Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, December 5, 2009

Profile on antitrust law scholar Maurice Stucke

Posted by D. Daniel Sokol

The University of Tennessee Law School Magazine has an interesting profile on Maurice Stucke in its latest issue.  Included are pictures from Maurice during law school and discussion of how he worked at Bloomingdales in women's fashion.  Maurice Stucke - failed fashionisto.  Yes, there is discussion of his antitrust work as well.

December 5, 2009 | Permalink | Comments (1) | TrackBack (0)

Price distributions and competition

Posted by D. Daniel Sokol

Ken Burdett (Penn - Econ) and Eric Smith (Federal Reserve Bank of Atlanta) explain Price distributions and competition.

ABSTRACT: Considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods. This paper adopts a simple, flexible equilibrium model of search to investigate the way the market structure influences price dispersion. Using the noisy search approach, the paper demonstrates the effects of having a single large, price-leading firm with multiple outlets and a competitive fringe of small firms with one retail outlet each.

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

Friday, December 4, 2009

Microsoft and the Limits of Antitrust

Posted by D. Daniel Sokol

Page_big My colleague Bill Page has posted a very interesting article on Microsoft and the Limits of Antitrust.  Highly recommended!

ABSTRACT: Frank Easterbrook’s 1984 article, The Limits of Antitrust, did not focus on public antitrust enforcement. Nevertheless, it expressed the kind of antitrust thinking that led the Antitrust Division of the U.S. Department of Justice, around that same time, to shift its resources to cartel prosecutions and away from big monopolization cases. The Microsoft case, filed in 1998, broke this pattern. I argue that the Division made this exception, and ultimately achieved a partial victory in the courts, because the relatively new economic theory of network effects seemed to make the filters Easterbrook proposed in 1984 less applicable in high technology markets like the ones in which Microsoft competed. In this essay, I return to Easterbrook’s filters and consider whether they offer a different perspective on the Division’s decision to sue and the courts’ eventual resolution of the case.

   

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

Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence

Posted by D. Daniel Sokol

Joseph A. Clougherty, Wissenschaftszentrum Berlin (WZB), University of Illinois at Urbana-Champaign has an interesting paper on Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence.

ABSTRACT: Motivated by the general lack of empirical scholarship concerning the cross-national environment for competition policy, I present measures here of the overall resources dedicated to competition policy and the merger policy work-load for thirty-two antitrust jurisdictions over the 1992-2007 period. The data allow analysing a number of perceived trends in competition policy over the last two decades, and allow the generation of some factual insights concerning these trends: e.g., the budgetary commitment to competition policy in the cross-national environment for antitrust has substantially increased over this period; budgetary increases appear to be commensurate with increased antitrust workloads; yet, the role of economics does not appear to have substantially increased relative to the role of law. Moreover, I am also able to provide some evidence that budgetary commitments to antitrust institutions yield economic benefits in terms of improved economic growth: i.e., higher budgetary commitments to competition policy are associated with higher levels per-capita GDP growth.

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

Regulating Two-Sided Markets: An Empirical Investigation

Posted by D. Daniel Sokol

Santiago Carbo Valverde, Universidad de Granada, Sujit Chakravorti, Federal Reserve Bank of Chicago - Research Department, and Francisco Rodriguez Fernandez, Universidad de Granada undertake Regulating Two-Sided Markets: An Empirical Investigation.

ABSTRACT: We study the effect of government encouraged or mandated interchange fee ceilings on consumer and merchant adoption and usage of payment cards in an economy where card acceptance is far from complete. We believe that we are the first to use bank-level data to study the impact of interchange fee regulation. We find that consumer and merchant welfare improved because of increased consumer and merchant adoption leading to greater usage of payment cards. We also find that bank revenues increased when interchange fees were reduced although these results are critically dependent on merchant acceptance being far from complete at the beginning and during the implementation of interchange fee ceilings. In addition, there is most likely a threshold interchange fee below which social welfare decreases although our data currently does not allow us to quantify it.


 

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

Thursday, December 3, 2009

Horizontal Merger Guidelines Review Project's First Workshop

Posted by D. Daniel Sokol

Varney's talk on Horizontal Merger Guidelines Review Project's First Workshop is up.

December 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, Bogota) Helmuth Cremer (Tolouse - Econ (GREMAQ-CNRS)) and Jean-Marie Lozachmeur (Tolouse - Econ (GREMAQ-CNRS)) address 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 e¤ects. 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 profi…ts and price structure have some specific 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 speci…c but realistic case where the common network externality is homogeneous of degree zero, platforms 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.

