Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, May 12, 2012

Regulating Trade in Services in the EU and the WTO

Posted by D. Daniel Sokol

Ioannis Lianos, University College London and Okeoghene Odudu, Emmanuel College, Cambridge have edited Regulating Trade in Services in the EU and the WTO.

TABLE OF CONTENTS: Introduction Ioannis Lianos and Okeoghene Odudu; Part I. The 'Trust' Theory of Integration: 1. Trust, distrust and economic integration: setting the stage Ioannis Lianos and Johanness Leblanc; Part II. Unpacking the Premises: Mutual Recognition, Harmonization: 2. Forms of mutual recognition in the field of services Vassilis Hatzopoulos; 3. Trust and mutual recognition in the services directive Gareth Davies; 4. Mutual recognition in the global trade regime: lessons from the EU experience Wolfgang Kerber and Roger Van Den Bergh; 5. Public procurement and public services in the EU Chris Bovis; Part III. The Interaction between Pluralism, Trust and Economic Integration: 6. Shifting narratives in European economic integration: trade in services, pluralism and trust Ioannis Lianos and Damien Gerard; 7. Trusting the poles, Mark 2: towards a regulatory peace theory Kalypso Nicolaidis; Part IV. Private Parties and the Economic Integration Process: 8. Who's afraid of the total market? On the horizontal application of the free movement provisions in EU law Harm Schepel; 9. The EU Services Directive and the mandate for the creation of professional codes of conduct Panagiotis Delimatsis; Part V. Seeds of Distrust: Regulatory Competition and Diversity in the Social Sphere: 10. Transborder provision of services and social dumping: rights-based mutual trust in the establishment of the internal market Olivier De Schutter; 11. Reconceptualizing the constitution of Europe's post-national constellation – by dint of conflict of laws Christian Joerges and Florian Rodl; 12. Fundamental rights as sources of trust and voices of distrust in the European internal market Antoine Bailleux; Part VI. Extensions: the Relevance of the 'Trust Theory' of Integration in the Context of the WTO: 13. I now recognize you (and only you) as equal: an anatomy of (mutual) recognition agreements in the GATS Juan A. Marchetti and Petros C. Mavroidis; 14. Importing regulatory standards and principles into WTO dispute settlement: the challenge of interpreting the GATS Arrangements on Telecommunications Robert Howse

May 12, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, May 11, 2012

Do We Need to Get Frantic About FRAND?

Posted by D. Daniel Sokol

Hein Hobbelen & Tone Oeyen (Freshfields Bruckhaus Deringer LLP) asks Do We Need to Get Frantic About FRAND?

ABSTRACT: For some time now, the concept of fair, reasonable, and non-discriminatory ("FRAND") has been a hotly debated topic in the antitrust community. Never free of what some may refer to as kafkaesk jargon, in Brussels we even have "FRAND roundtables" and "FRAND workshops." When advising on the issue, we have noticed that clients may, at first sight, tend to perceive the inclusion of FRAND terms in e.g. IPR license agreements to be too much of an absolute, strict requirement under EU competition law. This, however, requires nuance.

This contribution analyzes the role of fair, reasonable, and non-discriminatory license terms under EU competition law, in particular in the context of Article 101 and 102 of the TFEU. After an introductory section on standards and the basic relationship between standardization and competition law, we analyze in particular the role of the FRAND concept in the context of the new European Commission's Guidelines on the applicability of Article 101 TFEU to horizontal co-operation agreements and in the context of Article 102 TFEU. The purpose of the article is to get back to basics: What is the role of FRAND under EU competition law, particularly in the standardization context? The article does not give any detailed consideration to the intellectual property and contract law questions surrounding standardization and FRAND licensing. The key question is: How frantic should one get about FRAND in EU competition law?

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Cartel in the Indian Cement Industry: An Attempt to Identify It

Posted by D. Daniel Sokol

Sylwester Bejger (Nicholas Copernicus University of Torun) has written on Cartel in the Indian Cement Industry: An Attempt to Identify It.

ABSTRACT: This article is devoted to the problem of the detection of overt or tacit collusion equilibrium in the context of the choice of the appropriate econometric method, a choice that is determined by the amount of information that the observer possesses. The author addresses this problem in two steps. First, to provide a theoretical background, he uses a collusion marker based on structural disturbances in a price process’ variance. Then, he applies a Markov switching model with switching in variance regimes. The author considers this method adequate and coherent with the problem structure and the research objective, and useful for assessing the functionality of the collusion marker he uses. He uses the model to examine the Indian cement industry in the period 1994–2009 and finds some objective indications of collusion and competition phases. These phases are confirmed by certain historical facts as well as by numerous research articles.

