Antitrust & Competition Policy Blog

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

Saturday, October 16, 2010

Legal Privilege or Legal Inconvenience? Some Reflections on the Last Judgment of the ECJ in Relation to the Akzo Case

Posted by D. Daniel Sokol

Angela Laghezza addresses Legal Privilege or Legal Inconvenience? Some Reflections on the Last Judgment of the ECJ in Relation to the Akzo Case.

ABSTRACT: This article analyzes the concept of Legal Professional Privilege ("LPP") in EU through the lenses of the Akzo case. It underlines what the recent ECJ Judgment clarified and what, instead, left the door open to further discussion. It concludes that the Court has unduly limited the scope of the LPP by refusing to extend LLP to in-house lawyers. The ECJ Judgment creates real inconvenience for in-house lawyers who, fearing the use the Commission could make of their documented advice, are prevented from freely and fully advising companies.


October 16, 2010 | Permalink | Comments (0) | TrackBack (0)

Federal Courts and Enforcers Diagnose Physician Practice Associations with Risk of Conspiracy Liability: Degree of Integration is Crucial to Challenges to Medical Network Price Agreements

Posted by D. Daniel Sokol

Heather Cooper (Sheppard Mullin) address Federal Courts and Enforcers Diagnose Physician Practice Associations with Risk of Conspiracy Liability: Degree of Integration is Crucial to Challenges to Medical Network Price Agreements.

ABSTRACT: Thanks to a recent federal district court decision, physicians and medical staff have more reason to think twice about price and other arrangements adopted by the practice associations and clinics to which they belong. Last Spring, the United States District Court for the Eastern District of California held that a hospital and a physicians practice association, and a hospital and the physicians that provide services to it under contract, may be sufficiently distinct separate economic actors capable of conspiring with each other under Section 1 of the Sherman Act. The court denied a motion to dismiss a complaint that alleged that a hospital and two independent physician practice associations conspired to restrain trade in violation of Section 1 of the Sherman Act by prohibiting neonatologists who did not agree to practice exclusively at the hospital or refer cases to doctors practicing exclusively neonatology at the hospital, from using the hospital's neonatal intensive care unit ("NICU").

There are few Ninth Circuit cases addressing these issues and other circuits have come to different conclusions. Federal antitrust enforcement agencies have taken the position that members of physician practice associations and networks can conspire with each other and with hospitals for antitrust purposes. In fact, the Perinatal decision is fairly consistent with the enforcers' approach to evaluating antitrust issues with clinical integration practices and arrangements.

October 16, 2010 | Permalink | Comments (0) | TrackBack (0)

Friday, October 15, 2010

Airport privatization and international competition

Posted by D. Daniel Sokol

Toshihiro Matsumura (University of Tokyo) and Noriaki Matsushima (Osaka University) address Airport privatization and international competition.

ABSTRACT: We provide a simple theoretical model to explain the mechanism wherebyprivatization of international airports can improve welfare. The model consists of a downstream (airline) duopoly with two inputs (landings at two airports) andtwo types of consumers. The airline companies compete internationally. Using thesimple international duopoly model, we show that the outcome where both airportsare privatized is always an equilibrium while that where no airport is privatized is another equilibrium only if the degree of product differentiation is large.

October 15, 2010 | Permalink | Comments (0) | TrackBack (0)

Bankruptcy and low cost carrier expansion in the airline industry

Posted by D. Daniel Sokol

Hwa Ryung Lee (University Zurich) discusses Bankruptcy and low cost carrier expansion in the airline industry.