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

Asymmetric price effects of competition

Posted by D. Daniel Sokol

Saul Lach (The Hebrew University) Jose L. Moraga (University of Groningen) analyze Asymmetric price effects of competition.

ABSTRACT: This paper examines how the distribution of prices changes with the number of competitors in the market. Using gasoline price data from the Netherlands we find that as competition increases, the distribution of prices spreads out: the low prices go down while the high prices go up, on average. As a result, competition has an asymmetric effect on prices. These findings, which are consistent with a theoretical model where consumers differ in the information they have about prices, imply that consumers' gains from competition depend on their shopping behavior. In our data, all consumers, irrespective of the number of prices they observe, benefit from an increase in the number of gas stations. The magnitude of the welfare gain, however, is greater for those consumers that are aware of more prices. We conclude that an increase in the number of gas stations has a positive but unequal effect on the welfare of consumers in the Netherlands.

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

On Pricing and Vertical Organization of Differentiated Products

Posted by D. Daniel Sokol

Guanming Shi (Wisconsin - Agricultural and Applied Economics) Jean-Paul Chavas (Wisconsin - Agricultural and Applied Economics) have thoughts On Pricing and Vertical Organization of Differentiated Products.

ABSTRACT: This paper investigates the pricing and vertical organization of differentiated products under imperfect competition. In a multiproduct context, a Cournot model is used to examine how substitution/complementarity relationships among products and vertical structures can affect the exercise of market power. This motivates a generalization of the Herfindahl-Hirschman index (termed VHHI) capturing how market concentration and vertical structures interact to influence prices of differentiated products. The analysis is applied to pricing of soybean seeds in the US over the period 2000-2007. We consider two vertical structures employed by biotech firms: vertical integration and licensing. The econometric analysis finds evidence that vertical organization has significant effects on seed prices. These effects are found to vary depending on the institutional setup and the bundling of genetic material. The empirical evidence shows ! that complementarity and economies of scope can reduce the effects of market concentration on prices.

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

European Competition Law Annual 2008: Antitrust Settlements under EC Competition Law

Posted by D. Daniel Sokol

Out in print by Claus-Dieter Ehlermann and Mel Marquis is European Competition Law Annual 2008Antitrust Settlements under EC Competition Law.

BOOK ABSTRACT: This is the thirteenth in a series on EU Competition Law and Policy produced under the auspices of the Robert Schuman Centre of the European University Institute in Florence. The volume contains the written contributions of numerous competition policy experts, together with the transcripts of a roundtable debate which examined the subject of "settlements" between enforcers of competition law and defendant companies in cartel cases and in other types of antitrust cases. The Workshop participants included:

-- senior judges from major jurisdictions (the European Union, Germany and the United States);

-- senior enforcement officials and policy makers from the European Commission, from the national competition authorities of certain EU Member States and from the US Department of Justice and the US Federal Trade Commission; and

-- renowned international international academics, legal practitioners and professional economists.

In an intense, intimate environment, this group of experts debated a number of legal and economic issues pertaining to two broad lines of discussion:

1) settlements and plea agreements in cartel cases, including their links with leniency programs and with private enforcement; and

2) settlements in "commitment" cases decided under Article 9 of Regulation 1/2003 and under comparable procedures of national law.

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

Wednesday, December 2, 2009

Bilateral oligopoly and quantity competition

Posted by D. Daniel Sokol

Alex Dickson (Department of Economics, University of Strathclyde) and Roger Hartley (Department of Economics, University of Manchester) explain Bilateral oligopoly and quantity competition.

ABSTRACT: Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and su¢ cient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.

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

Competition Policy in Health Care in an Era of Reform

Posted by D. Daniel Sokol

December 10, 2009
Health Law Roundtable Event
Competition Policy in Health Care in an Era of Reform

Time: 3:00 p.m. -5:00 p.m.
Location: University Place Conference Center, room 216
Contact: Shari Baldwin at ssbaldwi@iupui.edu and Carsandra Knight at calknigh@iupui.edu

IU School of Law – Indianapolis, Hall Center for Law and Health,
and the American Antitrust Institute
Present:
Competition Policy in Health Care in an Era of Reform


On December 10 at 3 p.m., the IU School of Law – Indianapolis and the Hall Center for Law and Health, together with the Washington, D.C.-based American Antitrust Institute, are putting on a roundtable discussion dealing with the future of antitrust enforcement in light of the reality of changes in the health care landscape.

