Antitrust & Competition Policy Blog

India Competition Update: Commission & Appellate Tribunal Up and Running

Posted by D. Daniel Sokol

Abdullah Hussain (Luthra & Luthra) provides an India Competition Update: Commission & Appellate Tribunal Up and Running.

ABSTRACT: In its brief tenure, the Tribunal has disposed of several pending cases under the MRTP Act with surprising speed and efficiency. Its jurisdiction under the provisions of the Act, however, has so far been invoked only once. The Tribunal took that opportunity to deliver a very telling judgment.

Journal of Competition Law and Economics - June 2010; Vol. 6, No. 2, is available online

Posted by D. Daniel Sokol

Journal of Competition Law and Economics Table of Contents 

A new issue of Journal of Competition Law and Economics is available online:

June 2010; Vol. 6, No. 2

The below Table of Contents is available online at: http://jcle.oxfordjournals.org/content/vol6/issue2/index.dtl

ARTICLES

Niels J. Philipsen

REGULATION OF LIBERAL PROFESSIONS AND COMPETITION POLICY: DEVELOPMENTS IN THE EU AND CHINA
Journal of Competition Law and Economics Advance Access published on April 21, 2009
Journal of Competition Law and Economics 2010 6: 203-231; doi:10.1093/joclec/nhp009 [Abstract] [Full Text] [PDF]  

D. Daniel Sokol and Kyle W. Stiegert

EXPORTING KNOWLEDGE THROUGH TECHNICAL ASSISTANCE AND CAPACITY BUILDING
Journal of Competition Law and Economics Advance Access published on July 1, 2009
Journal of Competition Law and Economics 2010 6: 233-251; doi:10.1093/joclec/nhp010 [Abstract] [Full Text] [PDF]  

Bronwyn Howell

POLITICS AND THE PURSUIT OF TELECOMMUNICATIONS SECTOR EFFICIENCY IN NEW ZEALAND
Journal of Competition Law and Economics Advance Access published on September 9, 2009
Journal of Competition Law and Economics 2010 6: 253-276; doi:10.1093/joclec/nhp016 [Abstract] [Full Text] [PDF]  

Oliver Budzinski and Isabel Ruhmer

MERGER SIMULATION IN COMPETITION POLICY: A SURVEY
Journal of Competition Law and Economics Advance Access published on September 11, 2009
Journal of Competition Law and Economics 2010 6: 277-319; doi:10.1093/joclec/nhp014 [Abstract] [Full Text] [PDF]  

Adriaan ten Kate and Gunnar Niels

THE CONCEPT OF CRITICAL LOSS FOR A GROUP OF DIFFERENTIATED PRODUCTS
Journal of Competition Law and Economics Advance Access published on September 11, 2009
Journal of Competition Law and Economics 2010 6: 321-333; doi:10.1093/joclec/nhp015 [Abstract] [Full Text] [PDF]  

Kai Hüschelrath, Nina Leheyda, and Patrick Beschorner

ASSESSING THE EFFECTS OF A ROAD-SURFACING CARTEL IN SWITZERLAND
Journal of Competition Law and Economics Advance Access published on October 7, 2009
Journal of Competition Law and Economics 2010 6: 335-374; doi:10.1093/joclec/nhp018 [Abstract] [Full Text] [PDF]  

Cory S. Capps

BUYER POWER IN HEALTH PLAN MERGERS
Journal of Competition Law and Economics Advance Access published on November 13, 2009
Journal of Competition Law and Economics 2010 6: 375-391; doi:10.1093/joclec/nhp020 [Abstract] [Full Text] [PDF]  

Mika Kato

TRANSITORINESS OF MARKET POWER AND ANTITRUST ACTIVITY
Journal of Competition Law and Economics Advance Access published on November 15, 2009
Journal of Competition Law and Economics 2010 6: 393-421; doi:10.1093/joclec/nhp019 [Abstract] [Full Text] [PDF]  

