Antitrust & Competition Policy Blog

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

Friday, July 2, 2010

Patent licensing, bargaining, and product positioning

Posted by D. Daniel Sokol

Toshihiro Matsumura (Institute of Social Science, University of Tokyo) and Noriaki Matsushima (Institute of Social and Economic Research, Osaka University) discuss Patent licensing, bargaining, and product positioning.

ABSTRACT: Innovators who have developed advanced technologies, along with launching new products by themselves, often license these technologies to their rivals. When a firm launches a new product, product positioning is also an important matter. We consider a standard linear city model with two firms in which the licenser and the licensee negotiate on licensing and engage in Nash bargaining after they determine their product positions. We investigate how the bargaining power of the licenser affects the product positions of the firms. We find that the licenser more likely chooses the central position when its bargaining power is weak whereas the product position of the licenser accelerates price competition between the firms. We also discuss the welfare implication. We find that the inverse U shape relationship between the bargaining power of the licenser and total social surplus, i.e., neither too strong nor too weak bargaining p! ower of the licensor is optimal.

July 2, 2010 | Permalink | Comments (0) | TrackBack (0)

Draft Hong Kong Antitrust Bill Now Available

Posted by D. Daniel Sokol

See here.

July 2, 2010 | Permalink | Comments (1) | TrackBack (0)

Market Competition, R&D and Firm Profits in Asymmetric Oligopoly

Posted by D. Daniel Sokol

Junichiro Ishida (Institute of Social and Economic Research, Osaka University), Toshihiro Matsumura (Institute of Social Science, University of Tokyo), and Noriaki Matsushima (Institute of Social and Economic Research, Osaka University) explain Market Competition, R&D and Firm Profits in Asymmetric Oligopoly.

ABSTRACT: We investigate a Cournot model with strategic R&D investments wherein efficient low-cost firms compete against less efficient high-cost firms. We find that an increase in the number of high-cost firms can stimulate R&D by the low-cost firms, while it always reduces R&D by the high-cost firms. More importantly, this force can be strong enough to compensate for the loss that arises from more intense market competition: the low-cost firms' profits may indeed increase with the number of high-cost firms. An implication of this result is far-reaching, as it gives low-cost firms an incentive to help, rather than harm, high-cost competitors. We relate this implication to a practice known as open knowledge disclosure, especially Ford's strategy of disclosing its know-how publicly and extensively at the beginning of the 20th century.

July 2, 2010 | Permalink | Comments (0) | TrackBack (0)

AAI 11th Annual Conference Audio and Materials Now Available

Posted by D. Daniel Sokol

See here.

July 2, 2010 | Permalink | Comments (0) | TrackBack (0)

Google Declared a Monopoly in France by Competition Authority

Posted by D. Daniel Sokol

See here.

July 2, 2010 | Permalink | Comments (0) | TrackBack (0)

Intentional Price Wars on the Equilibrium Path

Posted by D. Daniel Sokol

Pot Erik, Peeters Ronald, Peters Hans, and Vermeulen Dries (all Department of Quantitative Economics, Maastricht University) analyze Intentional Price Wars on the Equilibrium Path.

ABSTRACT: In this paper we study the effect of information on the occurrence of intentional price wars on the equilibrium path. An episode of low prices is an intentional price war if it follows a period of high prices which was ended intentionally by one of the firms in the market (the price war leader). We show that for intentional price wars to exist on the equilibrium path, two elements are necessary regarding the information on which the firms base their decisions: (1) interperiod dynamics and (2) informational asymmetries. We illustrate this by means of a repeated price-setting game in which market shares fluctuate. Firms learn about the market share realizations at the beginning of each period. We show that intentional price wars on the equilibrium path are possible when firms have private information about their market share. When market shares are public information, we either see collusive price adjustment or episodes of! low prices that do not classify as an intentional price war.

July 2, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 1, 2010

Vertical bargaining and countervailing power

Posted by D. Daniel Sokol

Alberto Iozzi (Faculty of Economics, University of Rome "Tor Vergata") and Tommaso Valletti (Faculty of Economics, University of Rome "Tor Vergata") describe Vertical bargaining and countervailing power.

