Antitrust & Competition Policy Blog

Trust, Salience and Deterrence: Evidence from an Antitrust Experiment

Posted by D. Daniel Sokol

Sven-Olof Fridolfsson, Research Institute of Industrial Economics (IFN), Maria Bigoni, University of Bologna - Department of Economics, Chloe Le Coq, Stockholm School of Economics, SITE, and Giancarlo Spagnolo, University of Rome 'Tor Vergata', EIEF, Stockholm School of Economics (SITE) explore Trust, Salience and Deterrence: Evidence from an Antitrust Experiment.

ABSTRACT: We present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to “turncoat whistleblowers”. We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.

Making Health Care Reform Work: Accountable Care Organizations and Competition

Posted by D. Daniel Sokol

David Balto (Center for American Progress) Making Health Care Reform Work:  Accountable Care Organizations and Competition.

ABSTRACT: Almost 40 years ago Justice Thurgood Marshall wrote that the antitrust laws are a “consumer welfare prescription.” In few markets is competition as important as health care. This nation’s yearlong debate on health care reform illuminated many faults and weaknesses in our health care system while highlighting the potential for meaningful reform to improve health care results and better control costs. This paper attempts to explain how antitrust enforcers need to fully embrace the results of that inquiry and realign priorities in order for antitrust enforcement to become a tool and not an obstacle to improving our health care system.

Sunk Costs, Market Contestability, and the Size Distribution of Firms

Posted by D. Daniel Sokol

Ioannis N. Kessides, World Bank and Li Tang, describe Sunk Costs, Market Contestability, and the Size Distribution of Firms.

ABSTRACT: This paper offers a new economic explanation for the observed inter-industry differences in the size distribution of firms. The empirical estimates--based on three temporal (1982, 1987, and 1992) cross-sections of the four-digit United States manufacturing industries--indicate that increased market contestability, as signified by low sunk costs, tends to reduce the dispersion of firm sizes. These findings provide support for one of the key predictions of the theory of contestable markets: that market forces under contestability would tend to render any inefficient organization of the industry unsustainable and, consequently, tighten the distribution of firms around the optimum.

History-Friendly Model of the Evolution of the Pharmaceutical Industry: Technological Regimes and Demand Structure

Posted by D. Daniel Sokol

Christian Garavaglia (University of Milano-Bicocca, Faculty of Statistics - KITeS, Bocconi University, Milan, Italy), Franco Malerba (KITeS, Bocconi University, Milan, Italy - Bocconi University, Department of Economics), Luigi Orsenigo (KITeS, Bocconi University, Milan, Italy - DIMI, University of Brescia), and Michele Pezzoni (KITeS, Bocconi University, Milan, Italy - DIMI, University of Brescia) have a new paper on  History-Friendly Model of the Evolution of the Pharmaceutical Industry: Technological Regimes and Demand Structure.

ABSTRACT: This paper examines how the nature of the technological regime governing innovative activities and the structure of demand interact in determining market structure, with specific reference to the pharmaceutical industry. The key question concerns the observation that - despite high degrees of R&Dand marketing-intensity - concentration has been consistently low during the whole evolution of the industry. Standard explanations of this phenomenon refer to the random nature of the innovative process, the patterns of imitation and the fragmented nature of the market into multiple, independent submarkets. We delve deeper into this issue by using an improved modified version of our previous “history-friendly” model of the evolution of pharmaceuticals. Thus, we explore how changes in the technological regime and/or in the structure of demand may generate or not substantially higher degrees of concentration. The main resu! lts are that, while technological regimes remain fundamental determinants of the patterns of innovation, demand structure plays indeed a crucial role in preventing the emergence of concentration through a partially endogenous process of discovery of new submarkets. However, it is not simply market fragmentation as such that produces this result, but rather the entity of the “prize” that innovators can gain relative to the overall size of the market. Similarities and differences with other approaches are also discussed.

The Institutional Design of European Competition Policy

Posted by D. Daniel Sokol

Antonio Manganelli, Antonio Nicita, and Maria Alessandra Rossi (EUI) explore The Institutional Design of European Competition Policy.

ABSTRACT: This paper analyzes the institutional design of the European competition policy system. Besides the multi-level public enforcement, the paper describes other two fundamental dimensions of the European competition policy system: the relationship between public and private enforcement and that between competition law enforcement and sector specific regulation, with particular regards with the Electronic Communications sector. The main effort of the paper consists in representing the EU Competition policy system as a web of vertical and horizontal relationships among a large set of actors, sometimes coordinated by formal or informal mechanisms but still characterized by competence overlaps and strategic interdependencies. Finally the paper aims at assessing the relevant economic trade-offs associated to these overlaps and interactions in terms of efficiency and effectiveness of the system, giving some policy suggestions for! the future evolution of its overall design.

Advances in price time series tests for antitrust market definition

Posted by D. Daniel Sokol

Willem H. Boshoff (Department of Economics, University of Stellenbosch) describes Advances in price time series tests for antitrust market definition.

