chicago Loyola) 2294
6. Josh Wright (George Mason) 2253
7. Jon Baker (American University) 2176
8. Bob Lande (University of Baltimore) 2032
9. Randy Picker (University of Chicago) 1961
10. Steve Semeraro (Thomas Jefferson) 1327
11. Barak Richman (Duke) 1054
12. Daniel Sokol (University of Florida) 1048
13. Bill Page (University of Florida) 985
14. Tom Cotter (University of Minnesota) 923
15. Maurice Stucke (University of Tennessee) 899

January 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Shelf Space Fees and Inter-Brand Competition

Posted by D. Daniel Sokol

Hao Wang, Peking University - China Center for Economic Research has posted a working paper on Shelf Space Fees and Inter-Brand Competition.

ABSTRACT: When in-store display influences consumer choices, shelf space allocation can be strategically used by retailers to extract payments from manufacturers. The paper finds that manufacturers with better brand names have higher willingness-to-pay for shelf spaces. Shelf space fees soften inter-brand competition and result in higher sale-weighted average retail price. The fees increase the total industry profit but lower the upstream profit. Both the aggregate consumer surplus and social welfare are negatively affected. This paper suggests that even when the shelf space fees do not drive small manufacturers out of marketplaces, they might still be anticompetitive.

January 21, 2009 | Permalink | Comments (0) | TrackBack (0)

On Commercial Media Bias

Posted by D. Daniel Sokol

P2364b Fabrizio Germano (University Pompeu Fabra - Economics) has an interesting paper On Commercial Media Bias.

ABSTRACT: Within the spokes model of Chen and Riordan (2007) that allows for non-localized competition among arbitrary numbers of media outlets, we quantify the effect of concentration of ownership on quality and bias of media content. A main result shows that too few commercial outlets, or better, too few separate owners of commercial outlets can lead to substantial bias in equilibrium. Increasing the number of outlets (commercial and non-commercial) tends to bring down this bias; but the strongest effect occurs when the number of owners is increased. Allowing for free entry provides lower bounds on fixed costs above which substantial commercial bias occurs in equilibrium.

January 21, 2009 | Permalink | Comments (0) | TrackBack (0)

The Economics of Payment Card Fee Structure: Policy Considerations of Payment Card Rewards

Posted by D. Daniel Sokol

Fumiko Hayashi (Federal Reserve Bank of Kansas City) writes on The Economics of Payment Card Fee Structure: Policy Considerations of Payment Card Rewards.

ABSTRACT: This paper considers possible public policies that could improve efficiency and welfare distribution in the U.S. retail payments industry. Mainly, four options, i) encouraging competition; ii) allowing merchants to surcharge; iii) regulating merchant fees; and iv) regulating payment card rewards, are discussed, but each option has advantages and disadvantages. Any single option may not achieve the policymakers' objective; rather, combining several policy options may be required.

January 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 20, 2009

"[DOJ] Staff is irrelevant"

Posted by D. Daniel Sokol

A new article in Wired about the Google/Yahoo deal has a number of interesting tidbits, not least on which is the following paragraph:

Tom Barnett, assistant attorney general for antitrust, took his seat at the table and called the meeting to order. The Yahoo lawyers kicked things off by describing their negotiations with DOJ staff; they had already suggested limiting the length of the deal and capping the amount of money in play. Barnett seemed unimpressed. "Staff," he proclaimed, "is irrelevant." He made the decisions around there.

As five lawyers involved with the case recount it, the rest of the meeting did not go much better.

January 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Antitrust in an Obama Administration

Posted by D. Daniel Sokol

Global Competition Policy has a symposium issue out today on Antitrust in an Obama Administration.  Essays include:

Antitrust In the New U.S. Administration: A TransAtlantic View
by Ioannis Lianos & Abel Mateus (University College London)

Change and Continuity in International Antitrust Under an Obama Administration
by Daniel Sokol (University of Florida, Levin College of Law)

An Open Letter to the Next Federal Trade Commission Chairman
by David Balto (Center for American Progress)

The Intersection of Antitrust Law and Intellectual Property Rights Under the New Obama Administration
by Christopher R. Leslie (Chicago-Kent College of Law)

New Antitrust Realism
by Maurice Stucke (University of Tennessee College of Law)

January 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Competition Policy and Market Leaders

Posted by D. Daniel Sokol

Ilir Maçi (Charles University - Economics) and Kresimir Zigic (Charles University - Economics) discuss Competition Policy and Market Leaders.

ABSTRACT: We study the potential loss in social welfare and changes in incentives to invest in R&D that result when the market leading firm is deprived of its position. We show that under plausible assumptions like free entry or repeated market interactions there is a social value of market leadership and its mechanical removal by means of competition policy is likely to be harmful for society.

