Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, October 6, 2012

A Dozen Times to Call Your Antitrust Lawyer

Posted by D. Daniel Sokol

David Balto offers his thoughts on A Dozen Times to Call Your Antitrust Lawyer. 

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October 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, October 5, 2012

The Nature of Responsibility of an Undertaking in Antitrust Proceedings and the Concept of ‘Criminal Charge’ in the Jurisprudence of the European Court of Human Rights

Posted by D. Daniel Sokol

Anna Blachnio-Parzych, Polish Academy of Sciences - Institute of Legal Studies, describes The Nature of Responsibility of an Undertaking in Antitrust Proceedings and the Concept of ‘Criminal Charge’ in the Jurisprudence of the European Court of Human Rights.

ABSTRACT: The present article aims to answer the question whether an undertaking’s responsibility (sometimes also referred to as liability) in an antitrust proceeding held by the President of the Office of Competition and Consumer Protection (the Polish National Competition Authority) is of a criminal nature. The notion of ‘criminal charge’ is rather extensively construed in the jurisprudence of European Court of Human Rights, which has formulated the criteria for criminal responsibility. Taking these criteria into account, the author postulates that the severe character of pecuniary sanctions imposed in Polish antitrust proceedings is an argument for the criminal character of the proceedings. Thus the guarantees of Article 6 of the European Convention on Human Rights should be applicable to Polish antitrust proceedings.

October 5, 2012 | Permalink | Comments (0) | TrackBack (0)

An Analysis of the Proposed Interchange Fee Litigation Settlement

Posted by D. Daniel Sokol

Adam J. Levitin, Georgetown University Law Center provides An Analysis of the Proposed Interchange Fee Litigation Settlement.

ABSTRACT: This paper is a brief analysis of the proposed class settlement in In re Interchange Fee and Merchant Discount Antitrust Litigation, MDL 1720 (E.D.N.Y.). The analysis concludes that the relief plaintiff class members would obtain from the proposed settlement is largely illusory. The settlement does not result in meaningful reform of the interchange fee system and appears to provide less relief than would likely result from continued litigation. In short, the settlement is a bad deal for merchant plaintiffs and the public at large.

October 5, 2012 | Permalink | Comments (0) | TrackBack (0)

The Proposed Merger of US Airways and American Airlines: The Rush to Closed Airline Systems

Posted by D. Daniel Sokol

Diana L. Moss, American Antitrust Institute and Kevin Mitchell describe The Proposed Merger of US Airways and American Airlines: The Rush to Closed Airline Systems.

ABSTRACT: Should US Airways make a bid for American Airlines, currently in bankruptcy proceedings, the deal could present a conundrum for antitrust authorities. The transaction would create the largest domestic airline, reducing the number of legacy mega-carriers to three – Delta Air Lines (Delta), United Continental, and US Airways-American Airlines (US Airways-American). This consolidation would occur against an industry backdrop marked by a dwindling fringe of low-cost carriers (LCCs) and growing questions as to whether legacy look-alike Southwest Airlines-AirTran Airways (Southwest) exerts any significant competitive discipline in the industry. The merger could therefore hasten a troubling metamorphosis of the domestic airline industry from one in which hub airports were designed to accommodate multiple, competing airlines to a few large, closed systems that are virtually impermeable to competition and create a hostile environment in which LCCs and regional airlines have difficulty thriving and expanding.

This White Paper, produced jointly by the American Antitrust Institute (AAI) and Business Travel Coalition (BTC), asks: What competitive issues should be the focus of antitrust investigators in reviewing the proposed merger of US Airways and American?

The paper takes the position that a U.S. Department of Justice (DOJ) investigation into the proposed merger of US Airways and American should be informed by mounting evidence on the effects of previous airline mergers, namely Delta-Northwest and United- Continental. The White Paper presents a brief analysis of these combinations and highlights a number of preliminary observations that deserve a more in-depth look. These range from the effects of previous mergers on creating costly post-merger integration problems, substantially reducing rivalry on important routes, producing above-average fare increases, and driving traffic to major hubs and away from smaller communities.

