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 26, 2010

The Revised Horizontal Merger Guidelines: Can the Courts Be Persuaded?

Posted by D. Daniel Sokol

Leah Brannon and Kathleen Bradish (Cleary Gottlieb) ask The Revised Horizontal Merger Guidelines: Can the Courts Be Persuaded?  The answer should be "yes".  Check out the writing of Hillary Greene and my own contribution to this scholarshp.

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Timing Vertical Relationships

Posted by D. Daniel Sokol

Richard Ruble (EMLYON & CNRS, GATE), Bruno Versaevel (EMLYON & CNRS, GATE), and Étienne de Villemeur (Toulouse School of Economics (IDEI & GREMAQ)) describe Timing Vertical Relationships.

ABSTRACT: We show that the standard analysis of vertical relationships transposes directly to investment timing. Thus, when a firm undertaking a project requires an outside supplier (e.g. an equipment manufacturer) to provide it with a discrete input, and if the supplier has market power, investment occurs too late from an industry standpoint. The distortion in firm decisions is characterized by a Lerner index, which is related to the parameters of a stochastic downstream demand. When feasible, vertical restraints restore efficiency. For instance, the upstream firm can induce entry at the correct investment threshold by selling a call option on the input. Otherwise, competition may substitute for vertical restraints. In particular, if two firms are engaged in a preemption race downstream, the upstream firm sells the input to the first investor at a discount that is chosen in such a way that the race to preempt exactly osets the ve! rtical externality, and this leader invests at the optimal market threshold.

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Getting The Deal Through: Private Antitrust Litigation 2011

Posted by D. Daniel Sokol

 

Global Competition Review is pleased to announce the publication of Getting The Deal Through: Private Antitrust Litigation 2011.

This fully revised and updated 8th edition offers the reader coverage of 27 jurisdictions worldwide including new chapters on Argentina, China, Lithuania, Russia and Spain.

Key questions are answered by internationally renowned leading practitioners.

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

 

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October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

A Dynamic Duopoly Investment Game under Uncertain Market Growth

Posted by D. Daniel Sokol

Marcel Boyer (Université de Montréal), Pierre Lasserre (Université du Québec à Montréal) and Michel Moreaux(Toulouse School of Economics (IDEI and LERNA)) describe A Dynamic Duopoly Investment Game under Uncertain Market Growth.

ABSTRACT: We model investments in capacity in a homogeneous product duopoly facing uncertain demand growth. Capacity building is achieved through adding production units that are durable and lumpy and whose cost is irreversible. There is no exogenous order of moves, no first-mover or second-mover advantage, no commitment, and no finite horizon; while building their capacity over time, firms compete `a la Cournot in the product market. We investigate Markov Perfect Equilibrium (MPE) paths of the investment game, which may include preemption episodes and tacit collusion episodes. However, when firms have not yet invested in capacity, the sole pattern that is MPEcompatible is a preemption episode with firms investing at different times, but both have equal value. The first such investment may occur earlier, and therefore be riskier, than socially optimal. When both firms hold capacity, tacit collusion episodes may be MPE-compatible w! ith firms investing simultaneously at a postponed time (generating an investment wave in the industry). We show that the emergence of such episodes is favored by higher demand volatility, faster market growth, and lower discount rate (cost of capital).

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Competitive Markets for Achieving Growth and Development in West Africa

Posted by D. Daniel Sokol

Competitive Markets for Achieving Growth and Development in West Africa
Date:
Thursday, 11th November 2010
Venue: Room XXIII, Palais de Nations, Geneva
Time: 1330hrs to 1430hrs

CUTS has implemented a two-year project entitled, ‘Strengthening Constituencies For Effective Competition Regimes in Select West African Countries’ (referred to as the 7Up4 project, www.cuts-ccier.org/7up4) in seven countries of West Africa – Burkina Faso, The Gambia, Ghana, Mali, Nigeria, Senegal and Togo. The findings from the research undertaken to assess the state of competition regimes in the seven countries has been summarised into publication of a short report:  Competitive Markets for Achieving Growth and Development in West Africa, available in both English and French languages.

This report highlights challenges and opportunities for competition reforms which would be of interest to experts and practitioners on the subject from within the region and beyond. It also highlights how impediments to competition have restricted benefits that could have accrued to these countries from the liberalisation process. It advocates the need for national stakeholders (state and non-state actors) to take prompt and lasting actions that would promote a competition culture in these countries. It also tries to attract the attention of the international community for supporting these countries in their efforts for competition reforms.

