Antitrust & Competition Policy Blog

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

Monday, April 22, 2013

Webinar: Detecting Cartels and Collusive Behavior - May 1, 2013

Posted by D. Daniel Sokol

Bob Marshall - Penn State and Leslie Marx - Duke (recently named one of the GCR Women in Antitrust) are among the very top cartel experts in the world. Their writing on collusion has been path breaking. I also note with great pride that they are authors of a chapter in my forthcoming Oxford Handbook of International Antitrust Economics (Oxford University Press, Roger D. Blair & D. Daniel Sokol, forthcoming). Their consulting firm, Bates White, is hosting an event that is worth an hour of your time.

Webinar: Detecting Cartels and Collusive Behavior

  • May 1, 2013
  • 1:00 pm —2:00 pm

In this webinar, Professors Robert Marshall and Leslie Marx offer an examination of specific economic actions, called “super plus factors,” and how they can be used as indicators of collusion among a collection of firms. They will demonstrate how successful collusion requires three different types of enforcement structures among the colluding firms to prevent secret deviations and how these structures generate “super plus factors” that are consistent with explicit collusive actions.

Drawing from their extensive experience as consulting experts they use examples from cases, and from their recent book, The Economics of Collusion: Cartels and Bidding Rings, to help lawyers understand how they can detect collusive behavior in a company’s divisions, among competitors, or within a market. Understanding “super plus factors” and the mechanics of establishing collusion through “economic circumstantial evidence” equips lawyers with information to proactively monitor pricing activity and potentially detect aberrant, anti-competitive behavior in the market.

To register for the webinar, please click here.

Speakers

William Kovacic, Professor of Law, George Washington University (Moderator)

Robert Marshall, Bates White Partner and Professor of Economics, Penn State University 

Leslie Marx, Bates White Partner and Professor of Economics, Duke University

The Economics of Collusion 

To read more about Drs. Marshall and Marx’s book, including links to book reviews, please click here

For a short and readable summary of some of Bob and Leslie's ideas on the meaning of an "agreement, see their excellent work on super "plus factors" here.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

All-Units Discounts and Double Moral Hazard

Posted by D. Daniel Sokol

Daniel P. O'Brien, Federal Trade Commission - Bureau of Economics has written on All-Units Discounts and Double Moral Hazard.

ABSTRACT: An all-units discount is a price reduction applied to all units purchased if the customer's total purchases equal or exceed a given quantity threshold. Since the discount is paid on all units rather than marginal units, the tariff is discontinuous and exhibits a negative marginal price at the threshold that triggers the discount. Why would suppliers offer such tariffs? This paper shows that all-units discounts can arise in optimal contracts between upstream and downstream firms with market power who make non-contractible investments that enhance demand. I present conditions under which all-units discounts dominate two-part tariffs and other continuous tariffs. I also examine these tariffs when the upstream market faces a threat of entry. In the cases considered, continuous tariffs are a more profitable device for managing entry than all-units discounts. These findings begin filling the gap in economists' understanding of the equilibrium effects of all-units discounts in intermediate markets in which contract design affects incentives for pricing, investment, and competitive entry.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

ACCC Competition Policy Workshop – Infrastructure Access Workshop Comments by Rod Sims

Posted by D. Daniel Sokol

Austrialia's ACCC has posted a transcript of Rodd Sims' comments at the Infrastructure Access Workshop.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

Competition Policy and Poverty Reduction: A Holistic Approach

Posted by D. Daniel Sokol

Robert D. Anderson, World Trade Organization and Anna Mueller, WTO Secretariat explain Competition Policy and Poverty Reduction: A Holistic Approach.

ABSTRACT: This paper examines the role of competition law and policy as tools for poverty reduction and development. The authors put forward five related principles, building upon the important work on related issues that has been done by the OECD, the International Competition Network (ICN), UNCTAD and civil society organizations such as CUTS in recent years, in addition to the earlier work done on these topics in the WTO Working Group on the Interaction between Trade and Competition Policy when that body was active from 1997 through 2003. Together, these principles comprise the "holistic approach" to competition law and policy which is referenced in the title of the paper:

•First, the focus of policy makers in using competition policy as tool for poverty reduction should be on approaches that are relatively easy to implement but have a track-record of being effective and economically sound.

•Second, for competition policy reforms and legislation to be successful, public acceptance and support is critical and must be an essential focus of related initiatives.

•Third, to serve as an effective tool of poverty reduction, competition policy needs to address the needs of the citizens of poorer societies in their capacities as producers (and, therefore, as users of extensive input goods and services, including public infrastructure), in addition to their capacities as final consumers/households.

•Fourth, it is posited that "competition policy" is more than just "what competition agencies do" and includes the full spectrum of measures that governments employ to enhance competition and improve the performance of markets.

•Fifth, in order to address the challenges posed by the changing landscape of competition policy worldwide, new forms of international co-operation may need to be considered.

The paper then develops the application of these principles with respect to five specific areas in which competition policy can contribute to poverty reduction, namely: (i) the reform of public and business infrastructure sectors, particularly in the context of developing and transition economies; (ii) the complementary roles of competition law enforcement and market liberalization in public procurement markets; (iii) various related dimensions of competition policy as they relate to public health objectives; (iv) the addressing of possible monopsonistic practices in international supply chains that may affect the ability of developing country producers to reap gains from participation in international markets; and (v) measures to address the enduring problem of international cartels which, despite an impressive record of prosecutions by developed jurisdiction competition agencies over the past decade, continue to impose substantial costs on developing economies. The paper concludes with some observations regarding the future of international co-operation in the competition policy sphere.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

ICC unveils Antitrust Compliance Toolkit

Posted by D. Daniel Sokol

The ICC has unveiled an Antitrust Compliance Toolkit.