The White Paper continues on to evaluate key competitive issues raised by the proposed merger of US Airways and American that deserve some attention in an antitrust investigation. One is the expected outcome – similar to previous legacy mergers – that the proposed combination could eliminate competition on a number of important overlap routes, creating very high levels of concentration and potential harm to consumers. The risk that the proposed merger could adversely affect small communities through reduced levels of, or lower quality, air service is also worth a close look. Another observation is that the merger is unlikely to be one of complementary networks (as might be argued) and could instead create regional strongholds and solidify US Airways-American’s control over key airports. Any arguments that the merger is necessary to create another “equal-size” competitor to the existing Big 3 systems are also not compelling. The analysis concludes by examining the potential effect of the merger on buyer market power and disclosure of information regarding ancillary service fees.

The joint AAI/BTC White Paper offers a number of concluding observations and recommendations. Among them is that our analysis of the US Airways-American merger– coupled with potential warning signs from previous legacy mergers – indicates that there may be enough smoke surrounding the proposed combination to indicate a potential fire. The merging parties therefore bear a heavy burden is demonstrating that their merger would not be harmful to competition and consumers.

October 5, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 4, 2012

Verizon’s Deals with Cable Companies Raise Significant Competitive Issues

Posted by D. Daniel Sokol

Richard Brunell, FTC, advocates that Verizon’s Deals with Cable Companies Raise Significant Competitive Issues.

ABSTRACT: In December 2011, Verizon Wireless, the country’s largest wireless provider, announced agreements with some of the country’s largest cable operators — Comcast Corp., Time Warner Cable Inc., Cox Communications, and Bright House Networks — to acquire the AWS-band wireless spectrum licenses that the cable companies had acquired at auction in 2006. The transactions would result in Verizon Wireless acquiring either 20 or 30 megahertz of spectrum in local markets covering approximately 94% of the U.S. population. According to the smaller national wireless carriers, the “transactions will . . . eliminate from the market one of the two remaining large available bands of quality spectrum, which other carriers could rapidly deploy to broaden coverage and enhance competition,” and “the only sizable allocated but unused block of spectrum that would be suitable for 4G deployment.”

October 4, 2012 | Permalink | Comments (0) | TrackBack (0)

Bertrand Versus Cournot Competition in a Vertical Structure: A Note

Posted by D. Daniel Sokol

Arijit Mukherjee, University of York, Udo Broll, Dresden University of Technology - Faculty of Economics and Business Management and Soma Mukherjee, University of Nottingham address Bertrand Versus Cournot Competition in a Vertical Structure: A Note.

ABSTRACT: In a vertical structure with a profit‐maximizing upstream firm, we show that whether the profits in the downstream market are higher under Bertrand competition or under Cournot competition depends on the technology differences among the downstream firms and on the pricing strategy (namely uniform pricing or price discrimination) of the upstream firm. The upstream firm's profit, the profit of the upstream and the downstream firms taken together, and social welfare are always higher under Bertrand competition than under Cournot competition.

October 4, 2012 | Permalink | Comments (0) | TrackBack (0)

From Post- to Pre-Merger Notification: The Ultimate Outreach Challenge

Posted by D. Daniel Sokol

Carlos Emmanuel Joppert Ragazzo & Cristiane Landerdahl de Albuquerque (CADE) explain From Post- to Pre-Merger Notification: The Ultimate Outreach Challenge.

ABSTRACT: The new Brazilian Competition Law (Law no. 12,529/11) brought two major changes from the previous statute (Law no. 8,884/94): (i) it changed the enforcement structure by merging the functions previously performed by different governmental bodies into one called the General Superintendence, which is now responsible for merger review and anticompetitive conduct investigation; and (ii) it initiated a pre-notification system through which CADE´s approval is required before the closing.