ABSTRACT: We study the existence of countervailing buyer power in a vertical industry where the input price is set via Nash bargainings between one upstream supplier and many differentiated but competing retailers. In case one bilateral bargaining fails, the supplier still has the ability to sell to the other retailers. We show that the capacity of these other retailers to react in the final market has a dramatic impact on the supplier’s outside options and, ultimately, on input prices and welfare. Under downstream quantity competition, we find either no or opposite support to the hypothesis of countervailing power on input prices, as the retail industry becomes more concentrated. With price competition, we find a case for countervailing power, but its existence depends on the degree of product differentiation and on the ability of competing retailers to react to a disagreement.

July 1, 2010 | Permalink | Comments (0) | TrackBack (0)

Loyalty Rewards and Monopoly Pricing

Posted by D. Daniel Sokol

Philipp Ackermann, Department of Economics, University of Bern has a new paper on Loyalty Rewards and Monopoly Pricing.

ABSTRACT: This article examines the impact of customer reward programs on the competitive outcome in duopolistic markets. We argue that loyalty discounts for repeat customers constitute a commitment device beneficial to suppliers rather than customers. Analyzing a two-period Bertrand model we show that the use of loyalty discounts makes it possible for duopolists to attain the fully collusive outcome in both periods. By offering generous loyalty discounts, the firms can credibly commit to refrain from second period poaching given that they attract enough customers in period one. Loyalty discounts invite firms to collude in the first period.

July 1, 2010 | Permalink | Comments (0) | TrackBack (0)

GCR's conference to mark the 20th anniversary of EU Merger Regulation, 28-29 September 2010

Posted by D. Daniel Sokol

Global Competition Review takes great pleasure in announcing a major international conference to mark the 20th anniversary of the entry into force of the EU Merger Regulation to be held in Brussels.

Following the opening address from Joaquín Almunia, Vice-President of the European Commission and Commissioner in charge of Competition, current and former enforcers will come together with competition law specialists from the EU, the US and China to celebrate the EUMR’s achievements and legacy worldwide and look at the developments in international merger policy.

Distinguished speakers will discuss the major cases that have marked the first 20 years of EC merger review, highlight the principles that guide current enforcement, review the contribution of the European courts and of non-European regulators to the development of these principles and assess the challenges that lie ahead providing specialist knowledge in a practical way.

Distinguished speakers, who will provide delegates with a thorough update on recent developments, legislation and cases and assess the challenges that lie ahead, include:

Commissioner Joaquín Almunia
Vice-President of the European Commission

Jim Venit
Partner, Skadden Arps Slate Meagher & Flom LLP

Professor Mario Monti
President, Bocconi University, Milan

Philip Lowe
Director-General of the Energy DG, European Commission

William E. Kovacic
Member, Federal Trade Commission

Deborah Platt Majoras
Chief Legal Officer & Secretary, The Proctor & Gamble Company

Götz Drauz
Partner, Howrey LLP

Lars-Hendrik Röller
President, ESMT

Bo Vesterdorf
Consultant, Herbert Smith

Sir Christopher Bellamy QC
Senior Consultant, Linklaters LLP

Ian Forrester QC
Partner, White & Case LLP

Andrea Lofaro
Director, RBB Economics

John Davies
Partner, Freshfields Bruckhaus Deringer LLP

John Fingleton
Chief Executive, Office of Fair Trading

Rachel Brandenburger
Special Adviser, International, US Department of Justice

Melanie Aitken
Commissioner of Competition, Canada's Competition Bureau

Bruno Lasserre
President, Autorité de la Concurrence

Andreas Mundt
President, Bundeskartellamt

Thomas Vinje
Partner, Clifford Chance LLP

Damien Neven
Chief Economist,
DG Competition, European Commission

Amelia Fletcher
Chief Economist, Office of Fair Trading


Ronald A Stern
Vice-President and Senior Competition Counsel, General Electric Company