Viola Chen

THE EVOLUTION OF THE BABY FOOD INDUSTRY, 2000–2008
Journal of Competition Law and Economics Advance Access published on November 16, 2009
Journal of Competition Law and Economics 2010 6: 423-442; doi:10.1093/joclec/nhp021 [Abstract] [Full Text] [PDF]  

F. Andrew Hanssen

MONOPSONY ABUSE OR EFFICIENT PURCHASING? QUALITY MEASUREMENT IN THE TOBACCO LEAF MARKET
Journal of Competition Law and Economics Advance Access published on November 16, 2009
Journal of Competition Law and Economics 2010 6: 443-456; doi:10.1093/joclec/nhp022 [Abstract] [Full Text] [PDF]  

Michele Polo

ANTICOMPETITIVE VERSUS COMPETITIVE EXPLANATIONS OF UNILATERAL PRACTICES: THE IDENTIFICATION PROBLEM
Journal of Competition Law and Economics Advance Access published on November 19, 2009
Journal of Competition Law and Economics 2010 6: 457-476; doi:10.1093/joclec/nhp023 [Abstract] [Full Text] [PDF]  

Xinzhu Zhang and Vanessa Yanhua Zhang

CHINESE MERGER CONTROL: PATTERNS AND IMPLICATIONS
Journal of Competition Law and Economics Advance Access published on December 24, 2009
Journal of Competition Law and Economics 2010 6: 477-496; doi:10.1093/joclec/nhp029 [Abstract] [Full Text] [PDF]  

A Real-World Analysis of Pharmaceutical Settlements: The Missing Dimension of Product-Hopping

Posted by D. Daniel Sokol

chael A. Carrier, Rutgers University School of Law - Camden explores A Real-World Analysis of Pharmaceutical Settlements: The Missing Dimension of Product-Hopping.

ABSTRACT: The pharmaceutical industry plays an important role in improving human health. But it also provides the setting for some of the most concerning issues in the patent-antitrust intersection today. Two activities are particularly worrisome.

First, brand-name pharmaceutical firms and generic companies have settled patent litigation. As part of these agreements, brand firms have paid generics to drop their patent challenges and delay entering the market.

Second, brand firms, frequently at the end of a patent term, have engaged in “product hopping,” often switching from one means of administering a drug (e.g., tablet) to another (e.g., capsule).

In the past decade, courts and commentators have separately explored these activities. But no one has yet explored the intersection of these two forms of conduct. This Article tackles this project. In doing so, it uncovers a vital strategy that has, until now, fallen through the cracks of antitrust law.

This Article will show that the combination of settlements and product hopping results in unrecognized anticompetitive harm. Such a conclusion is particularly important given arguments offered - on the surface, reasonably - by settling parties today. These parties have contended that settlement that allows entry before the end of the patent term is, by definition, procompetitive. After all, such entry would appear to introduce competition before patent expiration. This would seem to be a significant justification for the settlement.

But the closer analysis presented here reveals the anticompetitive effects arising from the combination of settlement and product hopping. For a settlement that prevents patent challenges for a period of time - even if less than the duration of the patent - gives the brand firm the space in which it can comfortably switch the market to the new product. So by the time, years later, that the generic enters, the market will have already been switched to the new product. The generic will no longer be able to take advantage of state drug product substitution laws that allow pharmacists to automatically substitute generic drugs in place of brand-name drugs. The lethal combination of the two, in short, erects a significant roadblock to pharmaceutical competition.

The Criminalization of Serious Cartel Conduct in Australia

Posted by D. Daniel Sokol

David K. Round & Manish Agarwal (University of South Australia) discuss The Criminalization of Serious Cartel Conduct in Australia.

ABSTRACT: On July 24, 2009, the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 ("Cartels Act") came into force in Australia, introducing parallel criminal and civil prohibitions for designated serious forms of cartel conduct between competitors, namely price-fixing, market sharing, output restriction, and bid rigging. Each of these practices have featured heavily in court proceedings in Australia since the commencement of the Trade Practices Act 1974 and, in the last decade, have been the subject of considerable judicial, regulatory, and public concern as to their continuing presence in Australia and the apparently weak deterrent effect that available monetary penalties were having on enterprises and their executives.

