Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, September 21, 2010

Organized Business, Affiliated Labor, and Competition Policy Reform in Developing Democracies

Posted by D. Daniel Sokol

Stephen J. Weymouth, Georgetown University - Robert Emmett McDonough School of Business has posted Organized Business, Affiliated Labor, and Competition Policy Reform in Developing Democracies.

ABSTRACT: One of the enduring lessons of the global financial crisis is that regulatory laxity heightens systemic risk. This paper examines the political sources of regulatory laxity, highlighting the influence of interest groups on governments' commitments to competition (antitrust) regulation in democracies. I argue that competition policy enforcement reflects the relative political strength of two contending groups. A rent-preserving alliance of incumbent producers and affiliated labor ("insiders") opposes competition policies that erode its market dominance. A pro-competition coalition of consumers, unorganized workers, and entrepreneurs ("outsiders") favors regulatory oversight. A simple model illustrates that policymakers' commitments to competition policy vary according to the distributive effects of reform. Where insiders are concentrated and encompassing, commitments to antitrust regulatory reform are weakened. To test the propositions, I create an original dataset measuring competition agency design over the period 1975-2007. The results, which are robust to multiple specifications and instrumental variables, suggest that anticompetitive interest groups slow the reform process and weaken governments' commitments to a robust regulatory regime.

September 21, 2010 | Permalink | Comments (0) | TrackBack (0)

The Decision of the Commission of 13 May 2009 in the Intel Case: Where is the Foreclosure and Consumer Harm?

Posted by D. Daniel Sokol

Damien Geradin, Howrey LLP, Tilburg University - Tilburg Law and Economics Center (TILEC) asks The Decision of the Commission of 13 May 2009 in the Intel Case: Where is the Foreclosure and Consumer Harm?

ABSTRACT: On 21 September 2009, the European Commission published a provisional non-confidential version of its 13 May 2009 Decision in which it condemned Intel to a record fine of € 1.06 billion on the ground that it had granted conditional rebates and payments to a number of OEMs and a large retailer of consumer electronics purchasing its x86 CPUs, and that it had paid OEMs to delay, cancel or in some other way restrict the commercialization of specific AMD-based products.

This paper shows that the Commission Decision contains a number of flaws. They include the facts that the Decision: (i) relies in substance on a per se prohibition of conditional rebates recognized by the formalistic case-law of the Community courts, notwithstanding that the Commission had clearly indicated in various important policy documents, including its Guidance Paper on Article 82 EC, its intention to move away from this approach for an effects-based analysis; (ii) states, contrary to sound policy, that it need not conduct an “as efficient competitor” test, but conducts a misguided one anyway; (iii) insufficiently supports its speculative theory that the OEMs’ purchasing policy was influenced by their understanding of Intel’s alleged intention to reduce or eliminate their rebates should they buy x86 CPUs from AMD; (iv) fails to demonstrate its contention that Intel’s rebates harm competition and consumers; and (v) conducts an excessively restrictive analysis of the efficiencies created by Intel’s rebates.

The Intel decision thus stands for the dangerous proposition that any dominant firm is at risk under Article 82 EC if there exists evidence that employees of a customer believe that reducing present purchases from it could have repercussions with regard to the availability and terms of future purchases, even if the belief is ambiguous, equivocal or contrary to written assurances of the firm or its executives, and without any showing of foreclosure. While the foregoing may be considered as an overstatement and that an “agreement” on conditions (not a mere unilateral belief on the part of the customer) is necessary to find a violation, the Commission accords itself so much latitude on how it collects, interprets and weighs evidence that the distinction is illusory.

The compatibility of the Commission Decision with EC competition law will now be examined by the Court of First Instance of the European Communities to which Intel lodged an appeal. Because of the wide-ranging implications of this Decision, not only for Intel but for all large corporations having to negotiate price incentives with their customers, it is to be hoped that the Court of First Instance of the EC will review this decision carefully and hold the Commission to the same rigorous standards it has applied in the merger control area.

An important question (that will not be addressed by the Court of First Instance, but which is nevertheless relevant from a policy standpoint) is whether antitrust intervention was at all needed in a market characterized by increasing output, decreasing prices and sustained innovation. These characteristics alone should raise serious doubt about claims of anti-competitive foreclosure and consumer harm, especially when they are made by competitors. These characteristics also question the Commission’s wisdom of investing large enforcement resources in what turned to be a long and protracted investigation. As this paper will demonstrate, the market for x86 CPUs was competitive and there is no convincing evidence that Intel’s conduct was anti-competitive and foreclosed AMD and harmed consumers.


 

September 21, 2010 | Permalink | Comments (0) | TrackBack (0)

Getting The Deal Through: Merger Control 2011

Posted by D. Daniel Sokol

Global Competition Review is pleased to announce the publication of Getting The Deal Through: Merger Control 2011.

This fully revised and updated 15th edition is fact checked by leading competition agencies and offers the reader coverage of 65 jurisdictions worldwide including new jurisdictions such as Belarus, Cyprus and Namibia.

