Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, October 31, 2009

Antitrust community in Latin American: the role of universities

Posted by D. Daniel Sokol

Law professor Juan Gutierrez of the University of Javeriana (Colombia) writes in with a request:

I am conducting a research on the Latin American antitrust community as part of the investigation projects of the Competition Law Study Center (CEDEC) at U. Javeriana  in Bogota(actually I will try to submit it of NYU’s call for papers). In particular I am interested in studying how competition law is taught in our region and the impact of Universities in the development of competition law.

 

For that purpose I am collecting information regarding courses on competition law and policies (and related areas, such as industrial organization and regulation) in Latin America. I published a first draft in the “Boletín Latinoamericano de Competencia” N°26, (titled  “La comunidad académica y la defensa de la libre competencia: Bases para una propuesta en América Latina”) that justifies the research topic and explains the academic proposal.

Therefore, we hope to collect more data with the help of Latin American Universities, professors and practitioners. The information per course that we require is the following:

  •           University’s name.

  •          Geographical location of the University.
  •          School or department that offers the course (law school, economics, management).
  •          Title of the course.
  •          Type of course. Undergraduate (mandatory or optional), Graduate (specialization, masters or Phd) or a short course (seminar, certificate, etc:).
  •          Course length and class hours per week
  •          The teacher’s name and e-mail.
  •          The teacher’s academic experience and studies.
  •          The syllabus (subjects studied during the course) for each course.
  •          Number of students (average or per course)
  •          Since when it has been taught.
  •          Periodicity of the course. (once every two years, once a year, twice a year, monthly, etc).
  •          Additional information. Website, events, publication, concluded researches or on going, etc. 

 

I cordially invite everyone to send us the information, to the following e-mail addresses:

jdg@cable.net.co  and cedec@cable.net.co.

Collected information will be available here. Once the information has been processed, we will get in touch with all those who participated in the research in order to share the results and strengthen the bonds between them.


As some of the readers know, I have a chapter in Latin American Competition Law and Policy that addresses the human dimension of competition policy in Latin American that touches upon some of these issues.  This project by Professor Gutierrez is an important one.  I hope you Latin American readers can help him out.

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

Product Durability in Markets with Consumer Lock-in

Posted by D. Daniel Sokol

Tobias Langenberg (Free University of Berlin) has a new working paper on Product Durability in Markets with Consumer Lock-in.

ABSTRACT: This paper examines a two-period duopoly where consumers are locked-in by switching costs that they face in the second period. The paper's main focus is on the question of how the consumer lock-in affects the firms' choice of product durability. We show that firms may face a prisoners' dilemma situation in that they simultaneously choose non-durable products although they would have higher profits by producing durables. From a social welfare perspective, firms may even choose an inefficiently high level of product durability.

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

Friday, October 30, 2009

Competition policy and productivity growth: An empirical assessment

Posted by D. Daniel Sokol

For those interested in competition policy and development, Paolo Buccirossi (LEAR), Lorenzo Ciari (EUI and LEAR), Tomaso Duso (Humboldt University and the WZB), Giancarlo Spagnolo (University of Rome Tor Vergata), and Cristiana Vitale (LEAR) have a new paper on Competition policy and productivity growth: An empirical assessment.  It looks interesting.

ABSTRACT: This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy as measured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities, to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional set up and antitrust activities (rather than merger control). The effect is strengthened by a good legal system, suggesting complementarities between competition policy and the efficiency of law enforcement institutions.

October 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Input pricing by an upstream monopolist into imperfectly competitive downstream markets

Posted by D. Daniel Sokol

Ioannis Pinopoulos ((Department of Economics, University of Macedonia) examines Input pricing by an upstream monopolist into imperfectly competitive downstream markets.

ABSTRACT: In downstream markets where entry is independent from profitability conditions, the upstream supplier’s optimal pricing policy is invariant with respect to downstream market structure. This price invariant result, however, is reversed when there is free entry in downstream market. When entry is endogenously dependent on profitability conditions, the upstream supplier’s price-setting behavior depends on the number of operative firms in the final good market. We show that the upstream supplier charges a higher input price under a free entry situation in downstream market than under a no-entry condition. We also show that a higher input price is set under Bertrand competition than under Cournot competition in a downstream market with free entry.

