Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Wednesday, May 5, 2010

Due Process Before the Commission of the European Union? Some Reflections Upon Reading the Commission Draft Paper on Best Practices in Antitrust Proceedings

Posted by D. Daniel Sokol

Bo Vesterdorf (Herbert Smith and Plesner) explores Due Process Before the Commission of the European Union? Some Reflections Upon Reading the Commission Draft Paper on Best Practices in Antitrust Proceedings.

ABSTRACT: In this comment, I shall, however, not discuss the above mentioned issues in any more detail but shall deal with another issue which is an important part, indeed the most crucial part, of what due process is all about; the issue of "impartiality and fairness" of the administrative proceedings  which, as noted above, is a central principle of Article 41 of the Charter of Fundamental Rights. This is an issue which is not at all mentioned in the draft paper, yet is what the Best Practices paper should be and probably is aimed at ensuring.

I do want to address this issue for a reason specific to my own experience; which is that, in a large number of cases before the EU courts in Luxembourg (indeed from the very first cases with which I had the pleasure to deal as a judge at the then CFI), applicants have put forward a plea in law and arguments in support thereof claiming that the proceedings before the Commission were vitiated by a lack of objectivity from the officials who had investigated, examined, and in reality decided the case. The officials were claimed to have acquired a so-called "tunnel vision" as a result of which they were claimed to have refused to consider or even look at evidence or factual circumstances in favor of the undertakings concerned.  This kind of argument has also frequently been made at conferences on competition law by lawyers who have participated in competition proceedings before the Commission. The essence of that kind of argument is that the public authority is claimed not to have been impartial or fair in its examination of a case. Were that to be true, it would mean a violation of the principles of good administration and not meet the requirements of due process.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

Invitation to Review CUTS Project

Posted by D. Daniel Sokol

Sealed proposals (technical and financial) are invited from competent firms to review the CUTS project, entitled ‘A pilot project on capacity building on electricity reforms in Nepal, Bangladesh and India (West Bengal & Rajasthan), popularly known as the ‘RESA Project’.

The project was initiated in India (Rajasthan and West Bengal), Bangladesh and Nepal over the last two years. Its objective was to increase the long-term capacity of civil society organisations (CSOs), improve consumers’ representation as a measure to enhance effectiveness of regulatory regimes in electricity sector in Bangladesh, India and Nepal. Detailed information about the project including project proposal, key activities are given at the project webpage, http://www.cuts-ccier.org/RESA

To know about this assignment, its objectives and terms and conditions, see the detailed TOR at http://www.cuts-ccier.org/RESA/pdf/RESA_Project_evaluation_TOR.pdf

The technical as well as financial proposal should be submitted electronically at c-cier@cuts.org and a hard copy at the address given below in the signature line. Any queries may be forwarded to the undersigned to me or Mr. Rajesh Kumar (rk2@cuts.org). The last date of submission is May, 15th 2010 (18:00 IST). The assignment will start from June, 1st 2010 and will have to be completed (submission and acceptance of final report) latest by August 15, 2010.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

How Loyalty Discounts Can Perversely Discourage Discounting: Comment

Posted by D. Daniel Sokol

Assaf Eilat, Jith Jayaratne, Janusz Ordover (Compass Lexecon), & Greg Shaffer (University of Rochester) explain How Loyalty Discounts Can Perversely Discourage Discounting: Comment.

ABSTRACT: The academic literature on loyalty discounts and exclusive dealing demonstrates that the welfare effects of these practices are ambiguous and that market details determine the direction of the effect.  However, in his recent paper entitled How Loyalty Discounts Can Perversely Discourage Discounting,  Professor Einer Elhauge argues that exclusive contracts with loyalty discounts offered by a single incumbent seller can create anticompetitive effects in a broad range of settings. Moreover, he claims, "anticompetitive effects are exacerbated if multiple sellers use loyalty discounts."

To motivate his analysis, Professor Elhauge defines two types of customers of the incumbent seller, namely: "committed buyers," who signed an exclusive contract with the incumbent, and "uncommitted buyers," who did not.  The "uncommitted buyers" are free to purchase from the entrant, if there is entry, or from the incumbent. The contractual benefit from signing an exclusive contract with the incumbent is the promise that the committed buyer will always pay $d less than the price that the incumbent offers to the uncommitted buyers. Put another way, $d is the assured spread between the incumbent's prices offered to these two groups. From this it follows that if the incumbent chooses not to compete for the uncommitted buyers then the incumbent can, in effect, charge committed buyers the monopoly price.

