Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, January 4, 2011

The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access

Posted by D. Daniel Sokol

Georg Gebhardt (University of Munich) provides research on The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access.

ABSTRACT: Does the internet increase competition? To address this question, I exploit two institutional details unique to Germany: (1) Some municipalities received glass fibre cables that cannot be upgraded to DSL; I use these municipalities as a treatment group with reduced online competition. (2) German law mandates resale price maintenance for books; I compare three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers’ producer rents by 1.5 percent per year from 1999 to 2007.

January 4, 2011 | Permalink | Comments (0) | TrackBack (0)

Monitoring Managers Through Corporate Compliance Programs

Posted by D. Daniel Sokol

Charles Angelucci, University of Toulouse 1 - Toulouse School of Economics (TSE) and Martijn A. Han, University of Amsterdam - Amsterdam Center for Law & Economics (ACLE) have an interesting new paper on Monitoring Managers Through Corporate Compliance Programs.  I recommend reading this paper.

ABSTRACT: Compliance programs entail monitoring of employees’ behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring on contracting within the firm and the authority’s optimal sanctions and leniency policy. We find that compliance programs are beneficial in the fight against corporate crime if and only if the managerial sanction is low. Moreover, when the shareholder blows the whistle, the authority optimally grants partial corporate leniency, while not granting individual leniency to the involved employees. Conversely, when the employee blows the whistle, the authority grants individual leniency if and only if the expected managerial sanction is either particularly high or particularly low. Finally, we find that the authority does not apply a discount on the corporate sanction for the mere fact of having adopted a compliance program. Our results thus contradict the Corporate Leniency Program, Individual Leniency Program and US Sentencing Guidelines on several dimensions.

January 4, 2011 | Permalink | Comments (0) | TrackBack (0)

Monday, January 3, 2011

Standards, Innovation Incentives, and the Formation of Patent Pools

Posted by D. Daniel Sokol

Klaus M. Schmidt (University of Munich) addresses Standards, Innovation Incentives, and the Formation of Patent Pools.

ABSTRACT: Technolgical standards give rise to a complements problem that affects pricing and innovation incentives of technology producers. In this paper I discuss how patent pools can be used to solve these problems and what incentives patent holders have to form a patent pool. I offer some suggestions how competition authorities can foster the formation of welfare increasing patent pools.

January 3, 2011 | Permalink | Comments (0) | TrackBack (0)

Abuse of Dominance under the Egyptian Competition Law: Investigating Peculiarities That May Have Special Effects in the Economy

Posted by D. Daniel Sokol

Mourad Greiss, University of Sussex has posted Abuse of Dominance under the Egyptian Competition Law: Investigating Peculiarities That May Have Special Effects in the Economy.

ABSTRACT: This paper investigates peculiarities in the treatment of abuse of dominance under Egyptian Competition Law and evaluates their potential effects in the economy. Particularly, it recognizes the lack of excessive pricing prohibition and the deployment of effects-based approach to abuse of dominance at the present stage as likely peculiarities in Egyptian Competition Law that may harm the economy. It is specifically argued that the success of the practice of excessive pricing, at least in exceptional circumstances, may become more plausible at this stage in Egypt, as an emerging economy, since it lacks the necessary competition culture and, as such, its market is highly concentrated. The paper, furthermore, finds that employing an effects-based approach at this early stage of competition law enforcement may not be suitable due to the understandable lack of experience that may increase the likelihood of committing judicial errors. It is, however, perceived that investigating the practice of excessive pricing is quite complex and, as such prohibiting it may not be the best initiative at this stage. Moreover, it is suggested that employing an effects-based analysis, as opposed to per se approach, may help avoid type II errors (erroneously condemning pro-competitive practices). It is, hence, suggested to stick by this approach at the current stage; so long as caution is taken in relation to practices that generate questionable anti-competitive effects. Whether for introducing an excessive pricing prohibition in the future (should the practice continue to pose a threat) or employing effects-based approach, it is argued that increasing economic expertise in the field of competition law and cooperating with competition authorities of the developed world remains central.

January 3, 2011 | Permalink | Comments (0) | TrackBack (0)

Towards an International Dialogue on the Institutional Side of Antitrust

Posted by D. Daniel Sokol

Phil Weiser, University of Colorado Law School has posted Towards an International Dialogue on the Institutional Side of Antitrust.

ABSTRACT: The antitrust world is now globalized and interconnected, requiring ever-increasing awareness as to how different agencies operate. The need to promote convergence on substantive doctrines has received, and will continue to receive, considerable attention. What is less appreciated is the need to focus on institutional design and practice, particularly as to the promotion of transparency and procedural fairness in the conduct of antitrust investigations. This Essay makes the case for such a focus, explaining how one of the healthy aspects of a multijurisdictional world is that sister agencies can challenge one another and model means of improving our institutional practices. In so doing, it explains that such learning should continue at the same time as international authorities endeavor to converge on best practices for ensuring procedural fairness during the course of an antitrust inquiry.

January 3, 2011 | Permalink | Comments (0) | TrackBack (0)

The Applicability of Competition Law to the German Social Security System

Posted by D. Daniel Sokol

Christian Kersting, Heinrich Heine University of Duesseldorf - Faculty of Law and Sabine Faust, Heinrich-Heine Universitaet Duesseldorf - Faculty of Law analyze The Applicability of Competition Law to the German Social Security System.

ABSTRACT: During the last 20 years, the European Court of Justice (ECJ) repeatedly had to decide on whether the Member States’ social security systems are subject to European competition law. In these cases the ECJ was reluctant to apply the European competition rules in order not to interfere with the functionality of the Member States’ social security systems. Therefore, statutory health insurance providers were, for example, not considered to be undertakings in the sense of Art. 101 et seq. TFEU.

This article takes a critical view of this judicature, taking statutory health insurance providers as an example. An unrestricted application of the cartel prohibition in Art. 101 TFEU may on the one hand endanger the functionality of the social health-care system which to a certain degree requires cooperation. On the other hand, the German legislator has deliberately established room for independent decision-making of statutory health insurance providers and thus promoted competition between them. This form of competition deserves protection. It will be demonstrated that the apparently conflicting interests in cooperation on the one hand and in application of competition law on the other hand which both contribute to the functionality of the German health-care system can be balanced: Statutory health insurance providers have to be considered as undertakings and therefore as addressees of competition law. However, as far as the functioning of the health-care system requires cooperation, anti-competitive conduct in the sense of Art. 101 et seq. TFEU may be justified under Art. 106 para. 2 TFEU.

Furthermore it is argued that the German legislator is free to apply the German Act on Restraints of Competition (GWB) to anti-competitive conduct of social security providers. The ECJ’s judicature, according to which especially statutory health insurance providers are not considered to be undertakings in the sense of Art. 101 et seq. TFEU, is no obstacle in this regard. In the context of social security law Art. 3(2) Regulation 1/2003/EC does not require the term “undertaking” to be interpreted consistently in European and German law.

January 3, 2011 | Permalink | Comments (0) | TrackBack (0)