William J Kolasky
Partner, WilmerHale LLP

Cristina Caffarra
Vice President, Charles River Associates

Jean-Yves Art
Professor, College of Europe, Bruges

Nicholas Levy
Partner, Cleary Gottlieb Steen & Hamilton LLP

Ronan P Harty
Partner, Davis Polk & Wardwell LLP

Jorge Padilla
Managing Director, LECG

Janet L McDavid
Partner, Hogan Lovells US LLP

John Boyce
Partner, Slaughter and May LLP

Alec Burnside
Partner, Linklaters LLP

Nadine Mouy
Head of Mergers Service, Autorité de la Concurrence


Conference highlights include:

  • A panel of current and former regulators discuss key past developments and achievements in merger control and look to the future
  • The judicial perspective
  • International cooperation and convergence
  • The challenges for BRIC countries – merger enforcement priorities for the next three years
  • Horizontal mergers – a comparative look at the US, EU and elsewhere
  • Non-horizontal mergers – did the EC become too lenient?
  • Remedies/settlements in the international context – achieving consistency, aligning procedures, formal remedies and informal commitments

Conference Fees:

Register before 31st July to save with our early bird fees -

GCR Subscriber Rates

£850 + TVA = £1028.50

In-house counsel and
government agencies:

£700 + TVA = £847

Non-Subscriber Rates

£950 + TVA = £1149.50

In-house counsel and
government agencies:

£800 + TVA = £968

The above early bird rates are only available until 31st July 2010.

Forthcoming GCR Conferences:

  • 2010 Antitrust Litigation
    12 October 2010, The King’s Fund, London
  • 2010 Competition Law Review
    In-depth analysis and debate on recent developments in competition law and policy
    16 & 17 November 2010, Brussels
  • 2011 Antitrust Law Leaders Forum
    3 - 5 February 2011, Fontainebleau Hotel, Miami

For further details on any of these events please contact


Cancellations must be received in writing. Cancellations received in writing two weeks before the conference will receive a refund less 10% + TVA. Cancellations received one week before will receive a refund less 50% + TVA. Cancellations received less than a week before the conference will not receive a refund. Substitute delegates are welcome at any time.

July 1, 2010 | Permalink | Comments (0) | TrackBack (0)

Demand-Enhancing Investment in Mixed Duopoly

Posted by D. Daniel Sokol

Stefan Bühler (Institute of Public Finance and Fiscal Law - University of St. Gallen) and Simon Wey (University of Zurich) discuss Demand-Enhancing Investment in Mixed Duopoly.

ABSTRACT: This paper examines demand-enhancing investment and pricing in mixed duopoly. We analyze a model with differentiated products and reduced-form demand, making no assumptions on the relative efficiency of the public firm. First, we derive sufficient conditions for public investment to crowd out private investment. Second, we characterize the conditions under which individual investments (prices, respectively) in the mixed duopoly are higher (lower) than in the standard duopoly. Third, we show that with linear demand the public firm effectively disciplines the private firm, inducing an improvement in its price-quality ratio relative to the standard duopoly.

July 1, 2010 | Permalink | Comments (0) | TrackBack (0)

Antitrust & the Bowl Championship Series

Posted by D. Daniel Sokol

Nathaniel Grow, University of Georgia - Department of Insurance, Legal Studies, Real Estate explores Antitrust & the Bowl Championship Series.

ABSTRACT: This Article analyzes the potential antitrust liability of the Bowl Championship Series (“BCS”), college football’s current system for selecting the participants of both the national championship game as well as the other most desirable post-season bowl games. The BCS has recently been the subject of increasing attack from both politicians and law enforcement officials, who allege that the system constitutes an illegal restraint of trade due to its preferential treatment of universities from certain traditionally stronger conferences, at the expense of teams from other, historically less competitive conferences. Meanwhile, the academic literature considering the antitrust status of the BCS is mixed, with most recent commentaries concluding that the BCS alleviated any antitrust concerns by revising its selection procedures in 2004.

Contrary to these recent scholarly analyses, this Article argues that the BCS remains vulnerable to antitrust attack on several grounds. First, the BCS can be attacked as an illicit group boycott, insofar as it distributes revenue unequally without justification, to the detriment of universities from the disfavored conferences. Second, the BCS can be attacked as an illegal price fixing scheme, due to the fact that it enables formerly independent, competing entities to collectively determine the amount of revenue to be distributed to BCS participants. Finally, however, the BCS appears less susceptible to a claim of illegal tying, despite its collective marketing of the television broadcast rights for the BCS bowl games. Therefore, although the outcome of any antitrust trial is notoriously difficult to predict, this Article concludes that the BCS remains quite vulnerable to antitrust attack.