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Will Antitrust Concerns Set Back Facebook's IPO?

Posted by D. Daniel Sokol

According to the FT, an FTC investigation into Facebook's acquisition of Instagram may have impact Facebook's IPO. See here for the story.

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition Policy in Ireland: A Good Recession?

Posted by D. Daniel Sokol

Paul Gorecki (ESRI) asks Competition Policy in Ireland: A Good Recession?

ABSTRACT: This paper analyses the conduct of competition policy in Ireland between 2000 and 2011. Attention is paid to the policies and actions of those persons and institutions responsible for competition policy: the Minister for Jobs, Enterprise and Innovation; the Competition Authority; the Courts; and, since 2010, the European Union and the International Monetary Fund. Competition policy after some initial setbacks at the beginning of the recession, has enjoyed strong support since 2010.

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

GCR Live: Financial Services and Competition Law June 20, 2012

Posted by D. Daniel Sokol

GCR Live: Financial Services and Competition Law June 20, 2012

Programme

9.00am: Chairman's introduction Nicholas Levy, Cleary Gottlieb Steen & Hamilton LLP

9.10am: Keynote speech: Antitrust issues in the financial services sector Clive Maxwell, Executive Director, Office of Fair Trading

9.30am: Is the financial services sector different?
Peter Freeman, Cleary Gottlieb Steen & Hamilton LLP
Lisa Rabbe, Credit Suisse [tbc]
Paolo Palmigiano, Lloyds Banking Group
Nickolas Reinhardt, Fleishmann Hillard Simon Gaysford, Frontier Economics

11.20am: State Aid in the financial services sector: issues and challenges
Irmfried Schwimman, DG Competition, European Commission
Johan Ysewyn, Clifford Chance LLP
Onno Brouwer, Freshfields Bruckhaus Deringer LLP
Lorenzo Coppi, Compass Lexecon

2.00pm: Deutsche Börse/NYSE Euronext: legal, economic, regulatory and policy issues Jorge Padilla, Compass Lexecon Benoit Le Bret, Gide Loyrette Alec Burnside, Cadwalader, Wickersham & Taft LLP David A. Schwartz, Wachtell, Lipton, Rosen & Katz

4.00pm: Information exchange in the financial services sector
Alastair Mordaunt, Clifford Chance LLP
Matthew Bennett, Charles River Associates
Helen Jenkins, Oxera Consulting
Robbert Snelders, Cleary Gottlieb Steen & Hamilton LLP

5.30pm: Chairman's summing-up and closing Chaired by Nicholas Levy, Cleary Gottlieb Steen & Hamilton LLP
Keynote Speaker Clive Maxwell, Executive Director, Office of Fair Trading
Speakers Matthew Bennett, Charles River Associates
Onno Brouwer, Freshfields Bruckhaus Deringer LLP
Alec Burnside, Cadwalader, Wickersham & Taft LLP
Lorenzo Coppi, Compass Lexecon
Peter Freeman, Cleary Gottlieb Steen & Hamilton LLP
Simon Gaysford, Frontier Economics
Helen Jenkins, Oxera Consulting Benoit Le Bret, Gide Loyrette
Alastair Mordaunt, Clifford Chance LLP
Jorge Padilla, Compass Lexecon
Paolo Palmigiano, Lloyds Banking Group
Lisa Rabbe, Credit Suisse [tbc]
Nickolas Reinhardt, Fleishman Hillard
David A. Schwartz, Wachtell, Lipton, Rosen & Katz
Irmfried Schwimman, DG Competition, European Commission
Robbert Snelders, Cleary Gottlieb Steen & Hamilton LLP
Johan Ysewyn, Clifford Chance LLP

Conference fees: Rates will increase on 18th May Standard £600 Government agency £500
In-house counsel £325 Prices may be subject to 20% VAT Register online here to pay by credit card.

Contact For all registration enquiries, please contact +44 207 467 0178 or email: gcrlive@globalcompetitionreview.com

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

The Economic Impact of Merger Control Legislation

Posted by D. Daniel Sokol

Elena Carletti (EUI), Philipp Hartmann (EUI) and Steven Ongena (Tilburg) have an interesting paper on The Economic Impact of Merger Control Legislation.

