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 30, 2011

Leegin and Procompetitive Resale Price Maintenance

Posted by D. Daniel Sokol

Kenneth G. Elzinga, University of Virginia - Department of Economics and David E. Mills, University of Virginia - Department of Economics address Leegin and Procompetitive Resale Price Maintenance.

ABSTRACT: The recent Supreme Court opinion in Leegin reversed the long-standing precedent of Dr. Miles Medical. Resale price maintenance (RPM) is no longer condemned per se but instead is treated under the rule of reason. This ruling allows an inquiry as to the economic rationale and competitive consequences of a manufacturer’s RPM policy. This article reviews Leegin’s challenged pricing strategy and the business environment in which it arose. Leegin’s conduct is interpreted in light of the relevant economic literature about RPM. We conclude that Leegin’s price policy fits none of the accepted economic theories of how RPM could be anticompetitive, but instead exemplifies a theory that predicts procompetitive effects. The most compelling explanation for Leegin’s conduct is that it sought to induce efficient retail services to support Leegin’s product line and to increase interbrand competition between the company and its many competitors.

July 30, 2011 | Permalink | Comments (0) | TrackBack (0)

Friday, July 29, 2011

In Third Parties We Trust? The Growing Antitrust Impact of Third-Party Green Building Certification Systems for State and Local Governments

Posted by D. Daniel Sokol

Darren A. Prum, The Florida State University, Robert J. Aalberts, University of Nevada, Las Vegas, and Stephen Del Percio, Arent Fox LLP explore In Third Parties We Trust? The Growing Antitrust Impact of Third-Party Green Building Certification Systems for State and Local Governments.

ABSTRACT: According to the American Institute of Architects, there has been a 50 percent increase in the number of municipalities with a green building program in place since 2007. And 24 of the country's 25 largest metropolitan areas are built around a city with green building legislation on its books. Reducing buildings' environmental impact is a noble – and critical – goal. But governments' reliance on private, third-party standard-setting organizations – and the rating systems that they promulgate – as the basis for that legislation may be legally problematic.

This Article reviews one of those potentially problematic bases: antitrust. In order to suggest antitrust risk management strategies for both public and private actors that are promulgating green building legislation, this Article traces the history of some of the country's first green building programs. It also examines the different mechanisms through which governments at the federal, state, and local levels have crafted legislation. Based on those mechanisms, it then reviews and analyzes existing analogous antitrust case law to evaluate the types of issues that could arise between third-party organizations and various levels of government.

The Article concludes by suggesting that government should not rely exclusively on a single rating system when crafting green building policy. Relevant case law teaches that private third-party organizations are historical targets of antitrust scrutiny by the courts. Accordingly, the Article presents a variety of arguments in support of the proposition that governments should create legislation that provides for flexibility in implementation and compliance.

July 29, 2011 | Permalink | Comments (0) | TrackBack (0)

The Illusion of Anticompetitive Behavior Created by 100 Years of Misleading Farm Statistics

Posted by D. Daniel Sokol

Sheldon Kimmel (DOJ) has an article on The Illusion of Anticompetitive Behavior Created by 100 Years of Misleading Farm Statistics.

ABSTRACT: The share of U.S. consumer food-spending that farmers received (the “farm-share”) fell steadily from 48% in 1913 to only 20% by 2000, prompting repeated investigations into who might be to blame for that decline. Similar alarms come from the other standard measure of how markets treat farmers, the farm-retail, “price spread.” However, this paper explains the biases built into these measures: Both of these measures are distorted by purely nominal changes. This paper introduces a better measure of how markets have treated farmers, and shows that, if measured properly, the farm-share of total consumer food costs has been stable.

July 29, 2011 | Permalink | Comments (0) | TrackBack (0)

On the Meaning of Horizontal Agreements in Competition Law

Posted by D. Daniel Sokol

Louis Kaplow (Harvard Law) has posted On the Meaning of Horizontal Agreements in Competition Law.

ABSTRACT:Competition law’s prohibition on price fixing and related horizontal agreements is one of its few uncontroversial provisions and is understood to be well grounded in economic principles that are taken to provide the foundation for competition policy. Upon examination, however, commonly offered views of the law’s conception of agreement prove to be difficult to articulate in an operational manner, at odds with key aspects of legal doctrine and practice, and unrelated to core elements of modern oligopoly theory. This Article explores these and other features of the agreement requirement and suggests the need for a wholesale revision of how competition law should approach the oligopoly problem.

