Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, September 25, 2012

Quality improvement to meet competitive fringe

Posted by D. Daniel Sokol

Noriaki Matsushima (Osaka University) and Ren-Jye Liu (Tunghai University) theorize on Quality improvement to meet competitive fringe.

ABSTRACT: We investigate what kind of competitive pressure induces existing firms to engage in more intensive innovation activities. We examine two types of competitive pressure: a price decrease in competitive fringe firms and a quality improvement therein. We use an oligopoly model with vertical differentiation to investigate this question. We show that a decrease in the exogenous price of competitive firms induces the two existent leading firms (one high-quality firm and one mid-quality firm) to engage in quality investments more if the ex ante quality level of the high quality product is large enough; otherwise, only the mid-quality firm engages more in quality investment. We also show that an increase in the exogenous quality level of competitive firms diminishes the incentive of the mid-quality firm to engage in quality investments.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Canadian Competition Tribunal Orders Divestiture in Waste Merger: Some Lessons Learned

Posted by D. Daniel Sokol

Richard Elliott (Davies Ward) discusses Canadian Competition Tribunal Orders Divestiture in Waste Merger: Some Lessons Learned.

ABSTRACT: The Canadian Competition Tribunal (the "Tribunal") has issued its first decision in a fully contested application under the merger provisions of the Competition Act (the "Act") in over a decade. On May 29, 2012, further to an application by the Commissioner of Competition (the "Commissioner") challenging the acquisition (the "Merger") by CCS Corporation ("CCS") of Complete Environmental Inc. ("Complete"), the owner of a landfill site in northeastern British Columbia known as Babkirk, the Tribunal ordered CCS to divest Complete.

The Commissioner's application raised a number of legal issues, including the threshold and analysis for establishing that a merger has prevented future competition, as opposed to lessening existing competition in the marketplace. Importantly, the case also demonstrates the Commissioner's willingness to challenge mergers that are not subject to notification under the Act and that have already been completed. Finally, the case also confirms the Commissioner's readiness to seek the dissolution of a merger as an alternative to divestiture (even though the Tribunal did not grant dissolution in this particular instance). Accordingly, the potential for a post-closing challenge by the Commissioner should be of significance to all parties to a transaction, including vendors, where the transaction may have anticompetitive effects.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Antitrust in Asia: Developments in India's Competition Regime

Posted by D. Daniel Sokol

Antitrust in Asia: Developments in India's Competition Regime

When

November 30 - December 01, 2012

Where

  • The Taj Mahal Hotel
  • Number One Mansingh Road
  • New Delhi 110 011
  • India
Primary Sponsors
Co-Sponsors

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition between Multiproduct Firms with Heterogeneous Costs

Posted by D. Daniel Sokol

Roberto Roson (Department of Economics, University Of Venice Ca Foscari) addresses Competition between Multiproduct Firms with Heterogeneous Costs.

ABSTRACT: This paper draws upon Feenstra and Ma (2007, 2008), to develop a model of asymmetric competition between multiproduct firms. The model is used to analyze how cost asymmetry affects the equilibrium, with determination of quantity/price as well as product scope per firm. By treating the number of firms as a continuous variable, the model is extended to account for the endogenous determination of the number of firms in a long-run, monopolistically competitive equilibrium, with free entry by heterogeneous firms.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, September 24, 2012

Google and anti-trust: The new debate over Internet search

Posted by D. Daniel Sokol

Google and anti-trust: The new debate over Internet search
Friday, October 05, 2012 | 12:30 p.m. – 2:00 p.m.
AEI, Twelfth Floor
1150 Seventeenth Street, NW
Washington, DC 20036 
    RSVP
Google and anti-trust: The new debate over Internet searchFriday, October 05, 2012 | 12:30 p.m. – 2:00 p.m.AEI, Twelfth Floor 1150 Seventeenth Street, NW Washington, DC 20036  About This Event

Since publishing “The Anti-Trust Paradox: A Policy at War With Itself” in 1978, Judge Robert Bork has been among the most influential analysts and critics of U.S. anti-trust law. Judge Bork and other “Chicago School” thinkers have profoundly shaped constitutional jurisprudence with respect to anti-trust for more than three decades.
 
In a new paper entitled “What Does the Chicago School Teach about Internet Search and the Anti-Trust Treatment of Google?,” Bork and Gregory Sidak analyze and weigh the merits of the anti-trust concerns that have been raised concerning Google and the market for Internet search. Join AEI for a luncheon in which experts in the fields of anti-trust, law and economics and technology policy will discuss the market for Internet search, the evolving competitive landscape and the proper role of government regulation in this sphere.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
 Agenda
12:00 PM
Registration and Lunch

12:30 PM
Panelists:
Jeff Eisenach, AEI
Randal Picker, University of Chicago
George Priest, Yale University
Gregory Sidak, Criterion Economics
Moderator:
Nick Schulz, AEI

2:00 PM
Adjournment
 Event Contact Information
For more information, please contact Jennifer Carey at jennifer.carey@aei.org, 202.862.5948.
 Media Contact Information
For media inquiries, please contact Véronique Rodman at vrodman@aei.org, 202.862.4871   

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Inventories and Endogenous Stackelberg Leadership in Two-period Cournot Oligopoly

Posted by D. Daniel Sokol

Sebastien Mitraille (Universite de Toulouse, Toulouse Business School) and Michel Moreaux (Toulouse School of Economics (IDEI and LERNA)) identify Inventories and Endogenous Stackelberg Leadership in Two-period Cournot Oligopoly.