Professor Elhauge departs from key papers in the literature on exclusive dealing by defining his exclusive contracts to include a Most Favored Nation (MFN)-like feature, which actually does a great deal of work in his model. The MFN-like feature comes through the assumption that the price paid by committed buyers depends not only on the fact that they committed to an exclusive contract, but also on the price that the seller offers to uncommitted buyers (the "list" price). This link between the prices offered to committed and uncommitted buyers is not found in any of the key papers in the exclusive-dealing literature that Professor Elhauge cites.  This linkage is crucial because--as exposited by Professor Elhauge--it greatly increases the incumbent's cost of competing with the entrant for sales to the uncommitted buyers. In fact, in Professor Elhauge's model, the incumbent seller sets its list price so high that no uncommitted buyer will buy from it in equilibrium, which means that along the equilibrium path, committed buyers never actually receive the loyalty discount d they are promised; or, stated more precisely, they receive their "discount" d off of a phantom price which nobody pays!  As we show below, the qualitative results in his model are unchanged even if there are no loyalty discounts and buyers do not commit to buy exclusively from the incumbent. Thus, it is the MFN-like feature of the contracts, not the loyalty discounts, that drives his results--and the potential impact of MFN provisions on competition has already been extensively analyzed in other papers.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

UK's Office of Fair Trading Looking to Hire

Posted by D. Daniel Sokol

The Office of Fair Trading is are currently recruiting for Deputy Directors and Senior Policy Advisors to join its Competition Policy team. 

OFT824 Deputy Directors, Policy Group c. £60,000 plus excellent benefits, London


As the UK 's consumer and competition authority, the OFT’s mission is to make markets work well for consumers. At the heart of this process are three specialist policy teams (Consumer, Competition and Markets) which develop and implement the policies underpinning the OFT's mission. We are seeking to appoint two Deputy Directors to drive policy development in our Competition and Markets teams. There are two distinct roles available, one working 50% in the Markets team and 50% in the Competition team and the other working in the Competition team exclusively. Both roles share the potential to shape the regimes in the UK and EU. As proven innovators, this offers you precisely the challenge you’re looking for, a challenge which will include leading on the creation of policy that tackles the latest issues, engaging with external stakeholders to influence the future direction of the UK and EU legal and policy framework and advising colleagues around the OFT on policy issues arising in relation to competition cases, mergers, market studies or other OFT projects. Both roles offer unparalleled variety – and require unparalleled vision.

You will possess solid experience of analysing and applying competition law or competition economics within a legal or regulatory environment and, ideally, a proven ability to drive policy change. Alongside experience of leading and working in multidisciplinary teams and a genuine appreciation of OFT values, these qualities will enable you to make a cutting-edge contribution to a cutting-edge organisation. For more information please download a full job description from our website www.oft.gov.uk/vacancies

How to apply

Please submit a cover letter setting out your skills and experience that relate to the criteria listed on the person specification of the job description; and why the OFT should consider you for this post, please also enclose your CV. Send these documents, and a completed diversity monitoring form (available from our website) to recruitment@oft.gsi.gov.uk, or send by post to: Recruitment team The Office of Fair Trading 7th Floor Fleetbank House 2-6 Salisbury Square London EC4Y 8JX Please quote reference OFT824 – Deputy Director, Policy Group – on all correspondence. The closing date for applications is 5.00pm 17 May 2010. The Office of Fair Trading is an equal opportunities employer.

OFT825 Senior Policy Advisers c. £50,000 plus excellent benefits, London


As the UK 's consumer and competition authority, the OFT’s mission is to make markets work well for consumers. At the heart of this process sit the three specialist policy teams (Consumer, Competition and Markets) which develop and implement the policies underpinning the OFT's mission of the OFT. An opportunity has now arisen for a proven thought leader to join our Competition Policy team and thus help shape competition law for the UK . Liaising at the highest levels, you will help create new policies, and engage with external stakeholders to influence the future direction of the competition regime, for example through commenting on proposals for changes to the legislative framework or policy guidance at European and UK level.. You will additionally advise case and project teams on competition issues, case work and interdisciplinary functions, including CA98 cases and mergers. It is a uniquely diverse remit within the regulatory sector – calling for a uniquely talented individual. Specifically, you should possess demonstrable experience of analysing and applying competition law or economics within a legal or regulatory environment. Alongside proven negotiation skills, experience of multidisciplinary, collaborative working and a genuine appreciation of the values of the OFT, these qualities will enable you to make a cutting-edge contribution to a cutting-edge organisation. For more information please download a full job description from our website www.oft.gov.uk/vacancies