ABSTRACT: We construct a unique dataset of legislative reforms in merger control legislation that occurred in nineteen industrial countries in the period 1987-2004, and investigate the economic impact of these changes on stock prices. In line with the hypothesis that merger control should challenge anticompetitive mergers and thus limit future monopolistic profits, we find that the strengthening of merger control decreases the stock prices of non-financial firms. In contrast, we find that bank stock prices increase. Cross sectional regressions show that the discretion embedded in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. This suggests that merger control is anticipated to create a “separation of powers” and “checks and balances” mechanism in the banking sector that mitigates the potential for abuse and wasteful enforcement of the supervisory control. We provide a case study further supporting this interpretation.

May 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, May 10, 2012

Facing New Challenges at the Crossroads Between Competition and Intellectual Property in Europe: The Example of Korean Innovators

Posted by D. Daniel Sokol

Damien Geradin & Hee-Eun Kim (Covington & Burling) have written Facing New Challenges at the Crossroads Between Competition and Intellectual Property in Europe: The Example of Korean Innovators.

ABSTRACT: The Free Trade Agreement between the European Union ("EU") and Korea has been provisionally in force since July 1, 2011, nearly four years after negotiations started in May 2007. The Agreement removes tariffs and other trade barriers in an unprecedented manner, covering virtually all products. EU exporters of pharmaceutical products, auto parts, and agricultural goods are expected to be the primary beneficiaries of the Agreement. At the same time, Korean manufacturers of cars, ships, and high-tech products, such as mobile communications devices, are planning to increase their exports to the EU market. For instance, Hyundai Motor Company, the world's fourth-largest carmaker, announced its goal of increasing European sales in 2012 by 15.4 percent.

Although Korean high-tech companies may use this opportunity to expand their business in the EU, significant regulatory risks may arise as they navigate through the complex EU legal framework; in particular, competition rules. In this respect, striking the right balance in dealing with emerging issues at the intersection between competition and intellectual property rights ("IPRs") can present serious challenges. Taking the experience of Korean technology companies as an example, this article briefly reflects on competition law issues which innovative companies face when enforcing certain of their IPRs against infringers. In this connection, a hotly debated issue before the European Commission concerns the compatibility of certain uses of standard-essential patents ("SEPs"), i.e. patents that are essential to implement technical standards, with EU competition law.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Financial Sector Competition in West African Economic and Monetary Union

Posted by D. Daniel Sokol Florian LEON (CERDI) explores Financial Sector Competition in West African Economic and Monetary Union. ABSTRACT: This paper investigates the degree of competition in the WAEMU financial industry over the period 2002-2007 using firm-level data (591 year-firm observations). Market structure analysis, the Panzar-Rosse model and conjectural variation are applied to assess the level of competition. The results show that the prevailing market structure in the WAEMU financial industry is concentrated and financial intermediaries operate under imperfect competition. Although competition was fierce during the mid-2000s, the level of competition has remained limited. Moreover, apart from Benin and Mali, the structural and non-structural approaches are closely related, contrary to previous findings, which have some implications for the empirical studies. Finally, a common regulatory framework does not imply similar level of competition. The presence of non-legal barriers is the most plausible explanation of these large differences between WAE! MU members.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Bates White's 9th Annual Antitrust Conference June 7, 2012 Washington, DC

Posted by D. Daniel Sokol

Bates White's 9th Annual Antitrust Conference
June 7, 2012
Washington, DC

Quantitative Merger Analysis: Inside the Black Box and Before the Decision Makers

Panel sessions

Methods for Quantifying Merger Effects: What Are They & How Do They Work?

Wayne Dale Collins, Partner, Shearman & Sterling (Moderator)
Daniel Hosken, Deputy Assistant Director, Bureau of Economics, Federal Trade Commission
Aviv Nevo, Professor of Economics and Marketing, Northwestern University
Scott Thompson, Partner, Bates White Economic Consulting
Keith Waehrer, Partner, Bates White Economic Consulting

This panel will highlight for attorneys some of the key quantitative methods used for merger analysis with a focus on how best to apply these methods and produce useful results. For each method, the panelists will discuss the objectives, assumptions, data requirements, and strategies to successfully communicate these methods to decision makers. Techniques to be covered include:
•UPP and the role of efficiencies
•Methods of merger simulation without demand estimation
•Econometrics-based simulation methods