Even though the new enforcement structure was widely regarded as an improvement, the implementation of a pre-merger system has generated some level of anxiety throughout the business community, especially on account of the review period established by the statute (which allows the Brazilian Competition Authority a 240-day period for merger review, with the possibility of either 60- or 90-day extensions). The increasing number of transactions notified in Brazil, as well as the lack of staff, has created an overall apprehension as to the likely performance of the new Brazilian Competition Agencies in reviewing mergers under a pre-notification system.

Therefore, not only does CADE face the natural challenges that a transition from a post- to pre-merger system entails, but it also has had to develop an outreach strategy to communicate the transition efforts and its likely results to the business community. This article describes the transition process that CADE has undergone towards a pre-merger review, which encompassed a massive communication strategy not yet finished.

October 4, 2012 | Permalink | Comments (0) | TrackBack (0)

Parent's Liability: New Case Attributing Exclusive Jurisdiction to the General Court in Respect of Cases Raising Decisive Influence and Corporate Control Issues under EU Competition Law

Posted by D. Daniel Sokol

Antoine Winckler (Cleary) and Sophie Sahlin discuss Parent's Liability: New Case Attributing Exclusive Jurisdiction to the General Court in Respect of Cases Raising Decisive Influence and Corporate Control Issues under EU Competition Law.

ABSTRACT: In most cases, the General Court has exclusive jurisdiction to decide whether sufficient evidence is provided to rebut a presumption of liability of parent companies in cases of competition law infringements by wholly owned subsidiaries.

October 4, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 3, 2012

Price wars in pizzaland -- an antirust violation?

Posted by D. Daniel Sokol

Michelle Zierler (NYLS and the Director, Program in Law and Journalism) has a blog post on Price wars in pizzaland -- an antirust violation?

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Watch Out Google: The FTC Has Hired Superstar Rich Gilbert to Come After You

Posted by D. Daniel Sokol

Politco reports that the FTC has hired Berkeley economist Richard Gilbert as an expert in its case against Google. Rich is smart and has a strong publication record on issues of antitrust and technology.  He is part of the super elite of antitrust economists.

 

Note: I am a party of interest. Rich, you owe me a handbook chapter on standard setting and just because you are involved in the antitrust case of the century doesn't mean that I don't expect you to deliver for me too.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

CLR Forum Debate: Is Conservative Judaism a Cartel

Posted by D. Daniel Sokol

St. John's Law School has an interesting antitrust debate on its law-and-religion blog, CLR Forum, this week. The debate, “Is Conservative Judaism a Cartel?” pits Barak Richman (Duke) against Dan Crane (Michigan), and will address both antitrust and First Amendment concerns.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Discriminatory Pricing in Software Sales and Competition Law: More Efficiency than Harm?

Posted by D. Daniel Sokol

Qiang Yu, Leiden Law School asks Discriminatory Pricing in Software Sales and Competition Law: More Efficiency than Harm?

ABSTRACT: Discriminatory Pricing is a practice that can be used either to eliminate competitors or to charge consumers deserving prices, both of which are condemned by competition law. However, Discriminatory Pricing is often accompanied by certain positive effects. For instance, it allows more consumers to consume the product and thus commit to economies of scale. Therefore, there are no illegal issues associated with Discriminatory Pricing per se. This paper observes that Discriminatory Pricing practices occur in the software market. The software market is a new market that differs from traditional markets in many aspects. Although factors such as network effects and innovation competition provide an environment conducive to the proliferation of Discriminatory Pricing, these factors also remove the eliminative and exploitative aspects of Discriminatory Pricing in the software market. Traditional regulation is not well suited to regulating software Discriminatory Pricing. Software Discriminatory Pricing is a commonly used marketing strategy and should not be subject to restrictions by competition law. This paper analyzed the possibility of abusive Discriminatory Pricing in the software market and suggested a test for assessing such abuse. Accordingly, this paper has concluded that software Discriminatory Pricing is efficient.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Judicial Review in EU Competition Law

Posted by D. Daniel Sokol

Heike Schweitzer, University of Mannheim describes Judicial Review in EU Competition Law.