How to apply

Please submit a cover letter setting out your skills and experience that relate to the criteria listed on the person specification of the job description; and why the OFT should consider you for this post, please also enclose your CV. Send these documents, and a completed diversity monitoring form (available from out website) to recruitment@oft.gsi.gov.uk, or send by post to: Recruitment team The Office of Fair Trading 7th Floor Fleetbank House 2-6 Salisbury Square London EC4Y 8JX Please quote reference OFT824 – Senior Policy Adviser – on all correspondence. The closing date for applications is 5.00pm 17 May 2010. The Office of Fair Trading is an equal opportunities employer.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

Revised rules for the assessment of horizontal cooperation agreements under EU competition law

Posted by D. Daniel Sokol

The European Commission has unvieled Revised rules for the assessment of horizontal cooperation agreements under EU competition law.


This is the topic of a conference being organizing in Cyprus on May 22.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

Whom to Merge with? A Tale of the Spanish Banking Deregulation Process

Posted by D. Daniel Sokol

Ana Lozano-Vivas (Department of Economic Theory, Universidad de Málaga), Miguel A. Meléndez-Jímenez (Department of Economic Theory, Universidad de Málaga), and Antonio J. Morales (Department of Economic Theory, Universidad de Málaga) have posted Whom to Merge with? A Tale of the Spanish Banking Deregulation Process.

ABSTRACT: We put forward a simple spatial competition model to study banks’ strategic responses to the Spanish asymmetric geographic deregulation. We find that once geographic deregulation process finishes, inter-regional mergers between the savings banks are optimal. We claim that the public good nature of the merging activities together with the incentives provided by the deregulation process are the driving factors behind the equilibrium merger of the savings banks. It seems that the economic crisis will finally force regional politicians to allow inter-regional caja mergers, letting the consequences of the removal of geographic barriers in the 80’s come to a fruition with a delay of thirty years.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

Best Practices for the Conduct of Antitrust Procedures: Further Thoughts

Posted by D. Daniel Sokol

Ingrid Vandenborre & Nikolaos Peristerakis (Skadden) have written on Best Practices for the Conduct of Antitrust Procedures:  Further Thoughts.

ABSTRACT: On March 3, 2010, the European Commission (the "Commission") completed the public consultation of two "Best Practices" documents on the conduct of antitrust procedures under Articles 101/102 of the Treaty on the Functioning of the European Union ("TFEU") and the procedures of Hearing Officers. This article describes the Article 101/102 procedures in light of the Best Practices in comparison with the procedures employed by other leading competition law enforcers, in particular the U.S. Federal Trade Commission ("FTC") and the U.S. Department of Justice ("DOJ").

The Best Practices were issued amid intense debate concerning the Commission's dual role as prosecutor and judge and the lack of adversarial fact finding procedures, against the backdrop of the significant fines imposed by the Commission for anticompetitive conduct.  Many leading academics and practitioners have raised concerns about the protection of due process in light of the European Convention of Human Rights ("ECHR") and the forensic quality of the evidence relied on by the Commission in its decisions.

These criticisms are not new.  The first criticisms of the system date back to the 1970s and the most recent round to the mid 1990s. About 10 years ago, similar concerns about the combination of prosecutorial and adjudicative powers and evidentiary standards were again raised in the context of merger control review procedures after a series of Commission prohibition decisions.

The Commission's Best Practices clearly go a long way in improving the transparency of the Commission's antitrust proceedings.  However, commentators may still question whether the Best Practices go far enough in addressing the concerns regarding the Commission's dual role as prosecutor and judge and the absence of adversarial fact-finding procedures.

Some new issues have also been raised recently in connection with the Lisbon Treaty, as a result of which fundamental rights guaranteed under the European Charter for Human Rights ("Charter") will acquire the full value of primary EU law.

We describe below the key features of the U.S. DOJ's prosecutorial model and the FTC's administrative model, and compare them against the EU's procedures under Articles 101/102 TFEU.

