Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, November 7, 2009

European Competition Network report on leniency convergence

Posted by D. Daniel Sokol

Available here.

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

Second Annual FTC-Northwestern University Microeconomics Conference

Posted by D. Daniel Sokol

The Federal Trade Commission and Northwestern University will host the Second Annual FTC-NU Microeconomics Conference on November 19 and 20, in Washington, D.C. The two-day conference, to be held at the FTC Conference Center, will bring together scholars working in industrial organization, information economics, game theory, quantitative marketing, consumer behavior, and other areas related to the FTC’s antitrust and consumer policy missions. The conference will feature panel sessions on the mortgage industry and innovation as well as paper sessions on consumer choice, advertising, competition, and empirical industrial organization. For more information, please visit the conference website at:

To register, please email the following information to
- First Name
- Last Name
- Affiliation
- Email address
- (Optional) Preferred Name (i.e. Joe instead of Joseph)

The conference is sponsored by the FTC Bureau of Economics, the Northwestern University Searle Center on Law, Regulation and Economics Growth, and the Northwestern University Center for the Study of Industrial Organization.

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

Friday, November 6, 2009

Temporary Wholesale Gasoline Price Spikes Have Long‐Lasting Retail Effects: The Aftermath of Hurricane Rita

Posted by D. Daniel Sokol

Matthew Lewis (Ohio State - Econ) explains Temporary Wholesale Gasoline Price Spikes Have Long‐Lasting Retail Effects: The Aftermath of Hurricane Rita.

ABSTRACT: I study U.S. gasoline prices following Hurricane Rita to show that short‐lived geographical differences in the severity of wholesale gasoline price spikes are associated with long‐lasting geographical differences in retail prices. In most U.S. cities, wholesale prices spiked significantly for roughly 2 weeks following the hurricane. However, in cities where this spike was particularly large, retail margins remained higher than in other cities for nearly 2 months. High retail margins dissipated more quickly after the hurricane in cities where competition between stations tends to generate cyclical retail price fluctuations independent of wholesale cost movements. I discuss why prices may have fallen faster in cities exhibiting retail price cycles and present additional results identifying differences in market characteristics between cities with and without price cycles. I find that cycling cities tend to have higher population density and have independent (nonrefinery brand) stations that are more highly concentrated into large retail chains.

November 6, 2009 | Permalink | Comments (1) | TrackBack (0)

Call for Papers - The Next Generation of Antitrust Scholarship Conference NYU School of Law, January 29, 2010

Posted by D. Daniel Sokol

Call for Papers

The Next Generation of Antitrust Scholarship Conference
NYU School of Law
January 29, 2010
Co-sponsored by NYU School of Law, American Association of Law Schools – Antitrust and Trade Regulation Section and the American Bar Association – Antitrust Section

Conference Co-organizers
Harry First – NYU School of Law
Ilene Knable Gotts – Wachtell, Lipton, Rosen & Katz
Edward Cavanaugh – St. John’s School of Law
D. Daniel Sokol – University of Florida Law Levin College of Law

This conference is the first ever conference for the Next Generation of Antitrust Scholars.  Much has changed in both the law and economic theory of antitrust in the past 30 years.  The purpose of this event is to convene a conference of the next generation of antitrust law professors (people who started their teaching career in or after 2000) and provide them an opportunity to present their latest research.  Senior antitrust scholars and practitioners in the field will comment on the papers. 

Submissions are open to professors around the world.  Papers will be accepted based upon the highest scores given to the 1,000-2,000 word abstract or full article submitted. Speakers who are accepted by an abstract must have a completed draft of the paper ready two weeks before the conference.

The conference organizers will not pay for any expenses for speakers or discussants.  Refreshments at the conference, however, will be provided free of charge.

Please send abstracts of papers or completed drafts to  Please email any questions about the conference to

The deadline for submissions is November 20, 2009.  Participants will be notified by November 30, 2009.

November 6 UPDATE: A number of people have asked - is this limited to law professors or can economics professors also submit papers.  The answer is this is antitrust - economists are not just welcomed but encouraged.