October 30, 2009 | Permalink | Comments (0) | TrackBack (0)

The EU’s Flawed Assessment of Horizontal Aspects in GE/Honeywell: Re-Visiting the Last Pillar of the European Prohibition Decision

Posted by D. Daniel Sokol

Philipp Schumacher, Technical University of Berlin explains The EU’s Flawed Assessment of Horizontal Aspects in GE/Honeywell: Re-Visiting the Last Pillar of the European Prohibition Decision.

ABSTRACT: This paper argues that - in contrast to the decision of the European Commission in 2001 and the ruling of the Court of First Instance in 2005 - the merger between General Electric and Honeywell International would not have led to anti-competitive horizontal effects. Applying the European Commission Merger Regulation valid in 2001 and on the basis of empirical evidence available in that year, the relevant markets are defined taking into account demand-side and supply-side substitutability. The worldwide bidding markets for large regional jet aircraft engines, corporate jet aircraft engines and small marine gas turbines are characterised by potentially volatile market shares, high importance of after-sales revenue and profitable outside options. According to the two-level approach of the European Commission, firstly the competitive situation of the engine manufacturer in relation to its direct customer, the aircraft or marine vessel manufacturer, and secondly the competitive effects in the respective market of end-use applications are analysed. The paper shows that GE was not in the position to exert market power prior to the merger and would not have been ex post.

October 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 29, 2009

McCarran-Ferguson Antitrust exemption repealer legislation update

Posted by Chris Sagers

The comprehensive House health care bill introduced for floor consideration this morning contains, as section 262, the McCarran-Ferguson repealer that was voted out of House Judiciary earlier this month (the original bill repealing the exemption had been H.R. 3596). There are some non-trivial changes from the original text of H.R. 3596, including the inclusion of some of the "safe harbor" defenses that the ABA Antitrust Section has been urging for about 20 years.  Also, this version would preserve insurer's McCarran immunity from FTC Act section 5 liability.  However, the limitation of repeal to "price fixing, bid rigging, or market allocation" still appears in this version of the bill. I believe that language is extremely unwise because, on my understanding, health insurers are not allowed even now to engage in that conduct under existing law (because state insurance regimes authorize it only as to specific property/casualty insurers). Also, if there is a competitive problem in health insurance my sense is it's not conspiracy, but consolidation.

Apparently the House health care bill in its most current form has been hard to find on the Thomas website.  Here is a link to the (nearly 2000 page) document:

http://docs.house.gov/rules/health/111_ahcaa.pdf

The McCarran repealer, which is section 262 of the bill, appears on p. 150.


October 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Endogenous Mergers Under Multi-Market Competition

Posted by D. Daniel Sokol

Tina Kao and (ANU - Econ) Flavio Menezes (Queensland - Econ) analyze Endogenous Mergers Under Multi-Market Competition.

ABSTRACT: This paper examines a simple model of strategic interactions among firms that face at least some of the same rivals in two related markets (for goods 1 and 2). It shows that when firms compete in quantity, market prices increase as the degree of multi-market contact increases. However, the welfare consequences of multi-market contact are more complex and depend on how two fundamental forces play out. The first is the selection effect, which acts to increase welfare, as shutting down the relatively more inefficient firm is beneficial. The second opposing effect is the internalisation of the Cournot externality effect; reducing the production of good 2 allows firms to sustain a higher price for good 1. This works to increase prices and, therefore, decrease consumer surplus (but increasing producer surplus). These two effects are influenced by the degree of asymmetry between markets 1 and 2 and the degree of substitutabilit! y between goods 1 and 2.

October 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Competition, Essential Facilities, Bottlenecks and the Pricing of Mobile Phone Service

Posted by D. Daniel Sokol

Stanford L. Levin, Southern Illinois University Edwardsville and Stephen R. Schmidt, TELUS Communications, Inc. describe Competition, Essential Facilities, Bottlenecks and the Pricing of Mobile Phone Service.

