Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, October 2, 2012

Suggested Retail Prices with Downstream Competition

Posted by D. Daniel Sokol

Simona Fabrizi, Massey University, Steffen Lippert, University of Otago - School of Business - Department of Economics, Clemens Puppe, Karlsruhe Institute of Technology, University of Karlsruhe and Stephanie Rosenkranz, University of Utrecht - Utrecht University School of Economics analyze Suggested Retail Prices with Downstream Competition.

ABSTRACT: We analyze vertical relationships between a manufacturer and competing retailers when consumers have reference-dependent preferences. Consumers adopt the manufacturer’s suggested retail price as their reference price and perceive losses when purchasing above the suggested price and gains when purchasing below it. In equilibrium, retailers undercut price suggestions and the manufacturer suggests a retail price if consumers are sufficiently bargain-loving and perceive retailers as sufficiently undifferentiated. The manufacturer engages in resale price maintenance otherwise. Consumers can be worse off with suggested retail prices than with resale price maintenance, prompting a rethinking of the current legal treatment of suggested retail prices.

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

Competition Law in the BRICS Countries

Posted by D. Daniel Sokol

Vassily Rudomino (Alrud), Jose Regazzini (TozziniFreire) and Adrian Emch (Hogan) have a new book out on Competition Law in the BRICS Countries.

BOOK ABSTRACT: Companies around the world and their advisors have realized, over the past few years, that they must be very aware of merger control and antitrust enforcement developments in Brasilia, Moscow, New Delhi, Beijing, and Pretoria. When one appreciates the extent of enforcement by the competition authorities of the powerful emerging economies of Brazil, Russia, India, China, and South Africa, it becomes clear that a fundamental change in the focus of international antitrust enforcement has occurred. Under the auspices of the International Bar Association, this timely, invaluable book examines in detail the fast-moving antitrust developments in the BRICS countries. Twenty-nine outstanding experts – practitioners, officials, and academics, each of them working in one of the five countries – present in-depth descriptions of the structure, powers, and procedures of their country’s respective enforcement agencies. Disclosure, transparency, benchmarking, portfolio of policymaking tools, and the speed, phasing, and priorities of implementation are all fully analysed. The authors provide summaries with implications of relevant cases in their jurisdictions. The issues and topics covered include the following: politics, resources, priorities; cooperation with criminal prosecutors and police; extraterritoriality; availability of administrative sanctions, criminal enforcement, and private actions; assessment of dominance; investigation: procedure, powers, burden of proof, appeal; procompetitive development of particular sectors of the economy; leniency programs; calculation of market share thresholds; triggering events/thresholds; notification thresholds and documents; employee and trade union involvement; and government participation and intervention. At a time when the BRICS antitrust agencies are increasingly asserting their roles in a multipolar antitrust world and cooperating with each other more and more, this thorough and up-to-date comparative analysis on what the BRICS countries are doing in the antitrust sector will be extremely valuable to corporate counsel worldwide. For academics and policymakers it will provide a highly revealing perspective on the current state of international competition law enforcement.

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

Monday, October 1, 2012

Ex-ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator?

Posted by D. Daniel Sokol

Germain Gaudin (Telecom ParisTech) and Claudia Saavedra Valenzuela (Orange Telecom) ask Ex-ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator?

ABSTRACT: In this paper, we study the adjustments that National Regulatory Authorities make to simple margin squeeze tests, when using them ex-ante. More precisely, by inspecting the possible differences between an entrant and the incumbent that would cause a market disadvantage for the former, we provide a formal economic framework that translates these ex-ante specific issues into practical test adjustments. We identify six possible adjustments relevant to ex-ante margin squeeze tests, on the cost, the access charge, or the price parameters. We then review the implementation of margin squeeze tests by European telecommunications National Regulatory Authorities according to these adjustments, as to build a comparable benchmark of implementation choices.

October 1, 2012 | Permalink | Comments (0) | TrackBack (0)

Impacts of mobile termination rates (MTRs) on retail prices: The implication for regulators

Posted by D. Daniel Sokol

Chatchai Kongaut and Erik Bohlin, both Chalmers University of Technology observe Impacts of mobile termination rates (MTRs) on retail prices: The implication for regulators.

ABSTRACT: Mobile termination rates (MTRs) have been an important issue for regulators and operators in the telecommunications industry. Most regulators, especially the European Commission (EC), have tried to cut MTRs using cost-based regulation in the belief of improving social welfare and encouraging an efficient market. The operators, however, have disagreed and argued that decreasing MTRs can substantially reduce consumer welfare. There is also only a limited number of empirical analyses on the impacts of MTRs. In the new set of up-to-date data from 2006-2011, many countries have continuously reduced their MTRs. This paper therefore aims to enrich the empirical analysis of the impacts of MTRs on retail prices.This paper applies the one-step generalised method of moments (GMM) approach to dynamic panel data. The results support the hypothesis that lower MTRs will reduce consumer retail prices, which is consistent with the EC fra! mework. It is therefore recommended that regulators in the calling party network pays (CPNP) regime reduce MTRs to at least the same level as the operators' cost to raise overall social welfare, especially consumer welfare. However, the approach by each country can differ depending on its situation.

October 1, 2012 | Permalink | Comments (0) | TrackBack (0)

Asymmetry of mobile termination rates and the waterbed effect

Posted by D. Daniel Sokol

Jongyong Lee (Electronics and Telecommunications Research Institute) and Duk Hee Lee (Korea Advanced Institute of Science and Technology) Asymmetry of mobile termination rates and the waterbed effect.

ABSTRACT: This paper empirically analyzes the relationship between asymmetric regulation on mobile termination rates and mobile retail prices, using panel data collected from 20 OECD member countries for 22 quarters. In addition to the asymmetry of mobile access charges, the authors also focus on the impact of a number of variables, such as churn rates, mobile penetration rates, and the market concentration index on mobile operators' retail prices. The results reveal that pricing asymmetry in access services has a positive correlation with mobile retail prices. Therefore, this study supports the assumption that the waterbed effect between the asymmetry of mobile termination rates and retail prices may occur.

October 1, 2012 | Permalink | Comments (0) | TrackBack (0)

Remembering the Antitrust Bulltin - My Pick for the Most Influential Article

Posted by D. Daniel Sokol

As I noted in an earlier post, the Antitrust Bulletin has ceased publication. In my mind, the most important work that appeared in its pages is Elzinga & Hogarty's 1973 classic “The Problem of Geographic Market Definition in Antimerger Suits”, Antitrust Bulletin, Vol. 18, No. 1 , pp. 45-81.

October 1, 2012 | Permalink | Comments (3) | TrackBack (0)

The impact of telecommunication technologies on competition in services and goods markets: Empirical evidence

Posted by D. Daniel Sokol

Vahagn Jerbashian Anna Kochanova (both CERG-EI) show The impact of telecommunication technologies on competition in services and goods markets: Empirical evidence.

ABSTRACT: In this paper we empirically show that a more intensive use and wider adoption of telecommunication technologies significantly increases the level of product market competition in services and goods markets. Our result is consistent with the view that the use of telecommunication technologies can lower the costs of entry. This finding is robust to various measures of competition and a range of specification checks.

October 1, 2012 | Permalink | Comments (0) | TrackBack (0)