We will begin with an overview of the state of health care reform as of December 10. The event will then cover four broad topics. First will be the impact of then-extant health care reform proposals on the health insurance industry. The second topic on the agenda is the impact of health care reform on competition among health care providers. Third, we will discuss the impact of health care reform on consumers of health care. Our fourth and final topic for the gathering will be to outline a possible antitrust enforcement agenda for healthcare for 2010 and beyond.

Discussants will include law professors, economists, think-tank fellows, authors, and professionals and practitioners in the health-care industry. Discussants will have gathered prior to the public panel discussion to brainstorm on the issues being discussed. An edited transcript of the panel discussion will be published in the Indiana Health Law Review.

Scheduled speakers

  • Mr. Albert Foer, President, American Antitrust Institute
  • Professor William Comanor, UCLA
  • Professor Ted Frech, UC Santa Barbara
  • Professor Thomas Greaney, St. Louis University College of Law
  • Professor Barak Richman, Duke University School of Law
  • Mr. David Balto, Senior Fellow, Center for American Progress
  • Mr. Paul London, Author, The Competition Solution
  • Professor Chris Sagers, Cleveland-Marshall College of Law
  • Professor John Connor, Purdue University
  • Joseph P. Bauer, Notre Dame Law School
  • Professor David Orentlicher, IU School of Law –Indianapolis
  • Professor Emily Morris, IU School of Law – Indianapolis
  • Professor Max Huffman, IU School of Law – Indianapolis
  • Adjunct Professor Syd Arak, IU School of Law – Indianapolis
  • Ms. Gayle Reindl, '87, partner, Taft, Stettinius & Hollister LLP
  • John C. Render,'71, partner, Hall Render Killian Heath & Lyman P.C.
  • Clifton Johnson, partner, Hall Render Killian Heath & Lyman P.C.

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

Foreclosing competition through access charges and price discrimination

Posted by D. Daniel Sokol

Angel L. Lopez (IESE Business School) and Patrick Rey (Toulouse School of Economics) have thoughts on Foreclosing competition through access charges and price discrimination.

ABSTRACT: This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tariffs and may charge different prices for on-net and off-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist on the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough.

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

Transitoriness of Market Power and Antitrust Activity

Posted by D. Daniel Sokol

Mika Kato (Howard University - Econ) describes Transitoriness of Market Power and Antitrust Activity.

ABSTRACT: The economic rationale for how much market power is tolerable has so far been based mainly on static considerations; ideally, however, it should discriminate between persistent and transitory market power. I propose a dynamic dominant-firm type of model where the firm's use of market power, when it is discovered by an antitrust agency, will be penalized. Equilibrium entails a threshold market share above which the market tends toward monopoly and below which the market tends to competition. One may propose the region below this threshold to be the safety zone. The size of this region depends on how fast market power depreciates. In industries in which this depreciation is fast and where, as a result, monopoly power is more transitory, the safety zone should be wider, and there should be less policy intervention.

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

The Evolution of the Baby Food Industry, 2000–2008

Posted by D. Daniel Sokol

Viola Chen (FTC) explains The Evolution of the Baby Food Industry, 2000–2008.

ABSTRACT: In 2000, the Federal Trade Commission (FTC) prevented the merger of the second and third largest baby food manufacturers in the United States. Since the blocked merger, the landscape of the baby food industry has evolved significantly. All of the major brands of jarred baby food have undergone changes in ownership. The relevant product market may have slightly broadened beyond jarred baby food. Market concentration has increased, although prices have not. Gerber increased its market share from 71–72 to 73–80 percent. Beech-Nut's market share slightly declined from 13 to 11–12 percent, whereas Heinz's former brand, Nature's Goodness, declined from 13 to 2 percent. With no substantial entry, only Gerber and Beech-Nut currently have double-digit market shares. Also, although the average price of baby food has fluctuated over the years, prices in 2008 were the same as prices in 2000, after adjusting for inflation and changes in the composition of consumption. In terms of pricing, the market does not appear to be much different in 2008 than it was in 2000.

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

Tuesday, December 1, 2009

5th Annual In-House Counsel Forum on Pharmaceutical Antitrust: Understanding Antitrust Priorities Under a New Enforcement Regime

Posted by D. Daniel Sokol

5th Annual In-House Counsel Forum on Pharmaceutical Antitrust
Understanding Antitrust Priorities Under a New Enforcement Regime

Wednesday, February 17 to Thursday, February 18, 2010

For registration and other information click here.