Key questions are answered by leading practitioners to enable time-efficient research.

Click here to purchase a copy of the 2011 edition or subscribe online.

September 21, 2010 | Permalink | Comments (0) | TrackBack (0)

Reforming Rules and Regulations: Laws, Institutions, and Implementation

Posted by D. Daniel Sokol

Vivek Ghosal (Georgia Tech Econ) has edited Reforming Rules and Regulations: Laws, Institutions, and Implementation.

BOOK ABSTRACT: In recent years governments have paid increasing attention to weighing the socioeconomic benefits of regulations against their costs. Rules and regulations governing economic activity are typically formulated with a view to their benefits. Their effects on the costs and inefficiencies, in particular the possible chilling effects on competition and innovation, have received limited attention. In this collection, experts from Europe, the United States, and Asia examine a range of issues related to the effect of rules and regulations on competition, and explore the role of key institutions that affect market outcomes. Their contributions argue for using quantitative methods to guide policy and reform rules and regulation, and many of the essays offer methodologies for assessment and recommendations for policy alternatives.

Topics covered include the effectiveness of R&D tax incentives in OECD countries; the adverse effect of EU climate policy on competitiveness; telecommunication regulation in the developing countries of India, China, and Sri Lanka; the role of banks in fostering small and medium enterprises in Argentina and Chile; the evolution of the U.S. Federal Home Loan Bank (FHLB) System; and developing quantitative screening tools to assess which sectors in the economy might benefit most from regulatory reforms.

Contributors: Victoria Alexeeva-Talebi, Niels Anger, Dallas Burtraw, Martin Cave, Matthew Corkery, Adriaan Dierx, Sean Ennis, W. Scott Frame, Vivek Ghosal, Ivan Hascic, Ivan Hascic, Fabienne Ilzkovitz, Nick Johnstone, Boris Lokshin, Andreas Löschel, María Soledad Martínez Pería, Pradeep S. Mehta, Udai S. Mehta, Malwina Mejer, Siddhartha Mitra, Pierre Mohnen, Karen Palmer, Anthony Paul, Bruno van Pottelsberghe de la Potterie, Sergio L. Schmukler, Augusto de la Torre, Lawrence J. White

September 21, 2010 | Permalink | Comments (1) | TrackBack (0)

Monday, September 20, 2010

Proving Common Impact in Antitrust Class Actions: Current Legal and Economic Thinking

Posted by D. Daniel Sokol

Proving Common Impact in Antitrust Class Actions: Current Legal and Economic Thinking
October 20, 2010

8:00 AM - 9:30 AM (EDT)
Four Seasons Hotel New York

57 E. 57th Street, New York, NY

 

With issues raised by the In re Hydrogen Peroxide Litigation far from settled and the recent 5-4 decision to affirm class certification in Wal-Mart en banc, economic guidance in addressing proof of common impact is essential. Our panelists will review the legal landscape defined by these landmark cases and offer a systematic way of approaching common methods of proof, including:

  • The legal challenges of class certification in light of the recently decided Dukes v.Wal-Mart case and in the ongoing In re Hydrogen Peroxide Antitrust Litigation, with an update on the 9th and 3rd circuits
  • Assessment of merits and whether economic damages can be assessed at the class level
  • A systematic approach to testing whether regression analysis offers a common method of proof to assist the courts in assessing class certification

Panelists:
Edward A. Snyder, Ph.D., George Schultz Professor of Economics, The University of Chicago Booth School of Business; Dean Designate, Yale School of Management
Pierre Y. Cremieux, Ph.D., Managing Principal, Analysis Group
Ian Simmons, Esq., Partner, O’Melveny & Myers LLP

Moderator:
Maureen Chakraborty, Ph.D., Managing Principal, Analysis Group

Please join our panel of antitrust experts as they address these issues and your questions at this complimentary breakfast program.

Register: http://www.analysisgroup.com/common_impact_ny_seminar.aspx

September 20, 2010 | Permalink | Comments (0) | TrackBack (0)

“Assessing market dominance”: a comment and an extension

Posted by D. Daniel Sokol

Vasilis Droucopoulos (University of Athens) and Panagiotis Chronis (Bank of Greece) discuss “Assessing market dominance”: a comment and an extension.

ABSTRACT: Melnik et al. [Melnik, A., Shy, Oz, Stenbacka, R., 2008. Assessing market dominance. Journal of Economic Behavior and Organization 68, 63-72] have proposed a new statistic to assess market dominance. In this comment we expand their discussion of certain mathematical properties in their analysis and link their methodology to some previous approaches.

September 20, 2010 | Permalink | Comments (0) | TrackBack (0)

The Impact of Firm Entry Regulation on Long-living Entrants

Posted by D. Daniel Sokol

Susanne Prantl (Max Planck Institute for Research on Collective Goods, Bonn) analyzes The Impact of Firm Entry Regulation on Long-living Entrants.