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

Vertical Agreements and Competition Law - A Comparative Study of the EU and US Regimes

Posted by D. Daniel Sokol

Sandra Marco Colino (Glascow - Law) provides a comparative perspective of the important issue of vertical restraints with her book Vertical Agreements and Competition Law - A Comparative Study of the EU and US Regimes.

BOOK ABSTRACT: This book focuses on the current legal framework for vertical agreements in the EC and the US. Over the last ten years, antitrust rules governing these agreements have undergone thorough reform. In the EC, the old sector-specific block exemptions were replaced by Regulation 2790/99, applicable to all sectors of the economy. In addition, changes introduced to the procedural rules have led to the decentralisation of Article 81(3) and the removal of the notification requirement. In like manner, in the US the Supreme Court has gradually taken vertical restraints out of the per se illegality rule. What Sylvania achieved in placing non-price vertical restraints under the rule of reason in the late 1970s, the Khan judgment did for maximum resale price maintenance in 1997, whilst most recently and most significantly in 2007 the Leegin case followed suit for minimum resale price maintenance.

The book is divided into four chapters. The first chapter considers the 'double nature' of vertical agreements and the regulatory dilemma. The second chapter explores the most influential economic theories underpinning current regulatory frameworks, and how these theories shape antitrust policy. The third chapter questions the adequacy of the current economic analysis in recent EU and US legislation and court decisions. The fourth chapter analyses how this maturing economic analysis can be reconciled with what commentators and regulators have identified as a key role for competition policy, redressing assumed imbalances between dealers and manufacturers. The author concludes by querying the prevailing logic of protecting sectoral interests above the competitive process.

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

Article 82 EC - Reflections on its Recent Evolution

Posted by D. Daniel Sokol

Ariel Ezarchi (Oxford - Law) has edited an important collection on Article 82 EC - Reflections on its Recent Evolution.

BOOK ABSTRACT: The landscape of European competition law has seen significant changes in the past decade, both in terms of enforcement and substantive application. One of the last frontiers to be subjected to scrutiny has been Article 82. In recent years the European Commission has pushed forward the debate on the nature and scope of Article 82. Of major significance to this debate were the Commission’s Consultation Paper on an economic approach to Article 82, the Discussion Paper on the application of Article 82 to exclusionary abuses, and the Commission’s recent Guidance on its enforcement priorities in applying Article 82.

The debate over the realm of Article 82 EC has raised important questions as to its past and present application. This collection of essays by international experts explores the changing boundaries of Article 82 EC and considers its recent evolution. The chapters cover a range of subjects, including the legal and economic implications of an effects based approach to Article 82 EC, the recent Commission Guidance on Article 82 EC, the interface between intellectual property rights and competition law, licensing, tying, excessive pricing, and the protection of the consumer interest.

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

Thursday, November 5, 2009

Going Once, Going Twice, Reported! Cartel Activity and the Effectiveness of Leniency Programs in Experimental Auctions

Posted by D. Daniel Sokol

Jeroen Hinloopen, University of Amsterdam, Tinbergen Institute and Sander Onderstal, University of Amsterdam, Tinbergen Institute explain Going Once, Going Twice, Reported! Cartel Activity and the Effectiveness of Leniency Programs in Experimental Auctions.

ABSTRACT: We experimentally examine the effectiveness of a leniency program against bidding rings in two commonly used auctions: the English auction (EN) and the first-price sealed-bid auction (FPSB). Our results show that the leniency program does not affect the average winning bid, nor the average winning cartel bid. The program does deter cartel formation, but it makes cartels that do form more stable: subjects use the possibility to report the cartel as an additional stick to control cartel members. In fact, cartel defection is the sole reason for designated and non-designated winners to report the cartel. The results do not differ substantially across auction types although the deterrence effect of the leniency program is stronger in EN than in FPSB. At the same time we observe more defection from the cartel agreement in FPSB than in EN.

