Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, November 24, 2012

State and Federal Antitrust Enforcement: Complementary or Just Confusing?

Posted by D. Daniel Sokol

Elinor Hoffmann (New York Office of the Attorney General) asks State and Federal Antitrust Enforcement: Complementary or Just Confusing?

ABSTRACT: Our federalist system and our belief in the social, political, and economic benefits of competition have spawned a multiplicity of antitrust enforcers. On the federal side, the Federal Trade Commission ("FTC") and the Department of Justice's Antitrust Division ("DOJ") have overlapping jurisdiction with regard to civil antitrust enforcement, and the DOJ has sole jurisdiction to prosecute criminal violations of federal antitrust law. In almost every state, the state Attorney General plays a leading role in antitrust enforcement and, in many states, the Attorney General has both civil and criminal authority. On the local level, District Attorneys may prosecute criminal violations of state antitrust law. Beyond government enforcement, any "person"-individual, firm, or public entity-may sue to enjoin or recover treble damages caused by anticompetitive behavior, and private attorneys often represent classes of consumers who have suffered damage and who likely would not sue as individuals. These "private attorneys general" contribute to the legislative goal of maximizing enforcement of the antitrust laws.

From one point of view, our system looks inefficient and messy. Foreign enforcement officials sometimes quizzically wrinkle their brows, asking "how does this work?" (read, "how is this workable?"). But, history has taught us that this multi-faceted approach works quite well in the context of our competition driven system. Like most good outcomes, however, there are bumps in the road to success. This article focuses on just one type of collaboration-that between state Attorneys General ("state AGs") and the federal enforcement agencies. While the state Attorneys General and the federal enforcement agencies have cooperated across many sectors, and in many contexts, this article will illustrate the state/federal interface by focusing on two specific contexts: (1) collaborative civil investigations, particularly mergers; and (2) state civil investigations that are separate from, but parallel to, federal criminal investigations.

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

Friday, November 23, 2012

16th International Conference on Competition from 20-22 March 2013 in Berlin - Save the Date!

Posted by D. Daniel Sokol

16th International Conference on Competition from 20-22 March 2013 in Berlin - Save the Date!

The International Conference on
Competition, hosted by the Bundeskartellamt, is one of
the most renowned international events dealing with competition law issues. At
this conference, the heads of competition authorities, antitrust lawyers,
academics, politicians, prominent representatives of international companies and
other high-ranking participants discuss current, internationally relevant issues
of competition policy and competition law.
The Bundeskartellamt is proud to
announce that it will host its
16th International
Conference on Competition
in
Berlin
on 20 - 22 March
2013.
Keynote
speeches
will be given by Dr Philipp Rösler, German Federal
Minister of Economics and Technology,
Joaquín
Almunia
, Commissioner for Competition and Vice-President of the European
Commission,
and Karl-Ludwig Kley, Chairman of the
Executive Board of Merck KGaA
.
The keynote speeches will be
followed by
four panel discussions.
In addition to the keynote
speakers,
conference participants will include Prof Dr Carl
Baudenbacher
(EFTA Court), Prof Dr Joachim Bornkamm
(Federal
Court of Justice),
Dr Fabien Curto Millet (Google, London), Albert Foer
(American Antitrust Institute, USA), Chris Fonteijn (Netherlands Competition
Authority
),
Agnete
Gersing
(Competition Authority Denmark), Daniel Goffart (Focus Magazin Verlag),
Scott
Hammond

(Department of Justice, USA),
Prof Dr Thomas Hoeren
(Law
Faculty at Münster University),
Prof Dr Michael Hüther
(Institut der deutschen Wirtschaft), Ulrich Kelber (Member of the German
Parliament),
Dr Thomas Kremer (Legal Affairs and Compliance,
Deutsche
Telekom AG),
Prof Dr Kai-Uwe Kühn (DG Competition of the European Commission),
Bruno
Lasserre

