Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, July 16, 2011

Do No Evil? Google's Deceptive Practices Harm Consumers

Posted by D. Daniel Sokol

Over on the Forbes blog, Scott Cleland has written a post Do No Evil? Google's Deceptive Practices Harm Consumers.

July 16, 2011 | Permalink | Comments (0) | TrackBack (0)

Friday, July 15, 2011

After Google Book Search: Rebooting the Digital Library

Posted by D. Daniel Sokol

Randal C. Picker, University of Chicago - Law School addresses After Google Book Search: Rebooting the Digital Library.

ABSTRACT: The rejection of the Google Book Search settlement means that we are at a point of rebooting how we design our digital library future. There were many criticisms of GBS and the settlement but perhaps chief among those was the risk that approval of the settlement would have locked in a single approach to digital libraries. Google would have received unique access to the so-called orphan works and that would have provided it what may have been a decisive advantage against digital library competitors, both private and public. As we move forward on the orphan works, we need to do so with two principles in mind. First, we need to enable broad competing uses of the orphan works while, to the greatest extent possible, respecting the rights of the orphan works holders. Second, we should not repeat the mistake of the GBS settlement by somehow tilting the table in favor of digital library monopoly, either public or private. We should want to foster a rich digital library ecosystem. GBS makes clear that we can have large-scale private digital libraries. That is an important development and one that we should seek to enable. If we create use rights for copyrighted works for digital libraries, we should be sure to make those privileges available to both public digital libraries and private digital libraries such as GBS and its successors. Our existing statutory safe harbors for libraries favor noncommercial libraries and archives. The emergence of GBS suggests that that is too narrow a conception of what libraries can be in the digital age and we need a statutory scheme that supports that.

July 15, 2011 | Permalink | Comments (1) | TrackBack (0)

The Impact of the New York State Retail Milk Price Regulation on Farm-to-Retail Price Transmission and Supermarket Pricing Strategies in Metropolitan Fluid Milk Markets

Posted by D. Daniel Sokol

Yuliya V. Bolotova and Andrew M. Novakovic (both Cornell University Charles H. Dyson School of Applied Economics and Management) describe The Impact of the New York State Retail Milk Price Regulation on Farm-to-Retail Price Transmission and Supermarket Pricing Strategies in Metropolitan Fluid Milk Markets.

ABSTRACT: The New York State Milk Price Gouging Law establishes that the retail prices of fluid milk products are not to exceed 200% of the prices that NYS milk processors py for Class I milk. The enforcement of this law significantly affected the nature of the Class I fluid milk price transmission process and the milk pricing strategies of supermarkets in the five largest cities in New York State: New York City, Albany, Syracuse, Buffalo and Rochester. During the pre-law period, supermarkets used a retail price-stabilization strategy, as evidenced by asymmetric Class I fluid milk price transmission. In contrast, supermarkets use a retail profit stabilization strategy during the law period. This variation of retail milk price control actually creates an institutional environment that facilitates cooperative conduct of supermarkets, acting in an oligopolistic market environment, which caused greater instability in retail milk price! s. Differences in the competitive environments of each city impact the effects of the statewide law.

July 15, 2011 | Permalink | Comments (0) | TrackBack (0)

Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents

Posted by D. Daniel Sokol

Rabah Amir (University of Arizona - University of Arizona), David Encaoua (CES - Sorbonne, Paris School of Economics - Ecole d'Economie de Paris) and Yassine Lefouili (GREMAQ, Toulouse I) explore Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents.

ABSTRACT: This paper explores a licensor's choice between charging a per-unit royalty or a …fixed fee when her innovation is covered by a weak patent, i.e. a patent that is likely to be invali- dated by a court if challenged. Using a general model where the nature of competition is not speci…ed, we show that the patent holder prefers to use a per-unit royalty scheme if the strategic e¤ect of an increase in a potential licensee's unit cost on the aggregate equilibrium pro…t is positive. To show the mildness of the latter condition, we establish that it holds in a Cournot (resp. Bertrand) oligopoly with homegenous (resp. heterogenous) products under very general assumptions on the demands faced by …firms. As a byproduct of our analysis, we contribute to the oligopoly literature by offering some new insights of independent interest regarding the effects of cost variations on Cournot and Bertrand equilibria.