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

Tacit Collusion in Auctions and Conditions for its Facilitation and Prevention: Equilibrium Selection in Laboratory Experimental Markets

Posted by D. Daniel Sokol

Jin Li, Northwestern University - Department of Management & Strategy and Charles R. Plott, California Institute of Technology - Division of the Humanities and Social Sciences explain Tacit Collusion in Auctions and Conditions for its Facilitation and Prevention: Equilibrium Selection in Laboratory Experimental Markets.

ABSTRACT: The paper studies bidder behavior in simultaneous, continuous, ascending price auctions. We design and implement a “collusion incubator” environment based on a type of public, symmetrically “folded” and “item-aligned” preferences. Tacit collusion develops quickly and reliably within the environment. Once tacit collusion developed, it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game-theoretic model. The only successful remedy was a non-public change in the preference of participants that destroyed the symmetrically, “folded” and “item aligned” patterns of preferences, creating head-to-head competition between two agents reminiscent of the concept of a “maverick.”

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

The Increased Level of EU Antitrust Fines, Judicial Review, and the European Convention on Human Rights

Posted by D. Daniel Sokol

Wouter Wils (Legal Service of the European Commission, King's College London) has a new paper on The Increased Level of EU Antitrust Fines, Judicial Review, and the European Convention on Human Rights.

ABSTRACT: Some lawyers and businesses have claimed that, because of an increase in the level of antitrust fines imposed by the European Commission in recent years, these fines have become criminal in nature, and that the current institutional and procedural framework in which fines are imposed by the European Commission, with subsequent judicial review by the EU Courts, is no longer compatible with the European Convention on Human Rights. This paper critically examines those claims. The main point to be retained is that the case-law of the European Court of Human Rights distinguishes between, on the one hand, the hard core of criminal law, and, on the other hand, cases which are "criminal" within the autonomous meaning of the European Convention on Human Rights but which do not belong to the hard core of criminal law. Irrespective of any increase in their level, the antitrust fines imposed by the European Commission only belong to the second, broader category of criminal penalties, and the European Court of Human Rights has consistently held that it is compatible with the European Convention on Human Rights for such penalties to be imposed, in the first instance, by an administrative or non-judicial body such as the European Commission.

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

Google: The Benign Monopolist?

Posted by D. Daniel Sokol

Ian Forrester (White & Case) asks, Google: The Benign Monopolist?

ABSTRACT: If we are not abolishing copyright law, the proposed project raises several concerns. Some may say that copyright laws are too slow and do not adapt to developments in technology, the demands of teenagers, and the promises of novel technology. True, from the beginning of the twentieth century, content providers have fretted over the encroachment on their interests by new technology. Movie makers and artists worry that peer-to-peer sharing takes a lot of money away from the artists, and the music industry estimates that there has been an immense loss to due to unauthorized reproduction.

On the other hand, the success of the Apple iPod and YouTube prove that new techniques can make music and movies more easily accessible, can increase demand, and can bring extra revenues to the creators or extra levels of audience awareness. There is no obviously correct answer. I am content to observe that opinions are sharply divided, both as to music and moving images. However, creating an equivalent to You Tube for the book industry is a bit startling. One author might be pleased that five thousand enthusiasts had studied his work on-line whereas another author might prefer to see fifty works sold in hard copy: it is easy to understand the two points of view.

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

A Prescription for Change: How the Medicare Act Revises Hatch-Waxman to Speed Market Entry of Generic Drugs

Posted by D. Daniel Sokol

Stephanie M. Greene, Boston College - Wallace E. Carroll School of Management explains A Prescription for Change: How the Medicare Act Revises Hatch-Waxman to Speed Market Entry of Generic Drugs.

ABSTRACT: The author reviews the pharmaceutical industry's patenting process as it has been impacted by the Hatch-Waxman and Medicare legislation which expedite review and approval for generic follow-on drugs. The pharmaceutical industry's business model of investment in research and development to create and patent innovations in drug therapies, has proven to be successful. Evidence suggests however, that the industry overreached in prolonging the life of its drug patents to the detriment of competitors and consumers. The legislative efforts which substantially increased the availability of generics caused pharmaceutical companies to reconsider their processes as well. This article considers ways to incent innovation while benefiting the public from these innovations. The complex regulatory scheme highlights the fact that unexpected problems occur which may necessitate further legislative amendments that will provide guidance for courts where there is need for further interpretation.