Event studies

Quantitative methods in practice: before agencies and courts

Clifford Aronson, Partner, Skadden, Arps, Slate, Meagher & Flom
George Rozanski, Partner, Bates White Economic Consulting (Moderator)
Howard Shelanski, Professor of Law, Georgetown University; Counsel, Davis Polk
Jeane Thomas, Partner, Crowell & Moring
James Tierney, Chief, Networks and Technology Enforcement Section, Department of Justice

This session will focus on real-world implementation of economic analysis in merger cases before the agencies and courts. Based on personal experience, panelists will share their insights about how quantitative analysis fits into the big picture of case strategy, the level of complexity that courts and agencies can effectively process, how to characterize results and effectively present them, how to anticipate and deflect possible criticisms, and how to give comfort in the robustness of the results. Specific topics to be addressed include:

•Agency expectations and use of UPP or simulation analysis
•The legal perspective on presenting quantitative evidence to courts

Keynote

Exclusive Dealing—Having and Getting, in Dentsply and Beyond

Joseph Farrell, Director, Bureau of Competition, Federal Trade Commission; Professor of Economics, University of California, Berkeley

Location and timeline

Ronald Reagan Building 1300 Pennsylvania Avenue NW Washington, DC 20004

Registration 2:30–3:00 p.m. Horizon Room

Panel Sessions 3:00–6:00 p.m. Horizon Room

Reception 6:00–7:00 p.m. Rotunda Room

Dinner and keynote address 7:00–9:30 p.m. Rotunda Room

RSVP

Registration is complementary. To attend, please email Claudine Hoover or call her at 202.216.1801.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Cartel Stability, Mark-Up Cyclicality and Government Spending Multipliers

Posted by D. Daniel Sokol

Luca Lambertini (University of Pisa) and and Luigi Marattin (University of Pisa) discuss Cartel Stability, Mark-Up Cyclicality and Government Spending Multipliers.

ABSTRACT: Mark-up cyclical behaviour is relevant in determining the size of government spending multiplier on output. While theoretical literature priviliged the counteryclical hypothesis, empirical evidence is far from being conclusive. Based on seminal Rotemberg and Saloner (1986) contribution, we build a theoretical framework based on Bertrand duopoly, stochastic demand and product differentiation, where the analysis of cartel stability under partial collusion points towards procyclical pricing. According to the intensity of marginal cost cyclicality, this can produce a procyclical mark up or - at least - render it less countercyclical than expected, with relevant effects on the transmission mechanism of government spending stimuli.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Information and Competition Entry

Posted by D. Daniel Sokol

Mara Ewers (University of Bonn) addresses Information and Competition Entry.

ABSTRACT: This paper studies the influence of information on entry choices in a competition with a controlled laboratory experiment. We investigate whether information provision attracts mainly high productivity individuals and reduces competition failure, where competition failure occurs when a subject loses the competition because the opponent holds a higher productivity. Information on the opponent is a promising nudge to raise individuals' awareness towards the complexity of the decision problem and to update beliefs about success. In the experiment, subjects face the choice between a competition game and a safe outside option. We analyze subjects' entry behavior with a benchmark treatment without information and three treatments, where we exogenously manipulate the information on the opponents. Our results are, (1) information on the productivity distribution of all potential opponents reduces competition failures by more tha! n 50%, (2) information on the distribution is sufficient, i.e. precise information on the matched opponent's type does not further diminish failure rates.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

The Arm’s Length Principle and Tacit Collusion

Posted by D. Daniel Sokol

Chongwoo Choe and Noriaki Matsushima (Osaka University) have new work on The Arm’s Length Principle and Tacit Collusion.

ABSTRACT: The arm’s length principle states that the transfer price between two associated enterprises should be the price that would be paid for similar goods in similar circumstances by unrelated parties dealing at arm’s length with each other. This paper examines the effect of the arm’s length principle on dynamic competition in imperfectly competitive markets. It is shown that the arm’s length principle renders tacit collusion more stable. This is true whether firms have exclusive dealings with unrelated parties or compete for the demand from unrelated parties.

May 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 9, 2012

Cournot and Bertrand competition with asymmetric costs in a mixed duopoly revisited

Posted by D. Daniel Sokol

Choi Kangsik (Graduate School of International Studies, Pusan National University) describes Cournot and Bertrand competition with asymmetric costs in a mixed duopoly revisited.

