Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, May 11, 2013

8th ASCOLA Conference 23-25 May 2013

Posted by D. Daniel Sokol

8th ASCOLA Conference 23-25 May 2013

Universita del Salento, Dipartimento di Scienze per l'Economia Rettorato, Piazzetta Tancredi, 7, Lecce, Italy

THURSDAY 23 MAY 2013 (starts at 7pm) Drinks reception (venue: Palazzo Tamborino, Via Paladino 50)

FRIDAY 24 MAY 2013

8.30am Registration of participants

WELCOME ADDRESSES (starts at 9am) Domenico Laforgia Dean, University of Salento Alessandra Chirco Director, Department of Economics, University of Salento

SESSION ONE: REGULATORY APPROACH TO COMPETITION LAW: GENERAL REMARKS (starts at 9.15am) Chair: Josef Drexl Mariateresa Maggiolino Competition law and regulation: why should we purport a “pure conception” of the former?

Krystyna Kowalik Regulatory approach to competition law in the practice of the Polish Competition Authority – critical assessment

Mario Siragusa A reassessment of the relationship between competition law and sector specific regulation

Discussion

coffee break

2 SESSION TWO: COMPETITION ENHANCING POWERS AND REGULATION: INSTITUTIONAL ISSUES (starts at 11.15am)

Chair: Wolfgang Kerber

Michal Gal and Tamar Indig New Powers – New vulnerability? A critical analysis of market inquiries and other interventionary competition law regulation tools

Yane Svetiev Beyond law versus economics: competition policy as a learning platform

Nicoletta Rangone Competition Informed Approach to Regulation: the Role of Economic Analysis in Improving Integration

Discussion 1pm Lunch SESSION THREE: REGULATORY APPROACH TO SUBSTANTIVE COMPETITION LAW (starts at 2pm)

Chair: Giovanni Pitruzzella, President, Italian Competition Authority

Giovanni Pitruzzella Keynote speech

Adi Ayal Anti-anti regulation: the supplanting of industry regulators with competition agencies and how antitrust suffers as a result

Alexandr Svetlicinii and Marco Botta Enforcement of competition rules in regulated industries: abuse of dominance practices in the new EU member states and candidate countries

Discussion

GENERAL ASSEMBLY MEETING (starts at 4pm)

CITY TOUR – starts at 7pm 8pm, Social dinner (venue: Torre del Parco, Viale Torre del Parco, 1)

SATURDAY 25 MAY 2013 (starts at 9am)

SESSION FOUR: NEW EQUILIBRIA FOR THE REGULATION AND COMPETITION LAW INTERACTION: NET-NEUTRALITY, INFORMATION FLOWS AND STANDARDIZATION

Chair: Joel Moneger Edouard Lemoalle Net-neutrality, regulation and competition Fabiana Di Porto Market information flows: new challenges for competition and regulation

Bjorn Lundqvist The rise of standardization – Competition law as the limit of selfregulation

Discussion coffee break SESSION FIVE: SECTOR-SPECIFIC CHALLENGES TO COMPETITION LAW (starts at 11am)

Chair: Paul Nihoul Valeria Falce and Gustavo Ghidini The evolving role of competition law and policy in the financial sector in Italy: the regulation of interlocking directorates

Rolf H. Weber From Competition law to specific regulation in internet markets? A critical assessment of a possible structural change

Emanuela Arezzo Competition Law a san Instrument of IP regulation?

Toshiaki Takigawa Regulatory approach in competition law enforcement for innovationintensive industries: the case of broadband access regulation in Japan Discussion

We aim to finish the conference at about 1.30pm.

 

 

 

May 11, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, May 10, 2013

The Role of Efficiency Claims in Antitrust Proceedings

Posted by D. Daniel Sokol

OECD publishes “The Role of Efficiency Claims in Antitrust Proceedings
 
Even if efficiencies and efficiency claims have been vigorously discussed for decades, they have rarely turned out to be decisive in competition proceedings. Still, their role in competition law has recently gained greater prominence, as witnessed by a number of recent merger decisions in different jurisdictions and the fact that efficiency claims are also more often put forward in abuse of dominance or monopolisation cases.
 
The OECD today published The Role of Efficiency Claims in Antitrust Proceedings, a compilation of the materials presented and discussed at an OECD Competition Committee roundtable held in October 2012. This publication includes an executive summary and a summary of discussion, over 19 national contributions and a background note by the OECD Secretariat.
 
These proceedings together with the full set of OECD roundtable proceedings on Competition Policy can be found at www.oecd.org/competition/roundtables. More OECD work on Competition can be found at our website at www.oecd.org/daf/competition/.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Breaching the EC Competition Law and Private Action for Damages – Race to the Bottom or Improvement of the Efficiency of Enforcement?