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

Network-Based Governance in EC Law - The Example of EC Competition and EC Communications Law

Posted by D. Daniel Sokol

Maartje de Visser (Tilburg Law) explains Network-Based Governance in EC Law - The Example of EC Competition and EC Communications Law.

BOOK ABSTRACT: To strengthen the credibility of the EU and its policies, the European Community is increasingly concerned to emphasise effective enforcement of EC law. This book engages in the debate on the better application of European law by offering an integrated analysis of a new institutional arrangement - one that relies on networks grouping the Commission and national administrative authorities. Taking the traditional enforcement paradigms of decentralisation, centralisation and agency-based enforcement as starting points, their benefits and downsides are described and critiqued, and the author concludes that there is considerable room for improvement.

The book then undertakes a comprehensive analysis of the network model to determine its core characteristics and assess its effectiveness. European competition law and electronic communications law are used as case studies because, inter alia, the networks there have developed an adequate level of sophistication. The book also employs a bottom-up approach, considering how four key Member States (France, Germany, the Netherlands and the United Kingdom) have given effect to the relevant European rules. At the core of the book is a critique of the wider normative attractiveness of the network model. The discussion is kaleidoscopic, engaging with a wide variety of notions including legitimacy, judicial review, subsidiarity, institutional balance and efficiency. The thrust of the book is that network-based governance deserves careful consideration as the model that is able to mediate the competing concerns of coherence for Internal Market reasons, and of diversity and respect for local autonomy.

This book is useful for EC competition law and communications law practitioners, and those with a keen interest in institutional and administrative law.

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

Wednesday, November 4, 2009

The Proposed Google Book Settlement: Assessing the Exclusionary Effects

Posted by D. Daniel Sokol

Tim Brennan (U Maryland - Baltimore, Econ) explains The Proposed Google Book Settlement: Assessing the Exclusionary Effects.

ABSTRACT: Google’s actions in this matter, and perhaps others (e.g., interlocking directorates), are taking place against a backdrop of the promise from the Obama administration’s antitrust authorities to give single-firm conduct the attention they believe it deserved but did not get during the prior administration. The leading indicator of this changed attitude is Antitrust Division’s decision to withdraw, as too lax, the Department of Justice’s report on how to assess the competitive effects of single-firm conduct.

If that was not enough, the Google Books matter also brings to mind the increasing importance in an information-based economy of intellectual property—in this case copyright—and the tension many perceive between the exclusivity of IP and the openness of competition. Closely related to that point is the substitution of digital content delivery for traditional hard-copy based methods; a development affecting not just books but audio recordings, newspapers, and films.

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

NY files antitrust suit against Intel

Posted by D. Daniel Sokol

Do you ever feel like Intel is besieged?  Suits in the US (private), Japan, Korea, European Union and now another US suit (state level) by NY.  Is the FTC next?

I will have a forthcoming working paper on the multiple levels of institutional governance in antitrust and I explore the role of how these different types of governance affect antitrust. 

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

A Debate on American Needle v. NFL

Posted by D. Daniel Sokol

November 4, 2009

Roundtable Discussion

A Debate on American Needle v. NFL

Speaker: Dean Gary R. Roberts and Professor Max Huffman, Professor Antony Page will moderate
Time: 6:00 p.m.
Location: Wynne Courtroom
Contact: Shaun Ingram at

The debate will center on the issues surrounding the American Needle case in the U.S. Supreme Court involving whether professional sports leagues are single firms or a collection of competitors for antitrust purposes. This program, which takes place in the Wynne Courtroom, will carry one hour of CLE credit (pending approval).

