Antitrust & Competition Policy Blog

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

Monday, February 14, 2011

Efficiency Gains and Structural Remedies in Merger Control

Posted by D. Daniel Sokol

Helder Vasconcelos, University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) and Department of Economics, Centre for Economic Policy Research (CEPR) analyzes Efficiency Gains and Structural Remedies in Merger Control.

ABSTRACT: This paper studies the role of structural remedies in merger control in a Cournot setting where (endogenous) mergers are motivated by prospective efficiency gains and must be submitted to an Antitrust Authority (AA) which might require partial divestiture for approval. From a merger policy perspective, this paper's main contribution is two-fold. First, it shows that if mergers do not involve all firms in the industry, then merger remedies help the AA to increase consumer surplus only if assets are divested to competitors already in the market. Second, it presents a model which clarifies that there can only exist social costs to over-fixing the anticompetitive effects of a merger if merger review policy treats mergers as one-time events. When a more dynamic view is taken of sequential merger review, then there can never be an over-fixing problem. In this case, however, remedies are shown to be needed to make myopic merger review optimal.

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

The Effect of Competition on Process and Outcome Quality within Hospital Care in the Netherlands

Posted by D. Daniel Sokol

Michiel J. Bijlsma, CPB Netherlands Bureau of Economic Policy Analysis, Pierre Koning, CPB Netherlands Bureau of Economic Policy Analysis, and Victoria Shestalova, Netherlands Bureau for Economic Policy Analysis have written on The Effect of Competition on Process and Outcome Quality within Hospital Care in the Netherlands.

ABSTRACT: This study examines the impact of competition on hospital quality. Our panel covers all Dutch hospitals in the period 2004–2008, in which the transparency of hospital quality information increased substantially. The paper contributes to the existing literature by including both outcome and process indicators of quality. We find that competition explains the cross-sectional differences in process indicators, but not in outcome indicators. In particular, more competition in the hospital’s catchment area leads to more operation cancellations at short notice and more delays of hip fracture injury operations for elderly patients. Both results suggest that competition increases the utilization of operation capacity. At the same time, hospitals that face more competition perform check-ups for chronic patients more frequently and organize diagnostic processes more efficiently.

February 14, 2011 | Permalink | Comments (1) | TrackBack (0)

Joint-Venture Analysis after American Needle

Posted by D. Daniel Sokol

Alan James Devlin, U.S. District Court for the Northern District of Illinois and Michael S. Jacobs, DePaul University - College of Law offer their thoughts on Joint-Venture Analysis after American Needle.

ABSTRACT: The basic operational premise of the U.S. antitrust system posits that one can reliably demarcate business conduct into two distinct classes, specifically unilateral and concerted behavior. Professional sports leagues and other complex ventures confound this premise, engaging in arrangements that display both unilateral and concerted qualities. In 2010, the Supreme Court decided the American Needle case, which effectively asked in which category the conduct of professional sports leagues belonged. Rejecting the lower courts’ determination that the IP-licensing activities of the NFL constituted unilateral action, the Court held that much intra- and extra-league activity is concerted, and thus subject to full rule-of-reason analysis.

American Needle answered a simple question correctly, but failed to address a number of crucial issues about the permissible scope of joint-venture conduct, the nature of a “single entity,” and the application of the rule of reason to sports leagues and comparable ventures. We argue that distinguishing a sports league’s “core” activities from its other kinds of conduct is neither a workable nor a legitimate means of conducting antitrust analysis. If that distinction is unworkable for sports leagues, it is equally unworkable for other joint ventures. We offer some thoughts on how courts and scholars should interpret American Needle, and we formulate a framework within which to assess the antitrust legality of intra- and extra-league restraints. We conclude that, in analyzing the business conduct of joint ventures, courts should appeal to a hypothetical bargain that would occur ex ante between the prospective members of the relevant venture, at the time of the venture’s formation and thus under conditions of economic uncertainty. To the extent that the members would agree to adopt a particular practice to promote the effective functioning of the league, where the league faced efficiency-ensuring competition, that practice should satisfy any antitrust concerns. This approach suggests that the NFL’s exclusive licensing of its members’ IP ought to pass muster under the rule of reason.

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

Sunday, February 13, 2011

Australian Cartel Regulation: Law, Policy and Practice in an International Context

Posted by D. Daniel Sokol

Caron Beaton-Wells, University of Melbourne and Brent Fisse University of Sydney have produced an excellent new book Australian Cartel Regulation: Law, Policy and Practice in an International Context.

BOOK ABSTRACT: In Australian Cartel Regulation, leading competition law experts Caron Beaton-Wells and Brent Fisse reflect on developments in trade practices law in Australia over the last 30 years. They provide a comprehensive account of the current law as well as discussing key issues that may arise in the future.

The impact of the prohibitions, the exceptions, the principles and rules governing corporate and individual liability; the policies that guide decisions on enforcement, immunity and cooperation; the sanctions and the implications for compliance and liability control are all critically assessed. This definitive volume not only identifies the practical and theoretical issues, but also recommends workable solutions, and does so with the benefit of comparative analysis of the anti-cartel laws of major overseas jurisdictions.

Many of the issues identified and discussed in Australian Cartel Regulation are common to any scheme designed to regulate cartel conduct.

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

US Cartel Policy Too Lax

Posted by D. Daniel Sokol

As I argue in a forthocming article in the Antitrust Law Journal (not yet up on SSRN but I'll let you know once it is), the anti-cartel system needs a bit of help to effectively deter cartel acticity.  Apparently, I am not the only one who feels this way. U.S. District Judge Mark Bennett in the Northern District of Iowa just released a massive sentencing opinion in which he justifies a large upward variance from the antitrust guidelines by arguing, in part, that antitrust penalties are far too lenient when compared to fraud.

DOJ Press release

Bennett Opinion

The transcript for the May 26 status conference, it is a riot

HTs (Brendan Durey and Dale Collins) 

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