DAY ONE | Wednesday, February 17, 2010

8:00 Registration and Continental Breakfast

8:45 Co-Chairs’ Opening Remarks – Identifying the Players

Jeffrey W. Brennan
Partner
Dechert LLP (Washington, DC)

Seth Silber
Of Counsel
Wilson Sonsini Goodrich & Rosati (Washington, DC)

9:15 Keynote Address: Focus on Pharmaceutical Antitrust Enforcement Priorities

Richard A. Feinstein
Director, Bureau of Competition
Federal Trade Commission (Washington, DC)

10:00 Morning Refreshment Break

10:15 Perspectives from the Inside and Out: An Overview of FTC Enforcement Activity Affecting the Pharmaceutical Industry

Markus H. Meier
Assistant Director, Health Care Division, Bureau of Competition
Federal Trade Commission (Washington, DC)

Jeffrey W. Brennan
Partner
Dechert LLP (Washington, DC)

With new leadership at the helm at both the FTC and DOJ Antitrust Division, it is clear that a closer alignment is being forged between the two agencies. The DOJ has assumed a new position on enforcement under Section 2 of the Sherman Act, while continued activity by the FTC leaves many in the industry trying to determine how actions taken by the two agencies will impact the pharmaceutical industry as a whole.

During this session, hear directly from both the current and former Assistant Director of the FTC’s Health Care Division as they provide you with an overview of what the Division’s pharmaceutical antitrust enforcement priorities are. Providing you with specific insights into what you can expect in the near future by way of FTC enforcement in this area, topics of discussion will include:

  • How has the Commission has adjusted its enforcement prerogatives or modified its competitive analysis of pharmaceutical sector conduct due to changes in the economy or political leadership over the past year?
  • Patent settlement agreements have been an FTC priority for about a decade. What has staff learned over that time? Has experience affected how staff investigates settlement agreements? Has private antitrust counseling had to change over this period?
  • You filed your settlement agreement with the Agencies; what happens next?
    • Insights into FTC processes: When is the settlement reviewed? How long does the review take? What is staff looking to find? Will staff want more information? If so, what do they want to know?
    • Perspectives on effective counseling strategies before and after you file your settlement. Should counsel initiate discussion with staff or “lay low” unless/until staff calls?

11:15 Assessing the Impact of the EC Pharmaceutical Sector Inquiry on Global Antitrust Enforcement in the EU and Emerging Markets

“It is important to note that a sector inquiry ‘bears fruit’ over a number of years … So please look out for further news in the coming months.”
– Neelie Kroes
Commissioner for Competition
European Commission, September 2009

Spotlight Address: (11:15-11:45)

Harald Mische
European Commission, DG Competition, Directorate F
Pharmaceuticals Task Force (Brussels, Belgium)

Panel: (11:45-12:30)

Marleen Van Kerckhove
Head, European Competition Practice & Brussels Office
Arnold & Porter LLP (Brussels, Belgium)

Brian Healy
Senior Advisor
European Federation of Pharmaceutical Industries and Associations (Brussels, Belgium)
Former Vice President, Economic and Industrial Policy
Global Human Health, Merck & Co.

Frances Murphy
Partner
Jones Day (London, UK)

Never before has the interface between IP and antitrust laws across the globe become more pronounced. On July 8, 2009, Directorate General of Competition for the European Commission issued its final report on the Pharmaceutical Sector Inquiry, confirming its preliminary findings that “market entry of generic drugs is [being] delayed.” Already taking action on its promise to pursue investigations into industry practices that are curtailing innovation and generic product entry, many within the pharmaceutical industry are wondering how the EC’s findings and current investigation will impact global pharmaceutical operations.

During this session, hear directly from the European Commission’s Harald Mische and experienced foreign counsel, knowledgeable in current pharmaceutical enforcement initiatives in the E.U., as they provide insights into how to minimize your antitrust exposure both in the U.S. and abroad.

12:30 Luncheon and Keynote Address

David P. Wales
Partner
Jones Day (Washington, DC)
Former Acting Director & Deputy Director of the Bureau of Competition, FTC

Hosted By:

Jones Day

1:45 Update on FTC Policies and Congressional Action Impacting on Pharmaceutical Antitrust Enforcement: Reverse Settlement Payments, Follow-On Biologics, Authorized Generics and Healthcare Reform

Michael Wroblewski
Deputy Director, Office of Policy Planning, Bureau of Competition
Federal Trade Commission (Washington, DC)

Seth Bloom
General Counsel
Senate Antitrust Subcommittee (Washington, DC)

Moderator:

Seth Silber
Of Counsel
Wilson Sonsini Goodrich & Rosati (Washington, DC)

At press time, the status of several key bills affecting the pharmaceutical industry is still unknown. The outcome of these and other pending legislative matters could cause shockwaves throughout the pharmaceutical industry. The speakers will provide strategic guidance on how to prepare for potential changes in the status of the law concerning:

