Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, December 8, 2012

Joint Restraint of Trade: Does Manipulation of LIBOR Fall Within the Sherman Act's Definition of "Trade"?—A Question of First Principles

Posted by D. Daniel Sokol

Douglas Richards & Michael B. Eisenkraft (Cohen Milstein) ask Joint Restraint of Trade: Does Manipulation of LIBOR Fall Within the Sherman Act's Definition of "Trade"?—A Question of First Principles.

ABSTRACT: Defendants' motions to dismiss the antitrust claims of the Plaintiffs in the LIBOR multi-district litigation includes an argument that advocates for a limitation on the coverage of Section 1 of the Sherman Act based on the assertion that LIBOR is not a traditional good traded in commerce. Defendants argue that the Sherman Act does not cover manipulation of U.S. LIBOR as this manipulation cannot constitute a restraint of trade because "LIBOR is just an index and not is itself a marketplace transaction." Defendants' motions to dismiss the antitrust claims of the Plaintiffs in the LIBOR multi-district litigation includes an argument that advocates for a limitation on the coverage of Section 1 of the Sherman Act based on the fact that LIBOR is not a traditional good traded in commerce. Defendants argue that the Sherman Act does not cover manipulation of U.S. LIBOR as this manipulation cannot constitute a restraint of trade because "LIBOR is just an index and not is itself a marketplace transaction."...

From Plaintiffs' perspective, Defendants' arguments bear the usual indicia of an attempt to make new law-an absence of case citations supporting the core of an argument accompanied by rhetorical devices designed to indicate that the assertion they advocate is so simple and basic that common sense, as opposed to case law or other legal citations, is sufficient for them to prevail. From Defendants' perspective, their argument's lack of legal citations is a function of the novelty of Plaintiffs' claims and not the novelty of their defense- according to Defendants, no court has ever had to rule on a claim precisely like this one because no plaintiff has ever brought an antitrust claim based on manipulation of an index that lies outside the marketplace and that is not attached to an underlying commodity.

Regardless of who is right-whether this is a novel defense, a novel claim, or both-what is relatively certain is that there is something here that merits comment, discussion, and study.

December 8, 2012 | Permalink | Comments (0) | TrackBack (0)

Happy Chanukah

Posted by D. Daniel Sokol

Tonight begins the Chanukah - the festival of lights. Jews celebrate not being destoyed (a common theme in Jewish holidays). The villans in this story are the Syrian-Greeks of the Selucid Empire and the Jews triumphed over large odds to preserve their religion. New to Chanukah this year is the following song.  

December 8, 2012 | Permalink | Comments (1) | TrackBack (0)

Friday, December 7, 2012

Slovakian Competition Law: A Practitioner’s Viewpoint

Posted by D. Daniel Sokol

Zuzana Hnatova (NH Hager Niederhuber Advokati s.r.o.) offers Slovakian Competition Law: A Practitioner’s Viewpoint.

ABSTRACT: The Slovak republic does not have a long tradition in competition regulation, a condition predominately caused by the communist history of the country. The first statutory act in the post-communism era protecting competition on the market was enacted in 1991 and was the first attempt to correct the market distorted by the former regime. Just a few years later, in 1994, a new act superseded the first one. Since the former Czechoslovakia had separated and two independent states-the Czech republic and the Slovak republic-were created in 1993, this new 1994 act was effective only for the Slovak republic.

The enactment of the new act was related, in particular, to the necessity of the harmonizing Slovak competition law with the acquis communoutaire, as the Slovak republic was trying to become a member of the European Union. In addition, the independence of the Slovak Antimonopoly Office ("the AMO") needed to be strengthened. The third, and still effective, act on competition protection is Act No 136/2001 Coll., the Act on Protection of Competition, as amended ("the Act"). It became effective on May 1, 2002. Since then, it has been amended five times. These changes reflect, to a substantial degree, changes in EU law, in particular the enactment of Council Regulation (EC) No 1/2003 of December 16, 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty and group exemptions from the prohibition of cartel agreements and merger regulation. In addition, the Act was adjusted after the switch to the euro currency in 2009.

In addition to the issuance of the Act, two decrees of the AMO have been issued. The Decree No. 269/2004 Coll., as amended, lays down details on the calculation of turnover and the Decree No. 204/2009 Coll. regulates details on the notification of mergers.

December 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Recent Developments in Hungarian Competition Policy

Posted by D. Daniel Sokol

Miklos Juhasz (Hungarian Competition Authority) offers Recent Developments in Hungarian Competition Policy.