From the press release:

This global Toolkit has been produced by the ICC Task Force on Antitrust Compliance and Advocacy following suggestions by the OFT, DG COMP and other antitrust agencies. The Toolkit seeks to complement materials produced by antitrust agencies and other sources of guidance, by focusing on practical steps companies can take internally to embed a successful compliance culture.

The ICC Antitrust Compliance Toolkit benefited from contributions from antitrust specialists closely associated with in-house efforts around the world.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

Licensing: A Conceptual Framework for EU Guidance to the Member States

Posted by D. Daniel Sokol

Marco Ricolfi, University of Turin - Faculty of Law offers Licensing: A Conceptual Framework for EU Guidance to the Member States.

ABSTRACT: This memo intends to identify and link together a number of crucial topics concerning the licensing for the purpose of re-use of Public Sector Information under the Directive 2003/98/EC on the re-use of public sector information (the PSI Directive) and in connection with the draft Proposal for a Directive amending the Directive unveiled December 2011. The purpose of the document is threefold: first, to assist in the design of exercises concerning PSI licensing that might be launched in the near future, such as the preparation of a multi-level conference on the issue, aimed at bringing together stakeholders, scholars, the open data community, policy makers and the general public; second, to provide the conceptual terms of reference for the setting up of research projects, thematic networks or other cooperative initiatives in the area; and third to prepare the ground for the discussion of possible components of guidance by the Commission to the Member States in specific connection with “recommended licensing conditions and formats” as provided by Recital 18 of the draft Proposal.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

The Private Enforcement of Competition Law in Ireland

Posted by D. Danie Sokol

David McFadden (Irish Competition Authority) has written on The Private Enforcement of Competition Law in Ireland.

BOOK ABSTRACT: Competition is recognised as a key driver of growth and innovation. Competition ensures that businesses continually improve their goods and services whilst striving to reduce their costs. Anti-competitive conduct by businesses, such as price-fixing, causes harm to the economy, to other businesses and to consumers. It is small businesses and the consumer who ultimately pay the price for anti-competitive conduct. A coherent competition policy that is both effectively implemented and effectively enforced is essential in driving growth and innovation in a market economy. The importance of competition was recently emphasised when the EU/ECB/IMF 'Troika' included a number of competition specific conditions to the terms of Ireland's bailout. Both Irish and Community law recognise the right for parties injured by anti-competitive conduct to sue for damages. This right to damages, in theory allows those that have suffered loss to recover that loss whilst helping to deter others from taking the illegal route to commercial success. However private actions for damages in Ireland are rare.

This book asks what the purpose of private competition litigation is and questions why there has been a dearth of this litigation in Ireland. The author makes a number of suggestions for reform of the law to enable and encourage private competition litigation. The author takes as his starting point the European Commission's initiative on damages actions for breach of the EC antitrust rules and compares the position in Ireland to that currently found in the UK and US.

Note: Hart Publishing has offered readers of this blog a 20% discount on the book (discount code ACPB).

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

Tacit Patent Pooling

Posted by D. Daniel Sokol

Erik N. Hovenkamp, Northwestern University Department of Economics has written on Tacit Patent Pooling.

ABSTRACT: We define tacit patent pooling as a non-contractual arrangement in which producers freely utilize one another's patented technologies without charging license fees or filing infringement claims. This differs greatly from the standard notion of (explicit) patent pooling considered in the literature, which typically involves patent holders who set license fees collectively in order to profit from the elimination of double marginalization. In particular, explicit pooling is intended to increase licensing revenues, while tacit pooling is intended to avoid licensing altogether. Tacit pooling is commonly profitable for small firms in innovative industries plagued by patent thicket problems, such as small software publishers.

We show that tacit pooling may be a profitable cooperation strategy in a prisoner's dilemma game whose equilibrium involves aggressive cross-licensing in the shadow of litigation, as well as costly "disguising" of potential infringements. This practice is always socially desirable, as it reduces transaction and litigation costs, and it promotes idea sharing among inventors. We analyze how various phenomena may affect the scope and stability of tacit pooling. Large patent acquisitions may in principle be welfare enhancing if they serve to facilitate tacit pooling, but these efficiencies can be offset if firms regularly invest heavily in secondhand patents. The availability of injunctive relief as an infringement remedy will tend to forestall tacit pooling arrangements in concentrated markets, as its value as an exclusionary device will commonly outweigh the gains from tacit pooling, leading firms to prefer aggressive litigation strategies. The desire to facilitate tacit pooling may incentivize acquisition of patents that are ultimately never asserted, helping to explain the "patent paradox," which questions why many firms invest heavily in patents that ostensibly yield negative returns.

April 22, 2013 | Permalink | Comments (0) | TrackBack (0)

Sunday, April 21, 2013

Trade is Good for Competition, but Competition is Great for Trade

Posted by D. Daniel Sokol

Seth Sacher (FTC) argues that Trade is Good for Competition, but Competition is Great for Trade. ABSTRACT: It may seem obvious that good trade policy can promote competition. That is, by opening up a domestic economy to increased trade, additional competitive pressures may be placed on domestic producers, thereby decreasing domestic market power and improving industry performance in the form of lower prices, production that is more efficient, and more innovation.

On the other hand, although it may appear less obvious, good competition policy can be a means for fostering good trade policies. A competitive domestic economy, as enhanced by appropriate competition policies, can be a good defense against protectionist sentiments. In other words, robust competition enhances domestic prosperity and international competitiveness, which are conducive to political conditions supportive (or at least less obstructive) of freer trade. Indeed, this note argues that the benefits of good trade policy for good competition policy may be overemphasized, while the benefits of good competition policy for good trade policy may not be fully appreciated.

April 21, 2013 | Permalink | Comments (0) | TrackBack (0)