(
Autorité de
la concurrence, France
), Jon Leibowitz (Federal Trade Commission, USA),
Prof Dr
Koen Lenaerts
(Court of Justice of the European Union), Deborah P Majoras
(Procter
& Gamble),
Clive Maxwell (Office of Fair Trading, UK),
Dr Frank
Montag
(Competition Lawyers’ Association), Eduardo Pérez Motta
(Federal
Competition Commission, Mexico, Chair
of the ICN Steering Group), and
Thomas Vinje (Clifford Chance,
Brussels).
The first panel
discussion
will deal with the political content of
antitrust.
The second panel
discussion
will take a close look at the challenges
posed by different systems with different legal rights in a global
environment.
The third panel
discussion
will discuss the right balance when applying
a more economic approach in merger assessment.
The fourth panel
discussion
will deal with competition and the digital
economy.
---------------------------------
The event will start with a
welcome reception on the evening of Wednesday, 20 March. The conference will
begin in the morning of Thursday, 21 March and will end in the early afternoon
of Friday, 22 March.
The working languages of the
conference will be German and English (simultaneous translation services will be
provided).
For
more information about the conference, please visit our website
www.ikk2013.de which
will go online soon.

November 23, 2012 | Permalink | Comments (1) | TrackBack (0)

Excess Liquidity against Predation

Posted by D. Daniel Sokol

Dai Zusai (Department of Economics, Temple University) describes Excess Liquidity against Predation.

ABSTRACT: We consider precautionary liquidity holding as counter-strategy for the entrant to protect himself from predation. Threat of predation, even if avoided in equilibrium, affects the financial contract to raise precautionary liquidity and the equilibrium outcome in the product market competition. When the incumbent's strategy is unverifiable, the entrant with small start-up capital cannot raise large enough precautionary liquidity; consequently, he shrinks his business so as to avoid predation. Predation evolves in the model only as perturbation from equilibrium strategy. We provide the revelation principle for a sequential equilibrium to select a sensible outcome by imposing robustness to such perturbation.

November 23, 2012 | Permalink | Comments (0) | TrackBack (0)

State-Federal Relations

Posted by D. Daniel Sokol

Kathleen Foote (California DOJ, Attorney General’s Office) discusses State-Federal Relations.

ABSTRACT: Antitrust enforcers in the offices of state attorneys general frequently find ourselves between a rock and a hard place when it comes to public perceptions of our work. State antitrust enforcement tends to be subject to criticism as misguided-or worse-whenever it diverges publicly from enforcement by the federal agencies. Yet when it doesn't diverge it is often labeled "redundant" in the pejorative sense of that term. The reality is a good bit different from the perception in either case. Much of the perception is a legacy of the historic 2001 split between the U.S. Department of Justice Antitrust Division ("DOJ") and state government prosecutors over appropriate remedies in the Microsoft case, which arose after an exemplary partnership throughout the liability phase of the case. The rupture led to two contemporaneous and highly visible tracks through the same courtroom in early 2002: a Tunney Act review of whether the DOJ settlement (joined by nine states) was in the public interest, and a six-week merits trial in which nine other states sought to prove that far stiffer remedies should be required. Judge Kollar-Kotelly's ultimate rulings rejected most of the state-requested remedies but added some terms to the DOJ settlement, thus largely conforming the state and federal results. The subsequent years of joint enforcement of the affirmative mandates of the Microsoft decree under active court supervision marked a return to smooth sailing between the state and federal agencies and close cooperation in executing their shared enforcement responsibilities.

The wave of criticism following the initial split, however, by then had taken on a life of its own. It was promptly formalized in the initial agenda of the Antitrust Modernization Commission, which reviewed and debated at length the history of dual state-federal enforcement and considered, but ultimately rejected, various proposals for partial preemption of state authority. Its conclusion, reached in 2007, was that no changes to the institutional structure were warranted. The AMC did note, as others have, that further efforts by state and federal enforcers to harmonize their work would be salutary.