Posted by D. Daniel Sokol

Alen Balde, University of Primorska, Faculty of Management asks Breaching the EC Competition Law and Private Action for Damages – Race to the Bottom or Improvement of the Efficiency of Enforcement?

ABSTRACT: The EU Competition Law and its central and so uniform enforcement by the EU Commission and the ECJ have taken the important part in the expansion of the number of companies, business, economic growth, and in the effective functioning of the other EU policies, including the formation of the European Internal Market. With changes of the EC Competition policy and so giving the greater importance to the economic efficiency in assessing the potential breach of the EC Competition Law and, at the same time, the decision of the EU Commission to focus primarily on the hard-core cartels have lead to the, so called, modernization of the EC Competition Law. By enabling national competition authorities and national courts to judge upon actions preventing, restricting or distorting the EC Competition Law, without at the same time considering that the EC Competition policy is not merely a policy of promoting competitiveness and consumer welfare, without considering that the Member States have different attitudes towards which policies should be preserved in the greater extent, without considering that the law regulating the enforcement procedure in the Member States varies, that there is not established the fully cooperation between national courts and national competition authorities in this matter, and that there is not preserved the uniform level of legal certainty and protection of those being injured by anticompetitive practices, the questions that rise up are the following. Where, i.e. in which country, the party injured could sue for damages? Is there possible to bring the tort action on the basis of the principle of the most convenient forum? Is it possible to avoid the situation in which the injuring undertaking could be the party in the proceedings going on in more than one Member State at the same time? How the party claiming damages could efficiently prove the anticompetitive action if the part of it is taking place within another jurisdiction or the evidence of anticompetitive effect is located within the territory of the other Member State(s)? How to solve the situation in which the outcome of the case could differ depending on the country where the proceeding is taking place? How to enforce the final decision in the case where injuring undertaking is performing anticompetitive actions outside the jurisdiction of adjudicative authority causing anticompetitive effects within it? How to enforce the final decision if undertaking’s assets are located within the other Member States’ jurisdiction or even outside the EU? Without analyzing these issues it is hard to predict if the modernization of the EC Competition Law, in the way proposed by the EU Commission, is such that would contribute to the greater efficiency of its enforcement or would it cause that injuring undertakings would be tempted to move their activities to the jurisdiction with less strict competition policy and its laws not guaranteeing fully efficient private enforcement.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Understanding Corporate Compliance and Wrongdoing in Interdisciplinary Context

Posted by D. Daniel Sokol

D. Daniel Sokol (University of Florida) explores Understanding Corporate Compliance and Wrongdoing in Interdisciplinary Context.

ABSTRACT: The prevention of wrongdoing, both civil and criminal, is a growing preoccupation of businesses. The academic study of such compliance and potential wrongdoing is also a growth industry. However, much like a decentralized firm with various subunits that do not communicate efficiently with each other, academic research across fields has remained in various silos. Insights, both empirical and theoretical, in economics, finance, accounting, strategy/management and law often cover similar issues regarding compliance and corporate wrongdoing. While the frameworks, data and specific research questions may vary across disciplines, overall work in one field does not cross over into others to better inform research across each of these fields. This essay introduces new research into the topic of corporate compliance and wrongdoing in interdisciplinary context

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Evidence in Competition Law Proceedings: A Comparative Perspective

Posted by D. Daniel Sokol

UCL Centre for Law, Economics and Society

Annual Competition Law in Context Conference on

Evidence in Competition Law Proceedings: A Comparative Perspective

Wednesday 5 June 2013 at the UCL Faculty of Laws

About the conference: The CLES Annual Competition Law in Context conference series aims to examine issues that are crucial for competition law enforcement, yet remaining largely unexplored. This year's conference will examine the topic of Competition Law Evidence. While competition litigation is like other litigation in many ways, it also is unique in other respects. The recourse to economic evidence in competition law over the last decades in Europe and in the US constitutes an important challenge to competition law enforcement. In Europe, starting with merger control in the early 1990s and moving slowly but steadily in the area of antitrust in the late 2000s, economic evidence has become an essential ingredient of a successful competition law case, either at the level of authorities or courts. The increasing importance of private enforcement for competition law violations in national courts also raises important questions of proof (e.g. causation) and evaluation of damages. The legal system has taken stock of the challenges presented by economic evidence and has intervened to regulate the way this evidence is assessed. The conference will examine the way competition law evidence is collected and assessed by competition authorities in Europe and in the US and the increasing role of the judiciary in this context. We will discuss practical issues relating to the standard of proof, the differences between adversarial and inquisitorial processes, the limits to evidence gathering set by the Legal Professional Privilege, the Privilege Against Self-Incrimination and rights of defense in general. The conference will shed light to an unexplored but fascinating area of law enforcement. The speakers, global leaders in this field of law, come from the judiciary, competition authorities, academia and practice.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Standardization Agreements, Intellectual Property Rights and Anti-Competitive Concerns

Posted by D. Daniel Sokol

Enrico Bonadio, City University London - The City Law School addresses Standardization Agreements, Intellectual Property Rights and Anti-Competitive Concerns.