July 29, 2011 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 28, 2011

Competition Policy And The Economic Approach Foundations and Limitations

Posted by D. Daniel Sokol

Josef Drexl, Director, Max Planck Institute for Intellectual Property and Competition Law, Munich, Germany; Wolfgang Kerber, Professor of Economics, Philipps-Universitat Marburg, Germany; and Rupprecht Podszun, Senior Research Fellow, Max Planck Institute for Intellectual Property and Competition Law, Munich, Germany have edited Competition Policy And The Economic Approach  Foundations and Limitations.

BOOK ABSTRACT: This outstanding collection of original essays brings together some of the leading experts in competition economics, policy and law. They examine what lies at the core of the ‘economic approach to competition law’ and deal with its normative and institutional limitations. In recent years the ‘more economic approach’ has led to a modernisation of competition law throughout the world. This book comprehensively examines for the first time, the foundations and limitations of the approach and will be of great interest to scholars of competition policy no matter what discipline.

Table of Contents:

Introduction
Rupprecht Podszun

PART I: THE GOALS OF COMPETITION POLICY
1. Consumer Welfare and Competition Policy
Gregory J. Werden

2. Consumer Welfare, Total Welfare and Economic Freedom – On the Normative Foundations of Competition Policy
Viktor J. Vanberg

3. Consumer Welfare, Economic Freedom and the Moral Quality of Competition Law – Comments on Gregory Werden and Victor Vanberg
Daniel Zimmer

PART II: MERITS AND CHALLENGES OF MODERN INDUSTRIAL ECONOMICS
4. Current Issues in Antitrust Analysis
Daniel L. Rubinfeld

5. Using Economics for Identifying Anticompetitive Unilateral Practices
Michele Polo

6. Modern Industrial Economics: Open Problems and Possible Limits
Oliver Budzinski

7. Modern Industrial Economics Revisited – Comments on Daniel Rubinfeld, Michele Polo and Oliver Budzinski
Laurence Idot

PART III: COMPETITION POLICY AND EVOLUTIONARY AND INNOVATION ECONOMICS
8. Industrial Dynamics and Evolution – The Role of Innovation, Competences and Learning
Uwe Cantner

9. Competition, Innovation and Maintaining Diversity through Competition Law
Wolfgang Kerber

10. The Impact of Innovation – Comments on Uwe Cantner and Wolfgang Kerber
Andreas Heinemann

PART IV: COMPETITION POLICY AND BEHAVIOURAL AND EXPERIMENTAL ECONOMICS
11. Bounded Rationality and Competition Policy
Justus Haucap

12. Using Experimental Economics to Understand Competition
Bart J. Wilson

13. Competition as a Socially Desirable Dilemma – Theory v. Experimental Evidence
Christoph Engel

14. Introducing More Features of Real Life into the Economists’ World of Theoretical Models – Comments on Justus Haucap, Bart Wilson and Christoph Engel
Andreas Fuchs

PART V: THE POLITICAL ECONOMY OF COMPETITION POLICY
15. Normative and Institutional Limitations to a More Economic Approach
Dirk Schroeder

16. Competition Agencies, Independence, and the Political Process
William E. Kovacic

17. On the (a)political Character of the Economic Approach to Competition Law
Josef Drexl

July 28, 2011 | Permalink | Comments (0) | TrackBack (0)

Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets

Posted by D. Daniel Sokol

Guy David (Wharton) and Sara Markowitz (Department of Economics Emory) explain Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets.

ABSTRACT: The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm’s behavior under different competitive scenarios and test the model’s predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors’ spending decreases market share, while also having an influence on adverse drug reactions.

July 28, 2011 | Permalink | Comments (0) | TrackBack (0)

Managerial incentives under competitive pressure: Experimental investigation

Posted by D. Daniel Sokol

Ahmed Ennasri (LAMETA, UFR d'Economie) and Marc Willinger (LAMETA, UFR d'Economie) address Managerial incentives under competitive pressure: Experimental investigation.

ABSTRACT: We investigate the effects of competition on managerial incentives and effort in a laboratory experiment. Each owner offers compensation to his manager in two different contexts: monopoly and Cournot duopoly. After accepting the compensation, the manager chooses an effort level to increase the probability of reduced costs of his firm. Theory predicts that the entry of a rival firm in a monopolistic industry affects negatively both the incentive compensation and the effort level. Our experimental findings confirm that the entry of a rival firm reduces the incentive compensation but not the manager’s effort level. However, despite the reduction of the incentive compensation, the manager continues to accept the contract offers and exert the same level of effort.