While Microsoft is an undeniable and extreme exception to their usual consistency, it is not the only time that state and federal agencies have differed in recent years. Typically, the differences can be viewed as healthy ones that foster the overall goal of preserving competition, and rarely manifest themselves as public disagreements over major policy issues. No generalizations are possible, however, without distinguishing between merger reviews and non-merger situations.

November 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Does Input Purchase Cooperation Foster Downstream Collusion?

Posted by D. Daniel Sokol

Aldo Gonzalez (University of Chile) and Loreto Ayala (University of Chile) ask Does Input Purchase Cooperation Foster Downstream Collusion?

ABSTRACT: We set up a model where two retailers compete downstream and buy their inputs from a single producer. Retailers may collude downstream, when fixing the retail price and cooperate upstream by jointly negotiating the wholesale price with the producer. We find that purchase cooperation renders downstream collusion more likely. First it expands the range of differentiation where downstream collusion is a profitable strategy. Second it makes more stable the agreement downstream since the punishment becomes harsher due to the increase in the wholesale price coming from the breakdown of common upstream negotiation. The results are robust to a scenario of upstream price rigidity where the wholesale price cannot be immediately renegotiated after a deviation downstream has occurred.

November 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 22, 2012

Obama and Congress Must Protect Family Farmers

Posted by D. Daniel Sokol

David Balto's Thanksgiving message is that Obama and Congress Must Protect Family Farmers.

November 22, 2012 | Permalink | Comments (0) | TrackBack (0)

The State of State-Federal Cooperation at the Antitrust Division: A View from the Front Row

Posted by D. Daniel Sokol

Mark Tobey (DOJ) discusses The State of State-Federal Cooperation at the Antitrust Division: A View from the Front Row.

ABSTRACT: Under the leadership of former Assistant Attorney General ("AAG") Christine Varney and Acting Assistant Attorneys General Sharis Pozen and Joseph Wayland, the U.S. Department of Justice Antitrust Division has renewed and expanded federal-state partnerships that are essential to many of the division's accomplishments. As AAG Varney stated in an early speech to the state Attorney General ("AG") antitrust community, the division is prepared to work "hand-in-glove with our partners in State Attorney General Offices." For my part, having worked more than 20 years as a state antitrust enforcer at the Texas Attorney General's Office before coming to Washington, I know first-hand that effective federal-state coordination, like we have, does not happen accidently. In truth, it cannot occur without open communication, constant nurturing, and a large measure of mutual good will.

Of course, the focus on the importance of cooperation is not new for the Antitrust Division. Earlier this year, when the former AAG for Antitrust James Rill received the Department of Justice's ("DOJ's") John Sherman Award for lifetime accomplishment in antitrust, much of the praise was for Rill's contribution to the development of international cooperation mechanisms in antitrust law and publication of the first joint Department of Justice/Federal Trade Commission ("DOJ/FTC") horizontal merger guidelines. In his acceptance speech, Rill took pains to emphasize another important accomplishment: His work in the late 1980s and early 1990s developing protocols and mechanisms to promote federal-state cooperation in mergers, such as the National Association of Attorneys General ("NAAG") Voluntary Pre-Merger Disclosure Compact ("NAAG Merger Compact") and the Executive Working Group on Antitrust ("EWG-A").

Rill's emphasis was not misplaced and has been carried forward most recently by former AAG Varney and her successors Acting AAGs Sharis Pozen and Joseph Wayland. Today, effective federal-state cooperation is a given fact-of-life in the antitrust universe, integrally, and permanently woven into the fabric of antitrust enforcement.

The record of cooperation in antitrust between the states and the DOJ over the past three years illustrates the prescience of AAG Varney's words. It also demonstrates the importance and continuing vitality of the federal-state partnership. Many of the Antitrust Division's hardest won accomplishments during this time have been forged with the help of the states.