July 1, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 30, 2010

More details - Global Competition Law and Practice Conference in New Delhi, India

Posted by D. Daniel Sokol

I wanted to give readers of the blog some more information regarding the conference in New Delhi, India that Ioannis Lianos (UCL) and I (Daniel Sokol of the University of Florida) are organizing.  Within the next two weeks we will have an agenda and a conference website.  In the meantime, let me share some of the speakers for the Global Competition Law and Practice Conference in New Delhi, India on November 19, 2010:

Confirmed speakers include:
The Honorable Mr. Salman Khurshid, Indian Minister for Corporate Affairs
Mr. Dhanendra Kumar, Chairman of the Competition Commission of India
William Kovacic, Commissioner of the Federal Trade Commission
Frederic Jenny, Judge at the Supreme Court of France (Cour de Cassation), Chairman of the OECD Competition Law and Policy Committee
Damien Neven, Chief Economist of DG Competition
Howard Shelanski, Deputy Director for Antitrust of the Bureau of Economics, Federal Trade Commission

The conference also will involve law firm practitioners, in-house lawyers, academics and other government officials from India and around the world.  Again, we promise more names soon with a final agenda.

Mark the date in your calendar as an event that you must attend.

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Competition Prize - competition (antitrust) law or economics written by young scholars

Posted by D. Daniel Sokol



Wishing to promote competition culture in Greece, and in the context of its competition advocacy efforts, announces for 2010 a competition for the prize “Competition 2010”. The prize will be awarded to the best scientific article in competition (antitrust) law or economics written by young scholars that are not 31 years old or older on 30 November 2010.

The article must be written in Greek and must pertain to the broad subject of competition law or economics, more specifically either Greek or EU competition law & policy. The article must be unpublished and be based on recent research. It must not be longer than 15,000 words, including footnotes.

The prize amounts to 3,000 euros and the deadline for the submission of the articles is the 30th of November 2010.

More detailed information on the process of submission of the articles can be obtained from                                                               

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)


Posted by D. Daniel Sokol

Claudio Calcagno (European University Institute) and Mike Walker (CRA) have a new article on EXCESSIVE PRICING: TOWARDS CLARITY AND ECONOMIC COHERENCE.

ABSTRACT: One of the thorniest areas of antitrust enforcement is whether, and how, to deal with excessive pricing allegations. Even in jurisdictions that have laws against excessive pricing, there has been little case law on the issue. A recent dispute over the pricing of flat steel in South Africa provides helpful guidance on the correct approach to excessive pricing cases. The Competition Tribunal took a structural approach and deduced the existence of excessive pricing on the basis of super-dominance and market segmentation. The Competition Appeal Court overturned this decision and clearly stated that (1) an empirical exercise comparing prices with cost benchmarks is required in assessing these cases, and (2) excessive prices need to be judged against the long-run average costs of an efficient firm. A purely structural approach was not deemed adequate. In this article, we describe the case and explain why the judgment by the Competition Appeal Court is sound from an economic perspective and why it sets an important precedent in this area of competition law.

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Estimating Pass-On

Posted by D. Daniel Sokol

Jan Peter van der Veer & Andrea Lofaro (RBB Economics) have a paper on Estimating Pass-On.

ABSTRACT: When assessing the damage incurred by customers of a cartel, it may (depending on the applicable legal framework) be relevant to consider the extent to which these downstream firms have passed on some or all of any price increase caused by the cartel to their own customers. Since passing on a price increase will always reduce the overall damage, reference is often made to the "passing-on defense." However, it is important to note that any attempt by downstream firms to pass on cartel overcharges will lower their sales, implying that downstream firms will suffer a damage even when the entire price overcharge has been passed on. In view of this, the analysis of pass-on should, at least from an economic point of view, also consider the value of lost sales caused by any price increase.

