Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, October 19, 2010

Observations on Recent Competition Law Developments from a DG Energy Perspective

Posted by D. Daniel Sokol

Philip Lowe provides Observations on Recent Competition Law Developments from a DG Energy Perspective.

ABSTRACT: As an outsider now—but as a very interested observer and enthusiastic supporter of the Commission's competition policy—the first months into the mandate of Commissioner Almunia as Commissioner for Competition seem to me to reflect both continuity and change.

Commissioner Almunia has clearly taken over from Commissioner Kroes the cudgel against hard core cartels with the adoption of five cartel decisions since he took office in February this year. Fines have remained high, which is needed to sanction and deter effectively, with fines totalling over €1 billion in the prestressing steel and bathroom fitting cartels. With the readoption of the Bollore decision, the Commission continued to demonstrate its determination not to let cartel offenders off the hook when they try to escape liability through corporate restructuring.

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

Are the Bankrupt Skies the Friendliest?

Posted by D. Daniel Sokol

Federico Cilibertoy University of Virginia and Carola Schenonez University of Virginia ask Are the Bankrupt Skies the Friendliest?

ABSTRACT: We use data from the US airline industry to investigate whether firms that are under bankruptcy protection, as well as these firms' product market rivals, change the quality of the products they offer. We measure the quality of the services offered by a carrier using flight cancellations and delays, and the age of the aircraft used by the carrier. We find that delays and cancelations are less frequent during bankruptcy filings but return to their pre-bankruptcy levels once the bankrupt firm emerges from bankruptcy. We also find that firms use Chapter 11 filings to permanently reduce the age of their fleet. We do not find evidence of statistically and economically significant changes by the airline's competitors along any of the dimensions above.

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

OFT consults on competition compliance guidance

Posted by D. Daniel Sokol

From the OFT press release:

The OFT is consulting on two guidance documents that aim to help businesses and company directors comply with competition law.

One of the documents has been developed for businesses and their advisers and the other is specifically for executive and non-executive directors.

The guidance for businesses and their advisers includes a separate quick guide intended to meet the specific needs of small to medium sized enterprises.

How Your Business Can Achieve Compliance (pdf 371kb) sets out the OFT's recommended risk-based, four-step process for creating a culture of compliance within a business. It has been developed as part of the OFT's Drivers of Compliance and Non-Compliance with Competition Law research. The guidance sets out in more detail the practical compliance measures that businesses might be able to take.

In parallel, the OFT is consulting on its draft guidance, Company Directors and Competition Law (pdf 575kb). This is intended to explain the level of understanding of competition law that company directors are expected to have and steps they should be taking to detect and prevent breaches of the law.

The draft guidance for company directors follows the recent publication of the OFT's revised guidance on Director Disqualification Orders in competition law cases, which sets out how it intends to use the sanction to deter anti-competitive activity. At the time, the OFT undertook to provide company directors with practical guidance on their duties under competition law.

Cavendish Elithorn, the OFT's Senior Director of Policy, said:

'Sanctions for involvement in competition law infringements can be severe for both businesses and individuals, especially directors. The OFT is well aware that most businesses and directors wish to comply with competition law. We are keen to help them do so. These guidance documents are intended to set out steps that businesses and company directors can take in order to avoid competition law infringements.'

As the two consultation documents are complementary, interested parties should read both when considering and submitting their views.

Responses to the consultations are due by 21 January 2011 and final versions of both guidance will be published on this website.

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

The past and the future of merger control

Posted by D. Daniel Sokol

Joaquín Almunia (DG Comp) provides his thoughts on The past and the future of merger control in a speech given late last month.



October 19, 2010 | Permalink | Comments (1) | TrackBack (0)

Competition and Development: What competition law regime?