Having served for the past three years as Special Counsel for State Relations and Agriculture at the Antitrust Division, I am honored to offer my perspectives on the state of state-federal relations from my current position in the division. My view is that the record of the past three years is testament to, and the result of, a strong commitment from both the state AGs and the division to make the partnership work as well as it can for the benefit of competition and the American consumer.

November 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Being Thankful on Thanksgiving

Posted by D. Daniel Sokol

As people in the United States celebrate with friends and family, there are a number of things that I am thankful for both personally and with regard to antitrust.

Personal

  1. Family
  2. Health
  3. Friends
  4. Rule of Law
  5. Democratic and peaceful elections
  6. Religious freedom
  7. Hello Kitty (my girls really love Hello Kitty) 

Antitrust

  1. DOJ Antitrust's international cartel efforts. I may have some problems on the margins with the leniency program (I think that certain tweaks can make it more effective) but leniency has fundamentally transformed detection of cartels. The world is better off because of Scott Hammond and his team in the Antitrust Criminal Enforcement group and similar cartel units around the world. I would add that the introduction of leniency has been the most important antitrust policy globally of the past 25 years.
  2. Merger guidelines. Do people remember a world without merger guidelines? The most lasting antitrust improvement of the past 50 years globally has been the introduction of merger guidelines to provide greater certainty and better decision-making about merger control.
  3. Dedicated antitrust/competition enforcers.  Wherever I go around the world, I am always impressed with the great dedication that enforcers have to promote competition.  They toil through long hours and intellectually difficult issues to try to make the world better and do so at a fraction of the pay of their private sector counterparts.  When we think of government heroes, we tend to think of people such as police or firefighters.  Antitrust enforcers also play an important role in protecting us and deserve our great respect and gratitude.

November 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Monopolistic Location Choice in Two-Sided Industries

Posted by D. Daniel Sokol

Enrico Bohme, Christopher Muller (both Johann Wolfgang Goethe-University) discuss Monopolistic Location Choice in Two-Sided Industries.

ABSTRACT: We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the onesided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate.

November 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 21, 2012

Introducing the Turkish Competition Bulletin

Posted by D. Daniel Sokol

The newest Turkish delight is the wonderful new blog Turkish Competition Bulletin. The bloggers wrote me:

We, a number of competition specialists working for Turkish Competition Authority, decided to initiate this blog in order to inform the community about latest developments in Turkish competition law and to share our personal comments on them. We generally do not only try to appraise the new and important authority decisions but also intend to give some background information about cases and equivalent/relevant ones in US and EU. The main aspect of the blog is that it's the only English blog on Turkish competition law.

I encourage everyone to check it out.

November 21, 2012 | Permalink | Comments (1) | TrackBack (0)

Non-Mutual Offensive Collateral Estoppel in Private Antitrust Litigation: Lessons from the Microsoft Cases

Posted by D. Daniel Sokol

Michael E. Jacobs (DePaul Law) has posted Non-Mutual Offensive Collateral Estoppel in Private Antitrust Litigation: Lessons from the Microsoft Cases.

ABSTRACT: For nearly 100 years, antitrust policy in the United States has reflected the important role of private enforcement by allowing private litigants to benefit from successful government enforcement actions. With the enactment of section 5(a) of the Clayton Act in 1914, prior judgments obtained by the government were given prima facie effect in follow-on litigation by private parties. Following the U.S. Supreme Court’s 1976 decision in Parklane Hosiery Co. v. Shore, non-mutual offensive collateral estoppel has since supplanted section 5(a) as the tool of choice in many private antitrust lawsuits. That doctrine, however, has been described as “detailed, difficult, and potentially dangerous,” and the cautious approach that some courts have adopted in the antitrust context is in tension with the policy preference expressed in the Clayton Act that favors giving private plaintiffs the full benefits of prior government judgments.