We have invited Supachai Panitchpakdi, Secretary General of UNCTAD to grace the occasion and release the report.

Noted international competition expert, Frederic Jenny would be present and highlight some of the urgent challenges for competition reforms in the region, while Philippe Brusick, Chairman, CUTS Geneva Resource Centre will speak about his own experience of working on this challenging project.

CUTS International Secretary General, Pradeep S Mehta would speak about CUTS long term experience in implementing these challenging yet extremely motivating initiatives in Africa and our future plans.

All delegates attending the “6TH UN CONFERENCE TO REVIEW THE SET ON COMPETITION POLICY” are cordially invited. Sandwiches and refreshments would be offered.

For further info, please contact:
Rijit Sengupta, rsg@cuts.org, +91-9829285928
Rashid Kaukab, rsk@cuts.org, +41792024112

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model

Posted by D. Daniel Sokol

Pierre Dubois and Sandra Jódar-Rosell (both Toulouse School of Economics) discuss Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model.

ABSTRACT: We develop a model of competition between retailer chains with a structural estimation of the demand and supply in the supermarket industry in France. In the model, supermarkets compete in price and brand offer over all food products to attract consumers, in particular through the share of private labels versus national brands across all their products. Private labels can serve as a differentiation tool for the retailers in order to soften price competition. They may affect the marginal costs of all products for the retailer because of eventual quality differences and also by helping retailers to obtain better conditions from their manufacturers. Differentiation is taken into account by estimating a discrete-continuous choice model of demand where outlet choice and total expenditures are determined endogenously. On the supply side, we consider a simultaneous competition game in brand offer and price between retailers to ! identify marginal costs. After estimation by simulated maximum likelihood, the structural estimates allow to simulate the effect on the equilibrium behavior of retailer chains of a demand shock through an increase in transportation costs for consumers and a merger between two retailer chains.

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Discounts For Qualied Buyers Only

Posted by D. Daniel Sokol

David McAdams, Duke University discusses Discounts For Qualied Buyers Only.

ABSTRACT: The standard monopoly pricing problem is re-considered when the buyer can disclose his type (e.g. age, income, experience) at some cost. In the optimal sales mechanism with costly disclosure, the seller posts a price list, including a \sticker price" available to any buyer and a schedule of discounts available to those who disclose certain types. Unambiguous welfare implications of such a pricing policy are available in the limiting case when the buyer's type is fully informative: (i) The buyer is better o and the monopolist worse o when disclosure is more costly. (ii) When discounts are suciently rare, social welfare is strictly less than if the seller could not o er discounts.

October 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Intellectual Property and Antitrust Limitations on Contract: Comment

Posted by D. Daniel Sokol

Matthew John Holian, San Jose State University - Department of Economics and Neil N.H. Nguyen, San Jose State University - Department of Economics discuss Intellectual Property and Antitrust Limitations on Contract: Comment.

ABSTRACT: In their chapter in Dynamic Competition and Public Policy (2001, Cambridge University Press), Burtis and Kobayashi never defined their model’s discount rate, making replicating their simulation results difficult. Through our own simulations, we were able to verify their results when using a discount rate of 0.10. We also identified two new types of equilibria that the authors overlooked, doubling the number of distinct equilibria in the model.

October 26, 2010 | Permalink | Comments (1) | TrackBack (0)

Monday, October 25, 2010

CALL FOR PAPERS: CONFERENCE ON REVIEWING THE GLOBAL EXPERIENCE WITH ECONOMIC REGULATION A Forward Looking Perspective

Posted by D. Daniel Sokol

CALL FOR PAPERS

CONFERENCE ON REVIEWING THE GLOBAL EXPERIENCE WITH ECONOMIC REGULATION
A Forward Looking Perspective

CUTS International will be organising this conference in New Delhi On March 15-17, 2011. Papers are invited by practitioners, experts and students from all over the world in the following areas:

• The rationale for economic regulation - enforcement of competition law and sector regulation
• Methodology for regulatory decision making and evaluation of regulation
            a) Theory: Competition analysis, competition assessment, consumer impact assessment, regulatory impact assessment, other qualitative approaches
            b) Actual case studies of sector regulation, competition law enforcement and the interface between the two
• Regulatory frameworks and approaches for achieving regulatory coherence
• Consumer participation in economic regulation

A total of eight papers will be chosen for presentation at the conference. CUTS would provide travel allowance and local hospitality for chosen presenters as well as bring their submitted papers out through a volume from a leading publishing house.