ABSTRACT: Market definition is an important first step in any competition policy investigation. In competition policy, a market represents the set of products (product market) or regions (geographic market) that constrain the market power of the firm being investigated. Various quantitative tools have been developed for market definition. Econometric tests on price co-movement represent one such set of tools: two regions or products are considered part of the same market if their prices co-move. However, price co-movement tests, especially the more advanced econometric tests, have been criticized in the competition policy literature. This paper applies a range of tools, including correlation analysis, Granger-causality tests, unit root tests and the recent autoregressive distributed lag (ARDL) bounds test, to data from the 2006-2008 competition investigation into business practices in the South African dairy industry. The paper ar! gues that different price tests ask different questions and that it is not useful to argue, say, that the market suggested by a more advanced price test differs from the market suggested by a simple correlation statistic. The paper also responds to the continued practice of criticizing price co-movement for market definition on the basis of the poor performance of conventional price tests: many conventional tests have long been shown to suffer from small-sample power and size problems, but critics fail to account for recent improvements in this regard. The paper concludes that while no single price test offers conclusive evidence on the market, the combination of results offer a rich picture useful for market definition purposes.

Getting The Deal Through: Intellectual Property and Antitrust 2011

Posted by D. Daniel Sokol

Global Competition Review is pleased to announce the publication of Getting The Deal Through: Intellectual Property and Antitrust 2011. This fully revised and updated 5th edition offers the reader coverage of 23 jurisdictions worldwide, including new chapters on Bosnia and Herzegovina, Chile, Poland and South Africa. Key questions are answered by leading practitioners, providing international analysis in areas of law and policy for corporate counsel, cross-border legal practitioners and business people. Click here to purchase a copy of the 2011 edition or subscribe online.

More price competition can benefit spatial duopolists when the consumer preferences are uncertain

Posted by D. Daniel Sokol

Michal Krol (Manchester - Economics) has posted More price competition can benefit spatial duopolists when the consumer preferences are uncertain.

ABSTRACT: This note considers the e¤ect of the demand faced by Hotelling duopolists varying in both location and responsiveness to price changes. The latter may increase on average, but still make the firms better off due to the equilibrium product differentiation increasing sufficiently to relax the intensi…ed second-stage price competition. Furthermore, a social planner could always improve welfare via a pro- portional transport tax schedule contingent on the realization of the uncertainty.

Best Competition Conference in Asia for 2011 - A Global Competition Law and Economics Series Conference: Competition Law and the State, 18 & 19 March 2011, Hong Kong

Posted by D. Daniel Sokol

A Global Competition Law and Economics Series Conference:Competition Law and the State18 & 19 March 2011, Hong Kong

