Antitrust & Competition Policy Blog

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

Saturday, December 12, 2009

Communication, Renegotiation, and the Scope for Collusion

Posted by D. Daniel Sokol

David Cooper, Florida State University - Econ and Kai-Uwe Kühn, University of Michigan - Econ address Communication, Renegotiation, and the Scope for Collusion.

ABSTRACT: We use experiments to analyze what type of communication is most effective in achieving cooperation in a simple collusion game. Consistent with the existing literature on communication and collusion, even minimal communication leads to a short run increase in collusion. However, in a limited message-space treatment where subjects cannot communicate contingent strategies, this initial burst of collusion rapidly collapses. When unlimited pre-game communication is allowed via a chat window, an initial decline in collusion is reversed over time. Content analysis is used to identify multiple channels by which communication improves collusion in this setting. Explicit threats to punish cheating prove to be by far the most important factor to successfully establish collusion, consistent with the existing theory of collusion. However, collusion is even more likely when we allow for renegotiation, contrary to standard theories of renegotiation. What appears critical for the success of collusion with renegotiation is that cheaters are often admonished in strong terms. Allowing renegotiation therefore appears to increase collusion by allowing for an inexpensive and highly effective form of punishment.

December 12, 2009 | Permalink | Comments (0) | TrackBack (0)

Brand Protection and Competition

Posted by D. Daniel Sokol

IBIL & OFT Seminar: Brand Protection and Competition Logo

The Office of Fair Trading and UCL’s Institute of Brand and Innovation Law would like to invite you to an early evening event entitled


Date:      27 January 2010
Time:      4.30pm (registration), 5.00 to 7.30 pm,
               followed by a drinks reception.
Venue:    University College London, Gower Street, WC1E 6BT

The aim of the event is to bring together competition and IP specialists and industry experts to stimulate discussion on:

  • the protection of brand value under the competition rules;
  • the interaction of the competition rules with intellectual property law; and
  • L’Oreal v Bellure and other recent developments in the law.

 Confirmed speakers include:

  • Philip Collins (Chairman, OFT)
  • The Rt Hon Lord Justice Jacob
  • Deborah Majoras (Procter & Gamble)
  • Michael Miller (Amazon)
  • Ali Nikpay (Senior Director, OFT)
  • The Hon Mr Justice Roth
  • Dr Christopher Stothers (UCL & Milbank Tweed Hadley & McCloy)

This seminar is accredited with 2.5 CPD hours by the Solicitors Regulation Authority (SRA - our course provider reference is IU/UCL) and the Bar Standard Board. It is also accredited by ITMA and constitutes relevant CPD for CIPA Fellows.

This event is free of charge.

Places are strictly limited at this event so please secure your place by clicking on the link below.


You are invited to the following event:
IBIL & OFT Seminar: Brand Protection and Competition

Wednesday, January 27, 2010 at 4:30 PM (GMT)

UCL Jeremy Bentham Room
UCL Central Campus
Gower Street
London, London WC1
United Kingdom



Can you attend this event?  Respond Here



December 12, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, December 11, 2009

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), Jiang Yuan (Utrecht - Economics), and James W. Kolari (Texas A&M - Mays School of Business) have some interesting thoughts on A Fallacy of Division: The Failure of Market Concentration as a Measure of Competition in U.S. Banking.

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 wid! ely across states. These and other results lead us to conclude that a fallacy of division exists in concentration-based competition tests.

December 11, 2009 | Permalink | Comments (0) | TrackBack (0)

Happy Chanukah From the Youngest Reader of the Antitrust and Competition Policy Blog

Posted by D. Daniel Sokol

Anthony Chavez (Exxon Mobil) shares a picture of daughter Samantha Rachel Chavez wishing everyone a Happy Chanukah.  With a planned DOJ Antitrust workshop in Madison, WI on competition in dairy, the writing on her shirt is very appropriate.  Phil Weiser, I hope you are reading this so that you can order similar shirts for your team.


