Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, May 11, 2010

Branching Deregulation and Merger Optimality

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), amd Antonio J. Morales (Department of Economic Theory, Universidad de Málaga) discuss Branching Deregulation and Merger Optimality.

ABSTRACT: The U.S. banking industry has been characterized by intense merger activity in the absence of economies of scale and scope. We claim that the loosening of geographic constraints on U.S. banks is responsible for this consolidation process, irrespective of value-maximizing motives. We demonstrate this by putting forward a theoretical model of banking competition and studying banks’ strategic responses to geographic deregulation. We show that even in the absence of economies of scale and scope, bank mergers represent an optimal response. Also, we show that the consolidation process is characterized by merger waves and that some equilibrium mergers are not profitable per se -they yield losses- but become profitable as the waves of mergers unfold.

May 11, 2010 | Permalink | Comments (0) | TrackBack (0)

Monday, May 10, 2010

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

Posted by D. Daniel Sokol

I noticed that coming out soon is the GCR's annual rating of enforcement agencies.  It is always worth reading (and buying).  I suggest a different set of metrics for a symposium piece I did for the ABA Antitrust Section "Antitrust Institutions" conference that Chicago Loyola hosted last September in a piece titled Designing Antitrust Agencies for More Effective Outcomes: What Antitrust Can Learn from Restaurant Guides.

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 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Department of Justice, Federal Trade Commission and U.S. Patent and Trademark Office to Hold Workshop on Promoting Innovation

Posted by D. Daniel Sokol

The Department of Justice, the Federal Trade Commission (FTC) and the Department of Commerce's United States Patent and Trademark Office (USPTO) announced today that they will hold a joint public workshop on the intersection of patent policy and competition policy and its implications for promoting innovation.

Welcoming Remarks
9:00 a.m.-9:30 a.m.

David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office
Christine Varney, Assistant Attorney General, Antitrust Division, Department of Justice
Aneesh Chopra, U.S. Chief Technology Officer, Executive Office of the President

PANEL 1: The Patent Application Backlog: The Competitive Challenges for Innovators
9:30 a.m.-11:00 a.m.

Panelists
John F. Duffy, Oswald Symister Colclough Research Professor of Law,
The George Washington University Law School
Josh Makower, M.D., Founder & CEO, ExploraMed Development LLC
Michael Meurer, Professor of Law, Boston University School of Law
Richard T. Ogawa, Esq., Ogawa P.C.
Scott Stern, Joseph and Carole Levy Professor, Kellogg School of Management, Northwestern University and Visiting Professor, MIT Sloan School of Management

Break
11:00 a.m.-11:15 a.m.

PANEL 2: Permanent Injunctions in the District Courts and ITC: Effects on Competition and Innovation
11:15 a.m.-12:45 p.m.

Panelists
Bernard J. Cassidy, Executive Vice President and General Counsel, Tessera Technologies Inc.
Colleen Chien, Assistant Professor of Law, Santa Clara Law
Alice A. Kipel, Partner, Steptoe & Johnson LLP
Christine McDaniel, Economic Adviser to Chairman Shara L. Aranoff, U.S. International Trade Commission
William Barr, former General Counsel, Verizon Communications Inc.
Emily Ward, Vice President and Deputy General Counsel, eBay Inc. (invited)

Lunch Break
12:45 a.m.-2:15 p.m.

Introductory Remarks
2:15 a.m.-2:30 p.m.

Edith Ramirez, Commissioner, Federal Trade Commission

PANEL 3: Standard Setting, Patent Rights, and Competition Policy
2:30 p.m.-4:00 p.m.

Panelists
Mark Chandler, Senior Vice President & General Counsel, Cisco Systems Inc.
Patrick Gallagher, Director, National Institute of Standards & Technology,
Department of Commerce
Brian Kahin, Senior Fellow, Computer & Communications Industry Association
Anne Layne-Farrar, Director, LECG
Amy A. Marasco, General Manager, Standards Strategy, Microsoft Corp.
A. Douglas Melamed, Senior Vice President & General Counsel, Intel Corp.