May 5, 2010 | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 4, 2010

Critical Loss v. Diversion Analysis: Another Attempt at Consensus

Posted by D. Daniel Sokol

Malcolm Coate (FTC) & Joseph J. Simons (Paul Weiss) explain Critical Loss v. Diversion Analysis: Another Attempt at Consensus.

ABSTRACT: In our paper Critical Loss vs. Diversion Analysis: Clearing up the Confusion, we tried to bridge the gap between the merger analysts that prefer to begin the market definition exercise with firm level relationships (e.g., the Lerner Index) in conjunction with diversion ratios and those of us that prefer to start at the group or market level and to apply natural experiment and other evidence within the Critical Loss construct.  In our article, we developed the concept of the Retention Rate to link firm level to market level analysis. Given a theoretical estimate of the firm's sales diverted to rivals within the market in response to a single-firm price increase, the Retention Rate defines the share of those initially diverted sales that are "retained" within the market in response to an across-the-board price increase. The retained portion of the theoretical diversion can then be used as an adjustment to the Critical Loss analysis.  Farrell & Shapiro's comment presents a graphical illustration of our Retention Rate concept.  Either approach can be used to describe how sales are diverted to rivals in the hypothetical market in response to a market-wide small, but significant and non-transitory increase in price ("SSNIP").

In this rejoinder, we will first elaborate on the Critical Loss consensus identified in the Farrell & Shapiro paper and then move on to address the areas of misunderstanding associated with our work. As noted in our original paper, we do not disagree with the mathematics of Farrell & Shapiro's single-firm SSNIP analysis applied to a linear demand structure.

May 4, 2010 | Permalink | Comments (0) | TrackBack (0)

The Proposed Revisions to the Horizontal Merger Guidelines: What Firms Contemplating a Transaction Should Know

Posted by D. Daniel Sokol

The Proposed Revisions to the Horizontal Merger Guidelines: What Firms Contemplating a Transaction Should Know

On April 20, 2010, the US Federal Trade Commission (FTC) and the US Department of Justice
(DOJ) released for public comment a substantial proposed revision of the Horizontal Merger
Guidelines, which have not been comprehensively revised since 1992. The guidelines are
designed to describe the analytical framework the agencies apply in determining whether a
merger is likely to substantially lessen competition.

During this webinar, leading members of Arnold & Porter’s antitrust merger practice, William
Baer and Debbie Feinstein, will team with renowned economist, Dennis Carlton, to review the
most significant changes that have been proposed to the current guidelines, including:

  • The role of market definition, market shares, and concentration under the new guidelines
  • The importance of price discrimination markets and consideration of harm to subsets of customers
  • The framework for analyzing unilateral and coordinated efforts
  • Monopsony power


We will discuss the rationale key FTC and DOJ officials have offered for the changes. In addition, our
panelists will discuss the most effective ways of providing comments to the antitrust enforcement
agencies before the guidelines are finalized. The FTC and DOJ are accepting public comments
regarding their proposed revision until May 20, 2010.

Participants:
William Baer, Partner, Chair, Antitrust Practice Group, Arnold & Porter LLP
Debbie Feinstein, Partner, Arnold & Porter LLP
Dennis Carlton, Senior Managing Director, Compass Lexecon, Professor of Economics, University of Chicago Booth School of Business

When: Monday, May 10, 2010 from 12:00 – 1:30 p.m. EDT
RS VP: Click here to register. Webinar details will be provided following your registration.

May 4, 2010 | Permalink | Comments (0) | TrackBack (0)

The FTC Complaint against Intel Corporation: Implications for Consumer Protection

Posted by D. Daniel Sokol

Maureen Olhausen (Wilkinson Barker Knauer) discusses The FTC Complaint against Intel Corporation: Implications for Consumer Protection.

ABSTRACT: The Federal Trade Commission's controversial complaint against Intel Corporation contains much that will keep antitrust experts busy litigating, writing law review articles, and conducting conferences for many years to come. Beyond the fine points of antitrust law, however, the FTC's action has three important aspects that will likely have equally significant implications for consumer protection law and which may affect any business subject to the FTC's broad jurisdiction over commercial conduct. The FTC's expansive interpretation of Section 5 of the FTC Act coupled with the proposed strengthening of the FTC's remedial authority currently pending in Congress; the corrective advertising remedy it seeks; and the truncated process it followed in bringing the complaint all signal extraordinary changes in the FTC's approach that may have far-reaching effects for American business. The Washington Post neatly summarized these concerns in a recent editorial that observed "the agency's actions are aggressive and potentially worrisome" and its proposed remedies are "disconcertingly intrusive."