December 11, 2009 | Permalink | Comments (0) | TrackBack (0)

Price Controls and Consumer Surplus

Posted by D. Daniel Sokol

Jeremy Bulow (Stanford - Graduate School of Business) and Paul Klemperer (Oxford - Econ) p

rovide thoughts on Price Controls and Consumer Surplus.

ABSTRACT: The condition for when a price control increases consumer welfare in perfect competition is tighter than often realised. When demand is linear, a small restriction on price only increases consumer surplus if the elasticity of demand exceeds the elasticity of supply; with log-linear or constant-elasticity, demand consumers are always hurt by price controls. The results are best understood - and can be related to monopoly-theory results - using the fact that consumer surplus equals the area between the demand curve and the industry marginal-revenue curve.

December 11, 2009 | Permalink | Comments (0) | TrackBack (0)

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

Posted by D. Daniel Sokol

Joseph A. Clougherty (WZB - Econ) 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 11, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, December 10, 2009

On Polarized Prices and Costly Sequential Search

Posted by D. Daniel Sokol

Ruth G. Gilgenbach (SMU - Econ) writes On Polarized Prices and Costly Sequential Search.

ABSTRACT: This paper presents a homogenous goods duopoly model of costly sequential consumer search with three classes of consumers: costless searchers; moderately costly searchers; and consumers for whom search costs are extremely high--higher than the value they attach to the good. Under certain conditions, the mixed-strategy Nash equilibrium price distribution is one where low and high, but never moderate, prices are charged. In equilibrium, free searchers will always search for both prices, very costly searchers

December 10, 2009 | Permalink | Comments (0) | TrackBack (0)

Post Doctoral Research Fellow at UEA Centre for Competition Policy

Posted by D. Daniel Sokol

Post Doctoral Research Fellow

Ref: RA625

£29,704 to £35,469 per annum

The Centre

is a focus of research into Competition and Regulation across a range of disciplines, and welcomes applications in the area of competition or regulation policy from within the economics, competition law, political science and/or management disciplines. You will be expected to contribute to the Centre’s research individually, develop joint research with other Centre members, and undertake some teaching.

This is a three year post doctoral research training post for individuals wishing to develop an academic career. You must have submitted your thesis for a doctoral degree by the time you take up the appointment, and if you already have a doctoral degree, you should be within three years of the date of its award; and be able to satisfy all the essential criteria detailed in the person specification for this training post.

The appointment is available on a full-time, fixed-term basis for a period of three years from 1 September 2010.

Closing Date: 12 noon on 14 January 2010.

Further particulars and an application form are available on our website:

or Tel. 01603 593493.


December 10, 2009 | Permalink | Comments (0) | TrackBack (0)

Regional Competition Law Agreements: An Important Step for Antitrust Enforcement

Posted by D. Daniel Sokol

Michal Gal (Haifa - Law) has an interesting new paper on Regional Competition Law Agreements: An Important Step for Antitrust Enforcement.

ABSTRACT: In the past two decades the number of jurisdictions that adopted a competition law has grown exponentially. Yet many of them, most notably developing jurisdictions and small ones, face significant obstacles to efficient enforcement. Indeed, a World Bank study estimated that competition authorities in advanced countries are 40% more effective than their counterparts in developing ones. Many of these problems result from the unilateral enforcement model which currently dominates competition law.

This essay argues the regional competition law agreements on joint enforcement and advocacy (RJCAs) hold an important potential to solve many of the enforcement problems that developing and small jurisdictions face and can provide additional benefits that go beyond such solutions. It also argues that the costs involved in such agreements are not prohibitive and many can be overcome by structuring appropriate solutions. Accordingly, RJCAs hold the potential to create Pareto-superior solutions to enforcement problems relative to unilateral enforcement.

The essay then broadens the analysis and focuses on the potential effects of RJCAs on non-member states. It is argued that such agreements create much lower negative externalities on non-member states and on international coordination efforts than do regional trade agreements. On the contrary- they often create positive externalities on non-member jurisdictions. Accordingly, they offer an important potential for strengthening competition law enforcement and should generally be encouraged.