Break
4:00 p.m.-4:15 p.m.

Wrap-Up Discussion
4:15 p.m.-5:15 p.m.

Carl Shapiro, Deputy Assistant Attorney General for Economic Analysis, Antitrust Division, Department of Justice
Joseph Farrell, Director, Bureau of Economics, Federal Trade Commission
Stuart Graham, Chief Economist, U.S. Patent and Trademark Office

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Competition as a Socially Desirable Dilemma. Theory vs. Experimental Evidence

Posted by D. Daniel Sokol

Christoph Engel (Max Planck Institute for Research on Collective Goods) discusses Competition as a Socially Desirable Dilemma: Theory vs. Experimental Evidence.

ABSTRACT: Cartels are inherently instable. Each cartelist is best off if it breaks the cartel, while the remain-ing firms remain loyal. If firms interact only once, if products are homogenous, if firms compete in price, and if marginal cost is constant, theory even predicts that strategic interaction forces firms to set the market clearing price. For society, this would be welcome news. Without antitrust intervention, the market outcome maximises welfare. The argument becomes even stronger if the opposite market side has a chance to defend itself; if imposing harm on the opposite market side is salient; if it is clear that cartels are at variance with normative expectations prevalent in society. There is an equally long list of reasons, though, why such optimism might be unwarranted: capacity is limited; interaction is repeated, and the end is uncertain; firms might be willing to run a limited risk of being exploited by their comp! etitors, hoping that the investment pays. This paper explores the question both theoretically and experimentally. In the interest of capitalising on a rich body of experimental findings, and on the concept of conditional cooperation in particular, the paper offers a formal model that interprets oligopoly as a linear public good.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Beer - the ties that bind

Posted by D. Daniel Sokol

Michael Waterson (Department of Economics, University of Warwick) explores Beer - the ties that bind.

ABSTRACT: It started with the Beer Orders (1989). A watershed decision was made by the Law Lords in July 2006. For one man, Bernie Crehan, this was the culmination of a 15 year episode in the pub trade, in which he has made legal history as the first UK case of damages for breach of competition law being awarded by a court. Possibly hundreds of other cases hung on their Lordships’ decision and Nomura, the Japanese bank that took over the chain called Inntrepreneur, had a total potential liability of £100m. And it all concerns Article 81, vertical agreements, and the price of a pint of beer. In 1989, the UK Monopolies and Mergers Commission published its lengthy and longawaited report on Beer. The Commission “…recommended measures that eventually led brewers to divest themselves of 14000 public houses. The MMC claimed that their recommendations would lower retail prices and increase consumer choice. There is considerable dou! bt, however, that their objectives were achieved.” (Slade, 1998, p565). In their report, the MMC noted rising real prices of beer and seized upon the power of the then big six brewers exercised through their considerable tied estates as being a prime motor. Consequently, they recommended that the ties be substantially cut. At that stage, the MMC (unlike the present day Competition Commission) did not determine remedies and it was left to the Department of Trade and Industry (DTI) to formulate the remedies (the Beer Orders) and the Office of Fair Trading (OFT) to supervise their implementation. Thus the OFT found itself implementing the Beer Orders in the face of a brewing industry determined to fight back.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Heterogeneous Distributions of Firms Sustained by Innovation Dynamics – a model with an empirical application

Posted by D. Daniel Sokol

Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) and Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) explore Heterogeneous Distributions of Firms Sustained by Innovation Dynamics – a model with an empirical application.