ABSTRACT: This paper studies how financial distress affects competition and how incumbent bankruptcy affects the growth of rivals, specifically in the context of airline bankruptcies. I begin by studying whether bankrupt airlines put competitive pressures on rivals by cutting fares and maintaining or expanding capacity on the 1000 most popular domestic routes from 1998-2008. The results suggest that, although bankrupt legacy airlines reduce fares, they also reduce capacities significantly. Low-cost carrier (LCC) rivals do not match the fare cuts and expand capacities by 13-18% above trend growth. The significant capacity reductions associated with legacy airline bankruptcies create growth opportunities for LCC rivals. This indicates the existence of barriers that have limited LCCs from expanding faster and more extensively. The LCC expansion during rivals' bankruptcies is even greater when I consider the 200 most popular airports instead of the 1000 most popular routes. During legacy airlines' bankruptcy, non-LCC rivals reduce capacities on the routes affected by the bankruptcy but expand at the affected airports. A likely explanation for this result is that non-LCCs avoid 'bankruptcy' routes as more competitive pressure is expected with increasing presence of LCCs, but they pick up the gates or time slots given up by the bankrupt airlines to expand on other routes. On balance the total route capacity on the 1000 popular routes shows only a modest decrease during bankruptcy and eventually recovers, but the capacity mix changes in favor of LCCs. Overall, I find little evidence that distressed airlines toughen competition and lower industry profitability. LCC's capacity growth during legacy rivals' bankruptcy suggests the existence of market frictions in competition.

October 15, 2010 | Permalink | Comments (0) | TrackBack (0)

The AZ Judgment: A Green Light for Further Action on Pharma and IP

Posted by D. Daniel Sokol

Sean-Paul Brankin (Crowell & Moring) discusses The AZ Judgment: A Green Light for Further Action on Pharma and IP.

ABSTRACT: On July 1, 2010, the General Court issued its long awaited judgment in AstraZeneca v Commission, almost five years after AstraZeneca launched its appeal against the EUR 60 million fine imposed on it by the Commission for abuse of dominance in 2005.  The original Commission Decision was ground-breaking. It was the Commission's first abuse of dominance case in the pharmaceutical ("pharma") sector, a rare example of a case addressing the interaction between EU competition law and Intellectual Property ("IP") rights, and the types of abuse involved were novel. The decision launched the Commission on the path that eventually led to its 2009 pharmaceuticals sector inquiry; it also set the tone for a series of cases dealing with abuse of dominance in relation to the acquisition of IP rights, in particular patents, including Rambus and Qualcomm. The importance of the case is underlined by the persistent rumor that the Commission has delayed launching cases based on the results of the sector inquiry pending the outcome of the appeal. Many thought the Commission Decision would be overturned on appeal.

However, the General Court not only upheld the Commission's novel theories of abuse, it also appears to have extended their potential scope of application. And, in dismissing an appeal that challenged all aspects of the Commission Decision, the decision addresses a number of important issues, including the proper approach to market definition in the pharma sector, the scope for abuse in the context of applications for IP rights and litigation, and the circumstances in which prima facie legitimate behavior may be abusive-although it arguably leaves much scope for interpretation. This article discusses some of the issues raised in these important areas.

It should, however, be noted that the General Court's decision is itself under appeal to the European Court of Justice, so the law will remain uncertain for some time yet.

October 15, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 14, 2010

The Oxford Handbook of Judaism and Economics

Posted by D. Daniel Sokol

The Oxford Handbook of Judaism and Economics

Aaron Levine
ISBN13: 9780195398625ISBN10: 0195398629 Hardback, 720 pages
Nov 2010,  Not Yet Published


$150.00 (06)

See more from the series

The interaction of Judaism and economics encompasses many different dimensions. Much of this interaction can be explored through the way in which Jewish law accommodates and even enhances commercial practice today and in past societies.

From this context, The Oxford Handbook of Judaism and Economics explores how Judaism as a religion and Jews as a people relate to the economic sphere of life in modern society as well as in the past. Bringing together an astonishingly strong group of top scholars, the volume approaches the subject from a variety of angles, providing one of the most comprehensive, well-rounded, and authoritative accounts of the intersections of Judaism and economics yet produced. Aaron Levine first offers a brief overview of the nature and development of Jewish law as a legal system, then presents essays from a variety of angles and areas of expertise. The book offers contributions on economic theory in the bible and in the Talmud; on the interaction between Jewish law, ethics, modern society, and public policy; then presents illuminating explorations of Judaism throughout economic history and the ways in which economics has influenced Jewish history.