July 28, 2011 | Permalink | Comments (0) | TrackBack (0)

The Google Book Settlement & the Uncertain Future of Copyright

Posted by D. Daniel Sokol

Gina Durham & Debbie Rosenbaum (DLA Piper) discuss The Google Book Settlement & the Uncertain Future of Copyright.

ABSTRACT: In March of this year, the District Court for the Southern District of New York rejected the proposed settlement of legal claims arising from Google's digitization of books and online display of excerpts in a class action copyright infringement suit brought by the Authors Guild and others against Google. While the court acknowledged that "the digitization of books and the creation of a universal digital library would benefit many" and found that the majority of factors favored approval, it ultimately determined that the proposed settlement was not fair, adequate, and reasonable. Since then, the fate of the settlement has been in limbo. As of this publication, it remains far from certain as to whether and how a deal may be struck that addresses competition concerns while balancing the other interests of the relevant stakeholders.

July 28, 2011 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 27, 2011

EU and US Antitrust Arbitration

Posted by D. Daniel Sokol

Assimakis Komninos (Helenic Competition Commission) has written on EU and US Antitrust Arbitration.

Download Komninos - Landolt-Blanke (Assistance)

 

July 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Accountable Care Organizations: A New New Thing with Some Old Problems

Posted by D. Daniel Sokol

Tim Greaney (St. Louis Law) explains Accountable Care Organizations: A New New Thing with Some Old Problems.

ABSTRACT: When pressed for evidence that the proposed health reform legislation will control costs, proponents invariably cite the numerous pilot programs and other innovations in Medicare payment policy contained in the bill. At first blush, the ACO model seems well designed to foster competition among providers. Not unlike health maintenance organizations and other integrated delivery forms, ACOs assume responsibility for coordinating care and thus have strong incentives to provide cost effective care and to do so in a manner that is transparent and hospitable to comparative shoppers. But at the same time, the path of ACO development could prove profoundly anti-competitive. The concern lies with the possible exacerbation of already-weak competitive conditions prevailing in provider markets. This essay, written at as the Patient Protection and Affordable Care Act was enacted, discusses competition policy issues associated with the Shared Savings Program.

July 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare

Posted by D. Daniel Sokol

Antigoni Lykotrafiti, Tilburg Law and Economics Center (TILEC), Tilburg Law School has written on Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare.

ABSTRACT: The Discussion Paper examines the regulation of the air transport sector from the perspective of competition law, focusing specifically on EU-US air transport relations. Emphasis is placed on the ongoing negotiations between Europe and the United States for the creation of a transatlantic open aviation area, where American and European airlines will operate freely without restrictions on traffic rights, subject solely to common rules agreed between the parties. In 2007, the first-ever EU-US Air Transport Agreement was reached, followed, in 2010, by a second-stage agreement. All efforts are now concentrated on the conclusion of the final agreement. Given that the transatlantic air transport market accounts for almost 60% of world traffic, the conclusion of the final agreement will signal the creation of the biggest liberalized airspace in the world. The prospects and challenges thereof are expected to be major and are examined from the perspective of the consumers, the airline industry and the law itself. The first part of the paper is a flight into the past, tracing the regulation of air transport from the birth of civil aviation up until today. The second part is a flight into the future, aspiring to foresee how smooth or turbulent the transition to the new regime is going to be. Given that the successful application of the final agreement is dependent upon effective regulatory cooperation aimed ultimately at regulatory convergence, the analysis looks into the prospects and challenges associated with regulatory convergence at both sector-specific and general competition law level.

July 27, 2011 | Permalink | Comments (0) | TrackBack (0)

OFT Dairy Price-Fixing Case Leaves Sour Taste for Cooperating Parties in Settlements

Posted by D. Daniel Sokol

Andreas Stephan, University of East Anglia (UEA) - Centre for Competition Policy notes OFT Dairy Price-Fixing Case Leaves Sour Taste for Cooperating Parties in Settlements.

ABSTRACT: The UK's Office of Fair Trading (OFT) was forced to scale down its investigation into dairy price fixing due to a lack of evidence, after most of the parties under investigation had agreed to settle their liability and pay fines. This paper discusses implications for cartel enforcement and the use of settlements.