ABSTRACT: A principled and well-functioning regime of judicial review is a fundamental part of the European Union’s commitment to the rule of law, and of particular relevance in the field of EU competition law: The EU Commission has become one of the most powerful competition authorities worldwide, combining investigative, prosecutorial and decision-making powers. The risk of a prosecutorial bias is an obvious corollary of such an institutional design. Apart from procedural guarantees during the administrative proceedings, it must be countered by a strong and efficient regime of judicial review.

This chapter reviews the existing framework of judicial review in EU competition law cases in light of this challenge. It discusses its functions, its legal basis, and the actual practice of judicial review both with a view to regime of legality control of the Commission’s infringement and merger decisions and with a view to the courts’ unlimited jurisdiction regarding fines. In light of recent jurisprudence by the ECJ and the ECtHR, the paper explores whether the standards for effective judicial review established by Art. 6(1) ECHR and Art. 47 of the Charter of Fundamental rights are met. The paper argues that, overall, the ECJ has managed to establish a coherent and stringent regime of judicial review across all areas of substantive competition law that takes full account of the need to protect individual rights. This evolution has not been hindered by the courts’ “margin of appreciation” rhetoric. Yet, this language has become highly imprecise and needs to be reconceptualised: In fact, the Commission does not possess any margin of discretion that is beyond judicial review with regard to the interpretation and application of substantive competition law. In defining markets, measuring market shares or establishing cost standards in the context of price-based abuses, it does have a right to make the initial methodological choices. These choices are, however, subject to full judicial review regarding their adequacy and appropriateness. If this is true, the “more economic approach” has not, and must not lead to a weakening of judicial review. Among the most important challenges still to be met by the European courts is the need to ensure sufficiently intense judicial control also with a view to commitment decisions and soft-law rule-making powers that the Commission de facto assumes.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Are Anticompetitive Innovation Mergers Privately Profitable? An Exploratory Analysis

Posted by D. Daniel Sokol

Michael Cragg, The Brattle Group, Daniel Gaynor, The Brattle Group and John David Simpson, The Brattle Group ask Are Anticompetitive Innovation Mergers Privately Profitable? An Exploratory Analysis.

ABSTRACT: A significant number of proposed mergers involve the combination of two of only a small set of firms capable of the type of drastic innovation that will create new products. A potential anti-competitive concern in such mergers is that the merged firm might terminate the innovative effort at one of the merging partners, thereby reducing competition to innovate. While preliminary, the results of this paper suggest that such an anticompetitive effect is unlikely in three to two mergers or higher.

Specifically, this paper focuses on a comparison of two cases across several different competitive environments. In the first case, three firms each pursue an innovative opportunity; in the second case, two of the three firms merge, and the merged firm pursues only one innovative opportunity. In the examples that we consider, a merger in which the merged firm terminates one of its two innovation efforts is only profitable if the merged firm obtains substantial efficiencies in the innovation process. In many cases, the size of the efficiencies required to make the merger profitable means that the merger is likely to increase both the level of innovation and consumer welfare.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

AALS Section on Antitrust and Economic Regulation will hold a program on Google and Antitrust during the AALS 2013 Annual Meeting in New Orleans

Posted by D. Daniel Sokol

The AALS Section on Antitrust and Economic Regulation will hold a program on Google and Antitrust during the AALS 2013 Annual Meeting in New Orleans. It will explore the FTC’s potential antitrust case against Google and the Google Book Search settlement. The program will feature a roundtable panel involving leading scholars who have addressed these issues: Marina Lao (Seton Hall), Geoff Manne (Lewis & Clark), Frank Pasquale (Seton Hall), Mark Patterson (Fordham), and Pam Samuelson (Berkeley).

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Merger to Monopsony: AT&T, T-Mobile, and the Clayton Act

Posted by D. Daniel Sokol

Jim Chen (Louisville) has published Merger to Monopsony: AT&T, T-Mobile, and the Clayton Act.