The Oxford Handbook of Judaism and Economics at last offers an extensive and welcome resource by leading scholars and economists on the vast and delightfully complex relationship between economics and Judaism.

Table of Contents

Aaron Levine

I. Economic Theory in the Bible
1. The Right to Return: The Biblical Law of Theft
Eliakim Katz and Jacob Rosenberg
2 . Eliezer the Matchmaker: Ethical Considerations and Modern
Negotiation Theory
Aaron Levine
3. Land Concentration, Efficiency, Slavery, and the Jubilee
Jacob Rosenberg and Avi Weiss

II. Economic Theory in the Talmud
4 . Risk and Incentives in the Iska Contract
Jeffrey L. Callen
5. Externalities and Public Goods in the Talmud
Ephraim Kleiman
6 . An Extended Talmudic Search Model
Yehoshua Liebermann
7. Optimal Precautions and the Law of Fire Damages
Jacob Rosenberg
8. Valuation in Jewish Law
Keith Sharfman
9. Could What You Don't Know Hurt You? Information Asymmetry
in Land Markets in Late Antiquity
P.V. (Meylekh) Viswanath and Michael Szenberg

III. Jewish Law, Ethics, and the Modern Society
10. Hetter Iska, the Permissible Venture: A Device to Avoid the
Prohibition Against Interest-Bearing Loans
J. David Bleich
11. Ethical Demands on Creditors in Jewish Tradition
Yoel Domb
12. The Jewish Prohibition of Interest: Themes, Scopes, and
Contemporary Applications
Daniel Z. Feldman
13. Interloping Behavior in the Marketplace in Jewish Law
Howard Jachter
14. Principles of Ethical and Communal Investment in Judaism:
A Jewish Law Approach
Asher Meir
15. The Art of Moral Criticism: Rebuke in the Jewish Tradition
and Beyond
Moses L. Pava
16. "Know Before Whom You Stand": Trust, the Marketplace,
and Judaism
Jonas Prager
17. Payment for Organ Donation in Jewish Law
Fred Rosner and Edward Reichman
18. The Theory of "Efficient Breach": A Jewish Law Perspective
Ronald Warburg

IV. Economic Public Policy and Jewish Law
19. Public and Private International Law From the Perspective of Jewish
Michael J. Broyde
20. Jewish Environmental Ethics
Yehuda L. Klein and Jonathan Weiser
21. The Global Recession of 2007null: The Moral Factor and
Jewish Law
Aaron Levine
22. The Employee Free Choice Act, Unions, and Unionizing in
Jewish Law
Dani Rapp
23. Rabbinic Responses to Rapid Inflation in Israel, 1973--1985
Daniel Schiffman
24. Jewish Ethics, the State, and Economic Freedom
Meir Tamari

V. Comparative Law Studies Relating to Economic Issues
25. Economic Substance and the Laws of Interest: A Comparison
of Jewish and U.S. Federal Tax Law
Adam Chodorow
26. Transfer of Ownership in E-Commerce Transactions from the
Perspective of Jewish Law: In Light of Israeli and American Law
Ron S. Kleinman and Amal Jabareen
27. The Jewish Guarantor and Secular Law: Stumbling Blocks and
Their Removal
Roger Lister

VI. Judaism and Economic History
28. Babylonian Jews at the Intersection of the Iranian Economy
and Sasanian law
Yaakov Elman
29. Coins and Money in Jewish Law and Literature: A Basic Introduction
and Selective Survey
Laurence J. Rabinovich
30. Economics and Law as Reflected in Hebrew Contracts
Yosef Rivlin
31. Talmudic Monetary Theory: Currency in Rabbinic Halakhah
Lawrence H. Schiffman

VII. The Economics of Judaism
32. The Economic Progress of American Jewry: From Eighteenth-
Century Merchants to Twenty-First-Century Professionals
Barry R. Chiswick
33. How Economics Helped Shape American Judaism
Carmel Ullman Chiswick

October 14, 2010 | Permalink | Comments (0) | TrackBack (0)

Antitrust and Judaism - Are Rabbi Searches Anti-Competitive?