The amendment reflected a growing trend towards criminalization of serious cartel conduct internationally, a movement that has been led by the United States and supported by international organizations such as the Organization for Economic Co-operation and Development ("OECD")and the International Competition Network ("ICN").

With the amendments, Australia has joined Brazil, Canada, Czech Republic, Estonia, Ireland, Israel, Korea, Japan, Norway, Romania, Russia, Slovakia, Slovenia, the United States, and the United Kingdom as countries that criminalize hard-core cartel activity.

The European Union and the Financial Crisis: A State of Play (L'Union Européenne AU Chevet De La Crise Financière: Un État Des Lieux)

Posted by D. Daniel Sokol

Gaetane Schaeken Willemaers, Catholic University of Louvain and Damien Gerard, Chair of European Law, Louvain University advise on The European Union and the Financial Crisis: A State of Play (L'Union Européenne AU Chevet De La Crise Financière: Un État Des Lieux) .

ABSTRACT: The European Union was once portrayed as powerless in the face of the financial crisis. In fact, as apparent from this contribution, it has been at the forefront of the coordination of the rescue plans designed by the Member States and of the reform of the financial system. Those two aspects are dealt with successively, with no other ambition than to report on the current stage of the European Union’s involvement in the management of the crisis. The first part deals with the reliance on State aid rules as a tool of economic policy coordination. It shows how the enforcement of those rules has mirrored the development of the financial crisis and outlines the conditions imposed on the clearance of state guarantees and recapitalisation plans. The second part deals with the reforms of the regulatory framework applicable to the financial sector in the EU, in the aftermath of the de Larosière report. In doing so, it presents succinctly new regulations and pending proposals designed to make up for the substantive weaknesses highlighted by the crisis, and sketches the contours of the restructuring of the EU financial supervisory system.

Economics Now Plays an Important Role at The Class Certification Stage for Antitrust Class Actions

Posted by D. Daniel Sokol

Wendy Bloom (Kirkland & Ellis) argues that Economics Now Plays an Important Role at The Class Certification Stage for Antitrust Class Actions.

ABSTRACT: Economic analysis now plays an important role at the class certification stage of antitrust class actions. This is due to the increased scrutiny by courts of plaintiffs' class action allegations. Although not all federal courts apply a rigorous analysis to class action allegations, the trend is moving in this direction. As a result, there is a real opportunity now, with the help of economic experts, to defeat certification of antitrust class actions.

The critical battle in certification of a class pursuant to Federal Rule of Civil Procedure 23(b)(3) is whether plaintiffs can establish that common issues predominate over individual issues. Economists opine on whether plaintiffs can prove the elements of an antitrust claim-existence of a conspiracy, market definition, market power, anticompetitive effect-with common evidence. 

For antitrust class actions whether a class will be certified under Rule 23(b)(3) often turns on whether a defendant (and the economist it has retained) succeed in convincing the court that plaintiffs will be unable to prove antitrust injury to all alleged class members through common evidence. 

Competition Policy and Property Rights

Posted by D. Daniel Sokol

John Vickers, University of Oxford - Department of Economics discusses Competition Policy and Property Rights.

ABSTRACT: One of the most controversial questions in current competition policy is when, if ever, should competition law require a firm with market power to share its property, notably intellectual property, with its rivals? And if supply is required, on what terms? These questions are discussed with reference to recent law cases including the EC Microsoft judgment of 2007 and the US linkLine case of 2009. The analysis focuses on whether competition law and regulation are complements or substitutes and on incentives for investment and (sequential) innovation.

Cooperation, Comity, and Competition Policy

Posted by D. Daniel Sokol

Andrew Guzman (Berkeley Law) has a really great edited book coming out on Cooperation, Comity, and Competition Policy.

ABSTRACT: Cooperation, Comity, and Competition Policy , edited by Andrew T. Guzman, illustrates how domestic competition law policies intersect with the realities of international business. It offers a discussion of what might be done to improve the way in which cross-border business is handled by competition policy.