ABSTRACT: In a pivotal antitrust decision, Cellular South, Inc. v. AT&T Inc., 821 F. Supp. 2d 308 (D.D.C. 2011), the United States District Court for the District of Columbia allowed Sprint and Cellular South to pursue their suits to enjoin AT&T's proposed acquisition of T-Mobile. These suits posed a significant barrier to the merger of AT&T and T-Mobile. The ability of Sprint and Cellular South to pursue their claims represents a modest but important victory against the domination of the American wireless industry by an emerging AT&T/Verizon duopoly.

October 3, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 2, 2012

Economic Efficiency: The Sole Concern of Modern Antitrust Policy? Non-efficiency Considerations under Article 101 TFEU

Posted by D. Daniel Sokol

Ben Van Rompuy (T.M.C. Asser Institute) has written the book Economic Efficiency: The Sole Concern of Modern Antitrust Policy? Non-efficiency Considerations under Article 101 TFEU.

BOOK ABSTRACT:

Over the past decade, we have witnessed an apparent convergence of views among competition agency officials in the European Union and the United States on the appropriate goals of competition law enforcement. Antitrust policy, it is now suggested, should focus on enhancing economic efficiency, which we are to believe will promote consumer welfare. Recent EU Commission Guidelines on the application of Article 101 TFEU appear to banish considerations that cannot be construed as having an economic efficiency value – such as the environment, cultural policy, employment, public health, and consumer protection – from the application of Article 101 TFEU.

Arguing that the professed adoption of an exclusive efficiency approach to Article 101 TFEU does not preclude, but rather obfuscates the role of non-efficiency considerations, the author of this timely contribution accomplishes the following objectives:

  • traces the genesis of the shift to an efficiency orientation in EU and US antitrust policy and dispels several ingrained misconceptions that underpin it;
  • demonstrates the close interrelationship between evolving images of the purpose of antitrust, the development of related enforcement norms, and enforcement output;
  • provides in-depth analyses of a number of analytically rich cases in the audiovisual sector (and particularly those related to sports rights); and
  • explores what the role of non-efficiency considerations in the application of Article 101 TFEU could and should be under the modernized enforcement regime.
This book has no predecessors or peers in its detailed scrutiny of the main justifications for precluding non-efficiency ends from antitrust law and policy. With its valuable lessons about the practical importance of the choice of and emphasis upon goals, this incomparable book has a great deal to offer all practitioners, policymakers, and academics concerned with the future of competition law in Europe and beyond.

Foreword by William E Kovacic. General Introduction. Part I The Objectives of US and EU Antitrust Policy: A Historical and Comparative Perspective. Chapter 1 Antitrust’s Objectives: Theoretical Perspectives. Chapter 2 The Objectives of US Antitrust Policy. Chapter 3 The Objectives of EU Antitrust Policy. Part II The Role of Non-efficiency Considerations in the Application of Article 101 TFEU: Case Study of the Audiovisual Sector. Chapter 4 The Justifiability of Incorporating Non-efficiency Considerations in Article 101 TFEU. Chapter 5 More Than a Game? The Specific Characteristics of Sport and Its Societal Role. Chapter 6 Access to Content by Final Consumers. Conclusions to Part II. Final Conclusions. Bibliography. Table of Cases. Index.

October 2, 2012 | Permalink | Comments (0) | TrackBack (0)

Antitrust Enforcement Regimes: Fundamental Differences

Posted by D. Daniel Sokol

Keith Hylton (BU) discusses Antitrust Enforcement Regimes: Fundamental Differences.

ABSTRACT: Since China has modeled its antitrust regime on that of the EU, there are essentially two antitrust regime types: the U.S. and the EU. This chapter is a brief comparative study of the two regimes. I focus on three categories in which fundamental differences are observed: enforcement, legal standards, and procedure. Within each of the three categories, I narrow the focus to a specific illustrative feature. With respect to enforcement, the EU imposes gain-based penalties while the U.S. imposes harm-based penalties. In predation law, the U.S. has a marginal cost standard and the EU has an average cost standard. With respect to procedure, the U.S. is a common law system, while the EU’s procedure is closer to the civil law system in its allocation of power between the courts and the enforcement agency. These differences have profound implications for the welfare consequences of global antitrust enforcement.