ABSTRACT: Two-period Cournot competition between n identical firms producing at constant marginal cost and able to store before selling has pure strategy Nash-perfect equilibria, in which some firms store to exert endogenously a leadership over rivals. The number of firms storing balances market share gains, obtained by accumulating early the output, with losses in margin resulting from increased sales and higher operation costs. This number and the industry inventories are non monotonic in n. Concentration (HHI) and aggregate sales increase due to the strategic use of inventories.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Vertical integration, market floreclosure and quality investment

Posted by D. Daniel Sokol

Roberto Hernan Gonzalez (Chapman) and Praveen Kujal (Universidad Carlos III de Madrid) describe Vertical integration, market floreclosure and quality investment.

ABSTRACT: We study incentives to vertically integrate in an industry with vertically differentiated downstream firms. Vertical integration by one of the firms increases production costs for the rival. Increased production costs negatively affects quality investment both by the integrated firm and the unintegrated rival. Quality investment by both firms decreases under any (vertical integration) scenario. The decrease in quality invesment by both firms softens competition among downstream firms. By integrating first, a firm always produces the high quality good and earns higher profits. A fully integrated industry, with increased product differentiation, is observed in equilibrium. Due to increase in firm profits, social welfare under this structure is greater than under no integration.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Search, Essential Facilities, and the Antitrust Duty to Deal

Posted by D. Daniel Sokol

Marina Lao (Seton Hall) explores Search, Essential Facilities, and the Antitrust Duty to Deal.

ABSTRACT: The core of the gathering antitrust case against Google seems to be that it favors its own or its affiliates’ content over that of its competitors in ancillary markets in the unpaid search results. Seeking the competitive advantages inherent in integration, which is what preferential treatment of one’s own property is about, is usually not unlawful. This paper examines whether “essential facilities” and the duty-to-deal nonetheless provide a basis for prohibiting this practice, as some have suggested, and concludes that they do not.

On the threshold monopoly power issue, most assume, based on Google’s high percentage of general search queries, that Google has monopoly power. This paper analyzes why this assumption, though intuitively appealing, is incorrect. It also considers other problems with invoking either principle in the display of search results. For essential facilities, for example, important issues regarding which is the alleged essential facility, whether there is denial of access, and whether the facility is capable of being shared have been largely overlooked. For the duty-to-deal, it is difficult to see how the principle, rarely applicable, can be made to apply.

This paper also questions a fundamental assumption embedded in the discourse -- that favoring one’s own property in search results, being good for a search engine, must be anticompetitive. Antitrust law is consumer-centric, and practices that benefit search users, while also benefiting the search engine, would not be anticompetitive even if they incidentally hurt some competing providers.

The paper ends with a discussion of some policy issues and concludes that they generally cut in favor of allowing search engines to incorporate new features and redesign their product, even if that might unfortunately adversely impact some competitors in ancillary markets.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

The Constitutionality of Administrative Monetary Penalties Under the Competition Act: Is Rowan a Full Answer?

Posted by D. Daniel Sokol

John A. Campion & Antonio Di Domenico (Fasken Martineau) ask The Constitutionality of Administrative Monetary Penalties Under the Competition Act: Is Rowan a Full Answer?

ABSTRACT: Administrative Monetary Penalties ("AMPs") are monetary penalties where payment is ordered by a decision maker acting under a statutory power. AMPs are popular among regulators, including the Commissioner of Competition, because they fill the gap between true administrative remedies and criminal sanctions. They allow regulators to collect considerable sums without having to prove their cases on the "beyond a reasonable doubt" criminal standard. However, some AMPs are so large that they arguably amount to penal sanctions, triggering constitutional protections under the Canadian Charter of Freedoms.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Regulatory Asymmetry? The Competition Between Telecommunication Operators and Other ICT Players

Posted by D. Daniel Sokol

Laurent De Muyter (Jones Day) asks Regulatory Asymmetry? The Competition Between Telecommunication Operators and Other ICT Players.

ABSTRACT: Under EU law, telecommunication operators must open their main resources (networks) to service providers including other ICT providers under far reaching and sometimes conceptually inconsistent conditions. But they have limited access to the resources operated by the latter (content, data, handset, software). This distorts competition, hampers network related investments, and makes high bids less plausible in future spectrum auctions.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)