May 4, 2010 | Permalink | Comments (0) | TrackBack (0)

Severing Parent Liability For Cartel Infringements By Employees Of Subsidiaries

Posted by D. Daniel Sokol

Yves Botteman & Laura Atlee (Steptoe & Johnson) explore Severing Parent Liability For Cartel Infringements By Employees Of Subsidiaries.

ABSTRACT: We have previously  discussed the Akzo Nobel case,  in which the European Court of Justice ("ECJ")  clarified the presumption of joint and several liability of parent companies for cartel infringements committed by their wholly-owned subsidiaries. The attribution of liability has major implications for the amount (up to 10 percent of global turnover ) and payment of any fines imposed by the European Commission (the "Commission" or "EC") for such infringements. In most cases, regardless if a parent company has taken all of the steps necessary to ensure that its subsidiaries comply with competition law, it will be held jointly responsible for any subsequent infringement.

Assuming that the current EU competition legislation and the Court's position are not going to change in the near future, what can be done? In this article, we submit that the criminalization of cartel behavior against employees of subsidiaries could be used to achieve a higher level of deterrence while reducing fines on parent companies, particularly in circumstances where there is a showing that the latter have taken all of the steps within their power to ensure that their subsidiaries and employees strictly comply with EU competition law.

May 4, 2010 | Permalink | Comments (0) | TrackBack (0)

Best Practices in Article 101 and 102 Proceedings: Some Suggestions for Improved Transparency

Posted by D. Daniel Sokol

Marcus Glader (Vinge) suggests Best Practices in Article 101 and 102 Proceedings: Some Suggestions for Improved Transparency.

ABSTRACT: DG Competition has recently published three draft guidance papers setting out best practices for antitrust proceedings. The aim is to enhance transparency and predictability in the Commission's proceedings, while ensuring the efficiency of investigations into suspected competition law violations. This article focuses on the Commission's Best Practices on the conduct of proceedings concerning Articles 101 and 102 TFEU (the Best Practices) and considers potential improvements regarding access to documents and information in the Commission procedure.

The Commission has developed a number of practices to increase both efficiency and transparency during the investigative phase; these have now been fleshed out in the Best Practices. These practices include different kinds of meetings and disclosure of key submissions prior to the Statement of Objections ("SO"), thereby providing the parties concerned with some insight into the investigation and allowing them to express their views at an early stage in the proceedings. Nevertheless, the Commission could do more within the current institutional structure, in particular, to increase transparency and due process in the critical phase between SO and the Commission's decision. The Competition Commissioners and other Commission officials have often emphasized that due process is safeguarded since there are a number of "checks and balances" and that the decision is ultimately made by other people than those involved in the investigation. Against this background, two particular suggestions for further improvement will be made. First, the Commission should let the company under investigation (the defendant) have continuous access to the file from the SO until it has finalized the draft decision. The defendant then knows what is being submitted to the Commission and is given the opportunity to respond prior to the decision being made. Second, the defendant should be given access to, and the opportunity to comment on, key documents drawn up within the Commission during this critical phase.DG Competition has recently published three draft guidance papers setting out best practices for antitrust proceedings. The aim is to enhance transparency and predictability in the Commission's proceedings, while ensuring the efficiency of investigations into suspected competition law violations. This article focuses on the Commission's Best Practices on the conduct of proceedings concerning Articles 101 and 102 TFEU (the Best Practices) and considers potential improvements regarding access to documents and information in the Commission procedure.

A brief comparison will be made to how similar procedural issues are handled by the Swedish Competition Authority ("SCA"). This is relevant since the Swedish system involves an institutional structure with a division between the investigator (the SCA) and the adjudicator (the Stockholm City Court) and far-reaching transparency (under the principle of public access)-two aspects that have often been criticized as missing in the current Commission procedure.

May 4, 2010 | Permalink | Comments (1) | TrackBack (0)

Monday, May 3, 2010

Designing Antitrust Agencies for More Effective Outcomes: What Antitrust Can Learn From Restaurant Guides

Posted by D. Daniel Sokol

D. Daniel Sokol (University of Florida - Law) has posted a symposium essay Designing Antitrust Agencies for More Effective Outcomes: What Antitrust Can Learn From Restaurant Guides.  It is probably the only antitrust article ever that describes the Areeda-Hovenkamp treatise in the context of Chicago deep dish pizza.  Given the recent focus of the ICN on institution building, I think that this essay has some potential policy impact.