ABSTRACT: Two mobile service pricing frameworks have developed around the world, calling party pays (CPP) and mobile party pays (MPP). With CPP, a wireline customer is billed for placing a call to a mobile phone, and there is no charge to the mobile customer for receiving the call. The mobile customer is charged for placing a call, and there is no charge to the receiving party, wireline or mobile. In contrast, with MPP the mobile customer pays for both incoming and outgoing calls, and there is no charge to a mobile or wireline customer for placing calls to or receiving calls from a mobile customer other than those normally associated with placing a call from a mobile or wireline phone or receiving a call on a mobile phone.

This paper provides an analysis of the competition and monopoly issues behind the CPP and MPP regimes and offers the tools to understand if regulation is needed under each of the two pricing frameworks and, if so, over what specific prices and under what conditions. To do so, one begins with an analysis of what competition means for mobile service. This continues with the distinction between an essential facility and a bottleneck and the application of these concepts to mobile service in order to understand more completely the reasons for the different pricing outcomes that result under CPP and MPP. The general theoretical framework of essential facilities, bottlenecks, and market power offers particular insight into the specific case of mobile termination rates. The paper also identifies regulatory interventions in selected jurisdictions aimed at the control of mobile termination charges and assesses those measures using the concepts of an essential facility and a monopoly bottleneck.

October 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Transgenic Seed Platforms: Competition Between a Rock and a Hard Place

Posted by D. Daniel Sokol

Diana Moss (AAI) reports on Transgenic Seed Platforms: Competition Between a Rock and a Hard Place.

ABSTRACT: With the widespread adoption by farmers of corn, cotton, and soybean seed containing transgenic
technology, the U.S. seed industry has changed rapidly in the past twenty years. The largest changes include the creation of strongholds of patented technology and the gradual elimination of the numerous regional independent seed companies through consolidation. Resulting increases in concentration in affected markets has been driven largely by the industry’s dominant firm, Monsanto.

A threshold question to consider is whether Monsanto has exercised its market power to foreclose rivals from market access, harming competition and thereby slowing the pace of innovation and adversely affecting prices, quality, and choice for farmers and consumers of seed products. If the answer to this question is yes, remedying the intractable competitive situation that prevails in the transgenic seed industry may require antitrust enforcement, legislative relief, or both. The problem highlights both the importance of competition policy and the security and diversity of a key agricultural sector.

Any antitrust inquiry into the transgenic seed industry should carefully consider the three markets in which Monsanto possesses market power (innovation, genetic traits, and traited seed) and conduct that potentially stifles competition. Such conduct includes licensing restrictions on rivals’ use of Monsanto traits and control of the distribution channel to create adverse incentives for seed companies and farmers to distribute or plant anything but Monsanto products. At the core of this analysis is the tension between patent law and antitrust law. Moreover, antitrust enforcement will require thoughtful approaches to remedy, particularly the goals of promoting competition between transgenic seed platforms versus easing access to Monsanto’s dominant platform.

October 29, 2009 | Permalink | Comments (1) | TrackBack (0)

China’s First Court Decision under the Antimonopoly Law: A Misreading of the Law?

Posted by Wentong Zheng

On October 23, 2009, the Shanghai No. 1 Intermediary People’s Court in China handed down a decision in what became China’s first case under the Antimonopoly Law (“AML”) decided by a court (see here for a press report of the case in Chinese and here for a summary of the case in English).   In its decision the Shanghai court rejected the plaintiff’s claim that the defendant abused its dominant position in China’s online literature market by taking inappropriate action aimed at enforcing its copyrights.

Because of its “firstness,” and also because of the importance of its subject matter—abuse of dominant position under the AML, this case has aroused quite some interest in the antitrust community.  Given the timing of this case, I thought I would interrupt the sequence of my planned blog entries on this space to offer my thoughts on it.  I will have more to say about China’s dominance law in general in a future post.