July 15, 2011 | Permalink | Comments (2) | TrackBack (0)

Thursday, July 14, 2011

Welfare Analysis of Free Entry in a Dynamic General Equilibrium Model

Posted by D. Daniel Sokol

Koichi Futagami (Graduate School of Economics, Osaka University), Tatsuro Iwaisako (Graduate School of Economics, Osaka University), and Makoto Okamura (Economics Department, Hiroshima University) address Welfare Analysis of Free Entry in a Dynamic General Equilibrium Model.

ABSTRACT: This paper presents a welfare analysis of free entry equilibrium in dynamic general equilibrium environments with oligopolistic competition. First, we show that a marginal decrease in the number of firms at the free entry equilibrium improves social welfare. Second, we show that if a government can control the number of entrants intertemporally so as to maximize the level of social welfare, the number of entrants under free entry may be less than the second-best number of entrants. Capital accumulation plays an important role in determining whether excess entry occurs.

July 14, 2011 | Permalink | Comments (0) | TrackBack (0)

The Use of Natural Experiments in Merger Analysis

Posted by D. Daniel Sokol

Malcolm Coate (FTC) has an interesting paper on The Use of Natural Experiments in Merger Analysis.

ABSTRACT: Natural experiments may serve as a test of an economic theory that purports to evaluate the competitive effects of a proposed transaction and therefore play an important role in merger analysis. Using aggregate reviews of Federal Trade Commission merger studies, it is possible to identify a range of quantitative and qualitative experiments supportive of unilateral effects, coordinated interaction or continued competition theories. The court decisions in Staples, Oracle, and Whole Foods play an important role in structuring the review in unilateral cases, while Richard Posner’s commentary on performance analysis is relevant to coordinated interaction cases. Other experiments show either no structure-performance relationship in a market or undermine a key characteristic of Guidelines analysis to imply that the merger in question is not likely to be anti-competitive. A final section evaluates the linkage between the experimental evidence, supplemented at times with validated customer complaint and hot document findings, and the merger challenge decision. While the results show the bulk of the merger challenges were substantiated by some type of evidence, a number of matters are challenged on pure structural grounds.

July 14, 2011 | Permalink | Comments (0) | TrackBack (0)

Network Neutrality: A Research Guide

Posted by D. Daniel Sokol

Christopher T. Marsden, University of Essex - School of Law advises on Network Neutrality: A Research Guide.

ABSTRACT: The conclusion in a research handbook should emphasise the complexity of the problem than trying to claim a one-size-fits-all solution. I have categorised net neutrality into positive and negative (content discrimination) net neutrality indicating the latter as potentially harmful. Blocking content without informing customers appropriately is wrong: if it says ‘Internet service’, it should offer an open Internet (alongside walled gardens if that is expressly advertised as such). The issue of uncontrolled Internet flows versus engineered solutions is central to the question of a ‘free’ versus regulated Internet. A consumer- and citizen-orientated intervention depends on passing regulations to prevent unregulated nontransparent controls exerted over traffic via DPI equipment, whether imposed by ISPs for financial advantage or by governments eager to use this new technology to filter, censor and enforce copyright against their citizens. Unraveling the previous ISP limited liability regime risks removing the efficiency of that approach in permitting the free flow of information for economic and social advantage. These conclusions support a light-touch regulatory regime involving reporting requirements and co-regulation with, as far as is possible, market-based solutions. Solutions may be international as well as local, and international coordination of best practice and knowledge will enable national regulators to keep up with the technology ‘arms race’.

July 14, 2011 | Permalink | Comments (0) | TrackBack (0)

Competition Commission publishes 2010/11 Annual Report & Accounts

Posted by D. Daniel Sokol

The Competition Commission has published its 2010/11 Annual Report & Accounts.

July 14, 2011 | Permalink | Comments (0) | TrackBack (0)

After Lisbon, can the European Commission Continue to Rely on ‘Soft Legislation’ in its Enforcement Practice?

Posted by D. Daniel Sokol

Wolfgang Weiss (Public International and European Law, German University of Administrative Sciences) asks After Lisbon, can the European Commission Continue to Rely on ‘Soft Legislation’ in its Enforcement Practice?

ABSTRACT: The entry into force of the Lisbon Treaty gives reason to reconsider the compatibility of EU competition law enforcement with the reformed EU primary law in several respects. One aspect is the lawfulness of the Commission's quasi-legislative role in the adoption of soft law instruments to clarify fundamental issues of EU competition law enforcement. The Commission is thereby functionally amending EU primary and secondary law, which contradicts the principle of democracy strengthened in the Treaty of Lisbon. Article 290 of the Treaty on the Functioning of the European Union (TFEU) considerably increased the legal requirements for authorizing the Commission to adopt delegated legislation. These requirements cannot be undermined by adopting administrative standards, especially if these are of considerable legal significance.