In American Needle v. NFL, the plaintiff, a licensee of intellectual property for purposes of producing hats with team logos, sued the league when its license was terminated. The league had chosen to grant an exclusive license to Reebok after Reebok won a competitive bid. American Needle's claim asserted a conspiracy among the individual NFL teams to restrain trade in violation of Section One of the Sherman Act. If it proved its claim, American Needle stood to win three times the harm it suffered, in addition to costs and attorney fees. American Needle lost on the ground that the NFL was a single entity, unable to conspire with itself. Any agreement among the teams was "intra-enterprise," and did not rise to the level of the "contract, combination or conspiracy" that Section One requires. The rule in American Needle is an extension of the Supreme Court's holding in Copperweld that a parent and a subsidiary corporation, because of their unity of purpose, cannot be held to have conspired in violation of Section One. The result of the holdings in cases like Copperweld and American Needle is to immunize conduct from the antitrust laws.

The Supreme Court has granted certiorari in American Needle and will hear the case in December or January. An opinion can be expected no later than June. We are holding a debate, with Dean Gary Roberts taking the position that the Seventh Circuit was correct to treat the NFL as a single entity; Professor Max Huffman taking the position that the Seventh Circuit erred; and Professor Antony Page moderating.

November 4, 2009 | Permalink | Comments (1) | TrackBack (0)

European State Aid Law - A Handbook

Posted by D. Daniel Sokol

Martin Heidenhain (Hengler) provides a useful overview of European State Aid Law - A Handbook.

BOOK ABSTRACT: The handbook is a completely revised and updated version of the "Handbuch des Europäischen Beihilferechts", first published in German in 2003. The handbook is of general interest to competition lawyers and is not specifically concerned with German law or legal practice.

European State Aid Law has gained considerably in importance over the last decade. The number of proceedings before the Commission has escalated and the European Courts are increasingly involved with disputes concerning state aid. This handbook endeavours to provide practical guidance in State Aid cases. It fully incorporates the EU Commission State Aid Action Plan ('Less and better targeted state aid: a roadmap for state aid reform 2005-2009'), published mid 2008, and the new version of the General Block Exemption Regulation.

The main topics are covered are:
Basic principles
Elements of state aid
Compatibility of state aid with the Common Market according to Art. 87 Sec.2 and Sec.3 ECT
Block Exemption Regulations
Public enterprises
Commission proceedings according to Council Reg. (EC) No. 659/ 1999
Proceedings before the European Courts

To meet the needs of practitioners in Europe and beyond, the handbook also covers state aid concerning venture capital, agriculture and steel.

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

Tuesday, November 3, 2009

ABA Antitrust Section Janet Steiger Fellowship Opportunity for Summer 2010

Posted by D. Daniel Sokol

The ABA Antitrust Section Janet D. Steiger Fellowship is available again for up to 20 first and second year law students throughout the United States . The fellowship program, named the Janet D. Steiger Fellowship Project, honors the memory of the late Chairman of the Federal Trade Commission. Each of the 20 selected students will serve for a minimum of eight weeks in the consumer protection department of one of the participating State Attorneys General[1] during the summer of 2010:

Anchorage, Alaska
Little Rock, Arkansas
California (Los Angeles or San Francisco )
Wilmington, Delaware
Jacksonville, Florida
Atlanta, Georgia
Des Moines, Iowa
Topeka, Kansas
Baltimore, Maryland
Helena, Montana
Las Vegas, Nevada
Concord, New Hampshire
Santa Fe, New Mexico
New York, New York
Columbus, Ohio
Harrisburg, Pennsylvania
Austin, Texas
Richmond, Virginia
Washington (Seattle, Spokane or Tacoma)
Charleston, West Virginia

Each selected student will receive a $5,000 stipend for the summer (administered through the offices of the state attorneys general and subject to certain federal taxes). The program also offers a supplemental housing/travel allowance of up to $2,000 for those students who are not living at home for the summer (administered through the American Bar Association). This supplemental allowance will not be considered until after Fellows have been selected The application period is (November 15, 2009 until February 5, 2010). Applications will not be accepted beyond the February 5, 2010 deadline date. Students must submit: (1) the application form; (2) resume; (3) writing sample; (4) statement of interest; and (5) copy of unofficial transcript. The application form is available at

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

Competition in two-sided markets with common network externalities

Posted by D. Daniel Sokol

David Bardey (University of Rosario), Helmuth Cremer (Toulouse School of Economics), and Jean-Marie Lozachmeur (School of Economics IDEI and GREMAQ-CNRS) explain Competition in two-sided markets with common network externalities.