ABSTRACT: This paper develops a framework to appreciate the observed heterogeneity of firm size distributions and the entry and exit of products and firms associated with it. It is based on a model where new products are introduced by innovating firms in a quasi-temporal setting of monopolistic competition. The rate at which a firm innovates, according to a firm-specific Poisson process, is assumed to be influenced by the firm’s past experience and cumulated knowledge assets. The model assigns a fundamental role to entrepreneurship of existing and potential firms. The empirical analysis is based on detailed firm-level export data, which describes firm size in terms of products and markets, and firm dynamics in terms of changes in the supply pattern (varieties and markets) of existing firms in combination with entry/exit of firms. The empirical results are consistent with the model. First, the modeled innovation process imply a p! ersistent distribution of heterogeneous firms. Second, the invariant size distribution of firms is associated with significant micro-dynamics, where firms continuously add and subtract varieties from their product mix, and new firms may enter while some exit. Third, an econometric analysis where firms’ introduction of new varieties is explained by firm attributes provides support for the assumption of a firm-specific and state-dependent stochastic innovation process.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

British Airways fuel price-fixing trial collapses

Posted by D. Daniel Sokol

Things look really bad for the case against BA.  This is big news.  I have not had time to figure out what has happened but if anyone has details, please feel free to email them to me.

Update 10:46am - it looks as though the prosecution had not disclosed the full evidence to the defense, the "bit left off" being about 70,000 emails.

Update: 12:36pm - The OFT statement is out.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Pioneer burnout: Radical product innovation and firm capabilities

Posted by D. Daniel Sokol

Christina Guenther (Max Planck Institute of Economics) explains Pioneer burnout: Radical product innovation and firm capabilities.

ABSTRACT: The question of whether and when to enter a newly emerging product market has been the focus of practitioners as well as researchers. This paper contributes to the literature by investigating the order of entry as well as pre-entry experiences with a population-based approach for the radically new product market of multifunctional machine tools for the case of Germany between 1949 and 2002. Estimation results show, that later entrants outperform pioneers. Moreover, it turns out that industry and technology specific capabilities do not increase survival chances. But when decomposing the known positive age effect on survival, we see that particularly dynamic capabilities, i.e. the competence to integrate additional business activities into the current product portfolio, significantly lower the risk of failure in the new product market.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Best of the Best: Top Female Antitrust Economics and Law Professors

Posted by D. Daniel Sokol

Like any list, this is probably under-inclusive.  For every person selected, there is someone else deserving of a spot.  However, I tried to make an All Star Team that spanned people across the globe based on scholarly impact in the field of antitrust law and economics.  Let me qualify the list by noting that there is an English language bias to it.  The bias is more pronounced in law than in economics as law suffers from a lack of consensus "A" journals.  Because antitrust law is far more localized than antitrust economics, I have tried to allow for greater geographic diversity among law professors.  For this reason, I also include not more than three professors from any given jurisdiction. The goal was to include full time faculty. 

Law

Caron Beaton-Wells (University of Melbourne)

May Fong Cheong (University of Malaysia)

Paula Forgiani (University of Sao Paolo)

Eleanor Fox (NYU)

Michal Gal (University of Haifa)

Hillary Greene (UConn)

Laurence Idot (University of Paris)

Alison Jones (Kings College)

Val Korah (UCL)

Marina Lao (Seton Hall)

Imelda Maher (University College Dublin)

Catherine Prieto (University of Paris)

Heike Schweitzer (Mannheim)

Brenda Sufrin (University of Bristol)

Masako Wakui (Osaka City University)

Xiaoye Wang (Chinese Academy of Social Sciences)


Up and Coming

Pinar Akman (University of East Anglia)

Arianna Andreangeli (University of Liverpool)

Anu Bradford (University of Chicago)

M. Elina Cruz (Catholic University of Chile)

Kati Cseres (University of Amsterdam)

Yanbei Meng (Renmin University)

Kasturi Moodaliyar (University of the Witwatersrand)

Ruohong Chen (Beijing Foreign Studies University)

Anne-Lise Sibony (University of Liege)


Economics

Susan Athey (Harvard)

Cecile Aubert (University of Bordeaux)

Emmanuelle Auriol (Toulouse School of Economics)

Meaghan Busse (Kellogg)

Judith Chevalier (Yale)

Leemore Dafny (Kellogg)

Elizabeth Farina (University of Sao Paolo)

Nancy Gallini (University of British Columbia)

Penny Goldberg (Princeton)

Justine Hastings (Yale)

Francine Lafontaine (University of Michigan)