ABSTRACT: Antitrust policy should be concerned with the quality and effectiveness of the antitrust system. Some efforts at agency effectiveness include self-study of antitrust agencies to determine the factors that lead to improving agency quality. Such studies, however, often focus only on enforcement decisions and other agency initiatives such as competition advocacy. They do not reflect at least one other part of the equation: what do non-government users of the antitrust system think about the quality of antitrust agencies? This Symposium Essay advocates the use of a ratings guide by antitrust practitioners for antitrust agencies to add to the tools in which to measure agency effectiveness for both mature and emerging antitrust agencies.

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Apple a Potential Target of a US Government Antitrust Suit

Posted by D. Daniel Sokol

The news report is here

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Banking Competition and Capital Ratios

Posted by D. Daniel Sokol

Martin Cihák, International Monetary Fund (IMF) and Klaus Schaeck, Bangor Business School, University of Wales explore Banking Competition and Capital Ratios.

ABSTRACT: Empirical studies provide evidence that bank capital ratios exceed regulatory requirements. But why do banks maintain capital levels above regulatory requirements? We use data for more than 2,600 banks from 10 European countries to test recent theories suggesting that competition incentivizes banks to maintain higher capital ratios. These theories also predict that banks that engage in arm’s length lending have lower capital ratios, and that shareholder rights and deposit insurance characteristics affect capital ratios. Consistent with these theories, our evidence robustly indicates that competition increases capital holdings. Banks that lend at arm’s length exhibit lower capital ratios, whereas banks in countries with strong shareholder rights operate with higher capital ratios. We also show some evidence that generous deposit protection schemes that exclude non-deposit creditors are associated with higher capital ratios. Our results have important policy implications. First, while the traditional view suggests imposing restrictions on bank activities in order to restrain competition, our analysis indicates the opposite, even after adjusting the regressions for risk-taking. Second, weak shareholder rights undermine market forces that would otherwise encourage banks to hold higher capital ratios.

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Congrats to Einer Elhauge - Winner of the 2010 Jerry S. Cohen Award

Posted by D. Daniel Sokol

Einer Elhauge, the Petrie Professor of Law at Harvard Law School, has been selected as the recipient of the Jerry S. Cohen Award for Antitrust Scholarship for his article “Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory” (123 Harvard Law Review 397, 2009).  

Elhauge will receive the award during the gala luncheon at the American Antitrust Institute’s Annual Conference on June 24 at the National Press Club in Washington The Jerry S. Cohen Award for Antitrust Scholarship was created through a trust established in honor of the late Jerry S. Cohen, an outstanding trial lawyer and antitrust writer.  It is administered by his former law firm Cohen Milstein Sellers & Toll.  The Committee that selected the best antitrust scholarship of 2009 consisted of:  Prof. Eleanor Fox of New York University School of Law; Prof. Warren S. Grimes of Southwestern Law School; Ann C. Yahner, Administrative Law Judge for the District of Columbia; Charles P. Goodwin, Partner at Berger & Montague; and Daniel A. Small, Partner at Cohen Milstein Sellers & Toll.

In “Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory,” Elhauge contends that both Chicago School theorists (who have argued that tying cannot create anticompetitive effects because there is only a single monopoly profit) and some Harvard School theorists (who have argued that tying doctrine’s quasi–per se rule is misguided because tying cannot create anticompetitive effects without foreclosing a substantial share of the tied market) are mistaken. Instead, Elhauge asserts that even without a substantial foreclosure share, tying by a firm with market power generally increases monopoly profits and harms consumer and total welfare, absent offsetting efficiencies.

Elhauge is an author of numerous pieces on  a range of topics even broader than he teaches, including antitrust (monopolization, predatory pricing, tying, bundled discounts, loyalty discounts, disgorgement, petitioning and state action immunity, the Google Books Settlement, and the Harvard v. Chicago schools of antitrust), public law (statutory interpretation, legislative term limits, the 2000 Presidential election, the implications of interest group theory for judicial review), corporate law (social responsibility and sale of control doctrine), patent law (patent holdup and royalty stacking), the legal profession (the value of litigation and counseling advice), and health law policy (healthcare fragmentation, medical technology assessment, how to make health law a coherent legal field, and how to devise a morally just and cost effective medical system).  He served as Chairman of the Antitrust Advisory Committee to the Obama Campaign. 