Posted by D. Daniel Sokol

Barak Richman (Duke Law) is spending his sabbatical year focusing on one of the most difficult issues involving any Jewish organization - selecting a Rabbi.  He has a very interesting op-ed in the Forward that asks Rabbi Searches Are Tough, but Are They Illegal?

Luckily, we have an excellent Rabbi and probably one of the few Rabbis who holds an MBA and hence can actually read a balance sheet.  I am on the board of our synagogue.  I have probably learned more about corporate governance in this context than I have from teaching corporations, which I have done for a number of years.  To my knowledge, there are no current of former antitrust specialists who are also Rabbis. 

For those wondering about antitrust and Rabbis (after all, this is the Antitrust and Competition Policy Blog), the best antitrust related Rabbinical article is by Dennis Carlton and Avi Weiss entitled The Economics of Religion, Jewish Survival, and Jewish Attitudes Toward Competition in Torah Education. Those of you up on antitrust policy will know that Dennis and Avi are not merely impressive academics. Rather, Dennis is the former Deputy Assistant Attorney General for Economic Analysis at DOJ Antitrust and Avi is the former Chief Economist and Deputy General Director of the Israel Antitrust Authority.

Update 10/14/2010

Apparently there is an ordained Rabbi economist who has written on competition issues.  Meet Professor Aaron Levine of Yeshiva University's Economics Department.  He holds a PhD in Economics from NYU and ordained as a Rabbi at the Rabbi Jacob Joseph School.  Levine is the editor of the Oxford University Handbook on Judaism and Economics (Oxford University Press 2010).  The book comes out in November 2010.  It makes my list for the must have book for Channukah.    


October 14, 2010 | Permalink | Comments (1) | TrackBack (0)

The Economics of Parallel Trade – Iconoclast Views on a Dogma of EU Competition Law

Posted by D. Daniel Sokol

Nicolas Petit (University of Liege) discusses The Economics of Parallel Trade – Iconoclast Views on a Dogma of EU Competition Law.

ABSTRACT: This paper attempts to demonstrate that whilst parallel trade (also referred to as “grey market trade” in the United States, or as “arbitrage” in economic theory) in the European Union is subject to a remarkably favourable legal regime, the economic case supporting this approach remains to be made. To this end, it shows that the position of the EU Courts, and more generally of the EU institutions, is far from unquestionable in light of the relevant economic literature.

October 14, 2010 | Permalink | Comments (0) | TrackBack (0)

Revising the Horizontal Merger Guidelines: Lessons from the E.U. and the U.S.

Posted by D. Daniel Sokol

Richard J. Gilbert, University of California, Berkeley - Department of Economics and Daniel L. Rubinfeld, University of California at Berkeley - School of Law, NYU Law School explore Revising the Horizontal Merger Guidelines: Lessons from the E.U. and the U.S.

ABSTRACT: Recently, the U.S. Department of Justice and Federal Trade Commission have embarked on an effort to revise and update the U.S. Horizontal Merger Guidelines. here is substantial overlap between the U.S. and E.U. Guidelines, which makes a proposal for U.S. revisions immediately applicable to the E.U. and elsewhere. The U.S. Merger Guidelines can be revised in light of the learning of economists and lawyers in the past two decades to emphasize the importance of competitive effects analysis in merger evaluation and the forces that drive innovation. The Guidelines should also note that once a competitive effects analysis has been completed, it is possible to “back out” a relevant market (or markets) that is consistent with that competitive effects analysis.

October 14, 2010 | Permalink | Comments (0) | TrackBack (0)

Competition, Sanctions and Due Process in Troubled Times

Posted by D. Daniel Sokol

Andreas Mundt  (Bundeskartellamt) has written on Competition, Sanctions and Due Process in Troubled Times.