Conference Schedule
Friday 18 March 2011
08:30	Registration
09.00	Welcome and Introduction Professor Dame Hazel Genn DBE QC (Dean, UCL Faculty of Laws) & Professor Johannes Chan (Dean, The University of Hong Kong Faculty of Law) Dr Ioannis Lianos (UCL, Co-Director, Global Competition Law and Economics Series) Professor Daniel Sokol (University of Florida, Co-Director, Global Competition Law and Economics Series)
09:15	Official Address:
	Mr Gregory So (Under Secretary for Commerce and Economic Development, Hong Kong Special Administrative Region)
09:30	KEYNOTE ADDRESS: Government in Markets Keynote Speaker: John Fingleton (Chairman, UK Office of Fair Trading) Chair: Judge Frederic Jenny (Cour de Cassation and Chairman, OECD Competition Committee) Respondents: Allan Fels (Dean, Australian and New Zealand School of Government (ANZSOG)) William Kovacic (Commissioner, Federal Trade Commission) Eduardo Pérez Motta (President, Federal Competition Committee, Mexico) Followed by discussion
10:45	COFFEE BREAK
11:00	SESSION 1: Controlling anticompetitive action by the State: ex ante approaches (competition advocacy, competitive neutrality, competition law assessment of projected legislation) Chair: William Kovacic (Commissioner, Federal Trade Commission) Panelists: Joseph P Bauer (Professor of Law, The University of Notre Dame Law School) Michiyo Hamada (Commissioner, Japan Fair Trade Commission (JFTC)) Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Simon Milnes (Infrastructure, Competition and Consumer Division, the Australian Treasury) Eduardo Pérez Motta (President, Federal Competition Committee, Mexico)
13:00	The Baker & McKenzie Speakers' Lunch Light Lunch for other attendees
14:00	SESSION 2: Competition law and state regulation: Setting the stage and focus on state-owned companies Chair: Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Panelists: Gregory Leonard (Senior Vice-President, NERA) Yena Lim Hua Yen (Chief executive, Competition Commission of Singapore) Tony Prosser (Professor of Law, University of Bristol, Law School) Huang Yong (Professor of Law, University of International Business and Economics (UIBE) School of Law, Beijing) Georgina Foster (Partner, Baker & McKenzie LLP (Sydney))
15:45	COFFEE BREAK
16:00	SESSION 3: Controlling anticompetitive action by the State: ex post approaches (state aids, state action doctrine, state sponsored cartels and anticompetitive practices) Chair: Dhanendra Kumar (Chairman, Competition Commission of India) Panelists: Thomas Cheng (Assistant Professor of Law, The University of Hong Kong Faculty of Law) Michal Gal (Professor of Law, University of Haifa) Damien Geradin (University of Tilburg & Covington & Burling LLP) Gavin Robert (Partner, Linklaters LLP) Willard Tom (General Counsel, US Federal Trade Commission )
17:30	COFFEE BREAK
17:45	SESSION 4: Authorities Roundtable Exemptions from the application of competition law / the challenge of applying competition law to foreign state activities: comparative and international perspectives Chair: Allan Fels (Dean, Australian and New Zealand School of Government (ANZSOG)) Panelists: Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Dhanedra Kumar (Chairman, Competition Commission of India) Zhu Zhong Liang (Anti-Monopoly Bureau, MOFCOM) Yena Lim Hua Yen, (Chief Executive, Competition Commission of Singapore)
19:30	Close of Day one
Saturday 19 March - Competition law and the challenge of the evolving definition and structure of State activities
09:30	Registration and refreshments
10:00	SESSION 5: Competition law, regulation and the challenge of private interests: Self-regulation by professional associations and legitimate lobbying Chair: Eduardo Pérez Motta (President, Federal Competition Committee, Mexico) Panelists: Assimakis Komninos (Commissioner, Hellenic Competition Commission) Ioannis Lianos (UCL Faculty of Laws) Paul Lugard (TBC) (former Head of Antitrust, Philips; Vice-Chair, Competition Commission BIAC; Lecturer Tilburg University) D. Daniel Sokol, (Professor of Law, Levin College of Law, University of Florida) Mark Williams (Professor of Law, The Hong Kong Polytechnic) Shiying Xu (Institute of Competition Law, East China University of Political Science and Law)
11:30	Coffee Break
11:45	SESSION 6 The interaction between competition law and regulatory alternatives (case studies: broadcasting, energy, digital media) Chair: Gert-Jan Koopman (Deputy Director General (State Aids), European Commission) Panelists: Nick Economides (Professor of Law, Stern Business School, NYU) Geoff Edwards (Charles River Associates) Leigh Hancher (University of Tilburg & Allen & Overy LLP) Mark Whitener (Senior Counsel, General Electric)
13:15	LUNCH
14:15	SESSION 7: The interaction between competition law and regulatory alternatives II (case studies: healthcase, environmental regulation, financial services and crisis regulation) Chair: Yena Lim Hua Yen, (Chief Executive, Competition Commission of Singapore) Panelists: Alberto Heimler (Professor of Economics, Advanced School of Public Administration, Government of the Italian Republic) Clara Ingen-Housz (Partner, Baker & McKenzie LLP (Hong Kong)) Ioannis Kokkoris (University of Reading Law School ) William Kovacic (Commissioner, Federal Trade Commission) Franz Jürgen Säcker (Professor of Law, Freien Universität Berlin)
16:15	Break
16:30	DISCUSSION: Extensions - The evolving role of the State and the impact of competition law in a globalized world: institutional solutions for dealing with tragic choices Chair: Emeritus Professor Valentine Korah (UCL Faculty of Laws) Moderator: Judge Frederic Jenny (Cour de Cassation and Chairman, OECD Competition Committee) Open discussion to the floor
17:30	Concluding remarks: Thomas Cheng (HKU), Ioannis Lianos (UCL) & Daniel Sokol (Florida)
17:45	End of conference

 

Register here. 

EU Distribution Law - 5th Ed.

Posted by D. Daniel Sokol

Fifth Edition

EU Distribution Law

Joanna Goyder

The new edition of EU Distribution Law, published six years after the previous edition, is concerned with the competition rules prohibiting anti-competitive agreements and behaviour affecting trade between Member States, and the special rules which protect commercial agents. Under EU law such anti-competitive agreements may be void and substantial fines imposed and liability in damages may result. To minimise their risk companies and their advisers must therefore understand the current rules and exemptions.

 

In 2010 fully revised EU legislation and guidelines governing distribution and supply agreements came into effect. New features include an increased focus on powerful buyers and on internet sales, and there is also a more generous approach to resale price maintenance. [At the same time the special regime for the motor vehicle sector was significantly amended.] The European Commission, as well as national courts and competition authorities, actively apply EU competition rules in this area, so companies need to take the new rules fully into account. Furthermore, the continuing enlargement of the EU, most recently in 2007 to 27 Member States, and the ever-expanding case law of the European courts, means that EU law has an ever wider and more pronounced impact.

 

This comprehensively rewritten and updated new edition of a well-known text combines expert commentary with clear, practical advice on the law affecting distribution agreements, exclusive supply, purchase agreements, franchising, agency and selective distribution.

 

This book will be essential reading for commercial and competition lawyers, and the legal departments of manufacturers, suppliers, distributors and retailers currently trading or intending to trade within the European Union.

 

Joanna Goyder is a Barrister working for Freshfields Bruckhaus Deringer LLP in Brussels.

 

Feb 2011   374pp   Hbk   9781849461467   £95 / €125

Discount rate to e-mail list subscribers: £71 / €94

Click here to order online