The first part of the book provides country reports written by local experts explaining the extraterritorial reach of national laws. Each country report summarizes existing domestic law and examines the conditions under which each country applies its substantive competition laws to conduct that takes place abroad. These chapters also address the question of comity , meaning the circumstances in which a country would decline to exercise jurisdiction on the grounds that another state is the more appropriate jurisdiction. Finally, the extent of cooperation between the local government and other states is examined. In conducting cross-border business activity, these reports provide the reader with a sense of the multiple jurisdictions that a business must consider within the scope of how laws from various states interact and overlap. The countries covered include: Australia, Brazil, Canada, China, the EC, Israel, Japan, Singapore and the United States.

The second part of the book offers several proposals for effectively managing these overlapping competition policy regimes. Written by top academics and practitioners, the proposals render some of the most important current thinking on the topic.

The country reports and the expert policy proposals together provide a unique perspective on international competition policy and the challenges of the international competition policy regime.

Features

• Illustrates how domestic competition law policies intersect with the realities of international business
• Features country reports which summarize existing domestic law and the conditions under which each country applies its substantive competitition laws; they provide an expert introduction to national policies on the subject.
• Provides expert policy analysis written by prominent academics and practitioners to assist in managing the overlapping competition policy regimes
• Provides a global perspective which facilitates a sense of the full scope of multiple competition laws applying simultaneously to business activity.

Table of Contents

PART ONE: COUNTRY REPORTS
A. Cooperation, Comity, and Competition Policy: United States
Edward T. Swaine

B. Extraterritoriality, Comity and Cooperation in EC Competition Law
Damien Geradin, Marc Reysen and David Henry

C. The International Reach of Canadian Competition Law
Edward Iacobucci

D. Jurisdiction, Cooperation, Comity and Competition Policy in Brazilian International Antitrust Law
Luciano Benetti Timm

E. Cooperation, Comity, and Competition Policy: Japan
Naoki Ohkubo & Zenichi Shishido

F. Extra-territorial Application of Antitrust-The Case of a Small Economy (Israel)
Michal S. Gal.

G. Cooperation, Comity and Competition in China
Dong Ling

H. Cooperation, Comity and Competition Policy in Singapore
Burton Ong

I. Cooperation, Comity and Competition Policy in Australia
Allan Fels and Zaven Mardirossian

J. International Antitrust Institutions
D. Daniel Sokol

PART TWO: POLICY PROPOSALS
A. The Problem with Cooperation
Paul B. Stephan

B. Coordination of International Competition Policies-An Anatomy Based on Chinese Reality
Yong Huang

C. Antitrust Without Borders: From Roots to Codes to Networks
Eleanor M. Fox

D. Future Directions in Bilateral Cooperation: A Policy Perspective
Maher M. Dabbah

E. The Curious Incident of Positive Comity-The Dog That Didn't Bark [and the Trade Dogs That Just Might Bite]
Philip Marsden

F. International Antitrust Cooperation and the Preference for Non-Binding Regimes
Anu Bradford

G. Competition Law and Cooperation: Possible Strategies
Andrew Guzman

Quantification of Harm in Damages Actions for Antitrust Infringements: Insights from German Cartel Cases

Posted by D. Daniel Sokol

Hans Wolfgang Friederiszick, ESMT European School of Management and Technology and Lars-Hendrik Röller, ESMT European School of Management and Technology provide Quantification of Harm in Damages Actions for Antitrust Infringements: Insights from German Cartel Cases.

ABSTRACT: This paper argues that empirical economic analysis in court proceedings is subject to important economic and legal restrictions, culminating in a fundamental trade-off between accuracy and practicality. We draw lessons from two influential German court cases - the paper wholesaler cartel decision of 2007 and the cement cartel decision of 2009. We characterise the trade-offs arguing that they need to be well understood, made transparent, and that decisions on how to proceed in light of these trade-offs have to be taken upfront by the court. In this respect, we believe that the three-step procedure (design, application, and robustness checks) followed by the German court in the cement case is well suited to meet the appropriate legal standard and requirements, both with respect to accuracy and practicality.