ABSTRACT: The relationship between standardization processes, intellectual property rights and competition rules has increasingly become of interest in the recent years. Recent investigations of the European Commission confirm that standardization processes and in particular ownership of IPRs that cover standardized technology might in certain circumstances infringe competition rules.

The article first explores the meaning and different forms of standardization. It then analyses selected parts of the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, in particular those parts that cover standardisation agreements. The Guidelines have been adopted by the Commission in December 2010 with a view to addressing the anti-competitive concerns stemming from inter alia standardisation agreements (eg, they encourage IPRs holders to disclose their exclusive rights before the adoption of the standard, as well as to give an irrevocable commitment to offer to license the IPR to all parties interested on a fair, reasonable and non-discriminatory terms: so-called FRAND commitment).

The author will then present and comment on different points of view on whether the ownership of IPRs which cover standardized technologies really create market dominance capable of triggering anti-competitive behaviours. Finally, a set of additional solutions proposed by various legal scholars will be highlighted and commented.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Information Exchange in the Framework of a Merger

Posted by D. Daniel Sokol

Edurne Navarro Varona (Uria Menendez) explores Information Exchange in the Framework of a Merger.

ABSTRACT: Information exchange in the framework of a merger constitutes an important issue where the demands of the course of trade need to be balanced with the limitations imposed by competition law. Companies aim at completing the merger as soon as possible. However, competition law in most European jurisdictions requires the merger to be suspended until authorization is granted. Prior to the authorization, the parties to the merger remain competitors, and exchanging information between them is a walk on very thin ice.

Competition law considers that the exchange of information renders a market artificially transparent and may restrict competition. In that sense, the exchange of information during the negotiation of a merger may fall under the scope of Article 101 of the Treaty on the Functioning of the European Union or the corresponding legal provision in national law.

On the other hand, the exchange of information between merging companies is a crucial part of the merger itself. It is thus logical that, after an agreement to merge has been reached and before the authorization to execute the merger has been granted, the exchange of information might be considered in certain circumstances as a violation of the suspension obligation.

Therefore, legal concerns may arise both (I) prior to the merger agreement, when the exchange of information may be considered part of an anticompetitive practice and, (II) after a merger agreement has been reached, when the exchange of information may constitute an indication of the execution of the merger prior to its authorization, also known as gun-jumping.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Reframing the (False?) Choice between Purchaser Welfare and Total Welfare

Posted by D. Daniel Sokol

Alan J. Meese, William & Mary Law School is Reframing the (False?) Choice between Purchaser Welfare and Total Welfare.

ABSTRACT: This Article critique the role that the partial equilibrium trade-off paradigm plays in the debate over the definition of “consumer welfare” that courts should employ when developing and applying antitrust doctrine. The paper contends that common reliance on the paradigm distorts the debate between those who would equate “consumer welfare” with “total welfare” and those who equate consumer welfare with “purchaser welfare.” In particular, the model excludes, by fiat, the fact that new efficiencies free up resources that flow to other markets, increasing output and thus the welfare of purchasers in those markets. Moreover, the model also assumes that both the positive and negative impacts of a transaction are permanent and occur immediately and simultaneously. As a result, the model excludes the (very real) possibility that subsequent entry will undermine or mitigate any market power, leaving only efficiencies that benefit purchasers in the original market.

Removal of these unrealistic assumptions requires the antitrust community to reframe the debate about the appropriate welfare standard for antitrust and could require adjustment of the standards applied to practices that both raise prices and create efficiencies in the relevant market. For instance, recognition that efficiencies generated in one market cause resource flows to other markets and higher output in such markets undermines claims that producers “pocket” efficiencies whenever a practice results in in higher prices. Thus, instead of involving a conflict between “producers” and “purchasers” in a single market, transactions that both raise prices and create efficiencies require antitrust policy to resolve a conflict between purchasers in the original market, on the one hand, and those in other markets, on the other. In the same way, the realization that the trade-off model ignores the passage of time requires antitrust policy to resolve a conflict between current and future purchasers in the original market.