  • Reverse settlement payments – Protecting Consumer Access to Generic Drugs Act of 2009 (H.R. 1706), Preserve Access to Affordable Generics Act (S. 369) which would restrict brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market
  • Follow-on biologics – Promoting Innovation and Access to Life-Savings Medicine Act of 2009 (H.R. 1427; S. 729) which would create a regulatory pathway for the approval of biologic products as well as outline what the applicable period of market exclusivity will be for biologic products
    • considering the impact of various market exclusivity periods on competition within the market (5/7/14 years exclusivity)
    • will biologic products qualify for use under state substitution laws?
    • potential impacts on pricing?
  • Authorized Generics – A bill to amend the Federal Food, Drug, and Cosmetic Act to prohibit the marketing of authorized generic drugs (H.R. 573; S. 501)

2:45 Avoiding the Appearance of “Predatory Pricing” by Carefully Crafting Pricing and Distribution Strategies That Are In Line with Robinson-Patman

Robert P. Reznick
Co-Chair, Pharmaceuticals and Healthcare Industry Practice Group
Chair, Antitrust Practice Group, Washington, DC Office
(Washington, DC)

Stephen J. Cipolla
Counsel
Merck & Co., Inc. (North Wales, PA)

Moderator:

Kenneth L. Glazer
Partner
K&L Gates (Washington, DC)
Former Deputy Director, Bureau of Competition, FTC

  • Addressing key pricing issues such as presence of market power and potential market foreclosure when evaluating the risks of implementing such strategies
  • Dealing with wholesalers and other customers in order to determine what your company’s “channels of trade” are
  • Tackling resale maintenance, minimum advertised and average wholesale price, particularly when a company has several classes of trade
  • Structuring pricing for combination products
  • Verifying competitive pricing in association and payment systems
  • Counseling your client on the antitrust factors involved in discount and rebate programs for drug product bundles
  • Exploring antitrust concerns associated with exclusive dealing, tying and bundling
  • Assessing the impact of the Alabama Supreme Court’s recent AWP decision addressing state fraud claims relating to pricing

3:45 Afternoon Coffee Break

4:00 View from the Bench: Judicial Perspectives on Pharmaceutical Antitrust Litigation

The Honorable Gerald Bard Tjoflat
Circuit Court Judge
U.S. Court of Appeals for the Eleventh Circuit (Atlanta, GA)

Paul D. Clement
Head, National Appellate Practice Group
King & Spalding (Washington, DC)
Former Solicitor General of the United States

During this session, Judge Tjoflat and Paul Clement will provide their thoughts and commentary on the key pharmaceutical cases involving reverse settlement payment agreements. This session will be concluded with a brief Q & A session during which time Mr. Clement and Judge Tjoflat will accept questions from the audience.

5:00 Conference Adjourns to Day Two

DAY TWO | Thursday, February 18, 2010

8:00 Continental Breakfast

8:30 Co-Chairs’ Remarks

8:45 Keynote Address: Focus on Reverse Settlements Payment Agreements, Authorized Generics and Pharmaceutical Mergers

The Honorable J. Thomas Rosch
Commissioner
Federal Trade Commission (Washington, DC)

9:30 Morning Refreshment Break

9:45 Life Cycle Management: Perspectives from State Attorneys General on Current Enforcement and Strategies for Expanding Product Life While Also Minimizing Exposure to Antitrust Scrutiny

Recent high-profile mergers within the pharmaceutical industry have cast a new light on how the industry is tackling the inherent challenges presented by the expiration of key blockbuster patents in coming years. In this increasingly competitive market, companies both large and small are beginning to take strategic steps towards maintaining (and even expanding) their current position within a given treatment area.

During this session, gain firsthand insights into how state Attorneys General have been prosecuting cases arising out of life cycle management issues, as well as insights into the use of product migration tactics, authorized generics, and citizens petitions.

Spotlight Address: (9:45-10:15)

TriCor – A Case Study

Elizabeth G. Arthur (Invited)
Assistant Attorney General, Antitrust Division
Office of the Attorney General of the State of Florida (Tallahassee, FL)

Panel: (10:15-11:00)

David L. Meyer
Co-Chair of the Global Antitrust and Competition Law Practice Group
Morrison & Foerster LLP (Washington, DC)
Former Principal Deputy Assistant Attorney General,
Antitrust Division, USDOJ

Michael S. McFalls
Partner
Jones Day (Washington, DC)

Moderator:

Elinor R. Hoffman (Invited)
Assistant Attorney General, Antitrust Bureau,
Office of the Attorney General of the State of New York
(New York, NY)