The Microsoft antitrust litigation presents one of the most interesting and challenging examples of that tension, and thus provides important lessons for future cases. This article seeks to provide a framework, based on lessons learned in Microsoft, for the application of non-mutual offensive collateral estoppel in antitrust cases that gives effect to the policy considerations underlying section 5(a) of the Clayton Act, while remaining mindful of the concerns identified by the U.S. Supreme Court in Parklane Hosiery. It argues that a broader application of the doctrine is warranted in the antitrust context and that, in order to give private plaintiffs the full benefit of prior government enforcement actions, all issues decided in the earlier proceeding that were “necessary” to each analytical step undertaken by the court in deciding, under the applicable substantive standard, that the antitrust laws had been violated should be given preclusive effect.

November 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Rethinking RAND: SDO-Based Approaches to Patent Licensing Commitments

Posted by D. Daniel Sokol

Jorge L. Contreras, American University - Washington College of Law is Rethinking RAND: SDO-Based Approaches to Patent Licensing Commitments.

ABSTRACT: So-called “reasonable and nondiscriminatory” (RAND) licensing commitments have been utilized by standards-development organizations (SDOs) for years in an attempt to alleviate the risk of patent hold-up in standard-setting. These commitments, however, have proven to be vague and offer few assurances to product vendors or patent holders. A recent surge of international litigation concerning RAND commitments has brought this issue to the attention of regulators, industry and the public, and many agree that a better approach is needed. In this paper, I identify seven “first principles” that underlie the licensing and enforcement of standards-essential patents (SEP)s. These can be summarized as follows: (1) certainty is preferable to uncertainty concerning the cost of implementing a technical standard, (2) there is a meaningful upper limit on reasonable royalty rates, (3) information regarding RAND terms should be available before adoption of a standard, (4) individual RAND commitments must be constrained by the aggregate royalty burden on a standard, (5) non-SEPs need not be bundled with SEPs, (6) SEPs should not be used to block implementation of a standard unless the recovery of monetary compensation is impossible, and (7) RAND commitments should travel with the relevant patent.

Based on these first principles, I propose an SDO-driven approach to addressing the uncertainty of RAND commitments that is based on certain beneficial attributes of patent pools. I call this a “pseudo-pool” approach, as it draws on pooling strategies, but is adapted for use in the more flexible and prolific world of SDO standard-setting. The pseudo-pool approach includes the following elements: (a) SDO participants must declare SEPs in good faith, (b) SDO working groups that include patent holders and potential vendors establish aggregate royalty rates for each standard, (c) patent holders continue to grant licenses on RAND terms, subject to the aggregate royalty agreement, (d) each patent holder is entitled to a share of the aggregate royalty based on a proportionality measure, (e) there is a defined penalty for over-declaration of SEPs, (f) each patent holder is permitted to license its SEPs independently of the pseudo-pooling arrangement, (g) parties must waive their right to seek injunctive relief for infringement of SEPs unless monetary damages have proven impossible to collect, and (h) commitments made with respect to SEPs must bind all future transferees of such SEPs. This proposal requires the adoption of joint ex ante negotiation of royalty rates near the outset of a standardization project, conduct that has been viewed with favor by several regulatory agencies and acknowledged as offering various procompetitive benefits.

November 21, 2012 | Permalink | Comments (0) | TrackBack (0)

The EU’s Accession to the ECHR and Due Process Rights in EU Competition Law Matters: Nothing New Under the Sun?

Posted by D. Daniel Sokol

Albert Sanchez Graells, University of Hull - School of Law asks The EU’s Accession to the ECHR and Due Process Rights in EU Competition Law Matters: Nothing New Under the Sun?