May 10, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, May 9, 2013

How Do Hospitals Respond to Market Entry? Evidence from a Deregulated Market for Cardiac Revascularization

Posted by D. Daniel Sokol

Suhui Li, George Washington University and Avi Dor, Case Western Reserve University - Department of Economics ask How Do Hospitals Respond to Market Entry? Evidence from a Deregulated Market for Cardiac Revascularization.

ABSTRACT: Regulatory entry barriers to hospital service markets, namely Certificate of Need (CON) regulations, are enforced in many states; although no longer federally mandated, policy makers in other states are considering reinstating CON policies in tandem with service expansions mandated under the Affordable Care Act. While numerous studies have examined the impacts of CON on hospital volumes, demand responses to actual hospital entry into local hospital markets are not well understood. In this paper, we empirically examine the demand-augmenting, demand-redistribution, and risk-allocation effects of hospital entry by studying the cardiac revascularization markets in Pennsylvania, a state in which dynamic market entry occurred after repeal of CON in 1996. Our findings with respect to demand-augmentation are mixed: we find robust evidence that high entrant market share mitigated the declining incidence of coronary artery bypass graft (CABG), but it had no significant effect on the rising trend in percutaneous coronary intervention (PCI) procedures, among patients with coronary artery disease. Consequently, incumbent hospitals experienced a decrease in the likelihood of PCI due to entry, thereby indicating a shift in demand away from incumbents to entrants, namely business-stealing. Results of our analyses further indicate that entry by new cardiac surgery centers tended to sort high-severity patients into the more invasive CABG procedure and low-severity patients into the less invasive PCI procedures. Thus, from a welfare perspective our results are mixed: on the one hand, free-entry may lead to improved access rather than business stealing for CABG procedures; on the other hand, the empirical evidence is in favor of business-stealing for PCI procedures. Moreover, free-entry improves the match between underlying medical risk and treatment intensity. These findings underscore the importance of considering market-level strategic responses by hospitals when regulatory barriers to entry are rescinded.

May 9, 2013 | Permalink | Comments (0) | TrackBack (0)

Solving Google's Antitrust Dilemma: Cognitive Habits and Linking Rivals When There is Large Market Share in the Relevant Online Search Market

Posted by D. Daniel Sokol

P. Sean Morris, University of Helsinki - Faculty of Law is Solving Google's Antitrust Dilemma: Cognitive Habits and Linking Rivals When There is Large Market Share in the Relevant Online Search Market.

ABSTRACT: Do you use Google.com? Familiar with “search,” “maps,” “news,” “calendar,” and more? How about if in that little black toolbar on Google’s homepage, there is also “yahoo,” “bing,” “yandex” and other search providers? This paper considers this argument in the context of Google’s global market share. The claim is that Google should link rivals in its main toolbar, under the essential facilities doctrine. The paper argues that Google.com has become an essential facility, and in order to solve its antitrust dilemma under the essential facilities doctrine, it should link rival search services, as a form of public service – and thus lives up to its motto – “don’t be evil.” In discussing Google in an antitrust context, one can certainly argue that regulation is needed to control runaway market power. This is largely true, if a firm has dominant power, as a result of its market share, and it can be proven that the firm is abusing that dominant power. However, even if the firm has dominant power, that firm can self-regulate or promote fair competition, if it considers its products and services vital in the market which it operates. This is not a wild proposition, however, the idea of linking rivals should not be dismissed either. The arguments in this paper will offer one such proposition of solving Google’s antitrust dilemma in the relevant search engine market, where a firm is perceived to have market power, and is alleged to have abuse that market power.

May 9, 2013 | Permalink | Comments (0) | TrackBack (0)

Standard Oil as Lochner's Trojan Horse

Posted by D. Daniel Sokol

Alan J. Meese, William & Mary Law School has a wonderful paper on Standard Oil as Lochner's Trojan Horse.

ABSTRACT: This essay explains how one of the most maligned decisions in Constitutional Law, Lochner v. New York, 198 U.S. 45 (1905) lives on in one of the Sherman Act’s most celebrated decisions: Standard Oil v. United States, 221 U.S. 1 (1911). Standard Oil, it is shown, was simply an application of Lochnerian principles to antitrust policy. In particular, Standard Oil’s “Rule of Reason,” universally-embraced by modern jurists and scholars, functioned as a device for narrowing the Sherman Act to avoid abridging contracts and other conduct protected by the Fifth Amendment’s Due Process Clause. By banning only that conduct producing higher prices, reduced output or inferior quality, the Court left unscathed so-called “normal” or “ordinary” conduct necessary to “fructify” trade and create wealth, conduct beyond the scope of the “police power” as understood by Lochner and its progeny. In so doing, the Court simply reiterated the principles articulated by previous decisions, which had banned as “direct” those restraints that resulted in prices above the competitive level, leaving firms and individuals free to adopt “indirect” restraints sheltered by liberty of contract. Thus, Lochner lives on in Sherman Act case law, with no sign of mortality.