Margaret Levenstein (University of Michigan)

Julie Mortimer (Harvard)

Nancy Rose (MIT)

Suzanne Scotchmer (Berkeley)

Fiona Scott Morton (Yale)

Margaret Slade (University of British Columbia)

Valerie Suslow (University of Michigan)

Reinhilde Veugeleurs (KU Leuven)

Catherine Waddams (University of East Anglia)



Up and Coming

Yuliya Bolotova (University of Idaho)

Ying Fan (University of Michigan)

Chiara Fumagalli (Bocconi)

Katherine Ho (Columbia)

Mara Lederman (University of Toronto)

Guanming Shi (University of Wisconsin)

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Competition Law and Consumer Protection / Information Exchange Agreements

Posted by D. Daniel Sokol

The UCL Centre for Law and Economics is delighted to announce that it will hold a conference on competition law on 21 and 22 May 2010 in Cyprus.


This two day international conference will cover competition law and consumer protection (21 May) and information exchange agreements (22 May).


The topics that will be covered during the conference include:
Competition Law and Consumer Protection
The economics of information exchange in competition law 
Information Exchange: Current Law from a Compliance Perspective
The Future of Information Exchange in Competition Law
- Specific Market Characteristics and Competition Law (Economies in Transition, Small Market Economies, Economies with an Important Informal Economy)


The speakers at this international conference include: 
Bernard Amory, Jones Day
Georgios Arestis, European Court of Justice
Matthew Bennett, UK Office of Fair Trading
Antonio Capobianco, OECD
Michal Gal, University of Haifa
Judge Frederic Jenny, OECD, Cour de Cassation
Professor John Kallaugher, Latham & Watkins and UCL
Ronit Kan, Israeli Competition Authority, tbc
Assimakis Komninos, Hellenic Competition Commission
Professor Valentine Korah, UCL
Bill Kovacic, US Federal Trade Commission
Kai Uwe Kuhn, University of Michigan
Ioannis Lianos, UCL
Paolisa Nebbia, Italian Competition Authority
Petko Nikolov, Bulgarian Competition Authority
Alison Oldale, UK Competition Commission
Aleksandra Ossowska, European Commission, DG Comp
Jorge Padilla, LECG
Savvas Papasavvas, General Court of the! EU 
Robbert Snelders, Cleary Gottlieb 
Jules Stuyck, University of Leuven
Avishalom Tor, University of Haifa 
Thibaut Vergé, French Competition Council 


For more information on the conference and a programme, please visit the Eventbrite page at http://ucl-cyprus-conference.eventbrite.com/.

Tickets will be available for £95 and the event will be registered for CPD.

You are invited to the following event:
UCL Centre for Law and Economics conference, 21 & 22 May 2010, Nicosia, Cyprus

Date:
Friday, May 21, 2010 at 5:00 PM
- to -
Saturday, May 22, 2010 at 6:00 PM (GMT+0200)


Location:
Administration Centre, National Bank of Greece
Auditorium 15
Arch. Makarios III Avenue
Nicosia
Cyprus
 
  Can you attend this event?  Respond Here  
 
For more information click here

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)

Pricing and Information Disclosure in Markets with Loss-Averse Consumers

Posted by D. Daniel Sokol

Heiko Karle (Université Libre de Bruxelles) and Martin Peitz (University of Mannheim) discuss Pricing and Information Disclosure in Markets with Loss-Averse Consumers.

ABSTRACT: We develop a theory of imperfect competition with loss-averse consumers. All consumers are fully informed about match value and price at the time they make their purchasing decision. However, a share of consumers are initially uncertain about their tastes and form a reference point consisting of an expected match value and an expected price distribution, while other consumers are perfectly informed all the time. We derive pricing implications in duopoly with asymmetric firms. In particular, we show that a market may exhibit more price variation the larger the share of uninformed, loss-averse consumers. We also derive implications for firm strategy and public policy concerning firms’ incentives to inform consumers about their match value prior to forming their reference point.

May 10, 2010 | Permalink | Comments (0) | TrackBack (0)