ABSTRACT: The developments of Hungarian competition policy in the last two years have been motivated by endeavours to make the operation of the Hungarian Competition Authority ("GVH") more effective. In other words, the GVH has sought to strengthen the "client-friendly" features of the Authority, specifically by speeding up procedures, increasing the predictability of its law enforcement, and securing a competitive level playing field-especially at a time when an economic crisis has diminished society's confidence in the power of competition. Due to the agency competencies of the GVH in the enforcement of UCP-related consumer protection issues, the Authority also has a special responsibility to foster efficient markets by counterbalancing possible information deficiencies.

This article focuses on developments of the Hungarian competition policy in the period of November 2010 - October 2012. In addition, changes to the organization of the GVH are also described.

December 7, 2012 | Permalink | Comments (0) | TrackBack (0)

The Antitrust Analysis of Multi-Sided Platform Businesses

Posted by D. Daniel Sokol

David S. Evans, University of Chicago Law School, University College London, Global Economics Group and Richard Schmalensee, Massachusetts Institute of Technology (MIT) - Sloan School of Management, National Bureau of Economic Research (NBER) have posted the best literature review ever of two sided markets, The Antitrust Analysis of Multi-Sided Platform Businesses.

ABSTRACT: This Chapter provides a survey of the economics literature on multi-sided platforms with particular focus on competition policy issues, including market definition, mergers, monopolization, and coordinated behavior. It provides a survey of the general industrial organization theory of multi-sided platforms and then considers various issues concerning the application of antitrust analysis to multi-sided platform businesses. It shows that it is not possible to know whether standard economic models, often relied on for antitrust analysis, apply to multi-sided platforms without explicitly considering the existence of multiple customer groups with interdependent demand. It summarizes many theoretical and empirical papers that demonstrate that a number of results for single-sided firms, which are the focus of much of the applied antitrust economics literature, do not apply directly to multi-sided platforms.

December 7, 2012 | Permalink | Comments (0) | TrackBack (0)

The Simplicity of Antitrust Law

Posted by D. Daniel Sokol

Richard M. Steuer, Mayer Brown LLP has a short and well done piece on The Simplicity of Antitrust Law.

ABSTRACT: Antitrust law is simpler than it seems. Although it has grown increasingly complex over the years, leading some to believe that it is often irrational and varies from one country to the next, when it is properly applied it focuses simply, and entirely, on combating two of the most innate proclivities in human nature -- bullying and ganging up -- when such conduct harms competition. Once this is understood, concerns about irrationality and disharmony begin to disappear.

December 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, December 6, 2012

Google Foes Must Admit Defeat on Antitrust Case

Posted by D. Daniel Sokol

David Balto argues Google Foes Must Admit Defeat on Antitrust Case.

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

Is There (Still) Room for Non-Economic Arguments in Article 101 TFEU Cases?

Posted by D. Daniel Sokol

Christopher Townley, King's College London Dickson Poon School of Law asks Is There (Still) Room for Non-Economic Arguments in Article 101 TFEU Cases?

ABSTRACT: Many agree that public policy goals were considered in Article 81 EC (now Article 101 TFEU) from time to time. Section 2 explains why the EC Courts (now the EU Courts), the Commission and the other EC Institutions considered public policy within Article 81. Article 81’s goals were rarely discussed openly, but some recent Commission policy statements assert that, at least since 2004, the provision has had just one goal: “The objective of Article 81 is to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources.” There is no room in this ‘new approach’ for public policy goals. Many EU competition lawyers support this ‘new approach’ by the Commission. This attempt to remove public policy goals has advantages and disadvantages. Rather than examining these, this paper discusses two recent changes. First, the Lisbon Treaty 2007 modified some competition-related provisions. Secondly, from 1999 onwards, there was a period of ‘modernisation’ in EU competition law. Section 3 asks whether the Lisbon Treaty changed public policy’s relevance in (now) Article 101; and, if the Commission’s (and Council’s) modernisation agenda could change the substantive content of that article. Section 4 examines the EU Courts’ recent Article 101 case law; public policy goals have often been considered there, undermining the Commission’s ‘new approach’. There is still room for non-economic goals in Article 101 cases. There is renewed interest in Article 101’s goals today. It is an important issue, which can affect the compatibility of agreements with the internal market. This can have impacts for undertakings in terms of reputational issues, fines and damages actions; in some countries criminal offences may even have been committed. There are also implications for the Commission and the Member States’ courts and competition authorities when they are applying Article 101, what issues should they be considering. This, in turn, affects the kinds of expertise that they need to bring to bear on cases.

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

International Cooperation: Taking a Broader View

Posted by D. Daniel Sokol

RACHEL BRANDENBURGER (DOJ) discusses International Cooperation: Taking a Broader View.