Finally, it argues that RJCAs generally further the international efforts for coordination and cooperation in competition law. They might even serve to overcome the main obstacle for including anti-cartel provisions in the WTO or in another supranational enforcement body.

The analysis is timely, given that the past few years have experienced a wave of regionalism which is not only characterized by an increased dynamism but is also often characterized by more ambitious and deeper levels of integration, taking steps that go beyond information sharing and comity. Not surprisingly, all of the new regional agreements involve developing or small signatories.

December 10, 2009 | Permalink | Comments (0) | TrackBack (0)

Merger Control and the Rule of Law

Posted by D. Daniel Sokol

R.A.A. Khan, Free University of Amsterdam - Faculty of Law and Gareth T. Davies, Free University of Amsterdam - Faculty of Law are concerned about Merger Control and the Rule of Law.

ABSTRACT: This article asks whether competition law, in particular the law on mergers, should always be called law. It concentrates on merger control in the European Union but draws on US experience and history to provide ideas and to contribute to the framework for the analysis. The starting point is that competition law is increasingly located not in courts but in agencies: in the EU, the European Commission. These agency regulators take decisions based allegedly on economic theory, but which are non-predictable and nonreplicable; they do not provide a tight enough reasoning process to serve as a guide to action in future cases. Yet they are only marginally reviewable by courts. Finally, even insofar as identifiable and coherent rules exist for agency behaviour, their rule-like character is undermined by a culture of negotiation and compromise, which means that the link between rule and decision becomes even more tenuous and even less apparent to the nonparty. Over-reliance on questionable economics, as well as inadequately constrained agency behaviour, suggests that merger control is now the domain of ad-hoc decision making as much as it is of law.

December 10, 2009 | Permalink | Comments (0) | TrackBack (0)

Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement

Posted by D. Daniel Sokol

Randy Picker, U. Chicago - Law, explains Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement.

ABSTRACT: The Google Book Search Settlement has received a great deal of attention. In response to opposition, the original settlement has been delayed and will now be resubmitted. In this brief paper, I address three points. First, I do a quick status update on competition issues in the case. Second, I turn to a key issue that has emerged in the commentary on the competition issues, namely, what is the right way to frame the competition policy baseline for assessing whether a new arrangement such as GBS is procompetitive? That question is of general interest to the intersection of antitrust and innovation policy and given the importance of both to the health of the economy, it is critical that we get the baseline question right.

We will be misled if we simply track expansions in output. Clever cartelists will want to cartelize new industries in their infancy, as they know that a new product innovation will inevitably raise output, even if it does so by much less than we would see in the face of full competition. And innovators will want to bundle anticompetitive features with competitive ones if they know that they are simply being judged against the pre-innovation baseline.

Third, as applied to the Google Book Search settlement itself, antitrust enforcers need to disentangle the genuine benefits of the project from anticompetitive features. Obviously, that is a conventional problem in antitrust but it means here that product innovation can’t be used as a general shield against standard antitrust analysis. A single infrastructure such as the digitized book scans can be used to offer many products simultaneously and competitive benefits from one product cannot insulate anticompetitive steps in a second product using that same infrastructure.

December 10, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 9, 2009

More Antitrust, More Problems

Posted by D. Daniel Sokol

Ronn Cass (former Dean of BU Law) writes in Forbes on More Antitrust, More Problems.

December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

Collusion in Experimental Bertrand Duopolies with Convex Costs: The Role of Information and Cost Asymmetry

Posted by D. Daniel Sokol

Cédric Argenton, Tilburg Law and Economics Center (TILEC), Tilburg University - Econ, and Wieland Müller, Tilburg - Econ undertake work in Collusion in Experimental Bertrand Duopolies with Convex Costs: The Role of Information and Cost Asymmetry.