Product Migration

  • Conducting an antitrust analysis of various product migration strategies to extend product life
    • line extensions
    • special issues surrounding “me-too” products
    • revisiting dosage form
  • Understanding what litigation risks are presented by various product migration strategies – and what you can do to minimize your exposure to them

Authorized Generics

  • FTC Interim Report on “Authorized Generic” Drugs – understanding the implications of the report’s findings on drug competition between brand name and generic manufacturers
    • balancing competing interests – weighing the benefit of allowing authorized generics prior to the expiration of the brand name patent vs. the incentives of first ANDA filers to pursue generic entry prior to patent expiration
    • addressing the FTC’s current position on brand-generic agreements which delay the introduction of both authorized generics and independent generics

Citizens Petitions & Other Forms of Regulatory Practice

  • Antitrust analysis regarding citizen petitions
  • Determining when petitioning conduct is/is not immune from attack under Noerr-Pennington
  • Lessons from recent private actions challenging citizen petitions as sham

11:00 Minimizing Exposure to Liability by Preemptively Analyzing the Antitrust Implications of Engaging in Collaborative Activities

Thomas O. Barnett
Co-Chair, Antitrust & Consumer Law Practice Group
Covington & Burling LLP (Washington, DC)
Former Assistant Attorney General, Antitrust Division, USDOJ

Melissa S. Barnes
Assistant General Counsel
Eli Lilly and Company (Indianapolis, IN)

In-licensing and co-development

  • Understanding what types of restrictions/limitations can be imposed on a licensee without triggering antitrust scrutiny
  • Anticipating issues that may arise with potential competition and innovation during the diligence review process
    • considering how Quanta and developing case law on patent exhaustion will impact antitrust analyses conducted during pharmaceutical transactions
  • Handling exclusive in-licenses
  • Screening and distributing antitrust-sensitive royalty payments
  • Drafting non-compete provisions that will withstand government scrutiny
  • Strategies for fulfilling government notification requirements (Hart-Scott-Rodino)
  • Handling unique issues that arise in the context of joint ventures – calculating product assessments that both parties will agree with

Co-promotion and co-marketing

  • Ensuring the arrangement avoids credible charges of market division or price fixing
  • Drafting exclusivity and non-compete provisions that will withstand government scrutiny

12:00 Networking Lunch

1:15 Forward Thinking: Preparing for New and Emerging Trends in Government and Private Litigation Arising Out of Pharmaceutical Antitrust and Patent Infringement Litigation

Plaintiff’s Perspective:

Linda P. Nussbaum
Partner, Kaplan Fox & Kilsheimer LLP
(New York, NY)

Defense Perspective:

Sean Gates
Partner, Morrison & Foerster LLP (Los Angeles, CA)
Former Deputy Assistant Director, Anticompetitive Practices Division, Bureau of Competition, FTC

Jonathan Wasserman
Vice President & Senior Counsel
Litigation & Government Investigations
Bristol-Meyers Squibb (Plainsboro, NJ)

  • Identifying and evaluating the similarities and differences in theories put forth during patent infringement litigation that may open the door to an antitrust counterclaim
  • Harnessing information related to government investigations and infringement litigation in a manner that can be used if later private litigation ensues
  • Defending against allegations of “sham” litigation based on Noerr-Pennington challenges and Walker Process claims
  • Overview of state attorneys general offices that have been active in bringing parens patriae actions to pursue violations of the Sherman Act
  • The latest developments in antitrust class actions
    • handling them in court and in the court of public opinion
    • staying ahead of the curve with regard to class actions on the horizon
    • what you must know about participating as a named plaintiff
    • handling the claims process as a class member
    • recent caselaw developments in pharmaceutical antitrust litigation
      • the evolution of pleading standards for class actions in the antitrust context – In re Hydrogen Peroxide Antitrust Litigation, Iqbal, Twombly

2:15 Afternoon Coffee Break

2:30 Pharmaceutical Mergers and Acquisitions: Lessons Learned from Recent High-Profile Activity and Best Practices Going Forward

“Even in “down markets,” the Commission must hold the line against industry consolidation that may threaten competitive markets far into the future.”
– John Leibowitz
Chairman, Federal Trade Commission, March 2009

Despite a turbulent financial climate, this year has seen the return of high-profile mergers within the pharmaceutical industry, providing insight into whether the FTC’s approach to evaluating mergers has changed under the new administration, and if so, what the new approach may be. Additionally, with the FTC’s recent challenge to an already consummated merger that fell below the Hart-Scott-Rodino threshold, new issues are being exposed that may cause companies to re-examine their merger to assess the risk of later challenges by the FTC or DOJ.