ABSTRACT: In light of the ongoing discussion on the potential need for reform of the enforcement system of EU competition law to make it compliant with Article 6(1) of the European Convention on Human Rights (ECHR), the aim of this paper is to contribute to the debate in a threefold manner by: i) sketching the peculiarities of the enforcement of competition law (in general, but with a focus on EU competition law), which basically derive from the complex and data intensive economic assessments required in most cases; ii) critically appraising the requirements of Article 6(1) ECHR in the field of EU competition law in view of those peculiarities; and, finally, iii) assessing the impact of those requirements in terms of the potentially necessary amendments to the EU competition law enforcement system upon the EU’s accession to the ECHR.

The basic contention of the paper is that, given the specific architecture of the EU competition law enforcement system under Regulation 1/2003 (and the domestic competition laws of Member States) — which have crystallized in a network of highly specialised and independent administrative agencies that, generally, offer procedural guarantees equivalent (or superior) to those of most tribunals in other areas of the law — and as long as an effective (soft or marginal) judicial review mechanism is available to the undertakings affected by sanctions due to EU competition law infringements, no significant changes are required in order to make the system comply with Articles 6(1) ECHR and 47 EUCFR. This position is further supported by the express normative assumption that undertakings (or companies) deserve a relatively more limited protection than individuals under the ECHR and, more specifically, under Article 6(1) ECHR — at least as regards non-core due process guarantees, such as the standard of review applicable (and as opposed to ‘core’ due process guarantees such as the presumption of innocence, the principle of equality of arms, the right to have full access to the evidence, or the right not to suffer undue delays).

November 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Market Dominance and Quality of Search Results in the Search Engine Market

Posted by D. Daniel Sokol

Ioannis Lianos, University College London - Faculty of Laws and Evgenia Motchenkova, VU University Amsterdam - Department of Economics; TILEC describe Market Dominance and Quality of Search Results in the Search Engine Market.

ABSTRACT: We analyze a search engine market from a law and economics perspective and incorporate the choice of quality improving innovations by a search engine platform in a two-sided model of internet search engine. In the proposed framework we first discuss the legal issues the search engine market raises for antitrust policy through analysis of several types of abusive behavior by the dominant search engine. We also explore the possible consequences of monopolization of the search engine market for advertisers and users in the form of excessive pricing and deterioration of the quality of the search results. Second, in the technical analysis part we incorporate these considerations in a two-sided market model and analyze the rate of innovation, pricing, and quality choices by the dominant search engine. Our …findings show that a dominant monopoly platform results in higher prices and under-investment in quality improving innovations by a search engine relative to the social optimum. More generally, we show that monopoly is sub-optimal both in terms of harm to advertisers in the form of excessive prices, harm to users in the form of reduction in quality of search results, as well as harm to the society in the form of lower innovation rates in the industry.

November 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 20, 2012

IPRs, Competition and Standard Setting: in Search of a Model

Posted by D. Daniel Sokol

Valero Torti (University of Southampton) has written on IPRs, Competition and Standard Setting: in Search of a Model.

ABSTRACT: Standard setting is a field where the interaction IPRs-competition clearly comes to light. Misleading behaviours by IPRs owners taking part in standards institutes may compromise the crucial goal of standardization activities: making consumers’ lives better. These conducts may ultimately be caught by competition rules. In order to limit the risks of unfair practices, it seems crucial to strike an optimal balance between the innovators’ interests and the standards bodies’ objectives.

November 20, 2012 | Permalink | Comments (0) | TrackBack (0)

Language, Internet and Platform Competition: the case of Search Engine

Posted by D. Daniel Sokol

Doh-Shin Jeon, Toulouse School of Economics, Bruno Jullien, University of Toulouse and Mikhail M. Klimenko, Georgia Institute of Technology analyze Language, Internet and Platform Competition: the case of Search Engine.

ABSTRACT: The World Wide Web was originally a totally English-based medium due to its US origin. Although the presence of other languages has steadily risen, content in English is still dominant, which raises a natural question of how bilingualism of consumers of a home country affects production of web content in the home language and domestic welfare? In this paper, we address this question by studying how bilingualism affects competition between a foreign search engine and a domestic one within a small country and thereby production of home language content. We find that bilingualism unambiguously softens platform competition, which in turn can induce a reduction in home language content and in home country's welfare. In particular, it is possible that content in the foreign language crowds out so much content in the home language that consumers enjoy less content when they are bilingual than when they are monolingual.