ABSTRACT: Cartel proceedings with heavy fines for cartel members are currently in the spotlight of media coverage. Hardcore-cartels are neither solutions to the challenges companies face in times of economic crisis nor in better times. They are serious restrictions of competition and a threat to the market economy. They typically lead to higher prices and reduce incentives to improve quality and innovation. Customers who have to pay the higher cartel price are being ‘ripped off’, to put it in simple words. They are the direct victims of illegal behaviour. The plausible economic harm to competition and consumers occurs irrespective of the general economic situation and the one of the undertakings involved in the cartel. Furthermore, cartels also hold back recovery in times of economic crisis.

October 14, 2010 | Permalink | Comments (0) | TrackBack (0)

Breaking News: Merger of UK Competition Bodies Announced

Posted by D. Daniel Sokol

The Department of Business Innovation and Skills announced, "The Competition Commission (CC) and the competition functions of the Office of Fair Trading (OFT) [to be] merged to form a single competition and markets authority" in its press release today.  The release further explains, "This new body would be responsible for merger regulation, market investigations, cartel and antitrust cases, as well as a number of functions with respect to the regulated utilities." 


October 14, 2010 | Permalink | Comments (1) | TrackBack (0)

General Court’s AstraZeneca Judgment Set to Embolden Commission

Posted by D. Daniel Sokol

Kristina Nordlander & Patrick Harrison (Sidley Austin) predict the General Court’s AstraZeneca Judgment Set to Embolden Commission.

ABSTRACT: Five years and two weeks is a long time to wait for a judgment on appeal. For many, it is too long. However, such is the nature of the General Court's July 1, 2010 judgment in AstraZeneca v Commission that innovative pharmaceutical manufacturers and other companies who are at risk of being found dominant may well wish the Court had never issued its judgment at all. Although the precise implications of the AstraZeneca judgment for the European Commission's ("Commission") enforcement policy under Article 102 of the Treaty on the Functioning of the European Union ("TFEU") will only gradually become known, it seems clear that the Commission will be emboldened in its pursuit of alleged abuses of dominance.

This article seeks to explore key parts of the judgment and their potential impact on Article 102 TFEU enforcement in the EU. Section II of the article sets out the background to the Court's judgment. Section III examines some of the more important points arising out of the judgment, including:

a) the findings on market definition, where the Court's upholding of the Commission's decision may lead to further Commission enforcement in cases based on narrow and controversial market definitions;

b) the broad-ranging "transparency" standards for dominant companies when dealing with regulatory authorities;

c) the findings that representations to authorities can constitute abuses under Article 102 TFEU even absent implementation, fraud, or bad faith and the resultant inconsistency with U.S. jurisprudence;

d) the Court's observations in relation to the introduction of new products and the withdrawal of their older equivalents;

e) the Court's pharmaceutical sector-specific observations; and

f)   why the Court's €7.5 million reduction in AstraZeneca's fine is of little significance going forward.

Section IV concludes by commenting on the impact the judgment may have on the Commission's enforcement policy in the pharmaceutical sector and on companies who are at risk of being found dominant on EU markets.

October 14, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 13, 2010

What is the Future of UK Competition Policy Under the Tories? We will Find Out Very Soon

Posted by D. Daniel Sokol

I am waiting to find out.  According to the FT, the announcement will come tomorrow (Thursday).  In the meantime, the FT has stories here and here.  From the institutional structure issue, this will be a very interesting development.

My own sense on institutional issues in antitrust can be found in my recent article.

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

The Evolution of Brand Preferences: Evidence from Consumer Migration

Posted by D. Daniel Sokol

Bart J. Bronnenberg CentER, Tilburg University, Jean-Pierre H. Dube University of Chicago - Booth School of Business and Matthew Gentzkow University of Chicago - Booth School of Business describe The Evolution of Brand Preferences: Evidence from Consumer Migration.