ABSTRACT: We study competition in two sided markets with common network externality rather than with the standard inter-group effects. This type of externality occurs when both groups benefi…t, possibly with different intensities, from an increase in the size of one group and from a decrease in the size of the other. We explain why common externality is relevant for the health and education sectors. We focus on the symmetric equilibrium and show that when the externality itself satisfi…es an homogeneity condition then platforms’ pro…ts and price structure have some speci…c properties. Our results reveal how the rents coming from network externalities are shifted by platforms from one side to other, according to the homogeneity degree. In the specifi…c but realistic case where the common network externality is homogeneous of degree zero, platform’s pro…t do not depend on the intensity of the (common) network externality. This is in sharp contrast to conventional results stating that the presence of network externalities in a two-sided market structure increases the intensity of competition when the externality is positive (and decreases it when the externality is negative). Prices are affected but in such a way that platforms only transfer rents from consumers to providers.

November 3, 2009 | Permalink | Comments (2) | TrackBack (0)

Equal Strength or Dominant Teams: Policy Analysis of NFL

Posted by D. Daniel Sokol

Burhan Biner (Minnesota - Econ) analyzes Equal Strength or Dominant Teams: Policy Analysis of NFL.

ABSTRACT: In North America, professional sports leagues operate mostly as cartels. They employ certain policies such as revenue sharing, salary caps to ensure that teams get high revenues and players get high wages. There are two major hypotheses regarding the talent distribution among the teams that would maximize the total revenues, dominant teams rule and equal strength team rule. This paper examines the revenue structure of National Football League and proposes policy recommendations regarding talent distribution among the teams. By using a unique, rich data set on game day stadium attendance and TV ratings I am able to measure the total demand as a function of involved teams’ talent levels. Reduced form regression results indicates that TV viewers are more interested in close games, on the other hand stadium attendees are more interested in home teams’ dominance. In order to identify the true effects of possible policy experiments, I estimate the parameters of the demand for TV as functions of team talent , fixed team and market variables by using partial linear model described as in Yatchew (1998) which uses non-parametric and difference-based estimators. I then estimate the demand for stadium attendance using random coefficients model by using normative priors for the 32 cities that hosts the teams. Estimated demand for TV ratings and stadium attendance corroborates the findings of reduced form regressions, stadium demand and TV demand working against each other. We therefore propose a “somewhat” equal strength team policy where big market teams has a slight advantage over the others. Total revenues of the league is maximized under such a policy.

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

Software Innovation and the Open Source threat

Posted by D. Daniel Sokol

German Lambardi (Toulouse School of Economics) has an interesting paper on Software Innovation and the Open Source threat.

ABSTRACT: In this paper I study how innovation investment in a software duopoly is affected by the fact that one of the firms is, or might become Open Source. Firms can either be proprietary source (PS) or open source (OS) and have different initial technological levels. An OS firm is a for profit organization whose basic software is OS and it is distributed for free. The OS firm, however, is able to make profits from selling complementary software and, on the cost side, it receives development help from a community of users. I first compare a duopoly composed by two PS firms with a mixed duopoly of a PS and OS firm and I find that a PS duopoly might generate more innovation than a mixed duopoly if the initial technological gap between firms is small. However if this gap is large, a PS duopoly generates less innovation than a mixed duopoly. I then extend the setting to allow PS firms to switch to OS or to remain PS. A PS firm want! s to become OS if it gets behind enough in the technological race against a competitor. I find that the outside option to become OS might soften competition on innovation since the technological leader prefers to reduce his innovation investment to avoid the OS switch of the follower. Therefore, although the switch to OS could generate higher investment levels ex-post it might generate lower investment ex-ante. In this context I find that a government subsidy to OS firms could be potentially harmful for innovation.

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