Posted by D. Daniel Sokol

UCL Centre for Law and Economics presents a  Competition Law in a Global Context Lecture convened by Dr Ioannis Lianos (UCL)

Competition and Development: What competition law regime? 

by
Professor Abel Mateus
New University of Lisbon and 
former President of the Portuguese Competition Authority 

on 25 October 2010, from 1-2pm


Venue: 
UCL Law Faculty 
Bentham House, Endsleigh Gardens
London WC1H 0EG

Sign up online for your place (free of charge) at: http://global-competition-mateus.eventbrite.com/

About the lecture: 
Using a law and economics model of competition law enforcement we try to answer the following questions: What characterises the effectiveness of a competition law regime? How has competition law enforcement spread around the world? What factors limit the enforcement of competition law? And finally, what regimes for competition law and what are the pre-requisites for each one? Our econometric analysis confirm that democracy, the level of education and control of vested interests are the most important pre-requisites for a competition law regime, and its improvement is crucial for having a more effective regime. Quality of public administration and the regulatory system as well as of the judicial system and reduction of corruption are sub-factors that are central to enforcement.

About the speaker:
Abel Mateus is Associate Professor at New University of Lisbon and an adviser to the Board of the Banco de Portugal. He was the first President of the Portuguese Competition Authority from 2003 - 2008. Prior to this, he was adviser to the Board and Executive Director of the Banco de Portugal, a member of the Monetary Committee and a member of the Economic Policy Committee of the European Commission. For 10 years, he was a senior economist at the World Bank, where he worked with several North African and Latin American countries, including as project leader for a structural adjustment programme in Morocco, and for a large decentralisation and regional development project in Mexico, besides being a macroeconomist for several countries. He also worked on the social and agricultural sectors of several North African and Latin American Countries. During his six-year period as Member of the Board of the Banco de Portugal, he was responsible for the monetary policy in Portugal and, in particular, for bringing the country into the Eurozone. He also worked extensively on tax reforms. He has a PhD in Economics from the University of Pennsylvania, USA. He has taught at the "Universidade Nova de Lisboa", "Universidade Católica Portuguesa" and "Universidade Autónoma de Lisboa". He has published extensively. He speaks Portuguese (mother tongue), English, French and Spanish.

You are invited to the following event:
Competition and Development: What competition law regime?

Date:
Monday, October 25, 2010 at 1:00 PM (GMT)

Location:
UCL Faculty of Laws
Bentham House
Endsleigh Gardens
WC1H 0EG London
United Kingdom

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

Monday, October 18, 2010

The Antitrust Revolution In Europe: Exploring the European Commission’s Cartel Policy

Posted by D. Daniel Sokol

Lee McGowan, Senior Lecturer in European Studies, Queen’s University Belfast has published a book on The Antitrust Revolution In Europe: Exploring the European Commission’s Cartel Policy.

BOOK ABSTRACT:Lee McGowan expertly explores the European Commission’s cartel policy by examining competition policy from a politics/public policy perspective, and discusses the actors, ideas and policy developments involved. This topical study of EU cartel policy provides a fascinating account of supranational governance in action as the Commission looks for increasingly imaginative means to detect, unearth and penalize cartel offenders, through new regulations and strategic policy choices. The author traces the evolution of the European approach to cartels from 1870 with a major focus on the developments after 1945, especially the institutional architecture and policy advancements.

October 18, 2010 | Permalink | Comments (0) | TrackBack (0)

Six Principles for Limiting Government-Facilitated Restraints on Competition

Posted by D. Daniel Sokol

Michal Gal, University of Haifa - Faculty of Law; New York University and Inbal Faibish, University of Haifa - Faculty of Law have posted the interesting Six Principles for Limiting Government-Facilitated Restraints on Competition.

ABSTRACT: Regulation is an important tool to deal with market imperfections. Regulation might, however, sometimes go beyond what is socially justified and create undue restraints on competition. The problem of social engineering is thus to devise a system that will ensure that the optimum combination of competition and regulation is achieved. This article suggests harnessing the comparative advantages of competition authorities to this task. It proposes six general principles that are aimed at creating a system of "checks and balances" which maintains adequate safeguards to ensure that competition will be limited only where socially warranted. Whereas much has been written about where to draw the line between regulation and competition, the question of what institutional role competition authorities and courts can play to ensure that these boundaries are not overstepped has generally received little attention. This paper attempts to fill this gap. The first part of the article provides a basis for the discussion by surveying possible justifications and motivations for government-facilitated or imposed restrictions on competition. A dichotomy between two main types of restraints is suggested, based on their effects on social welfare. This dichotomy then serves as the basis for the discussion in the second part of the article, which focuses on the tools available to competition authorities and courts to combat welfare-reducing restraints on competition. Six general principles to achieve this goal are proposed. Some of these principles suggest that competition authorities should be allowed to venture outside their traditional confines and build upon their institutional comparative advantages in order to ensure that regulation increases social welfare. The third part of the article analyzes the existing EU law to evaluate whether, and to what extent, the proposed principles currently apply. It suggests several changes to the current system that have the potential to limit the existence of welfare-reducing restraints.