Unfortunately, people who are looking for guidance on the direction of China’s dominance law and think this case may offer some clues will likely be disappointed.  A close reading of the press report (the court decision itself is not available online yet) led me to believe that the plaintiff filed its claim, and the court adjudicated the plaintiff’s claim, both based on a misreading of the AML.  If my analysis below is correct, this case has no relevance to abuse of dominant position under the AML and the court should not have ruled on the AML aspects of the case at all.

First of all, here is what happened in the case.  The plaintiff is a web portal in China that specializes in publishing what is called “online literature” in China—fictions or non-fictions written by web surfers, often anonymously, that are published exclusively online.  The plaintiff commissioned and published a sequel to a popular online fiction that was first published on another online literature portal co-owned by the defendant (SNDA).  The defendant believed that the sequel infringed its copyrights in the original online fiction and asked the authors of the sequel to discontinue writing the sequel.  The authors of the sequel complied with the defendant’s request.  The defendant also requested other web portals in China not to publish the episodes of the sequel that were already written.  The plaintiff sued the defendant in court, alleging that it abused its dominant position in the online literature market by engaging in those conducts.

Now let’s look at what the AML has to say about abuse of dominant position (there is no official English translation of the AML and the translation below is my own).  Article 17 of Chapter 3 of the AML sets forth an exhaustive list of conducts that constitute abuse of dominant position and therefore are prohibited by the AML.  The prohibited conducts are: (1) selling products at unfairly high prices or buying products at unfairly low prices; (2) selling products at prices below costs without justifications; (3) refusal to deal with transaction counterparts without justifications; (4) restricting transaction counterparts to only deal with the undertaking or undertakings designated by the undertaking without justifications; (5) tying products or imposing other unreasonable conditions on the deal without justifications; (6) discriminatory treatment of equally situated transaction counterparts with respect to price or other transaction terms without justifications; and (7) other conducts that constitute abuse of dominant position as determined by the antimonopoly enforcement agency.  

According to the press report, it is Article 17(4) that the plaintiff argued the defendant violated. 

At trial the two sides had heated exchanges about how to define the relevant market and whether the defendant is a dominant player in the relevant market.  The court finally agreed with the defendant, holding that the plaintiff did not provide sufficient evidence that the defendant is a dominant player in China’s online literature market.  The court further held that, even assuming that the defendant is a dominant player, its conducts do not violate Article 17(4) because they are “justified.”

But the court did not address the most crucial issue: are the defendant’s conducts covered by Article 17(4)?  For people familiar with antitrust law, Article 17(4) apparently refers to what is known as “exclusive dealing” in the U.S. and EU.  So how could the defendant’s conducts be said to constitute exclusive dealing or anything remotely resembling exclusive dealing?  In my opinion, there is no way that the plaintiff could make that characterization.

So if my analysis is correct, the court should not have addressed the AML aspects of the case at all.  The defendant’s conducts do not fall within the scope of Article 17(4).  Nor do they fall within the scope of the other sections of Article 17.  If China had an equivalent of FRCP 12(b)(6), this case would be an ideal candidate to be dismissed for failure to state a claim upon which relief can be granted.  But since China does not have an equivalent of FRCP 12(b)(6), I understand that the court was obligated to take up the case.  But the court should have come out very clearly saying that this case has nothing to do with the AML and should have addressed the copyrights issue only.

But apparently both the plaintiff and the defendant—and the court—believe that this case is covered by the AML.  So could there be something else not reported by the press that makes the defendant’s conducts one of the prohibited conducts?  That is possible, but not very likely.  A more plausible explanation, at least to me, is that both parties and the court simply misread the AML.  As we know, the drafters of the AML heavily borrowed terms and concepts from the antitrust law of the U.S. and EU—“exclusive dealing” among one of them.  But the vast majority of the Chinese public—and perhaps a significant majority of lawyers and judges, too—are not familiar with the business contexts from which those borrowed terms and concepts arise.  Given the terseness of the AML text, they would have difficulties understanding what those terms and concepts really mean.  When an average person in China (lawyers and judges included) reads the AML and sees the words “restriction,” “transaction counterparts,” and “deal” juxtaposed against one another in the same sentence, it is tempting for him or her to misread the law by concluding that the sentence may somehow describe the complained conducts.