During this session, learn how the FTC evaluates pharmaceutical mergers and gain specific insights into what the evolving issues are in the area of M&A enforcement activity.

Spotlight Address: (2:30-3:00)

Michael R. Moiseyev
Assistant Directors, Mergers I, Bureau of Competition
Federal Trade Commission (Washington, DC)

Panel: (3:00-4:00)

Aryeh Friedman
Chief Counsel, Antitrust
Wyeth (Collegeville, PA)

Marc Brotman
Assistant General Counsel
Pfizer Inc (New York, NY)

  • Understanding how the Hart-Scott-Rodino process is applied to pharmaceutical mergers
  • Incorporating a comprehensive due diligence analysis into your assessment of the deal to uncover potential antitrust issues
  • Recognizing how changes within the pharmaceutical development pipeline have impacted companies’ motivations for pursuing mergers
    • expansion within a particular treatment vs. expansion based on general innovation
  • Determining what substantive analysis is being applied to evaluate pharmaceutical mergers (both horizontal and vertical), as well as analysis of potential competition between and among industries
    • brand-brand
    • brand-generic
    • generic-generic
    • with biotechnology companies
    • divestiture of product lines
    • being aware of various red flags that may trigger downstream FTC/DOJ interest in your deal although premerger notification was not required under Hart-Scott-Rodino
  • Knowing the FTC’s approach to remedies –
    • relationship to substantive violation
    • procedural pitfalls

4:00 Pharmaceutical Patent Settlements: Staying Abreast of the Evolving Status of the Law on Reverse Settlement Payment Agreements

“No matter what you call them, eliminating these deals is one of the Federal Trade Commission’s highest priorities.”
– Jon Leibowitz
Chairman, Federal Trade Commission, June 23, 2009

Government Panel: (4:00 – 4:40)

Analysis of the USDOJ’s Position in In re Cipro

Philip Weiser
Deputy Assistant Attorney General, Antitrust Division
U.S. Department of Justice (Washington, DC)

Current FTC View on Pay-for-Delay Settlements

Michael B. Kades
Attorney Advisor to Chairman Jon Leibowitz
Federal Trade Commission (Washington, DC)

Industry Panel: (4:40 – 5:30)

Structuring Settlement Agreements that Won’t Raise Antitrust Concerns

Lauren Freeman-Bosworth
Legal Director, Schering-Plough Corporation
(Kenilworth, NJ)

Donald L. Flexner
Managing Partner, Boies, Schiller & Flexner LLP
(New York, NY)

Over the past few years,” reverse settlement” or “pay-for-delay” agreements have become an increasingly contentious point of debate within the pharmaceutical industry. The FTC, and now the DOJ, both hold the position that these agreements are anti-competitive, while the Courts have taken varying approaches to this issue. Additionally, although the FTC has been steadfastly pursuing litigation that would bring a final resolution to this issue, the U.S. Supreme Court, for the third time, in In re Ciprofloxacin Hydrochloride Antitrust Litigation, declined to grant certiorari on yet another case where the legality of reverse settlement payments was at issue. Adding another layer of complexity to this issue, is legislation pending in Congress which would prohibit reverse settlement payments all together. With the law on this issue in such a state of flux, companies must tread carefully when considering the options for structuring settlements as part of Hatch-Waxman litigation.

During this session, learn how to structure settlement agreements that will pass antitrust scrutiny, as well as what steps you can take now to prepare for changes in the law that may take place over the next year.

Topics of discussion will include:

  • Identifying what factors to consider when crafting a Hatch-Waxman settlement
    • will a limited term or delayed license be granted?
    • understanding the impact of the following on settlement –
      • 180-day exclusivity for later infringers
      • forfeiture provisions under the MMA
    • considering the amount of the payment/consideration being given to the generic company
  • Complying with the MMA filing requirements
    • understanding how “side deals” with patent settlements are being reviewed by the FTC
    • how to apply the varying standards among the circuits to your proposed settlement agreement
    • considering the impact a change in position by the 2nd Circuit could have on the Supreme Court’s willingness to accept a case

5:30 Conference Concludes

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

Monopsony Abuse or Efficient Purchasing? Quality Measurement in the Tobacco Leaf Market

Posted by D. Daniel Sokol

Andrew Hanssen (Colby - Econ) asks Monopsony Abuse or Efficient Purchasing? Quality Measurement in the Tobacco Leaf Market.