Register for the AAI’s Annual Conference here.

If you are a former student of Einer's, I urge you to register for the conference.


May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Deutsche Telekom and Pacific Bell v. Linkline: Does Competition Law Have a Place in Regulated Industries?

Posted by D. Daniel Sokol

Martin Holterman, University of Twente - School of Management and Governance asks Deutsche Telekom and Pacific Bell v. Linkline: Does Competition Law Have a Place in Regulated Industries?

ABSTRACT: In two recent cases, the Supreme Court of the United States and the Court of First Instance of the European Communities gave very different answers to the question of how much involvement the competition authorities should have in the telecom industry. This paper takes those cases as a starting point to examine their legal reasoning, focusing on the question of whether those results were required by the substantive competition laws, and whether they make sense from the point of view of economic science. Subsequently, an attempt is made to model the costs and benefits of having more than one government agency supervise the same industry.

The results show that the rulings of each court are consistent with the well known trends in competition law, resulting in a more interventionist European approach contrasted with an American result that rules out certain theories of liability that are, economically speaking, undoubtedly meritorious. The model that is proposed to consider the uncertainties involved in regulating a high-innovation industry offers a framework for thinking about such matters without – for now – allowing specific recommendations for either Europe or the US.

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Dialectical Antitrust: An Alternative Insight into the Methodology of the EC Competition Law Analysis

Posted by D. Daniel Sokol

Oles Andriychuk (University of East Anglia) offers Dialectical Antitrust: An Alternative Insight into the Methodology of the EC Competition Law Analysis.

ABSTRACT: The main idea behind this article was to perform a theoretical analysis of the purposes and tools of antitrust policy and law. An ancient dialectical method has been applied to separate different components of competition policy with the following deconstruction of the conflicting essence of those elements without inevitable evening-out the distinctions between them.

Dialectical approach to antitrust demonstrates why competition deserves to be explored independently from other legitimate economic goals and that the primary purpose of competition law logically is protection (via preventive antitrust, i.e. arts 101–106 TFEU) and promotion (via proactive antitrust, i.e. sector-specific regulation) of competition.

Dialectical antitrust does not deny that consumer welfare constitutes a meta-goal of modern competition policy. Indeed in the hierarchy of economic values consumer welfare remains decisive, but methodologically it is neither exhausted nor entirely embraced by competition law, which exists in order to regulate competition.

Antitrust theory has striven for a long time to reconcile the apparent dilemma between the aspiration to protect the freedom of undertakings to benefit from their successful competition on one hand, and the freedom of their less successful counterparts to participate in this competition on the other; to provide for firms liberal environment on the one hand and to fine-tune their behaviour in order to establish legal predictability and economic efficiency on the other; to protect competition on the one hand and maximise common benefits for society on the other. Essentially, those three crucial dimensions of the competition dilemma can be solved within the framework of dialectical antitrust, which on the level of methodology proposes to utilitise those conflicts by placing their different components into separate parentheses.

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

United/Continental Merger Announced

Posted by D. Daniel Sokol

The merger announcement is now official.  But will it get antitrust approval?  The competitive balance of airlines has changed since the Delta/Northwest merger and it also seems that airlines cannot make a profit even after various consolidation waves.

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)

Mergers when firms compete by choosing both price and promotion

Posted by D. Daniel Sokol

Steven Tenna (FTC), Luke Froeb (Vanderbilt), and Steven Tschantz (Vanderbilt) ponder Mergers when firms compete by choosing both price and promotion.

ABSTRACT: We analyze the bias from predicting merger effects using structural models of price competition when firms actually compete using both price and promotion. We extend the standard merger simulation framework to allow for competition over both price and promotion and ask what happens if we ignore promotional competition. This model is applied to the super-premium ice cream industry, where a merger between Nestlé and Dreyer's was challenged by the Federal Trade Commission. We find that ignoring promotional competition significantly biases the predicted price effects of a merger to monopoly (5% instead of 12%). About three-fourths of the difference can be attributed to estimation bias (estimated demand is too elastic), with the remainder due to extrapolation bias from assuming post-merger promotional activity stays constant (instead it declines by 31%).

May 3, 2010 | Permalink | Comments (0) | TrackBack (0)