In this short article, we discuss the economic analysis of pass-on. Section 2 reviews a number of useful insights from the economic literature into the incentive of firms to pass-on cost increases under different circumstances. Section 3 discusses the estimation of pass-on in practice. Section 4 offers some concluding remarks.

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Private Litigation in England and Wales

Posted by D. Daniel Sokol

Renato Nazzini (University of Southampton) writes on Private Litigation in England and Wales.

ABSTRACT: The United Kingdom has been at the forefront of developments of private enforcement of competition law. However, as I discussed in a previous article co-authored with Ali Nikpay,this jurisdiction has also often adopted a cautious approach to measures aimed at facilitating litigation in this field, for fear of fostering spurious claims and a litigation culture that would be socially harmful and unfair to defendants.This article updates that article as to the current status of private litigation in England and Wales.

There is no doubt that England and Wales is well placed to be a forum for effective resolution of competition law disputes. First, English courts have adopted an expansive approach to territorial jurisdiction. In Provimi Ltd v Aventis Animal Nutrition SA, the court dismissed applications for striking out and summary judgment in actions brought by a German company against English defendants where the claimant had had no contractual dealings whatsoever with the English companies. However, the English companies were part of the same corporate group and formed the same "undertaking" as the German companies, from which the claimant had purchased goods at the allegedly higher cartel price. Higher prices in Germany would not have been tenable if the cartel had not been implemented on a supra-national scale. Therefore, the conduct of the English defendants had contributed to causing a loss to the claimant.

Second, almost uniquely in Europe, English law recognizes the principle that, in order to do justice between the parties, all relevant evidence must be placed before the court. Therefore, the parties are under a continuing duty to disclose all documents which are or have been in their possession and that either support their case, or support the other party's case, or undermine the disclosing party's case. Disclosure is essential in competition litigation. In civil law countries, the opposite general principle applies: A party does not have a duty to disclose evidence that supports the other party's case or undermines his own case. This principle has, of course, exceptions, particularly where the other party is able to identify a document with sufficient precision and applies to the court for specific disclosure of that document.

Third, competition cases in England and Wales must be issued in or transferred to the Chancery division of the High Court, where a small number of senior judges will be able to build significant experience in competition cases. The same judges can also sit as chairman of the Competition Appeal Tribunal ("CAT"), which, among other things, hears appeals against the decisions of the Office of Fair Trading ("OFT") or the regulators as to whether the national or European competition rules have been infringed. Furthermore, the CAT has jurisdiction to hear claims for damages or other sum of money when the infringement has already been established in a decision by the OFT, a regulator, or the European Commission (so-called "follow-on claims").

There are two main features of the English system that, however, are liable to constitute a significant obstacle to effective redress in competition cases: costs and the lack of a clearly established and effective procedure for collective claims.

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Advance notice of Request for Offers for African Competition Forum (ACF) Coordinator assignment

Posted by D. Daniel Sokol

IDRC – International Development Research Centre

Advance notice of Request for Offers for African Competition Forum (ACF) Coordinator  assignment.

The newly formed African Competition Forum (ACF), whose primary members are Competition Authorities from African countries, is entering its scoping phase.  The objective is to carry out  an international needs assessment (continent wide) and determine a plan of activities and organizational structure for the operational phase of the ACF.  The scoping phase is being managed by the ACF Interim Steering Group under the Chairmanship of Mrs Mona Yassine, Egyptian Competition Authority.  A formal Request for Offers for a consultant Coordinator to manage this exercise will shortly be issued.  The consultant is expected to provide approximately 6 months of input over the next 8-9 months, and must fit the following profile:  an expert in competition policy with PhD in economics or law of competition  and/or at least 7 years relevant experience, able to provide full- or nearly full-time input over the relevant period, fluent in French or English (preferably both), and currently resident in Egypt, Kenya, Zambia, South Africa, Senegal, Tanzania or Morocco. 

If you fit this profile and are interested in responding to the Request for Offers please write to Mrs Mona Yassine ( and Susan Joekes, IDRC Middle East and North African Regional Office (   The Request for Offers will be issued by Canada’s IDRC which, in collaboration with UK DFID, is providing funds for the ACF scoping phase (see  

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Antitrust Forum-Shopping in England: Is Provimi Ltd v Aventis Correct?