November 20, 2012 | Permalink | Comments (0) | TrackBack (0)

Trade-offs between environmental regulation and market competition: airlines, emission trading systems and entry deterrence

Posted by D. Daniel Sokol

Cristina Barbot (CEFUP, Faculty of Economics of Porto), Ofelia Betancor (Universidad de Las Palmas), M. Pilar Socorro (Universidad de Las Palmas) and M. Fernanda Viecens (Universidad de San Andres) discuss Trade-offs between environmental regulation and market competition: airlines, emission trading systems and entry deterrence.

ABSTRACT: Emission trading systems (ETS) are being applied worldwide and in different economic sectors as an environmental regulatory tool that induces reductions of CO2 emissions. In Europe such a system is in place since 2005 for energy intensive installations and, since 1st January 2012, for airlines with flights arriving and departing from Community airports. The efficiency of the system should consider not only how it allows reaching an environmental goal, but also it should take into account its implications for market competition. In this work we develop a theoretical model that analyses the European ETS’s main features as devised for airlines, focusing on its effects on potential competition and entry deterrence. Contrary to other economic activities under ETS, potential competition is usual in most airline markets. Our results indicate that the share of capped allowances allocated initially for free to air operators may! be a key element in deterring or allowing entry into the market. This result may be in collision with the general European principle of promoting competition and may represent a step backwards in the construction of a single European air transport market.

November 20, 2012 | Permalink | Comments (0) | TrackBack (0)

Directed Search and the Bertrand Paradox

Posted by D. Daniel Sokol

Athanasios Geromichalos (Department of Economics, University of California Davis) addresses Directed Search and the Bertrand Paradox.

ABSTRACT: I study a directed search model of oligopolistic competition, extended to incorporate general capacity constraints, congestion effects, and pricing based on ex-post realized demand. I show that as long as any one of these ingredients is present, the Bertrand paradox will fail to hold. Hence, I argue that, despite the emphasis that has been placed by the literature on sellers’ capacity constraints as a resolution to the paradox, the existence of such constraints is only a subcase of a general class of environments where the paradox fails. More precisely, Bertrand’s paradox will not arise whenever the buyers’ expected utility from visiting a specific seller is decreasing in that seller’s realized demand.

November 20, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, November 19, 2012

Federal Trade Commission, Department of Justice to Hold Workshop on Patent Assertion Entity Activities

Posted by D. Daniel Sokol

Federal Trade Commission, Department of Justice to Hold Workshop on Patent Assertion Entity Activities.

The workshop will take place at the FTC’s satellite conference center at 601
New Jersey Ave., N.W., Washington, D.C. from 9:00 a.m. to 5:30 p.m. EST on Dec.
10, 2012. Additional participants will be added to the agenda as they are
confirmed.  Updates to the agenda will be posted on the FTC and Department of
Justice
websites. The workshop will include the following panels,
presentations and confirmed participants:

9:00 a.m. – Opening Remarks:
FTC Chairman Jon Leibowitz

SESSION A: FRAMEWORK

9:15 a.m. – Lecture 1: Introduction to PAE
Activity

            Colleen Chien, Assistant
Professor of Law, Santa Clara University School of  Law

9:35 a.m. – Lecture 2: Introduction to PAE
Licensing

            Carl Shapiro, Transamerica
Professor of Business Strategy, University of  California at Berkeley, Walter A.
Hass School of Business

10:05 a.m. – Q & A with Professors Chien and Shapiro

BREAK (10:20 - 10:30 a.m.)

