Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, August 28, 2012

A Landmark Year for the Law on Fines Imposed in EU Competition Proceedings

Posted by D. Daniel Sokol

Eric Barbier de La Serre and Charlotte Winckler (Jones Day) explain why this past year was A Landmark Year for the Law on Fines Imposed in EU Competition Proceedings.

ABSTRACT: In 2011, there has been a slight slackening of the Commission's crack down on cartels with only four cartel decisions issued and no fines imposed (whether per case or per undertaking) that ranked amongst the 10 highest fines in the history of EU cartel enforcement. On the judicial front, the General Court issued its first rulings on the application of the 2006 Guidelines. The Court provided important interpretations concerning the assessment of gravity, as well as major notions such as those of relevant sales, repeat infringement, obstruction, ringleadership, and joint and several liability.

August 28, 2012 | Permalink | Comments (0) | TrackBack (0)

EU Merger Remedies and Competition Concerns: An Empirical Assessment

Posted by D. Daniel Sokol

Wei Wang, AAlto University School of Economics and Matti Rudanko offer EU Merger Remedies and Competition Concerns: An Empirical Assessment.

ABSTRACT: The purpose of merger remedies is to relieve the potential competitive detriments as to preserve the efficiencies. The European Community (EC) Merger Remedies Notice requires remedies able to remove the identified competition concerns entirely and proportionately. The scope of each merger remedy package is confined by the competition concern in question. This study analyses, from an empirical point of view, the relationship between competition concerns and merger remedies. It reviews all remedies accepted in Phase II EU merger investigation and categorises them into seven sets according to their nature. Results of the empirical assessment present the frequencies of each remedy type accepted for resolving various competitions concerns and reveal that merger remedy design does vary for different competition concerns. Horizontal effects require divestiture remedies more. Other structural remedies, especially access commitment and supply commitment, have a good chance to be accepted in resolving vertical and conglomerate effects.

August 28, 2012 | Permalink | Comments (0) | TrackBack (0)

More on the Rabbi Cartel - A Mini Symposium

Posted by D. Daniel Sokol

Based on the NY Times article and the response by the Conservative Movement's RA on antitrust liability (they think there isn't any), a number of academics will share their thoughts on the Rabbi cartel and the RA statement later this week.  

August 28, 2012 | Permalink | Comments (0) | TrackBack (0)

The Implications of Behavioral Antitrust

Posted by D. Daniel Sokol

Maurice Stucke ponders The Implications of Behavioral Antitrust.

ABSTRACT: Behavioral economics is now mainstream. It is also timely. The financial crisis raised important issues of market failure, weak regulation, moral hazard, and our lack of understanding about how many markets actually operate.

As behavioral economics (with its more realistic assumptions of human behavior) goes mainstream in academia and the business world, one expects lawyers and economists to bring the current economic thinking to the competition agencies. How should the competition agencies respond?

This paper examines how competition authorities can consider the implications of behavioral economics on four levels: first as a gap filler, i.e., to help explain “real world” evidence that neoclassical economic theory cannot explain; second to assess critically the assumptions of specific antitrust policies, such as merger review and cartel prosecutions; third to revisit three fundamental antitrust questions, namely what is competition, what are the goals of competition law, and what should be the legal standards to promote those goals; and fourth, to assess how behavioral economics will affect the degree of convergence/divergence of competition law among the over 100 jurisdictions with competition laws today.

August 28, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, August 27, 2012

DOJ Antitrust Economic Analysis Group (EAG) Fall Seminar Schedule

Posted by D. Daniel Sokol

Economics Seminars

The Economic Analysis Group (EAG) presents a seminar series to advance recent economic analyses in the fields of industrial organization, antitrust, and applied microeconomics. Schedules are organized in the spring and fall.