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

Are Joint Patents Collusive? Evidence from the US and Europe

Posted by D. Daniel Sokol

Andrea Fosfuri, Universidad Carlos III de Madrid - Department of Business Administration, Christian Helmers, London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) and Catherine Roux, University of Saint Gallen ask Are Joint Patents Collusive? Evidence from the US and Europe.

ABSTRACT: We investigate whether patents that are jointly held by legally independent companies help sustain product-market collusion. We use a simple model of repeated interactions to show that joint patents can serve collusive purposes. Our model generates two testable predictions: when joint patents are held for collusive purposes, a) there is a positive relationship between the propensity to jointly own a patent and proximity in the product market; b) joint patents are associated with less licensing in the market for technology than individually owned patents, especially when firms are close product-market competitors. We construct a large, novel dataset that contains information on patents, research joint ventures, and licensing at the firm-level for the US and the EU to validate our theoretical predictions. We exploit differences in the legal regimes applicable to joint patents in the US and Europe to show that the data is consistent with our theoretical predictions.

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

New Wine into Old Wineskins: Recent Developments in China's Competition Policy against Monopolistic/Collusive Agreements

Posted by D. Daniel Sokol

Xinzhu Zhang, Chinese Academy of Social Sciences (CASS) - Research Center for Regulation and Competition and Vanessa Yanhua Zhang, Global Economics Group, LLC; Renmin University of China discuss New Wine into Old Wineskins: Recent Developments in China's Competition Policy against Monopolistic/Collusive Agreements.

ABSTRACT: China’s anti-monopoly law contains comprehensive legal rules against monopolistic/collusive agreements. However, the legal standards for defining monopolistic agreements and the applicability of exemption and leniency programs need to be further clarified. Moreover, several coordination problems caused by the special organizational features of China’s antitrust institutions need to be addressed carefully. The Chinese antitrust authorities therefore face tremendous challenges in enforcement given both the intrinsic complications of monopolistic conduct and the existence of some inadequacies in the existing competition policy regime.

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

Wrap up of the TILEC-LCII conference on fines

Posted by D. Daniel Sokol

Nicolas Petit has a write up of all of the sessions of the TILEC-LCII conference on fines.

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

CALL FOR PAPERS Time Series and Competition Policy - Stellenbosch, 4-5 March 2012

Posted by D. Daniel Sokol

CALL FOR PAPERS
Time Series and Competition Policy
Stellenbosch, 4-5 March 2012

Time-series tools are often employed in competition law investigations to detect collusion, estimate damages and study post-merger market outcomes. Time-series data (including panel data) are also often employed in empirical industrial organisation (IO) models to estimate demand function and simulate mergers, as well as to delineate markets. To advance research in each of these subfields and to contribute to greater integration of the various fields, Stellenbosch University is organising a workshop on 4-5 March 2013. The workshop, funded by Economic Research Southern Africa (ERSA), will offer researchers across South Africa and beyond to build networks and present current research involving time-series applications to competition policy problems. The workshop coincides with a visit by Prof Daniel Rubinfeld to Stellenbosch University. Prof Rubinfeld is the Robert L. Bridges Professor of Law and Professor of Economics Emeritus at University of California (Berkeley) and Professor of Law at New York University. He is a distinguished academic, with wide-ranging scholarly work in applied microeconomics, econometrics, public policy, and industrial organization. His publication list includes seven books, over seventy articles in leading scholarly journals, and more than forty articles in books. Prof Rubinfeld is actively involved in competition policy practice; he was deputy assistant attorney general at the US Department of Justice and acted as expert consultant in landmark US competition cases. He has held a number of visiting professorships at leading American and European universities. Target audience and workshop structure The intended target audience are researchers, academics and graduate students in the fields of IO and competition policy as well as competition policy practitioners.

The workshop will consist of:

  • The keynote lecture by Prof Rubinfeld.
  • Paper sessions on market definition, cartel detection/damages estimation and post-merger evaluation, including presentations by Prof Kai Hüschelrath (Mannheim) and Prof Elena Argentesi (Bologna).
  • ‘Paper development’ sessions (where participants can obtain inputs on initial research ideas).
Financial support ERSA covers the travel and accommodation expenses for a limited number of participants from South African institutions. Places are limited and funding to attend the workshop is entirely at the discretion of the workshop organizers. Financial support for private-sector participants is conditional on their active participation and once again at the discretion of the workshop organizers. Submissions Send abstracts of 200 words for consideration to Ms Yoemna Mosaval, yoemna.mosaval@econrsa.org, by 14 January 2013. Academics and especially graduate students intending to participate in the paper development sessions must indicate this in their submission e-mail, and also include an abstract. Successful applicants will be informed towards the end of January.