This case is not the first case in which this kind of misreading happened.  In September 2008, the Chinese press reported (see here for the report in Chinese) that shortly after the AML went into effect, a lawsuit was filed under the AML in the southwestern city of Chongqing against one of the major state-owned banks.  The plaintiff company had a checking account with the defendant bank, which charged an account management fee for any accounts with deposits less than a certain amount.  The plaintiff’s account was assessed the account management fee pursuant to the bank’s policy, but the plaintiff had refused to pay the fee because it believed the charge was unreasonable.  When the plaintiff tried to withdraw funds from the checking account using a cashier’s check, the bank refused to accept the check because of the nonpayment of the fee.  In the lawsuit, the plaintiff alleged that the bank abused its dominant position through its “refusal to deal” under Article 17(3) and “discriminatory treatment of equally situated transaction counterparts” under Article 17(6).  I believe that by now anyone familiar with antitrust law will have been amazed by the novel meanings the terms “refusal to deal” and “discriminatory treatment” have taken on in China.  But the court took the plaintiff’s arguments seriously, and accepted the case for official adjudication.  As of today, I have not seen any press reports that the court has reached a conclusion in that case.

This kind of misreading drives home the deep skepticism the drafters of the AML had towards enforcement of the AML by private actions through the courts.  As I recall, the earlier drafts of the AML used to contain one entire chapter devoted to private actions.  In the final draft, private right of action is still allowed but the provision granting it has been reduced to one single sentence, which by the way is ambiguous and conveniently hidden in a non-conspicuous place (Article 50: “Undertakings that are engaged in monopolistic conducts and cause damages to other parties assume civil liabilities in accordance with law.”  Unsuspecting eyes may not even recognize that Article 50 talks about private right of action).

Exit question: So far I have assumed that the terms and concepts used in the AML have the same meaning as their Western counterparts—e.g., “refusal to deal” in China has the same meaning as “refusal to deal” in the U.S. and EU.  But could the AML really mean something else when it uses those terms and concepts?  For example, could the drafters of the AML really have intended “refusal to deal” to capture the refusal by the Chongqing bank to deal with its customers?  I do not think that is the case.  But if it were, it would represent an enormous expansion of the reach of antitrust law.  Either way, the Supreme People’s Court had better come out with an interpretative ruling clearly detailing what types of conducts are prohibited under the abuse of dominant position provisions of the AML.  I bet all of us would want to know.


October 29, 2009 | Permalink | Comments (0) | TrackBack (0)

European State aid policy in search of a standard. What is the role of economic analysis?

Posted by D. Daniel Sokol

Alberto Heimler (Scuola superiore della pubblica amministrazione - Econ) asks, European State aid policy in search of a standard. What is the role of economic analysis?

ABSTRACT: In the early years of enforcement of antitrust and of State aid in Europe, given the integration objectives that the European Treaty pursues, fairness seemed the most natural standard to choose. In antitrust it took more than forty years to convince the Commission and the Courts of the soundness of the effect based approach. By enhancing the role of economic analysis, the objective of the 2005 State Aid Action Plan was to modernize State aid policy. Unfortunately the Commission did not go as far as suggesting that distortions of competition be noticeable before a State measure is declared incompatible. As a result, EU policy continues to be over extensive addressing cases where the distortions of competition are minimal. This is particularly the case for restructuring aid, where the effects of the aid on competition are hardly analyzed in the Commission decisions. In these cases the restoration of the healthiness of the firm is the final objective of the aid. However the Commission, while often authorizing the aid, tries to overcome moral hazard by attaching a number of very intrusive conditions to its authorization decisions (prohibition of reducing prices before a competitor does, introduction of capacity or sales caps, etc). These conditions reduce, not increase, the possibility of these companies to successfully restructure. Moral hazard can only be eliminated by not allowing the aid, not by constraining the company from competing. Finally when the anticompetitive effect of the aid is only indirect, restitution of the aid requires a very difficult calculation of the added value of the aid on the market equilibrium. A very complex calculation to be performed and hardly capable of being established by a Court. A new and different criterion should be devised for sanctioning indirect aid.