EU Competition Law Applicable to Distribution Agreements: Review of 2009 and Outlook for 2010

Posted by D. Daniel Sokol

Louis Vogel (Professor of Law and President of the University Panthéon-Assas (Paris 2)) provides an overview of EU Competition Law Applicable to Distribution Agreements: Review of 2009 and Outlook for 2010.

ABSTRACT: Profound changes are expected this year in the rules applicable to vertical agreements. New regulations will be adopted for vertical restrictions and motor vehicle distribution. In the case law, various issues regarding distribution have been clarified.

Deutsche Telekom and Pacific Bell v. Linkline: Does a Regulatory Obligation to Deal Suffice to Establish a Price Squeeze? And 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 a Regulatory Obligation to Deal Suffice to Establish a Price Squeeze? And 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.

 

Attention Professors from Middle and Lower Income Countries

Posted by D. Daniel Sokol

Christine Parker (University of Melbounre - Law) has asked for some help.  She writes:

Vibeke Nielsen and myself together chair the “collaborative research network on regulatory governance” for the US Law and Society Meeting. We have the opportunity to obtain some funding to help bring scholars from low and middle income countries to the next two meetings of the Law and Society Association in San Francisco (2011) and Hawai’i (2012). However we need to have the names of scholars now.

If you are in this category, would you please email me urgently (by Monday June 7) with your name and a very rough idea of the topics on which you might present at the Law and Society meeting. (You will not be held to it – but we do need to provide a specific indication at this stage.

I have included  a list of relevant countries below my signature line.

All the best,

Christine Parker

Dr Christine Parker
Associate Professor and Reader
ARC Australian Research Fellow
Melbourne Law School
University of Melbourne
Victoria 3010 AUSTRALIA
Ph. (+61) (0)3 8344 1093
My web profile:
http://www.law.unimelb.edu.au/staff/Christine%20Parker


Below is a list of low income, lower middle income and upper middle income countries.
 
LOWER
 Afghanistan  
 Bangladesh  
 Benin  
 Burkina Faso  
 Burundi  
 Cambodia  
 Central African Republic  
 Chad  
 Comoros  
 Congo, Dem. Rep.  
 Eritrea  
 Ethiopia  
 Gambia, The  
 Ghana  
 Guinea  
 Guinea-Bissau  
 Haiti  
 Kenya  
 Korea, Dem. Rep.  
 Kyrgyz Republic  
 Lao PDR  
 Liberia  
 Madagascar  
 Malawi  
 Mali  
 Mauritania  
 Mozambique  
 Myanmar  
 Nepal  
 Niger  
 Rwanda  
 Senegal  
 Sierra Leone  
 Somalia  
 Tajikistan  
 Tanzania  
 Togo  
 Uganda  
 Uzbekistan  
 Vietnam  
 Yemen, Rep.  
 Zambia  
 Zimbabwe  
****
LOWER MIDDLE
Albania  
 Angola  
 Armenia  
 Azerbaijan  
 Belize  
 Bhutan  
 Bolivia  
 Cameroon  
 Cape Verde  
 China  
 Congo, Rep.  
 Côte d'Ivoire  
 Djibouti  
 Ecuador  
 Egypt, Arab Rep.  
 El Salvador  
 Georgia  
 Guatemala  
 Guyana  
 Honduras  
 India  
 Indonesia  
 Iran, Islamic Rep.  
 Iraq  
 Jordan  
 Kiribati  
 Kosovo  
 Lesotho  
 Maldives  
 Marshall Islands  
 Micronesia, Fed. Sts.  
 Moldova  
 Mongolia  
 Morocco  
 Nicaragua  
 Nigeria  
 Pakistan  
 Papua New Guinea  
 Paraguay  
 Philippines  
 Samoa  
 São Tomé and Principe  
 Solomon Islands  
 Sri Lanka  
 Sudan  
 Swaziland  
 Syrian Arab Republic  
 Thailand  
 Timor-Leste  
 Tonga  
 Tunisia  
 Turkmenistan  
 Ukraine  
 Vanuatu  
 West Bank and Gaza  
*****
UPPER MIDDLE
Algeria  
 American Samoa  
 Argentina  
 Belarus  
 Bosnia and Herzegovina  
 Botswana  
 Brazil  
 Bulgaria  
 Chile  
 Colombia  
 Costa Rica  
 Cuba  
 Dominica  
 Dominican Republic  
 Fiji  
 Gabon  
 Grenada  
 Jamaica  
 Kazakhstan  
 Latvia  
 Lebanon  
 Libya  
 Lithuania  
 Macedonia, FYR  
 Malaysia  
 Mauritius  
 Mayotte  
 Mexico  
 Montenegro  
 Namibia  
 Palau  
 Panama  
 Peru  
 Poland  
 Romania  
 Russian Federation  
 Serbia  
 Seychelles  
 South Africa  
 St. Kitts and Nevis  
 St. Lucia  
 St. Vincent and the Grenadines  
 Suriname  
 Turkey  
 Uruguay  
 Venezuela, RB