 

July 14, 2011 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 13, 2011

Fourth Annual Searle Center Research Symposium on Antitrust Economics and Competition Policy Friday, September 23 - Saturday, September 24, 2011

Posted by D. Daniel Sokol

Antitrust Economics and Competition Policy

Fourth Annual Searle Center Research Symposium on Antitrust Economics and Competition Policy
Friday, September 23 - Saturday, September 24, 2011

Registration | Confirmed Speakers

The Fourth Annual Searle Center Research Symposium on Antitrust Economics and Competition Policy will be held, September 23-24, 2011.

The goal of this Research Symposium is to provide a forum where leading scholars from across the country can gather together with Northwestern's own distinguished faculty to present and discuss high quality research relevant to antitrust economics and competition policy.

The Symposium is co-sponsored by the Searle Center on Law, Regulation, and Economic Growth and the Center for the Study of Industrial Organization at Northwestern University.

Confirmed Speakers

  • Heski Bar-Isaac, New York University, Leonard N. Stern School of Business
  • Liran Einav, Department of Economics, Stanford University, and NBER
  • Christos Genakos, Selwyn College, Cambridge University
  • David Hadock, Northwestern University School of Law and Department of Economics
  • Tonja Jacobi, Northwestern University School of Law
  • Sonia Jaffe, Department of Economics, Harvard University
  • Justin Johnson, Samuel Curtis Johnson Graduate School of Management, Cornell University
  • Fiona Scott Morton, School of Management, Yale University
  • Robert Porter, Northwestern University, Department of Economics
  • Xavier Vives, IESE Business School
  • E. Glen Weyl, Society of Fellows, Harvard University

 

 

REGISTRATION

Attendance at the symposium is by invitation only. To request an invitation, please send an email to searlecenter@law.northwestern.edu.

 

Location
Northwestern University School of Law
Wieboldt Hall
Room 147
340 E. Superior Street
Chicago, IL 60611

Contact
For more information regarding this conference or other initiatives of the Searle Center, please call (312) 503-1811 or send an email to searlecenter@law.northwestern.edu .

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

Amicus Briefs and the Sherman Act: Why Antitrust Needs a New Deal

Posted by D. Daniel Sokol

Rebecca Haw (Vanderbilt Law) explains Amicus Briefs and the Sherman Act: Why Antitrust Needs a New Deal.

ABSTRACT: Power to interpret the Sherman Act, and thus power to make broad changes to antitrust policy, is currently vested in the Supreme Court. But reevaluation of existing competition rules requires economic evidence, which the Court cannot gather on its own, and technical economic savvy, which it lacks. To compensate for these deficiencies, the Court has turned to amicus briefs to supply the economic information and reasoning behind its recent changes to antitrust policy. This Article argues that such reliance on amicus briefs makes Supreme Court antitrust adjudication analogous to administrative notice-and-comment rulemaking. When the Court pays careful attention to economic evidence and arguments presented in amicus briefs, it moves the process away from a traditional Article III case or controversy and towards rulemaking under the Administrative Procedure Act (APA) where any interested party can influence the decision. In doing so, the Court sacrifices some of the epistemological benefits of Article III’s standing requirements. In the case of antitrust, those costs are probably outweighed by how much the Court benefits from hearing the amici’s economic arguments. But while the Court’s hybrid rulemaking – quasi-administrative and quasi-judicial – may improve upon the traditional judicial model, it cannot realize the full benefits of APA rulemaking. The awkwardness of using amicus curiae briefs like comments on a rulemaking suggests a more dramatic shift in authority over the Sherman Act is necessary. Power to interpret the Act in the first instance should go to an administrative agency.

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

How Big is a Tip of the Iceberg? A Parsimonious Way to Estimate Cartel Detection Rate

Posted by D. Daniel Sokol

Peter L. Ormosi, Norwich Business School, University of East Anglia (UEA) - Centre for Competition Policy asks How Big is a Tip of the Iceberg? A Parsimonious Way to Estimate Cartel Detection Rate.