July 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 26, 2011

An Empirical Analysis of Pricing in the United States Cheese Industry: 2000-2010

Posted by D. Daniel Sokol

Yuliya V. Bolotova, Cornell University and Andrew M. Novakovic, Cornell University provide An Empirical Analysis of Pricing in the United States Cheese Industry: 2000-2010.

ABSTRACT: The U.S. cheese industry has historically used the organized Exchange spot cheese prices as reference prices in contract cheese market. Furthermore, the Exchange cheese prices have been influencing government-set prices of milk used in cheese manufacturing (i.e. Class III milk). The thinness of the Exchange spot cheese market has been raising concerns as to whether it adequately represents the cheese market fundamentals, which is important for the effective performance of cheese industry. The empirical evidence presented in the paper may suggest that due to the nature of cheese manufacturing, which basically depends on one input (milk), and a presence of government milk pricing, Class III milk price has become a key strategic variable in the modern cheese industry. While variation in cheese production and stock explains 4-15% of variation in the Exchange cheddar cheese price, variation in lagged Class III milk price explains 72% of variation in the Exchange cheddar cheese price. Furthermore, the effect of lagged Class III milk price on the Exchange cheddar cheese price and its variance tends to be stronger than the effect of cheese production and stock.

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

Indirect Purchaser Suits after the Class Action Fairness Act

Posted by D. Daniel Sokol

My colleague Bill Page (University of Florida Law) has posted Indirect Purchaser Suits after the Class Action Fairness Act.

ABSTRACT: Until 2005, indirect purchaser class actions were filed and remained almost exclusively in state courts while direct purchaser class actions alleging the same core conduct proceeded in federal court. Because federal courts usually lacked subject matter jurisdiction over the state-law claims, and state courts lacked subject matter jurisdiction over the federal claims, no single court could hear all of the cases. In earlier studies of indirect purchaser litigation, I found that this dispersed and inefficient system provided little benefit to consumers who actually paid an overcharge. First, many courts declined to certify consumer suits as class actions under the standards of the applicable rules of civil procedure, because it was impractical to prove impact on consumers on a class-wide basis; individual issues of impact, in other words, predominated over class issues. Second, even courts that did certify classes found it impractical to distribute most of the settlement funds to consumers who actually suffered harm, instead relying on dubious coupon and cy pres distributions. Indirect purchaser suits provided no added deterrence, because direct purchasers almost always sued for the full overcharge.

In 2005, Congress enacted the Class Action Fairness Act in an effort to limit the obvious costs of duplicative state-law class actions. That statute’s most important innovation was to relax the criteria for federal diversity jurisdiction in ways that permit federal courts to hear most antitrust class actions brought under state law. State-law indirect purchaser class actions are now almost always either filed in federal court by plaintiffs or removed there by defendants. Once pending in federal district courts, class actions under numerous states’ laws are often consolidated for pretrial proceedings along with direct purchaser actions based on the same conduct. Under this mechanism, federal courts applying primarily federal standards determine the suitability of the putative classes representing all of the multilayer interests in the case for class treatment.

In this Article, I consider whether these procedural and jurisdictional changes have improved the performance of indirect purchaser class action litigation in the United States. I examine all of the reported decisions on class certification since 2005, comparing the results in direct and indirect purchaser classes where possible. I find that the federal courts have certified these class actions at roughly the same rate as state courts in the earlier periods. In virtually all of the controversies, both direct and indirect purchasers sued; courts certified almost all of the direct purchaser classes, but only slightly more than half of the indirect purchaser classes. In the indirect purchaser decisions, the grounds for certification or refusing to certify were essentially the same as the state courts applied in the earlier periods. Although the consolidation of multiple state-law class actions in federal court for pretrial proceedings has undoubtedly reduced the direct costs of private enforcement, the cases give little reason to think that substantially more consumers are receiving meaningful compensation as a result of the Class Action Fairness Act.

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

GAO Releases Report on ACPERA (Antitrust Criminal Penalty Enhancement and Reform Act of 2004)

Posted by D. Daniel Sokol

The GAO Report on ACPERA Antitrust Criminal Penalty Enhancement and Reform Act of 2004) is out.