Location: Seminars are held in  the Liberty Square Building at 450 Fifth St. NW, 9th floor. The closest Metro stop is Gallery Place/Chinatown.
Time: Seminars take place 2:00 to 3:30 p.m. on Tuesdays unless otherwise noted.
Attendance: Seminars are free and open to the public, but prior arrangements must be made in order to pass through building security.
Contact: For more information or to arrange attendance, contact Nathan Miller (nathan.miller@usdoj.gov or 202-307-3773) or Gloria Sheu (gloria.sheu@usdoj.gov or 202-532-4932).
DateSpeakerTopic
Sept 6
            (Thurs 2-3:30)

Severin Borenstein
Berkeley  Haas

What  Happened to Airline Market Power?
Sept 18

Nathan Wilson
FTC

For-Profit  Status and Industry Evolution in Health Care Markets: Evidence from the  Dialysis Industry
Sept 25

Judy Chevalier
Yale  SOM

Promotional  Reviews: An Empirical Investigation of Online Review Manipulation (joint  with Dina Mayzlin and Yaniv Dover)
Oct. 9

Steve Salop
Georgetown  Law

vGUPPI:  Scoring Unilateral Pricing Incentives in Vertical Mergers (joint with Serge  Moresi)
Oct. 16

Allan Collard-Wexler
NYU  Stern

Reallocation  and Technology: Evidence from the U.S. Steel Industry (joint with Jan De  Loecker)
Oct. 23
            (Tues 12-1)

Charles Taragin
              Antitrust  Division

Calibrating Demand Systems and Simulating Mergers: The  Antitrust R Package (brownbag)
Nov. 6

Kevin Murphy
Chicago  Booth

Direct Licensing, PROs and Competition
Nov. 13

Kate Ho
Columbia

Hospital Choices, Hospital Prices and Financial Incentives  to Physicians (joint with Ariel Pakes)
Nov. 27

Leslie  Marx
Duke  Fuqua

To Be Determined

August 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Chilean Agency Offers ‘Practical Guidance’ on Competition

Posted by D. Daniel Sokol

Javier Tapia, Centre for Regulation and Competition, Universidad de Chile notes that Chilean Agency Offers ‘Practical Guidance’ on Competition.

ABSTRACT: This note briefly describes the Chilean competition authority’s (FNE) new guide on competition law compliance programs. It highlights the focus of the Guidance on the elements of an effective program and observes that the FNE considers companies’ compliance programs in its recommendations relating to fines and in its willingness to settle cases. Remarkably, the FNE approach is an important reminder to competition authorities worldwide that there is a better strategy than the antagonistic approaches of the US Antitrust Division and DG Comp. The note also comments on related case law.

August 27, 2012 | Permalink | Comments (0) | TrackBack (0)

vGUPPI: Scoring Unilateral Pricing Incentives in Vertical Mergers

Posted by D. Daniel Sokol

Serge Moresi, Charles River Associates (CRA) and Steven C. Salop, Georgetown University Law Center explore vGUPPI: Scoring Unilateral Pricing Incentives in Vertical Mergers.

ABSTRACT: One key concern in vertical merger cases is input foreclosure. Input foreclosure involves raising the costs of competitors in the downstream market, which could in turn increase the sales and profits of the downstream merger partner. In this article, we explain how the upward pricing pressure resulting from unilateral incentives following a vertical merger can be scored with vertical Gross Upward Pricing Pressure Indices (“vGUPPIs”). These vGUPPIs are derived from an economic model where upstream firms sell differentiated inputs to downstream firms which in turn sell differentiated products. There are separate vGUPPIs for the upstream and downstream merging firms and, in addition, vGUPPIs for the rivals of the downstream firm whose costs are raised. Our model also explains how the vGUPPIs can account for potential input substitution and merger-specific elimination of double marginalization. These vGUPPIs are analogous to the horizontal GUPPIs commonly used for the evaluation of unilateral effects in horizontal mergers. Like the horizontal GUPPIs, the vGUPPIs provide more direct evidence on unilateral pricing incentives than other metrics commonly carried out in vertical merger cases, such as concentration indices and vertical arithmetic. They also are simpler to implement and require less data than merger simulation models.