ABSTRACT: We report the results of a series of experimental Bertrand duopolies where firms have convex costs. Theoretically, these duopolies are characterized by a multiplicity of Nash equilibria. Using a 2x2 design, we analyze price choices in symmetric and asymmetric markets under two information conditions: complete versus incomplete information about profits. We find that information has no effect in symmetric markets with respect to market prices and the time it takes for markets to stabilize. However, in asymmetric markets, complete information leads to higher average market prices and quicker convergence of price choices.

December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

Antitrust Law in China, Korea and Vietnam

Posted by D. Daniel Sokol

Recently out is Antitrust Law in China, Korea and Vietnam by Mark Furse (Glascow - Law).

BOOK ABSTRACT: Following China's entry into the WTO in September 2001, it has been keen to establish itself among trading parties as a market economy. In recent years it has become one of the largest trading nations in the world, and is a source of substantial inward investment. In recognition of these developments, the government has undertaken a major overhaul and modernization of its competition law, superseding the outdated and disparate provisions previously in place, with new legislation in 2007. China's near neighbors, Vietnam and South Korea, likewise have vibrant economies and have had strong trading relationships with the west for many years. This book is the first to cover the practical implications of the developments in competition law in these countries.

It is aimed at practicing lawyers and company advisors, giving a clear description of the new antitrust law in China, the established antitrust law in Taiwan and Korea, and the underdeveloped law in Vietnam. It also considers developments in Hong Kong, which is in the process of introducing a general law of antitrust. The first part of the book gives a concise introduction to antitrust laws and policies in the jurisdictions covered, as well as an introduction to standards in antitrust law for those new to the area. China, Taiwan, Korea and Vietnam each have five chapters devoted to discussion of the regime in general, its institutional shape, the substantive laws relating to agreements, dominant or monopoly firm conduct, merger control and procedures. The relevant legislation is explained and the principles clarified by references to guidelines, practice and relevant decisions and cases. In the case of Hong Kong a single chapter discusses the proposals brought forward by the legislature. Particular attention is paid to the extent to which antitrust laws in each jurisdiction may be applied to parties who are not citizens in those jurisdictions.

December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

Collective Dominance In Canada: A New Direction

Posted by D. Daniel Sokol

Anita Banicevic & Mark Katz (Davies Ward Phillips & Vineberg LLP)explore Collective Dominance In Canada: A New Direction.

ABSTRACT: The October issue of Global Competition Policy contained an informative series of articles discussing the concept of "collective dominance,” principally from a European perspective. In this article, we provide a Canadian epilogue of sorts to that discussion, as collective dominance is emerging as a hot-topic in Canada as well.

Specifically, it appears that the Canadian Competition Bureau ("Bureau") will be taking a more aggressive approach than in the past to instances of what it regards as the collective (or "joint") abuse of dominance. This shift in approach is part of a broader effort by the Bureau to step up enforcement of the Competition Act's abuse of dominance provisions, in line with a renewed focus by competition authorities worldwide on the potentially anticompetitive effects of conduct by dominant firms.

December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

Senator Orrin Hatch Releases His New Chanukah Song (I am Serious)

Posted by D. Daniel Sokol

If Neil Diamond and Bob Dylan can pen a Christmas Album, then why not the opposite?  Senator Orin Hatch, the senior senator from Utah (and a Mormon), has just released his first Chanukah song.  The New York Times has full coverage here.

December 9, 2009 | Permalink | Comments (1) | TrackBack (0)