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

Too LIBOR, Too Late: Time to Move to a Market Rate

Posted by D. Daniel Sokol

Michael S. Barr (Univ. of Michigan School of Law) argues Too LIBOR, Too Late: Time to Move to a Market Rate.

ABSTRACT:

But what about reform? Didn't the British authorities just fix the problem?

No.

The "Wheatley Report" issued last month is definitely better than the status quo. It echoes a series of reform proposals first put out by the New York Federal Reserve Bank in 2008-making LIBOR less subject to manipulation, and requiring the auditing of submissions. This is all for the good. If we have to keep LIBOR, making it subject to greater scrutiny is definitely preferable to the status quo.

But at this point, it is not enough. The proposed reforms are too reliant on the existing structure of LIBOR, and come too late to save it. Continued reliance on LIBOR rightly undermines trust in the financial system.

What should we do going forward?

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

Collective Rights Management, Competition Policy and Cultural Diversity: EU Lawmaking at a Crossroads

Posted by D. Daniel Sokol

Christoph B. Graber, University of Luzern Law School discusses Collective Rights Management, Competition Policy and Cultural Diversity: EU Lawmaking at a Crossroads.

ABSTRACT: In the digital networked environment, user’s expectations of getting easy access to digital content all the time and through a multitude of devices clash with the territorial structure of copyright and the complications of the licencing process. Under these circumstances, systems of collective rights management (CRM) offering a one-stop shop for rights clearance would seem to be an attractive solution to simplify cross-border licencing and save on transaction costs. In the European Union (EU), the Commission has made many attempts over the last decade not only to make collective management organisations (CMOs) work more efficiently but also to bring them from a system of national licences granted by national monopolies to a system of EU-wide authorisations. The European Commission’s Proposal of 12 July 2012 for a directive on CRM is a confirmation of this policy. However, it is questionable whether these regulatory attempts are compatible with cultural diversity interests. This paper discusses the role of CRM in ensuring cultural diversity and how a purely competition-orientated approach can impinge on this. It does so through analysing EU case law and the Commission’s Proposal.

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

Wednesday, December 5, 2012

Introducing Compliance Network

Posted by D. Daniel Sokol

For those of you interested in antitrust compliance, please note that the Compliance Network has been launched.

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

Market Power, Fully Revealing Prices and Welfare

Posted by D. Daniel Sokol

Manuel Mueller-Frank, University of Oxford describes Market Power, Fully Revealing Prices and Welfare.

ABSTRACT: This paper considers a dynamic duopoly market with strategic, price setting firms and an infinite set of fully rational, privately informed consumers who enter the market sequentially. I show that there exists a sequential equilibrium in which prices converge to their realized product qualities, hence perfectly aggregating the privately held information. This fully revealing equilibrium is shown to be welfare inferior to a fixed price equilibrium in which perfect information aggregation might fail. Therefore, one has to be careful not to equate fully revealing prices with welfare optimality.

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

The Role of Standards in the Current Patent Wars

Posted by D. Daniel Sokol

Fiona Scott-Morton (DOJ) has given a speech on The Role of Standards in the Current Patent Wars.

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

Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity

Posted by D. Daniel Sokol

Avichai Snir, Bar Ilan University - Department of Economics, Daniel Levy, Bar-Ilan University - Department of Economics, Emory University - Department of Economics, Rimini Center for Economic Analysis, Alex Gotler, Open University of Israel and Haipeng (Allan) Chen, Texas A&M University discuss how Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity.

ABSTRACT: There is evidence that 9-ending prices are more common and more rigid than other prices. We use data from three sources: a laboratory experiment, a field study, and a large US supermarket chain, to study the cognitive underpinning and the ensuing asymmetry in rigidity associated with 9-ending prices. We find that consumers use 9-endings as a signal for low prices, and that this signal interferes with price information processing. Consequently, consumers are less likely to notice a bigger price when it ends with 9, or a price increase when the new price ends with 9, in comparison to a situation where the prices end with some other digit. We also find that retailers respond strategically to this consumer bias by setting 9-ending prices more often after price increases than after price decreases. 9-ending prices, therefore, usually increase only if the new prices are also 9-ending. Consequently, there is an asymmetry in the rigidity of 9-ending prices: they are more rigid than non 9-ending prices upward but not downward.

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

Josh Wright Testimony for his FTC Commissioner Nomination

Posted by D. Daniel Sokol

You can get Wright's Testimony for his FTC Commissioner Nomination here. I signed an academics letter that supports Josh that was sent to the Senate. In short, Josh has done some very good scholarship (I particularly like his verticals work), care very much about the FTC as an institution, worries both about predictability of process and outcomes and getting to correct outcomes, and is a nice guy. I am sure he will do a good job if confirmed. 

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