August 27, 2012 | Permalink | Comments (0) | TrackBack (0)

On the Welfare Effects of Exclusive Distribution Arrangements

Posted by D. Daniel Sokol

Jurgen Eichberger, University of Heidelberg - Alfred Weber Institute for Economics and Frank Mueller‐Langer, Max Planck Institute for Intellectual Property and Competition Law provide their thoughts On the Welfare Effects of Exclusive Distribution Arrangements.

ABSTRACT: The regulation of vertical relationships between firms is the subject of persistent legal and academic controversy. The literature studying vertical trade relationships seems to assume that an upstream monopolist prefers downstream competition over exclusive distribution arrangements. We derive precise conditions for when an upstream monopolist prefers competing distribution systems over exclusive distribution in the downstream market. We also show that the welfare effects of downstream competition are ambiguous. A downstream oligopoly may have negative welfare properties compared to a downstream monopoly.

August 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition Within Intellectual Property Regimes - The Instance of Patent Rights

Posted by D. Daniel Sokol

Rudolph J.R. Peritz, New York Law School has authored Competition Within Intellectual Property Regimes - The Instance of Patent Rights.

ABSTRACT: This chapter describes an emergent jurisprudence and a residual economics that converge to support the reconceptualization of U.S. patent policy as a competition regime. Its approach is inspired by an opinion that Justice Sandra Day O’Connor wrote for a unanimous Supreme Court some twenty years ago. The Court’s recent patent jurisprudence sounds an echo of the opinion, which described the foundation of patent policy this way: “[F]ree exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.” There is, Justice O’Connor explained, a “baseline of free competition upon which the patent system's incentive to creative effort depends.”

The chapter develops this proposition in three sections. The first explicates the economics of incentive theory, both its limits and its residual value. The second analyzes the jurisprudence of recent decisions by the Supreme Court and Federal Circuit Court of Appeals – the speciality court for patent and trademark. The third section presents some instances of progressive change that would come of extending the re-conception of the patent system as fundamentally a competition regime, an extension inspired by Justice O’Connor’s image but informed by the failure of incentive theory as the economic logic for patent protection.

August 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Entry Time Effects and Follow-on Drugs Competition

Posted by D. Daniel Sokol

Luiz Flavio Andrade (Gate-Groupe d'analyse theorique et economique) discusses Entry Time Effects and Follow-on Drugs Competition.

ABSTRACT: Pharmaceutical firms have been criticized for concentrating their efforts of R&D on the so called “me-too” or “follow-on” drugs. There have been many comments against and favourable to the dissemination of these incremental innovations but few papers have broached the subject from an empirical point of view, possibly because identification of “me-too” is not so obvious. This paper focuses on the impact of entry order on “follow-on” drugs competition in the French market between years 2001 and 2007. More precisely, this study examines the effects on market share of first entrants in the follow-on drug market and how this possible competitive advantage changes over time. Our results are coherent with theoretical microeconomic issues concerning the importance of being first. We find evidence that first movers in the follow on drug market have the ability to capture and maintain greater market share for a! long period of time. The hierarchical market position of follow on drugs does not seem to be affected by generic drugs emergence. From a dynamic perspective, our analysis shows that market share is positively correlated with the ability of follow on drugs to set prices higher than the average follow-on drug price in a specific therapeutic class (ATC) which means that market power remains considerably important for first movers. Finally we found that the optimum level of innovation to maximize market share is the highest one.

August 27, 2012 | Permalink | Comments (1) | TrackBack (0)

Sunday, August 26, 2012

NY Times Coverage of Barak Richman's Crusade Against the Rabbi Cartel in Judaism

Posted by D. Daniel Sokol

Four words that normally don't go together: Richman, Crusade, Rabbi and Cartel. However, Duke's Barak Richman has waged a crusade (or perhaps jihad) against what he identifies as a cartel in the hiring of Rabbis. Oy vey! The NY Times has coverage here.

August 26, 2012 | Permalink | Comments (0) | TrackBack (0)