October 18, 2010 | Permalink | Comments (0) | TrackBack (0)

General Court upholds Commission's Digital Decoders Decision

Posted by D. Daniel Sokol

Alexander Winterstein (DG Comp) discusses how the General Court upholds Commission's Digital Decoders Decision.

ABSTRACT: Article 107(1) TFEU provides that for State aid to be present the Member State's intervention must, inter alia, confer a selective economic advantage on the recipient which distorts or threatens to distort competition. Such interventions are incompatible with the internal market unless they are deemed compatible pursuant to Article 107(2) TFEU or declared to be so by the Commission pursuant to Article 107(3) TFEU.

When assessing compatibility, the Commission essentially puts the positive and the negative effects of the measure into balance. On the positive side, the Commission will check whether the measure adequately and proportionally addresses an objective of common interest—which in most cases will consist in tackling a market failure. On the negative side, it will in particular assess possible distortions of competition. If the Commission, after having conducted such a balancing exercise, finds a State aid measure to be incompatible, the Member State must not put it into effect. If it was already implemented, the Commission will demand the Member State concerned to recover the aid from the recipient.

With regard to the issues at stake in the present case, that is the digitisation of broadcasting, the Commission's assessment of State aid measures aimed at facilitating the process of digital switchover relies on a number of elements set out in its pertinent policy documents. In this area, the concept of ‘technological neutrality’ is of critical importance: State interventions must not favour the use of a particular digital transmission platform—for example terrestrial TV—vis-à-vis others like satellite or cable.

October 18, 2010 | Permalink | Comments (0) | TrackBack (0)

Bankruptcy and Product-Market Competition: Evidence from the Airline Industry

Posted by D. Daniel Sokol

Federico Cilibertoy University of Virginia and Carola Schenonez University of Virginia have a new paper on Bankruptcy and Product-Market Competition: Evidence from the Airline Industry.

ABSTRACT: We investigate the effects of Chapter 11 bankruptcy filings on product market competition using data from the US airline industry. We find that bankrupt airlines permanently downsize their national route structure, their airport-specific networks, and their route-specific flight frequency and capacity. We also find that bankrupt airlines lower their route-specific prices while under bankruptcy protection, and increase them after emerging. We do not find robust evidence of significant changes by the bankrupt airline's competitors along any of the dimensions above. Overall, our results are consistent with the hypothesis that bankruptcy is the result of a war of attrition over capacity and network cutbacks.

October 18, 2010 | Permalink | Comments (0) | TrackBack (0)

Spatial Competition and Cooperation Effects on European Airports' Efficiency

Posted by D. Daniel Sokol

Pavlyuk Dmitry, Transport and Telecommunication Institute explains Spatial Competition and Cooperation Effects on European Airports' Efficiency.

ABSTRACT: This paper is devoted to statistical analysis of spatial competition and cooperation between European airports. We propose a new multi-tier modification of spatial models, which allow estimating of spatial influence varying with the distance. Competition and cooperation effects don't diminish steadily with moving from a given airport, their structure is more complex. The suggested model is based on a set of distance tiers, with different possible effects inside each tier. We apply the proposed modification to the standard spatial stochastic frontier model and use it to estimation of competition and cooperation effects for European airport and airport's efficiency levels. We identify three tiers of spatial influence with different completion-cooperation ratio in each one. In the first, closest to an airport, tier we note significant advantage of cooperation effects over competition ones. In the second, more distant, tier ! we discover the opposite situation – significant advantage of completion effects. The last tier's airports doesn't influence significantly. In this paper we also consider some other possible applications of the proposed spatial multi-tier model.

October 18, 2010 | Permalink | Comments (0) | TrackBack (0)