ABSTRACT: We study the long-run evolution of brand preferences, using new data on consumers' life histories and purchases of consumer packaged goods. Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors such as availability, prices, and advertising. Heterogeneity in brand preferences explains 40 percent of geographic variation in market shares. These preferences develop endogenously as a function of consumers' life histories and are highly persistent once formed, with experiences 50 years in the past still exerting a significant effect on current consumption. Counterfactuals suggest that brand preferences create large entry barriers and durable advantages for incumbent firms, and can explain persistence of early-mover advantage over long periods. Variation across product categories shows that the persistence of brand preferences is related in an intuitive way to both advertising levels and the social visibility of consumption.

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

Vertical Restraints, Dealers with Power, and Antitrust Policy

Posted by D. Daniel Sokol

Herb Hovenkamp (Iowa Law) has posted the very interesting Vertical Restraints, Dealers with Power, and Antitrust Policy.

ABSTRACT: The Supreme Court’s Leegin decision has no brought the rule of reason to all purely vertical intrabrand distribution restraints. But the rule of reason does not mean per se legality and occasions for anticompetitive vertically imposed restraints may still arise. Of all those that have been suggested the most plausible are vertical restraints imposed at the behest of a powerful dealer or group (cartel) of dealers.

Although a vertical distribution restraint resembles a dealer cartel in that both limit intraband competition, a manufacturer restraining the distribution of its product shuns the excess dealer profits a dealer cartel would seek. Accordingly, a knowledgeable and un-coerced manufacturer who restricts rivalry among dealers must do so for some other reason, such as to facilitate dealer services. In fact, however, manufacturers have been known to restrain intrabrand competition — especially through resale price maintenance — not to achieve more effective distribution but rather to appease dealer interests in excess profits. Whatever the social benefits of a distribution restraint that serves a manufacturer's self-interest, a competition-limiting restraint extracted by dealer power can be harmful.

Vertical restraints reflecting dealer power could well be ignored by antitrust law if they were rare, insignificant in magnitude, or readily detected and remedied under other branches of antitrust law. But we doubt that dealer power is that rare and are troubled by an apparent history of price-enhancing resale price maintenance for the benefit of dealers. At least some of the claimed justifications for it actually reflect dealer power, and antitrust rules controlling horizontal combinations cannot themselves prevent those distribution restraints that result from the power of a single dealer.

Requiring the plaintiff to prove that the challenged restraint is explained solely and exclusively on cartel, dealer power, or other non-efficiency grounds would be an attractive policy option for those who think such instances are rare. This option allows prompt validation of many such restraints. On the other hand, requiring the defenders to offer a plausible and legitimate business reason for every restraint would allow the antitrust tribunal easily to condemn those restraints obviously lacking justification but would complicate many cases in which dealer power is unlikely. Depending on the restraint, challengers might be required to prove specified indicia of dealer power, or, for legally less favored restraints, such power might be presumed subject to rebuttal by disproof of the same specified indicia. In sum, presumptions must be developed that will both clarify and simplify the fact finding process.

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

Cartel Settlements and Commitment Decisions

Posted by D. Daniel Sokol

Mel Marquis, European University Institute, University of Verona addresses Cartel Settlements and Commitment Decisions.

ABSTRACT: This is the introductory chapter to a 38-chapter book relating to two principal subjects: the decision of competition authorities to settle cartel cases, with a focus on the development of a cartel settlement regime in Europe; and the use by the European Commission of “commitments decisions” under Article 9 of Regulation 1/2003 to close non-cartel cases. The author discusses the various chapters of the book in detail and highlights continuities as well as points of contention.

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

Les principes du "Procés équitable" dans les procédures de concurrence

Posted by D. Daniel Sokol

La revue Concurrences et White & Case LLP

vous invitent

à un déjeuner-débat sur le thème :



Bruno Lasserre

Président de l’Autorité de la concurrence

Carles Esteva Mosso

Directeur Unité Politique et stratégie, DG COMP

Jean-Paul Tran Thiet

Avocat associé, White & Case LLP

Ian Forrester

Avocat associé, White & Case LLP

Jeudi 28 octobre 2010

 12.00 - 14h30

White  & Case, 19 Place Vendôme, Paris

Métro : Opéra

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

The Governance of Overlapping Jurisdictions - How International Cooperation Enhances the Autonomy of Competition Authorities

Posted by D. Daniel Sokol

Michael Blauberger, University of Bremen discussess The Governance of Overlapping Jurisdictions - How International Cooperation Enhances the Autonomy of Competition Authorities.