Posted by D. Daniel Sokol

Brian Kennelly (Blackstone Chambers) asks Antitrust Forum-Shopping in England: Is Provimi Ltd v Aventis Correct?

ABSTRACT: This article examines the judgment of Aikens J in Provimi Ltd and ors v Aventis Animal Nutrition SA and ors, which opened the door to the stream (if not yet a flood) of non-U.K. claimants bringing competition law damages claims in this jurisdiction. Provimi found that a corporate entity (e.g. a subsidiary) may be liable for implementing a cartel contrary to Article 101(1) TFEU where it is part of the same undertaking as the cartelist, even if it had no knowledge of the cartel and never made sales of the cartelized products to the claimants (§§31, 39-41).

On this basis, and armed with Article 6(1) of the Judgments Regulation,a foreign victim can sue all of the foreign members of the cartel in England provided that there is at least one subsidiary of one of the cartelists in England. Provimi was clearly a welcome decision for U.K. competition litigators. It may, however, be wrong.

June 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 29, 2010

Vertical Control of a Distribution Network - An Empirical Analysis of Magazines

Posted by D. Daniel Sokol

Stijn Ferrari, Catholic University of Leuven (KUL) and Frank Verboven, Catholic University of Leuven (KUL) - Faculty of Business and Economics explore Vertical Control of a Distribution Network - An Empirical Analysis of Magazines.

ABSTRACT: How does an upstream firm determine the size of its distribution network, and what is the role of vertical restraints? To address these questions we develop and estimate two models of outlet entry, starting from the basic trade-o¤ between market expansion and fixed costs. In the coordinated entry model the upstream firm sets a market-specific wholesale price to implement the first-best number of outlets. In the restricted/free entry model the upstream firm has insufficient price instruments to target local markets. It sets a uniform wholesale price, and restricts entry in markets where market expansion is low, while allowing free entry elsewhere. We apply the two models to magazine distribution. The evidence is more consistent with the second model where the upstream firm sets a uniform wholesale price and restricts the number of entry licenses. We use the model to assess the profitability of modifying the vertical restraints. A government ban on restriced licensing would reduce profits by a limited amount, so that the business rationale for restricted licensing should be sought elsewhere. Furthermore, introducing market-specific wholesale prices would implement the first-best, but the profit increase would be small, providing a rationale for the current uniform wholesale prices.

June 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Deliberate Concealment in Cartel Claims

Posted by D. Daniel Sokol

Romano Subiotto QC and Ruchit Patel (Cleary Gottlieb) describe Deliberate Concealment in Cartel Claims.

ABSTRACT: This paper examines the application of the deliberate concealment doctrine (as contained in the UK Limitation Act 1980) to damages claims based on alleged cartel activity ("cartel claims") brought in the English High Court.  The nature and scope of the cartel claims that have been brought to date indicate that the issue of whether, and to what extent, a claimant's action is brought "in time" raises novel, interesting, and complex legal questions.  It therefore seems likely that this important battleground is destined to be the subject of a great deal of further litigation in the near future.

It is perhaps instinctive to assume that because a claimant is usually unaware that he has a claim prior to the announcement of an infringement decision, time ought to run from the date of the infringement decision. However, as explained below, the position under English law is that, unless certain elements are evident (e.g., fraud, mistake, or deliberate concealment), time starts to run from the date that the cause of action accrues.  Cartel claims normally concern the level of any overcharge arising from the alleged cartel and, as such, time will normally begin to run from the date of the sale of the good or service. As some such sales may have taken place long before the expiry of the relevant limitation period, one of the key questions in cartel claims is often whether that limitation period has been postponed due to deliberate concealment by the defendant of a fact relevant to the claimant's action.

Section I of this paper examines the law and policy underlying the deliberate concealment doctrine, and Sections II and III highlight some of the key questions surrounding the respective elements of "deliberate" and "concealment" in the context of cartel claims.

June 29, 2010 | Permalink | Comments (0) | TrackBack (0)