ABSTRACT: What is the impact of firm entry regulation on sustained entry into self-employment? How does firm entry regulation influence the performance of long-living entrants? In this paper, I address these questions by exploiting a natural experiment in firm entry regulation. After German reunification, East and West Germany faced different economic conditions, but fell under the same law that imposes a substantial mandatory standard on entrepreneurs who want to start a legally independent firm in one of the regulated occupations. The empirical results suggest that the entry regulation suppresses long-living entrants, not only entrants in general or transient, short-lived entrants. This effect on the number of long-living entrants is not accompanied by a counteracting effect on the performance of long-living entrants, as measured by firm size several years after entry.

September 20, 2010 | Permalink | Comments (0) | TrackBack (0)

Entry and Incumbent Innovation

Posted by D. Daniel Sokol

Philipp Weinscheink (Max Planck Institute for Research on Collective Goods, Bonn) has written on Entry and Incumbent Innovation.

ABSTRACT: We explore how the threat of entry influences the innovation activity of an incumbent. We show that the incumbent’s investment is hump-shaped in the entry threat. When the entry threat is small and increases, the incumbent invests more to deter entry, or to make it unlikely. This is due to the entry deterrence effect. However, when the threat becomes huge, entry can no longer profitably be deterred or made unlikely and the investment becomes small. Then the Schumpeterian effect dominates. These results turn out to be very robust.

September 20, 2010 | Permalink | Comments (0) | TrackBack (0)

Myths and Untold Stories - Private Antitrust Enforcement in Germany

Posted by D. Daniel Sokol

Sebastian Peyer, University of East Anglia - Centre for Competition Policy has a very interesting paper on Myths and Untold Stories - Private Antitrust Enforcement in Germany.  I highly recommend this paper.

ABSTRACT: The paper offers an empirical analysis of private antitrust enforcement in Germany based on cases that were decided by courts between 2005 and 2007. The study presents information about the magnitude and nature of civil antitrust actions in Germany. The data includes inter alia, information about the courts involved in litigation, the relationship of the parties, affected industries, the remedies sought, the outcome of the claim, the alleged anticompetitive conduct, the proportion of stand-alone and follow-on litigation, and the length of proceedings before a given court. The study shows that a large number of private cases were concluded even when compared with public investigations in Germany. It seems that private antitrust actions complement rather than duplicate public enforcement efforts because of the overwhelming proportion of stand-alone claims and the amount of actions based on the abuse of market power. Only a small number of litigants asked for the compensation of loss suffered from anticompetitive conduct. Interpreting the results from the study cautiously, the paper suggests that the European Commission and other stakeholders may have misunderstood the nature of private actions in Germany (and maybe Europe) and, consequently, asked the wrong question, focusing on compensation. Expensive damages actions for the breach of the antitrust rules might not be as important as commonly assumed.

September 20, 2010 | Permalink | Comments (1) | TrackBack (0)

Sunday, September 19, 2010

Fordham 37th Annual Conference on International Antitrust Law and Policy

Posted by D. Daniel Sokol

37th Annual Conference on International Antitrust Law and Policy:
Thursday & Friday, September 23 & 24, 2010.
 

The conference will be held at McNally Amphitheater, Fordham Law School, located at 140 West 62nd Street, New York, NY.

For more than 30 years, FCLI has hosted the Annual Conference on International Antitrust Law and Policy , which is widely recognized as a leading annual events.

Each year, a full, two-day program focuses on a wide range of issues related to antitrust policy and enforcement. Leaders in the field, representing competition authorities, the judiciary, private practice and the academia, regularly contribute to the success of the conference as speakers and discussants.

The conference attracts close to 400 participants, including competition authorities from Africa, Asia, Europe, Latin/South America and North America, as well as practitioners and academics

THURSDAY
8:15am
Registration & Breakfast

9:00am 
Welcome

Enforcers’ Perspectives on International Antitrust
A. Paul Victor --- Presider
Alexander Italianer
Jon Leibowitz
Mariana Tavares de Araujo
Jolling de Pree
Barbara Rosenberg
 
2:00pm
Unilateral effects in Merger Analysis
Kevin J. Arquit, Presider
Joseph Farrell
Thorsten Mager
Miguel de la Mano   
Alison Oldale 
Michael  N. Sohn
   
5:20pm
EU Competition Policy
Laurence Sorkin,  Presider
David Anderson
Enrico Adriano Raffaelli
Rein Wesseling

Reception Following 


 

FRIDAY

8:15am
Registration & Breakfast
 
9:00am
Competition Policy, Abusive Dominance and Economic Development
Frederic Jenny, Presider
Maher Dabbah
Dennis Davis
William Kovacic
Tad Lipsky
Eduardo Perez Motta

LUNCHEON --- Ken Auletta. New Yorker
  
2:00pm
Antitrust in the Digital Environment
Daniel A. Crane,  Presider
Paul T. Cappuccio
John Frank
Lawrence A. Jacobs
Damien Neven 
Carl Shapiro 
Hal R.Varian

5:00pm
End of conference

September 19, 2010 | Permalink | Comments (0) | TrackBack (0)