ABSTRACT: As a result of international legalization, the potential for conflicts of overlapping jurisdictions has multiplied - vertically between national and international law, as well as horizontally between national and foreign law. In competition control, the latter type of horizontal overlap between US and EU jurisdictions is significant, but very few conflicts actually occur. Rather than solving the underlying issue of extraterritorial jurisdiction, US and EU competition authorities have established a practice of cooperation which aims at preventing conflicts in the first place. Moreover, apart from conflict prevention, transatlantic cooperation significantly enhances the autonomy of competition authorities vis-à-vis politics, judges, and firms.

October 13, 2010 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 12, 2010

Antitrust Implications of Clinically-Integrated Managed Care Contracting Networks and Accountable Care Organizations

Posted by D. Daniel Sokol

Ashley Fischer & David Marx, Jr. (McDermott Will & Emery) address Antitrust Implications of Clinically-Integrated Managed Care Contracting Networks and Accountable Care Organizations.

ABSTRACT: The Patient Protection and Affordable Care Act ("PPACA") established various mechanisms to make healthcare providers more accountable for both the cost and quality of the services they provide. One of these mechanisms is the establishment of a new class of Medicare provider-the Accountable Care Organization ("ACO"). An ACO is accountable for the quality, cost, and overall care for a defined set of Medicare beneficiaries.

Although popularized by PPACA, the concept of independent providers coming together and being jointly accountable for the cost and quality of care they provide is not new. In 1996, the Department of Justice ("DOJ") and Federal Trade Commission ("FTC") in the Statements of Antitrust Enforcement Policy in Health Care ("Policy Statements") first recognized the concept of clinical integration as a collaborative activity among competing health care providers that may provide a sufficient basis for analyzing joint pricing negotiations under the rule of reason and not the per se standard of illegality.

Following a decline in capitation and other traditional risk-based contracts in the late 90s, some physician-contracting networks pursued clinical integration as a means to continue joint contracting on behalf of their independent, competing members. However, the significant resource investment required for these programs-in electronic health records systems ("EHRS"), for example-and the lack of data to monitor and assess performance goals, coupled with the uncertainty of payor receptivity to these types of programs, limited their widespread adoption. Government incentives for the adoption of EHRS, along with the development of pay-for-performance programs in the commercial insurance marketplace, have reduced these barriers. With the shared-savings program incentive provisions of PPACA, providers who coordinate their care to meet cost and quality objectives now have an additional incentive to jointly pursue these efficiency objectives.

This article explores how the DOJ and FTC (collectively, the "Agencies") have treated clinically-integrated managed care contracting networks under the antitrust laws, and how the Agencies are likely to apply those concepts to ACOs.

October 12, 2010 | Permalink | Comments (0) | TrackBack (0)

How Are Cartels Detected? The Increasing Use of Proactive Methods to Establish Antitrust Infringements

Posted by D. Daniel Sokol

Kai Hüschelrath, ZEW Centre for European Economic Research, Department for Industrial Economics and International Management, Mannheim, Germany asks How Are Cartels Detected? The Increasing Use of Proactive Methods to Establish Antitrust Infringements.

ABSTRACT: Hard core cartels impose significant harm on society and therefore competition authorities around the world are increasingly active in their fight against these conspiracies. Competition authorities typically rely on both ex ante and ex post instruments to reduce the incentives to form cartels and to increase the probability that existing cartels are detected. Although reactive methods to detect cartels (such as complaints) still play the dominant role in practice, there are signs that competition authorities increasingly apply proactive detection tools. The three-step market screening method described in this note is not unlikely to become part of an efficient and effective overall cartel enforcement strategy.

October 12, 2010 | Permalink | Comments (0) | TrackBack (0)