GAO-11-619 July 25, 2011
Highlights Page (PDF)   Full Report (PDF, 76 pages)   Accessible Text   Recommendations (HTML)

SUMMARY: After ACPERA's enactment, there was little change in the number of wrongdoers applying for leniency, an increase in successful applicants reporting previously unknown criminal conduct, and higher penalties in criminal cartel cases. Analysis of DOJ data indicate ACPERA may have resulted in little change in the number of leniency applications submitted--78 submitted in the 6 years before ACPERA versus 81 in the 6 years after--the most relevant indicator of ACPERA's impact, according to Antitrust Division officials. In addition, most defense attorneys representing leniency applicants in our sample indicated that ACPERA's offer of relief from some civil damages had a slight positive effect on leniency applicants' decisions to apply for leniency, though the threat of jail time and corporate fines were the most motivating factors both before and after ACPERA's enactment. However, after ACPERA's enactment nearly twice as many successful applicants reported criminal cartel activity about which the division had no prior knowledge. In addition, higher fines and jail times were imposed in criminal cartel cases after ACPERA's enactment, though Antitrust Division officials stated that neither trend is primarily attributable to ACPERA. Factors other than ACPERA--such as the increase of leniency programs in other countries--may also have affected the number and types of leniency applications submitted over this time period, making it difficult to isolate ACPERA's impact. Plaintiffs' attorneys from most of the 17 civil cases in our sample indicated that ACPERA's cooperation provision--which provides the leniency applicant with relief from some civil damages in exchange for cooperation with plaintiffs--has strengthened and streamlined their cases. However, differing views on the timing and amount of ACPERA cooperation have resulted in challenges, such as disputes about delayed cooperation. Some plaintiffs' and defense attorneys for leniency applicants have mitigated these challenges by developing detailed agreements which set forth the timing and extent of cooperation that leniency applicants will provide. In addition, a 2010 amendment to ACPERA provides some clarification that cooperation must be provided in a timely manner, but it is too soon to assess the impact of this amendment because private civil antitrust cases often take years to resolve. There was no consensus among key stakeholders GAO interviewed--antitrust plaintiffs' and defense attorneys, among others--regarding the addition of a whistleblower reward, but they widely supported adding antiretaliatory protection. Nine of 21 key stakeholders stated that adding a whistleblower reward in the form of a bounty could result in greater cartel detection and deterrence, but 11 of 21 noted that such rewards could hinder DOJ's enforcement program. Currently, whistleblowers who report criminal antitrust violations lack a civil remedy if they experience retaliation, such as being fired, so they may be hesitant to report criminal wrongdoing, and past reported cases suggest retaliation occurs in this type of situation. All 16 key stakeholders who had a position on the issue generally supported the addition of a civil whistleblower protection though senior DOJ Antitrust Division officials stated that they neither support nor oppose the idea. Adding a civil remedy for those who are retaliated against for reporting criminal antitrust violations could help mitigate such retaliation and increase reporting of antitrust violations. Congress may wish to consider an amendment to add a civil remedy for those who are retaliated against for reporting criminal antitrust violations. DOJ generally agreed with GAO's findings but did not comment on this matter.

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

Injunctive Relief and Private Antitrust Enforcement

Posted by D. Daniel Sokol

Sebastian Peyer, University of East Anglia (UEA) - Centre for Competition Policy describes Injunctive Relief and Private Antitrust Enforcement.

ABSTRACT: The paper analyses the role of injunctions in the private enforcement of competition law. Most commentators deal predominantly with damages actions and the European policy proposals only discuss the conditions for successful compensation claims. However, damages claims are likely to be the most expensive and time consuming remedy available. In many cases injunctive relief may be cheaper and, thus, be preferred by the victim. Asking the court to order the perpetrator to either cease from certain behaviour or to undertake certain actions, plaintiffs might be willing to forego compensation in exchange for a quicker dispute solution with effect for the future. The variety and flexibility of injunctive relief–injunctions can be granted on a preliminary basis or permanently, contain a prohibition or being mandatory–provides victims of anticompetitive conduct with a multi-functional tool to seek relief. The paper compares the usage of and the legal framework for injunctive relief in England and Wales and Germany. The antitrust litigation data available for both jurisdictions indicate that the use of injunctive relief in English and German courts differs greatly. Analysing the legal framework for injunctive relief, I will look at the judicial approach that is taken with respect to injunctions and the possible reason for a varying usage of this remedy.