ABSTRACT: Reliable estimates of the probability of cartel detection could help regulators design more appropriate sanctions for cartelising behaviour, and improve our understanding of the efficiency of cartel enforcement and its potential deterrent effects. In comparison to previous works, this paper offers a more parsimonious and simple-to-use method to estimate time-dependent cartel detection and survival rates, whilst allowing heterogeneity across firms and markets. It draws on capture-recapture methods, similar to those used in ecology to make inferences on various population characteristics by looking at the number of recurring individuals in successive samples with replacement. Given the simplicity and minimal data needs of this method, it could be developed to provide an important tool for cartel-related policy analysis, something that could also lead to promising new research on the deterrent effect of cartel enforcement.

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

The Ryanair Judgment on Transparency: A First Step towards Reconciling the Case Law of the General Court and the Court of Justice

Posted by D. Daniel Sokol

Gaetane Goddin (Facultes universitaires Saint-Louis and administrator at DG Competition, European Commission) explores The Ryanair Judgment on Transparency: A First Step towards Reconciling the Case Law of the General Court and the Court of Justice.

ABSTRACT: The author would like to thank Laurent De Muyter for his comments on an earlier draft. The views expressed are purely those of the author and may not in any circumstances be regarded as stating an official position of any institutions to which she belongs.

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

Center for American Progress Releases a Report on Antitrust Under the Obama Administration

Posted by D. Daniel Sokol

The Center for American Progress has released a report about antitrust enforcement under Obama.

Download the report (pdf) Read the introduction and summary (pdf)

According to the Center:

Our nation and our economy are at a critical juncture in antitrust enforcement. Increasingly, the markets that consumers depend upon the most—health care, pharmaceuticals, financial services, and agriculture, just to name a few—are becoming more and more concentrated as fewer and fewer competitors remain amid mergers and acquisitions that sharply reduce competition and as dominant companies in our economy take advantage of their position to abuse their market dominance. The bulwarks of the competitive marketplace, choice and aggressive rivalry, are increasingly diminished, with many of these markets plagued by deceptive conduct designed to mask the degree of concentration.

This was especially the case during the Bush administration, but fortunately President Barack Obama selected exceptional leaders for both the antitrust division of the Department of Justice and the Federal Trade Commission—the two agencies that handle antitrust issues in Washington—to turn the tide back in favor of consumers. Both Assistant Attorney General Christine Varney and FTC Chairman Jon Leibowitz bring a keen perception about the important role of antitrust enforcement as a bulwark to a competitive marketplace. Both are strong leaders who know how to make the most of the limited resources of their agencies, and both are supported by talented career lawyers and economists who are dedicated to the mission of protecting consumers.
The new leaders of the two antitrust agencies have been at the helm for just over two years. Their leadership shows a commitment to a progressive enforcement agenda that:
■Seeks to prevent anticompetitive practices that raise prices, reduce output, and dampen economic growth
■Works with other administration officials to try to enact and adapt regulations to fully protect competitive markets, especially in health care, financial services, and agriculture
■Makes the antitrust process more transparent and less burdensome for business
This approach to antitrust enforcement and engagement in competition issues across the government has contributed to the administration’s efforts to promote innovation and job growth through the preservation of competitive forces in the market. Simply, rivalry spurs economic growth.
This paper provides a midterm assessment of the accomplishments of the Obama administration’s top antitrust enforcers and then offers some suggestions about where even more progress could be made. The paper first identifies the accomplishments of the agencies in critical industries, including health care, pharmaceuticals, agriculture, and financial services, and then describes the key changes in the agencies’ approaches to so-called “dominant firm conduct,” where firms who account for a significant share of the market seek to exploit that position to fend off competition, and vertical integration, where a firm controls multiple levels of the production process.
The paper then examines the changes to antitrust process with the goal of making it more transparent and less burdensome for businesses. It concludes by identifying areas that the Obama administration should focus on in order to strengthen antitrust enforcement as a whole, among them:

■Resolving the jurisdictional overlaps between the antitrust division of the Department of Justice and the Federal Trade Commission so that antitrust regulation is more predictable and effective
■Recognizing the role of the two antitrust agencies as regulators as well as litigators and working to make sure the remedy process is transparent and remedies are fully effective
■Working proactively with other administration regulators to solve competitive problems best addressed through regulation
■Issuing a revised health care policy antitrust statement so that guidelines that are more than a decade old are updated to reflect the new health care law
■Stepping up litigation in those key areas of antitrust enforcement to clarify important areas of the law

These suggested reforms become self-evident when the paper first looks at today’s antitrust landscape in light of the necessary changes delivered up by the Obama administration after the troubling Bush era of antitrust nonenforcement and then at what the current administration has accomplished but still has left to do.