10:30 a.m. – Panel
1: Realities of Licensing and Litigation Practices

  • Cynthia Bright, Associate General Counsel, IP Litigation and Public Policy,
    Hewlett-Packard
  • Scott Burt, Vice President & Chief Intellectual Property Counsel, Mosaid
    Technologies Inc.
  • John Desmarais, Partner, Desmarais LLP; Founder, Round Rock Research LLC
  • Peter Detkin, Founder and Vice-Chairman, Intellectual Ventures
  • Sarah Guichard, Vice President of Patent & Standards Strategy, Research
    In Motion (RIM)
  • Paul Melin, Chief Intellectual Property Officer, Nokia
  • Neal Rubin, Vice President Litigation, Cisco Systems Inc.
  • Alan Schoenbaum, Senior Vice President, General Counsel and Secretary,
    Rackspace Hosting
  • Mallun Yen, Executive Vice President, RPX Corporation

LUNCH (12:00 - 1:15 p.m.) 

1:15 p.m. – Remarks
            Stuart
Graham, Chief Economist, U.S. Patent & Trademark Office

SESSION B: POTENTIAL EFFICIENCIES AND HARMS FROM PAE ACTIVITY: 
EFFECTS ON COMPETITION AND INNOVATION

1:45 p.m. – Academic Introduction to Potential Efficiencies from PAE
Activity

Panel 1: Potential Efficiencies from PAE Activity

  • Ron Epstein, CEO, Epicenter IP Group LLC
  • Anne Layne-Farrar, Vice President, Antitrust & Competition Economics
    Practice, Charles River Associates

Academic Introduction to Potential Harms from PAE
Activity

Panel 2: Potential Harms from PAE Activity

  • Thomas Ewing, Principal Consultant, Avancept LLC
  • Robin Feldman, Professor of Law, University of California Hastings College
    of the Law
  • Michael Meurer, Professor of Law and Abraham and Lillian Benton Scholar,
    Boston University School of Law
  • David Schwartz, Associate Professor of Law, Illinois Institute of Technology
    Chicago-Kent College of Law

Panel 3:  Industry Reaction

BREAK (3:45 - 4:00 p.m.)

SESSION C:   HOW DOES ANTITRUST APPLY TO THE POTENTIAL EFFICIENCIES
AND HARMS GENERATED BY PAE ACTIVITY

4:00 p.m. – Academic Introduction
Phillip Malone,
Clinical Professor of Law, Harvard Law School; Clinical Co-Director and Senior
Fellow, Berkman Center for Internet & Society, Harvard Law School

4:20 p.m. – Panel Discussion

  • Logan Breed, Partner, Hogan Lovells
  • Susan Creighton, Partner, Wilson, Sonsini, Goodrich & Rosati PC
  • Hanno Kaiser, Partner, Latham & Watkins LLP
  • Hill Wellford III, Partner, Bingham McCutchen LLP

5:00 p.m. – Q & A

5:20 p.m. – Closing Remarks: Acting Assistant Attorney General for
the Antitrust Division
Renata B. Hesse

November 19, 2012 | Permalink | Comments (0) | TrackBack (0)

Access pricing, infrastructure investment and intermodal competition

Posted by D. Daniel Sokol

Gines de Rus (Universidad de las Palmas) and M. Pilar Socorro (Universidad de las Palmas) explain Access pricing, infrastructure investment and intermodal competition.

ABSTRACT: In this paper we analyze the consequences of access pricing on infrastructure investment and intermodal competition. First, we analyze the optimal access prices to be charged to private operators. We find that the optimal access price to be charged for the use of a particular infrastructure depends on the existence of intermodal substitution or complementarity with other transport modes and infrastructures. Second, we analyze under which circumstances the investment in rail infrastructure is socially desirable both in a context with and without budget constraints. The positive net present value of the investment is not a sufficient condition. The necessary and sufficient condition implies a positive difference in social welfare for the cases in which the new infrastructure is and is not constructed.

November 19, 2012 | Permalink | Comments (0) | TrackBack (0)