Posted by D. Daniel Sokol

International Max Planck Research School For Competition and Innovation & The Professorship for Intellectual Property ETH Zurich                        
June 20 to June 22, 2010                  
From June 20 to June 22, 2010, the International Max Planck Research School for Competition and Innovation and the Professorship for Intellectual Property at ETH Zurich will jointly organize their 2010 Workshop for Junior Researchers on the Law and Economics of Intellectual Property and Competition Law.
The workshop will enable a small number of junior researchers from law and from economics to engage in an intensive, rigorous discussion of their own scholarly work. Several senior professors from law and from economics departments in Europe and the United States will provide feedback on the research projects. The workshop will be held in Wildbad Kreuth, a lovely region one hour south of Munich, Germany, from June 20 to June 22, 2010. The organizers will fund travel and hotel expenses for all
     invited workshop participants.
Excellent junior researchers (doctoral students, post-docs,  research fellows and assistant professors) from law and from economics are invited to submit a curriculum vitae, a list of two references as well as an extended abstract of their research project and/or a draft paper by February 15, 2010. Notifications of acceptance will be sent out by March 1, 2010. Papers are due for circulation among workshop participants and commentators on May 15, 2010. Please send your submissions to:
     CONTACT:       Prof. Stefan Bechtold
For junior researchers from economics, research projects should relate to industrial organization, competition, innovation and/or intellectual property and may include formal models as well as empirical or experimental approaches. For junior scholars from law, research projects should relate to intellectual property and/or competition law and must use law and economics as a research approach. In order to achieve a good international mix of workshop participants, submissions from researchers from outside Europe are particularly encouraged.
The International Max Planck Research School for Competition and Innovation is a joint initiative by the Max Planck Institute for Intellectual Property, Competition and Tax Law as well as the Department of Economics, the Munich School of Management, and the Faculty of Law of the Ludwig Maximilians University of Munich. Any questions concerning the workshop should be directed to:
     CONTACT:       Prof. Stefan Bechtold
     Tel:                    +41-44-632-2670


December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

EU Cartel Fining Laws and Policies in Urgent Need of Reform

Posted by D. Daniel Sokol

Karl Hofstetter (University of Zurich) expressess concern that EU Cartel Fining Laws and Policies in Urgent Need of Reform.

ABSTRACT: The criticisms against the cartel fining policies of the European Commission are mounting. Feeling the heat, the Commission is finally entering the debate: that's good news. The bad news is the Commission keeps stonewalling. Philip Lowe's GCP online article is no exception. Even though he deserves credit for publicly addressing some of the major substantive and procedural criticisms against the Commission's cartel fining policies, his defensive posture is sobering. By brushing off or ignoring important important arguments against the legal basis under which the current EU cartel fining regime operates, the outgoing head of DG IV shows little sensitivity for the concept of due process. 

At least as astonishing, the chief enforcement officer for EU cartel law seems, at best, marginally interested in crucial questions relating to the effective prevention of cartel law violations. As long as milk and honey are flowing in the form of huge corporate cartel fines, the EU enforcement cadres, it seems, remain remain happy with the status quo. No wonder that the Commission has been bragging repeatedly about the significant contribution these fines are making to the EU's overall budget.

December 9, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 8, 2009

The Second Circuit Cautiously Expands Walker Process Standing in In re DDAVP

Posted by D. Daniel Sokol

Aidan Synnott (Paul Weiss) & Charlene Jones (Paul Weiss) illustrate how The Second Circuit Cautiously Expands Walker Process Standing in In re DDAVP.

ABSTRACT: In October 2009, the United States Court of Appeals for the Second Circuit became the first appeals court to decide that direct purchasers have standing to assert Walker Process claims. In so holding, the court did three interesting things: (1) it retained jurisdiction based on a minor aspect of plaintiffs’ claims, despite defendants’ arguments that the case belonged in the Federal Circuit because it concerned issues that arose under patent law; (2) it was very cautious in its expansion of antitrust standin

December 8, 2009 | Permalink | Comments (0) | TrackBack (0)

Procedural Fairness

Posted by D. Daniel Sokol

Jonathan Zuck (Association for Competitive Technology argues for Procedural Fairness.

ABSTRACT: In a recent speech, Neelie Kroes of the European Commission argued that “as enforcers we do have ‘special responsibility’ to ensure a fair and transparent process. But the great weight of evidence says we meet this responsibility.” While the Commission clearly has made some efforts to meet its “special responsibility,” there is also evidence to suggest more can—and should—be done. The Commission has made important changes to its procedures over the years, but it still has a way to go to create full confiden

December 8, 2009 | Permalink | Comments (0) | TrackBack (0)