January 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Cheap Exclusion: Role and Limits

Posted by D. Daniel Sokol

Patricia Schultheiss and William E. Cohen of the FTC discuss Cheap Exclusion: Role and Limits.

ABSTRACT: This paper examines the legal and policy issues related to using section 2 to prosecute such cases. Section II elaborates on the nature of “cheap exclusion,” briefly describes the principal lines of cases that could be characterized as cheap exclusion, and identifies the policy reasons for, and concerns with, applying antitrust theories in such cases. Section III highlights key principles and limits for determining when cheap exclusion is an appropriate candidate for antitrust review, and Section IV discusses how these considerations have interacted in practice. Section V addresses the framework for analyzing cheap exclusion allegations. Section VI summarizes our conclusions.

January 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Horizontal market concentration: Theoretical Insights From the Spatial Models

Posted by D. Daniel Sokol

Andreea Cosnita-Langlais (EconomiX, Université Paris Ouest-Nanterre la Défense (Paris X)) gives some thought to Horizontal market concentration: Theoretical Insights From the Spatial Models.

ABSTRACT: This paper aims to further advance the study of horizontal mergers by critically reviewing the theory on spatial models that may be used for the analysis of horizontal market concentration. We examine the incentives conveyed by locations for undertaking merger and merger-related strategies, as well as the impact of merger on strategic location choices. Thereby this paper highlights the two-way relationship between market concentration behavior and firm location.

January 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, January 19, 2009

The Future of International Antitrust and Improving Antitrust Agency Capacity

Posted by D. Daniel Sokol

Sokol I am posting my essay that recently appeared in the Northwestern University Law Review Colloquy on The Future of International Antitrust and Improving Antitrust Agency Capacity. Put in the style of the blog posts on this blog -

D. Daniel Sokol offers his insights on The Future of International Antitrust and Improving Antitrust Agency Capacity.

ABSTRACT: This Essay focuses on how both external (international institutions) and internal (agency capacity and technical assistance) dynamics shape the capacity of younger agencies to undertake antitrust in their jurisdictions. Both approaches play an important role in improving capacity. In the case of technical assistance, this Essay analyzes survey data from recipient agencies of antitrust technical assistance to determine the most effective means of improving antitrust agency capacity. Part I explains the type of capacity building that antitrust agencies undertake themselves. The rest of this Essay focuses upon international efforts that can assist agencies in capacity building, but it is important not to overlook capacity building efforts that can occur at the agency level. Part II describes the work that international antitrust institutions undertake to improve agency capacity. Part III provides an analysis of survey data that shows how technical assistance from outside providers can improve agency capacity. Part IV concludes and offers recommendations to improve developing world antitrust agency capacity building.

January 19, 2009 | Permalink | Comments (0) | TrackBack (0)

The Mccarran-Ferguson Exemption from the United Stated Antitrust Laws: Recent Developments

Posted by D. Daniel Sokol

Beth Farmer of Penn State Law writes on The Mccarran-Ferguson Exemption from the United Stated Antitrust Laws: Recent Developments.

ABSTRACT: This paper was presented at a conference sponsored by the Korean Competition Law Association on the subject of antitrust exemptions and the insurance industry. It analyzes recent developments in four areas: theoretical critiques of McCarran-Ferguson immunity, legislative developments, recent judicial interpretations and international approaches to antitrust exemptions. It argues that the allocation of power and deference is at the heart of the American doctrine and issues of federalism predominate. To the extent that McCarran-Ferguson was designed to clarify the balance of state and federal power to regulate and to set a clear substantive standard, the project has failed. Though the exemption has been criticized from all directions since adoption, legislative reform has been unavailing, demonstrating that a "one way rachet" is at work: once embedded in the law, exemptions are difficult to remove despite criticism, confusion among the courts, and proffers of compromise.

A version of the American immunity covering information exchanges among firms in the insurance industry, currently the subject of a block exemption of the European Commission, is due to sunset in 2010 unless extended. As part of its oversight responsibilities, DG Comp conducted a sector inquiry and opened a public consultation into the need for the block exemption, concluding, as a preliminary matter, that claims for the exemption are unpersuasive, and is inclined to allow the block exemption to expire and rely on the general competition rules to protect necessary and pro-competitive activities in the business of insurance.

At the end of the day, however, some consensus can be observed. There is wide agreement that antitrust laws are a consumer welfare prescription, exemptions should be adopted only when necessary to remedy market failures and then construed narrowly, and data dissemination and other agreements in the business of insurance are likely pro-competitive when analyzed under the rule of reason.

January 19, 2009 | Permalink | Comments (0) | TrackBack (0)