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

New EC Horizontal Guidelines: Providing Helpful Guidance in the Highly Diverse and Complex Field of Competitor Cooperation and Information Exchanges

Posted by D. Daniel Sokol

Peter D. Camesasca (Covington and Burling LLP and Ass. Prof. at the Rotterdam Institute of Law and Economics, Erasmus University Rotterdam) and Anna K. Schmidt have published New EC Horizontal Guidelines: Providing Helpful Guidance in the Highly Diverse and Complex Field of Competitor Cooperation and Information Exchanges.

ABSTRACT: After an intense period of public consultation, the European Commission published in January 2011 a new set of Horizontal Guidelines which, for the first time, include general principles on the competitive assessment of information exchange between competitors.

July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 12, 2011

European Commission Report on Competition Policy 2010 is Out

Posted by D. Daniel Sokol

The European Commission Report on Competition Policy 2010 is out.

July 12, 2011 | Permalink | Comments (0) | TrackBack (0)

Varney's Parting Thoughts - Rethink the Institutional Design of Mergers - Two Agencies May be One Too Many

Posted by D. Daniel Sokol

In a speech at the Center for American Progress today, Christine Varney questioned the current institutional design of merger control according to the Wall Street Journal. As the WSJ reports:

Ms. Varney, speaking at the Center for American Progress, a liberal think tank, said lawmakers may want to examine "the kind of redundancy that they have in merger review."

Ms. Varney expressed concern that the Justice Department and its sister antitrust agency, the Federal Trade Commission, have "potentially substantively different legal standards" when seeking to block mergers they view as anticompetitive.

"I don't think we want to foster a system where ... the legal review, the result of your merger, depends on which agency it's in front of," Ms. Varney said. "So with that, I would recommend to the Congress that they start to think about how to rationalize that."

 

I agree entirely. In fact, I noted the same problem in my article Antitrust, Institutions, and Merger Control, 17 Geo. Mason L. Rev. 1055, 1078-79 (2010).

July 12, 2011 | Permalink | Comments (1) | TrackBack (0)

The Rejection of the Amended Google Book Settlement Agreement: A Librarian's Perspective

Posted by D. Daniel Sokol

Mark Giangrande (De Paul Univ. School of Law) offers thoughts on The Rejection of the Amended Google Book Settlement Agreement:  A Librarian's Perspective.

ABSTRACT: Much of the discussion surrounding the ASA considers the economic power that Google would have if it was approved and the impact on Google's book selling competitors. However, the point that seems secondary in this analysis, the actual content of the scanned books, is, from a librarian's perspective, very important. Having online access to the contents of the book collection from a library such as the University of Michigan would be remarkable in and of itself. Adding collections from other great academic library systems such as the Universities of Texas, California, and more would create a unique resource with unparalleled research opportunities.

July 12, 2011 | Permalink | Comments (0) | TrackBack (0)

Drawing the Line—the Application of State Aid Provisions to Internet Activities of Public Broadcasters

Posted by D. Daniel Sokol

Christian Lewke (Broadcasting Council, Hessische Rundfunk hr (ARD)) has written Drawing the Line—the Application of State Aid Provisions to Internet Activities of Public Broadcasters.

ABSTRACT: In a number of recent cases, the EU Commission has raised objections concerning the internet activities of public service broadcasters.

These objections dwelt on the extent to which such broadcasters can use public funds to subsidise their internet activities that are carried out in competition with private actors.

In order to establish a clear test, inspiration can be drawn from practices in several Member States, particularly Germany.

July 12, 2011 | Permalink | Comments (0) | TrackBack (0)

An Empirical Analysis of a Merger between a Network and Low-Cost Airlines

Posted by D. Daniel Sokol

Xavier Fageda, University of Barcelona - Department of Economic Policy and Jordi Perdiguero, University of Barcelona provide An Empirical Analysis of a Merger between a Network and Low-Cost Airlines.

ABSTRACT:We use a difference-in-difference estimator to examine the effects of a merger involving three airlines. The novelty lies in the examination of this operation in two distinct scenarios: (1) on routes where two low-cost carriers and (2) on routes where a network and one of the low-cost airlines had previously been competing. We report a reduction in frequencies but no substantial effect on prices in the first scenario, while in the second we report an increase in prices but no substantial effect on frequencies. These results may be attributed to the differences in passenger types flying on these routes.

July 12, 2011 | Permalink | Comments (0) | TrackBack (0)