Download Fordham State aid september 09 post

October 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 28, 2009

GCR 2010 Antitrust Review of the Americas

Posted by D. Daniel Sokol

The Antitrust Review of the Americas 2010

October 28, 2009 | Permalink | Comments (0) | TrackBack (0)

"Lost in Translation": Towards a Theory of Economic Transplants

Posted by D. Daniel Sokol

Ioannis Lianos (UCL Law) has an interesting new piece called "Lost in Translation": Towards a Theory of Economic Transplants.

ABSTRACT: The rise of economics as one of the main (some will advance the most important) “source” of competition law discourse is well documented. This study focuses on a facet of the integration of economic analysis in competition law: "economic transplants". The term “economic transplants” refers to specific economic concepts that were incorporated into the legal discourse by an act of “translation”. They represent the ultimate degree of interaction between the legal and the economic systems. Using a paradigmatic approach the study examines their specific characteristics and what distinguishes them from other forms of integration of economic analysis in competition law. It critically assesses their role and their impact on the legal and the economic discourses. The study concludes that the “paradigm” of translation constitutes the most appropriate explanatory framework for taking into account the dual nature of economic transplants and, more broadly, for conceptualizing the interaction of law with other social sciences. It should be distinguished from the existing methodologies of interaction between the disciplines of law and economics, such as the concept of “economic law” and the law and economics approach.

October 28, 2009 | Permalink | Comments (0) | TrackBack (0)

linkLine's Institutional Suspicions

Posted by D. Daniel Sokol

Dan Crane (Michigan Law) has a nice piece on linkLine's Institutional Suspicions.

ABSTRACT: The Supreme Court's recent decision in Pacific Bell v. linkLine, rejecting antitrust liability for price squeezes by integrated dominant firms, is the latest in a line of cases in which the two schools of antitrust thinking represented on the Court - the Chicago and Harvard Schools - have lined up in rejecting liability in large part due to deep suspicion about the institutional players in the antitrust system. Both schools distrust juries, generalist trial judges, plaintiff's lawyers, and the systemic effects of treble damages. Although the two schools diverge in their attitude toward other institutions - the Chicago School distrusts regulators which the Harvard School trusts and the Harvard School distrusts markets which the Chicago School trusts - in most cases the two schools combine to produce unanimous or nearly unanimous wins for defendants. Proponents of enhanced antitrust enforcement who chafe at antitrust defendants’ 15-0 run in the Supreme Court are unlikely to see different results until they seriously engage the institutionalist concerns that motivate the Court.

October 28, 2009 | Permalink | Comments (0) | TrackBack (0)

The significance of economic evidence in competition cases

Posted by D. Daniel Sokol

Peter Freeman (Competition Commission) explains The significance of economic evidence in competition cases.


October 28, 2009 | Permalink | Comments (0) | TrackBack (0)

Squeezing Price Squeeze Under EC Antitrust Law

Posted by D. Daniel Sokol

Gianluca Faella, Cleary Gottlieb Steen & Hamilton, Luiss Guido Carli University and Roberto Pardolesi, Libera Università degli Studi Sociali (LUISS) Guido Carli explain Squeezing Price Squeeze Under EC Antitrust Law.