ABSTRACT: We investigate a differentiated mixed duopoly in which private and public firms can choose to strategically set prices or quantities when the public firm is less efficient than the private firm. Thus, if the Singh and Vives assumption of positive primary outputs holds, (i) Bertrand competition or quantity-price competition can occur depending on the degree of public firm's inefficiency when the goods are substitutes. (ii) regardless of its inefficiency, there can be always sustained Bertrand competition when the goods are complements. (iii) the ranking of a private firm's profit is not reversed. However if we relax the parameter restriction imposed implicitly by Singh and Vives (i.e., we adopt Zanchettin (2006) assumption) to allow for a wider range of cost asymmetry, there can be always sustained multiple subgame Nash perfect equilibria in the contract stage by each critical value of the public firm's inefficiency. In p! articular, Cournot and Bertrand competition coexist if its inefficiency is sufficiently small or large.

May 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Markets in IP and Antitrust

Posted by D. Daniel Sokol

Herb Hovenkamp (Iowa) discusses Markets in IP and Antitrust.

ABSTRACT: The purpose of market definition in antitrust law is to identify a grouping of sales such that a single firm who controlled them could maintain prices for a significant time at above the competitive level. The conceptions and procedures that go into “market definition” in antitrust can be quite different from those that go into market definition in IP law. When the issue of market definition appears in IP cases, it is mainly as a query about the range over which rivalry occurs. This rivalry may or may not have much to do with a firm’s ability to charge a high price.

Antitrust is more sensitive to market structure than any discipline, and entirely on the basis of statutes that say little about structure. By contrast, intellectual property law says almost nothing about structure and largely proceeds without these inquiries.

We know a great deal about the relationship between market structure and innovation — about the types of industries in which patents work better and are more valuable, those in which trade secrets are preferred, or where first mover advantages alone provide sufficient incentives. We can also identify markets in which copying is easiest, thus justifying strong protection, and where it is much more difficult. Knowing all of this, IP law might have developed much more “market specific” rules than it has, and if those rules had been properly formulated and applied, we would be in a better place than we are today.

What we in fact have, however, are IP laws that proceed as if market structure doesn’t matter. To be sure, there is less consensus and poorer quality information about the relationship between market structure and innovation than about the relationship between market structure and traditional power over price under constant technology. But that hardly justifies a set of protections that are invariant to market structure in those areas where it counts most. In the Supreme Court’s Prometheus decision, Justice Breyer’s opinion for a unanimous Court may have opened a window for differentiating the application of patent law with the market in question.

May 9, 2012 | Permalink | Comments (0) | TrackBack (0)

2012-13 Antitrust Law Professors on the Move - Version 2

Posted by D. Daniel Sokol

2012-13 Antitrust Law Professors on the Move - Version 2

Lateral Moves

Columbia Anu Bradford (from University of Chicago)
University of Vermont Tom Sullivan (from University of Minnesota) - will serve as President of the University

Visits

Ned Cavanagh (St. Johns) at Cardozo
Anca Chirita (University of Durham) at Max Planck
Ariel Katz (University of Toronto) at NYU
Marek Martyniszyn (UC Dublin) at Loyola Chicago
Ian McEwin (National University of Singapore) at Chulalongkorn University
Danny Sokol (University of Florida) at University of Minnesota
Abe Wickelgren (University of Texas) at Yale

May 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition Law and Sector Regulation in the European Energy Market after the Third Energy Package: Hierarchy and Efficiency

Posted by D. Daniel Sokol

Michael D. Diathesopoulos, University of Cambridge - Faculty of Law, Tilburg Law and Economics Center (TILEC), University of Leicester - Faculty of Law explores Competition Law and Sector Regulation in the European Energy Market after the Third Energy Package: Hierarchy and Efficiency. ABSTRACT: The aim of this research is to provide the basic parameters for a model for the definition of the relation between the general competition and sector specific frameworks and rules regarding the regulation of the Internal Energy Market, especially after the Third Energy Package. The research considers the recent sector specific framework in relation to a series of recent competition law cases of the Energy Market where structural remedies were applied under the commitments procedure.