 




Dr Christine Parker
Associate Professor and Reader
ARC Australian Research Fellow
Melbourne Law School
University of Melbourne
Victoria 3010 AUSTRALIA
Ph. (+61) (0)3 8344 1093
My web profile:
http://www.law.unimelb.edu.au/staff/Christine%20Parker

Cartel Laws Undermined: Corruption, Social Norms, and Collectivist Business Cultures

Posted by D. Daniel Sokol

Andreas Stephan, University of East Anglia - Centre for Competition Policy has a new article on Cartel Laws Undermined: Corruption, Social Norms, and Collectivist Business Cultures.

ABSTRACT: The combination of leniency programmes, high sanctions, complaints from customers and private actions for damages, has proven very successful at uncovering and punishing cartel agreements in United States Antitrust Law. Countless jurisdictions are being encouraged to adopt these ‘conventional’ enforcement tools, in the absence of an international competition authority. This paper identifies three issues which may undermine the universal efficacy of these cartel laws: (i) corruption and organized crime; (ii) social norms that are sympathetic to collusive practices; (iii) collectivist business cultures built on personal relationships.

CELF II: Settling into a Weak effet utile Standard for Private State Aid Enforcement

Posted by D. Daniel Sokol

Thomas Jaeger, Senior Research Fellow, Max Planck Institute for Intellectual Property, Competition and Tax Law addresses CELF II: Settling into a Weak effet utile Standard for Private State Aid Enforcement.

ABSTRACT: The judgment in CELF II clarifies that national courts must freeze illegal aid until a final binding authorization is given, but does not change the overall picture or alter the narrow bounds for national court action set by CELF I.

The Application of Competition Law in the Communications and Media Sector: A Survey of Recent Cases

Posted by D. Daniel Sokol

Antonio Bavasso and Dominic Long (both Allen & Overy) discuss The Application of Competition Law in the Communications and Media Sector: A Survey of Recent Cases.

ABSTRACT: This article presents an overview of key competition law decisions in the electronic communications sector in 2009. During the period surveyed, the Commission has been involved in a number of cases relating to abusive pricing practices. It has also been heavily involved in issues relating to territorial restrictions in the distribution of digital media. There appears to be a cross fertilisation between regulation and general competition law in the electronic communications sector.

GAO Report: Issues Raised by the Proposed Merger of United and Continental Airlines

Posted by D. Daniel Sokol

The GAO has issued a report on the competition implications of the United/Continental merger.

An early section of the report reads:

One of the most important issues in this merger will be its effect on competition in the airline industry. For example, GAO’s analysis of 2009 ticket data showed that combining these airlines would result in a loss of one effective competitor (defined as having at least 5 percent of total traffic between airports) in 1,135 markets (called airport pairs) affecting almost 35 million passengers while creating a new effective competitor in 173 airport pairs affecting almost 9.5 million passengers (fig.). However, in all but 10 of these airports pairs there is at least one other competitor.

New Procedures and Remedies for Regulating Dominant Operators under the EU Electronic Communications Regulatory Framework

Posted by D. Daniel Sokol

Laurent Garzaniti and Matthew O'Regan (both at Freshfields) explain New Procedures and Remedies for Regulating Dominant Operators under the EU Electronic Communications Regulatory Framework.