ABSTRACT: Price squeeze abuses lie at the crossroad between different forms of potentially anticompetitive conduct, as well as between antitrust law and regulation. The main question that has arisen in the academic debate and actual practice is whether a combination of a lawful wholesale price and a non-predatory retail price can be characterized as exclusionary conduct based on the analysis of the margin between the two prices. In the paper, we argue that there is no need for a separate price squeeze theory under antitrust law. Assuming that the costs of supplying an input to rivals and to internal downstream divisions do not differ, a price squeeze capable of excluding equally efficient competitors may arise only from upstream discrimination (discriminatory price squeeze) or downstream predation (predatory price squeeze). However, when the downstream division of the dominant firm is not a separate legal entity, distinguishing discriminatory and predatory price squeezes may turn out to be impossible, as internal transfer charges are absent in many concrete settings of vertical integration. In these cases, an analytical framework for the assessment of price squeeze cases can be useful, provided that it is intended as an operational tool aimed at detecting anticompetitive conduct of a discriminatory or predatory nature, which is not directly observable. Instead of mimicking regulatory tools and criteria, the analytical framework for the assessment of price squeeze cases should be construed in accordance with basic principles of competition law and traditional doctrines of antitrust liability. This approach strongly supports the application of principles on refusal to deal to price squeeze cases and the use of the equally efficient competitor test to ascertain whether a given pricing policy is anticompetitive.

October 28, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 27, 2009

Merger Guidelines Online Symposium

Posted by D. Daniel Sokol

You can get links to the entire online Truth on the Market Merger Guidelines Symposium here.

October 27, 2009 | Permalink | Comments (0) | TrackBack (0)

Convergence and Canada's New Merger Control Law

Posted by D. Daniel Sokol

Steve Szentesi (IP & Competition Law Canada) explains Convergence and Canada's New Merger Control Law.

ABSTRACT: As a result of sweeping amendments to the Act earlier this year, significant changes were made to Canada’s merger control regime which now means that Canada’s law is more closely aligned with the merger notification process in the U.S. under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”). This paper discusses Canada’s prior merger control regime, the recent amendments, areas of convergence with other major jurisdictions and some of the key impacts for domestic and international companies as a result of the changes.

Download Canada convergence

October 27, 2009 | Permalink | Comments (0) | TrackBack (0)

Monopoly Broth Makes Bad Soup

Posted by D. Daniel Sokol

Not surprising from a law professor who lives in the same town as foodie mecca Zingerman's, Dan Crane (Michigan - Law) explains that Monopoly Broth Makes Bad Soup.  Personally, I am a fan of chicken stock.  Above cost pricing does not taste the same and lacks that wow factor in soup.

ABSTRACT: There is an oft-repeated maxim that a monopolist’s conduct must be examined in its totality since it is “the mix of various ingredients... in a monopoly broth that produces the unsavory flavor.” This maxim is subject to use and abuse. In this symposium essay, I propose three principles for a correct normative understanding of the “monopoly broth” maxim. First, independently lawful conduct - such as above-cost pricing, refusals to deal, or functionality-enhancing product innovations - should never be added to a “broth” to create liability. Second, where the legality of certain conduct - particularly exclusive dealing, tying, and similar conduct - turns on the degree of market foreclosure, aggregating the defendant’s various exclusive-dealing-like practices is necessary to determine legality. Finally, where the defendant commits independently unlawful acts “such as torts, crimes, breaches of contract, or regulatory violations” that purportedly serve to monopolize the market, the conduct should only be combined in a “broth” for litigation purposes if the plaintiff offers a robust explanation of the synergistic effects of the disparate forms of bad behavior.

October 27, 2009 | Permalink | Comments (0) | TrackBack (0)

Service Quality and Competition in the U.S. Down-hill Ski Industry

Posted by D. Daniel Sokol

James G. Mulligan (Economics,University of Delaware) offers some thoughts on Service Quality and Competition in the U.S. Down-hill Ski Industry.

ABSTRACT: This paper illustrates the importance of the role of land constraints in a model explaining the effect of real income and transportation cost on long-run lift-ticket prices and lift capacity in a competitive two-sector ski industry. The model also explains large endogenous increases in lift capacity and real prices over time in response to an increase in real skier income despite a static number of skier-days per year. This approach, thus, has points in common with work by Shaked and Sutton (1986 and 1987), Sutton (1991 and 1998) on endogenous vertical differentiation and persistent market concentration.

October 27, 2009 | Permalink | Comments (0) | TrackBack (0)