All submissions must be made to c-cier@cuts.org and/or vb@cuts.org by December 30, 2010. Those submitting would receive decisions through email by January 31, 2011. All submissions must be between 8000 - 10,000 words in length.

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)

2010 Horizontal Merger Guidelines: The View from the Technology Industry

Posted by D. Daniel Sokol

Susan Creighton (Wilson Sonsini) has explained 2010 Horizontal Merger Guidelines: The View from the Technology Industry.

 

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)

A New Approach to Relevant Market Under the Prospective Broadcasting-Telecommunications Business Development Law

Posted by D. Daniel Sokol

Young-Cheol (David) Jeong (Yonsei University - Law) offers A New Approach to Relevant Market Under the Prospective Broadcasting-Telecommunications Business Development Law.

ABSTRACT: Mergers and acquisitions are subject to competition law review based on the concept of “relevant market.” The relevant market is where a hypothetical monopolist can exercise despite SSNIP. To find the relevant market, critical loss analysis or its variations has been adopted by regulatory agencies. However, they have many drawbacks especially where new products or markets are being formulated. Thus, regulatory agencies still tend to rely on qualitative analysis in most cases. Korea is now about to legislate the Broadcasting and Telecommunications Development Business Law to address legal hodgepodges due to their convergence. Broadcasting and Telecommunications Development Business Law will offer the same regulatory framework to the same services, regardless of whether they fall within the meaning of broadcasting or telecommunications under the bifurcated regulatory framework. Under the Broadcasting and Telecommunications Development Business Law, services probably would be classified into three categories (network, contents, and platform), or even two (network and contents). A broader market approach would promote mergers and acquisitions, eradicate regulatory uncertainties, and foster technological advances. To achieve these goals, relevant markets are to be decimated as network, contents, and platform or even as network and contents in line with the regulatory framework.

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)

Systemic Financial Service Institutions and Monopoly Power

Posted by D. Daniel Sokol

Sharon Eleaine Foster (Arkansas Law) has posted Systemic Financial Service Institutions and Monopoly Power.

ABSTRACT: This paper examines the application of Sherman Section 2 to systemic financial service institutions and concludes that a systemic financial service institution may be found to possess monopoly power under Sherman Section 2 using a negative externality analysis. Further, the conduct of a systemic financial service institution in deliberately seeking systemic status may satisfy the improper conduct requirement under Sherman Section 2.

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)

Concerted Practices and the Presence of Obligations: Joint Action in Competition Law and Social Philosophy

Posted by D. Daniel Sokol

Maksymilian T. Del Mar, Faculty of Social and Political Sciences, University of Lausanne, explores Concerted Practices and the Presence of Obligations: Joint Action in Competition Law and Social Philosophy.

ABSTRACT: This paper considers whether, and if so how, the modelling of joint action in social philosophy – principally in the work of Margaret Gilbert and Michael Bratman – might assist in understanding and applying the concept of concerted practices in European competition law. More specifically, the paper focuses in on a well-known difficulty in the application of that concept, namely, distinguishing between concerted practice and rational or intelligent adaptation in oligopolistic markets. The paper argues that although Bratman’s model of joint action is more psychologically plausible and phenomenologically resonant, its less demanding character also makes it less useful than Gilbert’s in our understanding of the legal concept of concerted practice and in dealing with the above difficulty. The paper proceeds in two parts: first, a discussion of the concept of concerted practices in European competition law; and second, a discussion of Gilbert and Bratman’s models of joint action, including a comparative assessment of their ability to provide an evidentiary target and an evidentiary platform for concerted practices.

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)

Corporate Governance and Competition Policy

Posted by D. Daniel Sokol

Spencer Waller (Chicago Loyola Law) has written on Corporate Governance and Competition Policy.  He is correct to note that many people have not linked the two areas.

ABSTRACT: Corporate governance law addresses the misaligned incentives between officers and directors of publicly-owned companies and their shareholders and how this can lead to the destruction of shareholder value. Antitrust law governs the interaction between corporations and other economic actors in the marketplace and prohibits and penalizes anticompetitive agreements, unilateral conduct which unreasonably injures competition, and mergers and acquisitions which may substantially lessen competition. This article explores the puzzling lack of meaningful interaction between these two fields of law which govern the internal and external operations of key economic players in our economy. While a handful of commentators have lamented the lack of a closer organic connection between these two bodies of law, most do not even notice. This article goes beyond the conventional disconnect and discusses how to create a more unified approach to two key area of business law in order to promote the interests of both shareholders and consumers in a more systematic and meaningful way.

October 25, 2010 | Permalink | Comments (0) | TrackBack (0)