ABSTRACT: On 25 November 2009, the European Parliament and Council adopted new legislation to revise the regulatory framework for the electronic communications sector, including new institutions, procedures and remedies for regulating dominant operators. The new legislation must be transposed into Member States' legislation by no later than May 25 2011.

The Impact of European Antitrust Policy: Evidence from the Stock Market

Posted by D. Daniel Sokol

Andrea Guenster, Maastricht University - Department of Organization & Strategy and Mathijs A. van Dijk, Erasmus University - Rotterdam School of Management measure The Impact of European Antitrust Policy: Evidence from the Stock Market.

ABSTRACT: We evaluate the impact of European antitrust policy by analyzing the stock market response to antitrust investigation announcements, infringement decisions, and appeals. We examine a sample of 253 companies involved in 118 European antitrust cases over the period 1974-2004. We uncover significantly negative stock price responses of almost -5% around the dawn raid and 2% around the final decision, and a significantly positive response of up to 4% around a successful appeal. These numbers correspond to a total market value loss of €24 billion around the raid and the decision, of which roughly 75% cannot be explained by fines and legal costs. The stock market thus anticipates a significant decrease in future profitability as a result of European antitrust action. We show that the strength of the market response depends on the magnitude of the fine, the duration of the infringement, media attention, and in particular the size of the firm. Small firms suffer more from an infringement decision by the European Commission than large firms. We discuss several key policy implications of our results.

Lightening Up Market Definition

Posted by D. Daniel Sokol

David S. Evans, University of Chicago Law School, University College London suggests Lightening Up Market Definition.

ABSTRACT: This article proposes a resolution to the longstanding controversy between courts, economists, and antitrust authorities over the appropriate role of market delineation. Market definition should remain the first step in antitrust and merger analysis. It provides information on competitive constraints and other aspects of the economic landscape that are essential for understanding whether the practice at issue could harm consumers. However, there is no basis in economics for, as a general matter, drawing hard market boundaries and making strong inferences about market power from shares calculated based on those boundaries. The courts should abandon these practices, which are not required by the antitrust statutes, as they have done with other antitrust jurisprudence, such as maximum price fixing, that has been shown to be inconsistent with economics. They can write coherent analyses of antitrust issues without relying on hard market boundaries. The antitrust authorities should examine the competitive effects of business practices such as mergers only after a market inquiry that focuses on understanding the competitive landscape and the potential competitive constraints on business practices; but that inquiry does not need to settle on a hard boundary.

A Critical Appraisal of Remedies in the E.U. Microsoft Cases

Posted by D. Daniel Sokol

Nic Economides (NYU - Stern School of Business) and Ioannis Liannos (UCL Law) have posted A Critical Appraisal of Remedies in the E.U. Microsoft Cases.

ABSTRACT: We discuss and compare the remedies from the European Union’s two cases against Microsoft. The first E.U. case (“E.U. Microsoft I”) alleged that Microsoft illegally bundled the Windows Media Player with Windows and that Microsoft did not provide adequate documentation that would allow full interoperability between Windows servers and non- Microsoft servers, as well as between Windows clients and non-Microsoft servers. After finding Microsoft liable and imposing a large fine, the E.U. imposed as remedies two requirements on Microsoft: (1) to sell a version of Windows without Windows Media Player (“Windows-N”) and (2) to publish and license interoperability information. Windows-N was a commercial failure, and there has been only limited cross-platform server entry. In its second investigation of Microsoft (“E.U. Microsoft II”), the E.U. alleged illegal tying of Internet Explorer with Windows. The E.U. settled with Microsoft by having them accept the “choicescreen proposal”: an obligation to ask consumers whose computers have Internet Explorer pre-installed to choose a browser from a menu of competing browsers through compulsory Windows updates. Thus, the E.U. imposed quite different remedies in the two cases: an unbundling remedy for the Windows Media Player but close to a must-carry requirement for Internet Explorer. We analyze and compare the different approaches.