October 2, 2012 | Permalink | Comments (0) | TrackBack (0)

Joseph Wayland, "Recent Activities of the Department of Justice Antitrust Division, including the ATT – T-Mobile Merger Challenge and the Division’s Renewed Focus on Litigation" Wednesday, October 10, 2012

Posted by D. Daniel Sokol
 

 

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Recent Activities of the Department of Justice Antitrust Division, including the ATT – T-Mobile Merger Challenge and the Division’s Renewed Focus on Litigation.

Speaker:

Joseph Wayland, Acting Assistant Attorney General for the Antitrust Division of the Department of Justice  

Joseph Wayland, Acting Assistant Attorney General for the Antitrust Division of the Department of Justice, will speak on recent Division activities, including merger challenges and litigation. Mr. Wayland came to the Justice Department in September 2010 as the Division’s First Deputy Assistant Attorney General for Civil Enforcement. In addition to managing key merger reviews, he was responsible for all of the Division’s civil litigation and non-merger investigations. Mr. Wayland also served as the Division’s chief trial counsel.

Last year, Wayland helped the Division secure a victory in its challenge to AT&T’s proposed $39 billion acquisition of T-Mobile USA after four months of litigation. Mr. Wayland also led the Division’s first successful trial challenge in almost ten years, blocking H&R Block from acquiring TaxAct after a two-week trial.

Before joining the Justice Department, Mr. Wayland was a partner at Simpson, Thacher & Bartlett LLP, where his practice focused on complex business litigation, including antitrust and securities matters. He has served as lead trial counsel in numerous federal and state trials involving antitrust, fraud, contract, and regulatory matters. He was elected a Fellow of the American College of Trial Lawyers in 2009.

1 hour of Standard CLE credit applied for. The event code is 172237.

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Details:

 

Date:   Wednesday, October 10, 2012

Time:  Noon to 1:30 p.m.

Location:   Dorsey & Whitney, LLP
50 South Sixth Street, Suite 1500, Minneapolis, MN 55402 

The CLE will take place in the Minnesota Room. The receptionist on the 15th floor will direct you to the room.

Lunch will begin at Noon, followed by the CLE program from
12:15 p.m. - 1:15 p.m.

Cost:
Antitrust Law Section Member:  $25.00

MSBA Member but not an Antitrust Law Section Member:  $30.00

Join the Antitrust Law Section and attend this meeting for FREE (You must be a current MSBA member but not an Antitrust Section member. Pay the 12-month section dues and your section membership will expire on June 30, 2013.): $27.00

Non-MSBA Members:  $35.00

Law Students:  Free

 

Teleconferencing is available. Teleconferencing instructions will be sent by e-mail on Tuesday, October 9. Registrations must be received no later than October 5 in order to receive the instructions.

 

Cancellation Policy:
Refunds will be processed for cancellation requests received in writing on or before noon on the registration deadline. Requests should be directed to the event contact person listed at the bottom of this notice. Cancellation requests received after this time are not eligible for refunds. You may send a colleague in your place if you are unable to join us and the registration deadline has passed.

 

 

 

 

 

Date:

Wednesday, October 10, 2012

Deadline to Register:

Friday, October 5, 2012

 

Register (Choose One):


 

Special Dietary Requests:

Special meal requests need to be received no later than Friday, October 5.

 


 

Go to the Antitrust Section Website

October 2, 2012 | Permalink | Comments (0) | TrackBack (0)

Promoting Compliance with Competition Law

Posted by D. Daniel Sokol

The OECD has released Promoting Compliance with Competition Law.

October 2, 2012 | Permalink | Comments (0) | TrackBack (0)