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

Good Luck to Bar Exam Takers

Posted by D. Daniel Sokol

There are broader issues of competition policy as to who can sit for lawyer accreditation that I will leave aside today but note that they exist.  Instead, let me focus on something more immediate.  Today is Day 1 of the very stressful bar exam that JD and LLM students take to become admitted to practice somewhere in the US.  To all of our readers taking the exam, good luck. 

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

Separating the ex post effects of mergers: an analysis of structural changes on the Hungarian retail gasoline market

Posted by D. Daniel Sokol

Gergely Csorba (Institute of Economics - Hungarian Academy of Sciences), Gabor Koltay and David Farkas assess Separating the ex post effects of mergers: an analysis of structural changes on the Hungarian retail gasoline market.

ABSTRACT: This paper develops an empirical method to identify the price effects of simultaneous mergers and to separate the different effects on the prices of the buyer and seller firms and on the prices of their respective competitors. Our difference-in-differences approach exploits variation in the presence of merging firms across local markets to form different treatment-control group pairs in order to estimate separate effects for each type of firms affected by the mergers. We apply this method to provide an ex post evaluation of two almost simultaneous mergers in the Hungarian retail gasoline market. We show that both mergers resulted in a significantly positive but economically negligible price effect, but while the first merger affected only the prices of buyer firm's stations, the second had an effect on the prices of seller's stations and of its competitors. We also demonstrate that the results are not sensitive to the as! sumed dates when the mergers effectively change the firms' pricing policy.

July 26, 2011 | Permalink | Comments (0) | TrackBack (0)

Monday, July 25, 2011

Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare

Posted by D. Daniel Sokol

Antigoni Lykotrafiti  Tilburg Law and Economics Center (TILEC); Tilburg Law School discusses Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare.

ABSTRACT: The Discussion Paper examines the regulation of the air transport sector from the perspective of competition law, focusing specifically on EU-US air transport relations. Emphasis is placed on the ongoing negotiations between Europe and the United States for the creation of a transatlantic open aviation area, where American and European airlines will operate freely without restrictions on traffic rights, subject solely to common rules agreed between the parties. In 2007, the first-ever EU-US Air Transport Agreement was reached, followed, in 2010, by a second-stage agreement. All efforts are now concentrated on the conclusion of the final agreement. Given that the transatlantic air transport market accounts for almost 60% of world traffic, the conclusion of the final agreement will signal the creation of the biggest liberalized airspace in the world. The prospects and challenges thereof are expected to be major and are examined from the perspective of the consumers, the airline industry and the law itself. The first part of the paper is a flight into the past, tracing the regulation of air transport from the birth of civil aviation up until today. The second part is a flight into the future, aspiring to foresee how smooth or turbulent the transition to the new regime is going to be. Given that the successful application of the final agreement is dependent upon effective regulatory cooperation aimed ultimately at regulatory convergence, the analysis looks into the prospects and challenges associated with regulatory convergence at both sector-specific and general competition law level.

July 25, 2011 | Permalink | Comments (0) | TrackBack (0)

COMPETITION POLICY: IS IT BAD FOR BUSINESS?

Posted by D. Daniel Sokol

Wan Liza (University of Wisconsin Madison, Wisconsin, USA and Private Law Department, IIUM) asks COMPETITION POLICY: IS IT BAD FOR BUSINESS?

ABSTRACT: Of late, the element of competition has posed to be a conundrum to the emerging economies; Malaysia is no exception. Selection of economies theories indicated; competition has been used in innumerable sense. Entrepreneurial competition among producers defines competition as an attempt to offer product at lower prices, in contrast to the adjective; competition policy denotes deregulation of markets with a framework that elevates market disciplines, eliminates distortion and promotes economic efficiency. In developing a competitive framework: a significant question arose; does competition policy merely generates economic efficiency? Empirical analysis on trade and communication has indicated positive impacts. However, competition in Malaysia i.e. implemented through sector regulation; for example in electricity generation has shown little changes on economic efficiency and other benefits. This paper suggests competition po! licy advocates economic advantages and maximization of other benefits i.e. customer welfare. Simultaneously effects business dynamics. The key to workable ‘model’ originates from strong and independent structural and administrative implementation of the policy. This research reiterates plausible arguments of the benefits i.e. competitive markets generate efficiency and allow for the reflection of true prices in the markets. Alternatively, it also highlights competition impacts on business dynamics and cognizance of Malaysian Competition Act 2010.

July 25, 2011 | Permalink | Comments (0) | TrackBack (0)