ABSTRACT: In the recent case of Deloach v. Philip Morris, plaintiff tobacco growers accused the major cigarette manufacturers of using unusually structured tobacco auctions to engage in monopsony collusion. The DeLoach case produced one of the largest antitrust settlements ever. The objective of this paper is to evaluate the claims of exercise of monopsony power by exploring why tobacco wholesaling systems (which have evolved dramatically over time) have taken the various forms they have. The paper concludes that the ways in which tobacco leaf has been sold—including the allegedly collusive auctions—developed to combat the fundamental problem that the quality of tobacco leaf is very costly to measure.

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

Anticompetitive versus Competitive Explanations of Unilateral Practices: The Identification Problem

Posted by D. Daniel Sokol

Michele Polo (Bocconi - Econ) analyzes Anticompetitive versus Competitive Explanations of Unilateral Practices: The Identification Problem.

ABSTRACT: I consider the application of Article 82 using an economic approach. I argue that proving a given practice anticompetitive or efficient can be usefully framed as an identification problem. I need to spell out in detail not only the anticompetitive story, related to the type of alleged anticompetitive strategy, but also the alternative competitive explanation, extracting the empirical predictions of the two. Comparing the latter, I can identify the factual elements that, occurring under both circumstances, are admissible under both of them, and those that instead, being specific to one of the stories, allow for discriminating between them. I apply this approach to a recent Italian case [Mercato del Calcestruzzo Cellulare Autoclavato, No. A372 (Autorità Garante della Concorrenza a del Mercato, 24 October 2007)] of selective price cuts, an example of predation where the dominant firm tries to eliminate a competitor by selectively offering discounts to the clients of the target. On the basis of a rich empirical analysis, the Authority condemned RDB, a medium-sized firm active in the market for construction materials. I show that, once the two stories are properly described, the evidence provided in the decision of the Antitrust Authority is consistent with a competitive strategy of decentralized price negotiation, whereas it is in sharp contrast with the empirical predictions derived from a predatory model of selective price cuts.

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

A Fallacy of Division: The Failure of Market Concentration as a Measure of Competition in U.S. Banking

Posted by D. Daniel Sokol

Jaap W.B. Bos (Utrecht - Economics), Ivy Chan (Utrecht - Economics), James W. Kolari (Texas A&M - Mays Business School), and Jiang Yuuan (Utrecht - Economics) explain A Fallacy of Division:  The Failure of Market Concentration as a Measure of Competition in U.S. Banking.  This is a really interesting paper.

ABSTRACT: Empirical literature and related legal practice using concentration as a proxy for competition measurement are prone to a fallacy of division, as concentration measures are appropriate for perfect competition and perfect collusion but not intermediate levels of competition. Extending the classic Cournot-type competition model of Cowling and Waterson (1976) and Cowling (1976) used to derive the Hirschman-Herfindahl Index (HHI) of market concentration, we propose an adaptation of this model that allows collusive rents for all, none, or some of the firms in a market. Application of our model to data for U.S. commercial banks in the period 1984-2004 confirms that concentration measures are unreliable
competition metrics. While collusion is prevalent in the banking industry at the state level, the critical market shares at which market power is achieved, rents earned from collusion, and collusive concentration levels vary widely across states. These and other results lead us to conclude that a fallacy of division exists in
concentration-based competition tests.

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

The Dragon in the Room: China’s Anti-Monopoly Law and International Merger Review

Posted by D. Daniel Sokol

Chris Hamp-Lyons (Vanderbilt Law) has a paper on The Dragon in the Room: China’s Anti-Monopoly Law and International Merger Review.

ABSTRACT: In today's world, where companies and their transactions often transcend national borders, multi-jurisdictional antitrust review is a reality of major mergers and acquisitions. A new hurdle appeared in the path of these transactions in August 2008, when China’s Anti-Monopoly Law (AML) came into effect. Antitrust review by a government that is historically wary of market forces raises both substantive and procedural concerns for parties to mergers with connections to China. Substantively, the AML empowers Chinese regulators to consider factors beyond the competitive effect of a merger, which could result in efficient mergers being blocked for nationalistic or parochial reasons, to the detriment of consumers and the economy both in China and worldwide. Procedurally, imposing yet another regulatory burden on mergers may deter economically efficient mergers, particularly where the procedure of review remains unclear.

This Note argues that a phased-implementation approach to merger review, starting with a focus on domestic mergers (and other areas of AML enforcement) before moving on to cross-border transactions, gives the best chance of a Chinese merger review regime that protects and benefits Chinese consumers without creating friction in the global economy. Using this approach, a new antitrust regime that initially appeared to be a threat to international mergers may provide valuable lessons for antitrust in developing countries and ultimately improve multi-jurisdictional merger review.

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