Essential facilities doctrine and generally competition law tools do not seem to provide a suitable framework for effectively addressing the dynamic competition concept, treating the issue of balancing incentives to invest with open market concept and designing solutions for the stable development of Energy Market infrastructure. Competition law provides ex post and case-by-case solutions, which lack the breadth of objectives expressed by sector regulation. On the other hand, sector regulation seems to incorporate competition rules and objectives, while the application of competition law in recent decisions did not seem to take into consideration present and forthcoming sector-specific context and parameters. However, competition law has a hierarchical priority over sector-specific rules and its direct application cannot be excluded when sector regulation is insufficient or is not applied efficiently. Sector rules should have a functional priority regarding their implementation as lex specialis and constitute the context for any potential application of competition law. Furthermore, structural interventions based on competition rules will abide by the principle of proportionality, only in specific cases where market organisation and poor regulatory supervision allow the continuation of high vertical integration and anticompetitive practices. There is also a need to establish an efficient model of clear allocation of duties between Competition Authorities and Sector Regulators.

The model proposed by the research emphasizes prioritization of sector-specific rules, use of competition rules as an interpretative tool, limitation of their independent application to cases where sector regulation fails and even then after taking into consideration sector specific context and acceptance of dynamic competition as an orientating framework for the regulation of the Internal Energy Market.

May 9, 2012 | Permalink | Comments (0) | TrackBack (0)

From Dallas Cap to American Needle and Beyond: Antitrust Law’s Limited Capacity to Stitch Consumer Harm from Professional Sports Club Trademark Monopolies

Posted by D. Daniel Sokol

Matt Mitten, Marquette University - Law School discusses From Dallas Cap to American Needle and Beyond: Antitrust Law’s Limited Capacity to Stitch Consumer Harm from Professional Sports Club Trademark Monopolies.

ABSTRACT: A nearly fifty-year contemporaneous trend of increasing legal protection for sports team trademarks, collective exclusive licensing of professional sports team trademarks, and antitrust litigation regarding its validity culminated in the United States Supreme Court’s 2010 decision in American Needle, Inc. v. NFL, which rejected the NFL’s single-entity defense. Collective exclusive trademark licensing by professional sports leagues generally does not have significant incremental anticompetitive effects beyond the consumer harm already caused by each individual club’s lawful trademark monopoly, which likely are outweighed by procompetitive benefits in many instances. However, in order for antitrust law to minimize the consumer harm caused by the extension of trademark law protection beyond its traditional boundaries to create professional sports club trademark monopolies, the collective granting of exclusive product category licenses should be invalidated under the quick-look rule of reason because this restraint has clear anticompetitive effects that are not necessary to achieve legitimate procompetitive justifications and/or which may be achieved by a substantially less restrictive alternative.

May 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 8, 2012

DOJ Merger Statement Renews Focus on Competitive Implications of Industry Standards

Posted by D. Daniel Sokol

Donald Falk & Christopher Kelly (Mayer Brown LLP) discuss DOJ Merger Statement Renews Focus on Competitive Implications of Industry Standards.

ABSTRACT: The DOJ's statement has caused some consternation, as it signals at the very least that the agency may be willing to use the merger review process to discourage-and possibly even extract concessions related to-a company's lawful exercise of its intellectual property rights, even where the DOJ acknowledges that the acquisition itself would not be anticompetitive. It is not clear that the DOJ will intervene more aggressively to regulate intellectual property licensing in the future. It appears at least possible, however, that the statement indicates a desire on the part of the DOJ, in conjunction with the FTC, to move antitrust regulation over intellectual property rights closer to the compulsory licensing model that the European Commission has pursued in response to alleged abuses of dominance in violation of Article 102.

May 8, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition and Innovation: The Inverted-U Relationship Revisited

Posted by D. Daniel Sokol

Aamir Rafique Hashmi, National University of Singapore has posted Competition and Innovation: The Inverted-U Relationship Revisited.

ABSTRACT: I re-examine the inverted-U relationship between competition and innovation (originally modeled and tested by Aghion et al. (2005) by using data from publicly traded manufacturing firms in the US. I control for the possible endogeneity of competition by using a trade-weighted average of industry exchange rates as the instrument. I find a mildly negative relationship between competition (as measured by the inverse of markups) and innovation (as measured by citation-weighted patents). The relationship is robust to many alternative assumptions and specifications. To reconcile the mildly negative relationship in the US data with the inverted-U relationship that Aghion et al. (2005) find in the UK data, I modify their theoretical model and show that the modified model can explain both negative and inverted-U relationships. The key theoretical assumption is that the UK manufacturing industries are technologically more neck-and-neck than their counterparts in the US. I find support for this assumption in the data.

May 8, 2012 | Permalink | Comments (0) | TrackBack (0)