The essay also explores how a Lochnerized Rule of Reason would address two current antitrust controversies: first, the appropriate definition of “consumer welfare,” and second, whether courts should condemn “normal” conduct when a balancing test reveals that the harms produced by such conduct outweigh its benefits. Implementation of Lochnerian principles would, it is shown, require courts to equate the “consumer welfare” relevant for antitrust doctrine with “total welfare” instead of the welfare of purchasers in the relevant market. After all, the “police power” invoked by Lochner and its progeny entailed the power to ban externalities and other market failures, while decisions such as Coppage v. Kansas, 236 U.S. 1 (1915) rejected, as outside the police power, interference with liberty and property that simply redistributed wealth from one party to another. Lochnerian principles would also require antitrust courts to reject the sort of balancing that supposedly characterizes modern Rule of Reason analysis.

May 9, 2013 | Permalink | Comments (1) | TrackBack (0)

Getting The Tough Deal Done: The Roles of The General Counsel and Outside Antitrust Counsel

Posted by D. Daniel Sokol

Craig Waldman & Aimee DeFilippo (Jones Day) explain Getting The Tough Deal Done: The Roles of The General Counsel and Outside Antitrust Counsel.

ABSTRACT: The merger approval process can be a challenging experience, especially in tough deals that prompt extended antitrust investigations. Long wait times, high costs, and the resulting uncertainty for the parties, their employees, customers, and investors about whether and when the deal will be consummated can make it difficult to hold a transaction together during a prolonged merger review. Adding further complexity is the global nature of M&A, as transactions with international implications can be particularly taxing on the parties.

It is obvious that managing a company through this process takes careful planning, hard work, and strategic thinking. What may be less obvious is the critical importance of close coordination and transparency between a company's general counsel ("GC") (or other in-house counsel responsible for the antitrust investigation) and its outside antitrust counsel. Few GCs have the time or the specialized expertise to advise merging companies on the myriad of issues encountered during a lengthy merger investigation, but they will be accountable to the Board and company for having set proper expectations and for ensuring that the merging companies interact with each other within the proper antitrust boundaries. A closely aligned outside counsel can be a valuable asset for a GC during what can be an arduous process. What is key is for outside counsel to not only be responsive to the GC's concerns, but also candid and direct about the likely outcomes and creative in developing solutions to accomplish the company's goals.

This article both describes the challenges GCs face during the merger review process, and suggests the optimal ways in which the GC and outside counsel can collaborate in order to maximize the chances of a successful result.

May 9, 2013 | Permalink | Comments (0) | TrackBack (0)

Coordinating Static and Dynamic Supply Chains with Advertising through Two-Part Tariffs

Posted by D. Daniel Sokol

Luca Lambertini, University of Bologna - Department of Economics is Coordinating Static and Dynamic Supply Chains with Advertising through Two-Part Tariffs.

ABSTRACT: Zaccour (2008) investigates the behaviour of a marketing channel where firms invest in advertising to increase brand equity, showing that an exogenous two-part tariff cannot be used to replicate the vertically integrated monopolist’s performance. I revisit the same model proving the existence of a multiplicity of franchising contracts taht can do the job. In particular, I set out by illustrating an optimal two-part tariff specified as a linear function of the upstream firm’s advertising effort, performing this task both in the static and in the dynamic game. Then, I show that an analogous result emerges (i) in the static game by writing the fixed component of the two-part tariff as a non-linear function of the manufacturer’s advertising effort; and (ii) by using a contract which is linear in the brand equity, in the dynamic case.

May 9, 2013 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 8, 2013

Antitrust as an Interdisciplinary Field: Insights from Business Strategy and Research

Posted by D. Daniel Sokol

Antitrust as an Interdisciplinary Field: Insights from Business Strategy and Research

Event Date:  Tuesday, June 11, 2013
Location: National Press Club, Washington DC

Fee: No registration fee but invitation is required

Link:
http://www.antitrustinstitute.org/2013Symposium

AAI’s 2013 Invitational Symposium, Antitrust as an Interdisciplinary Field: Insights from Business Strategy and Research, will take stock of recent contributions to the understanding of competition and examine in more depth, developments occurring in economics and the business disciplines and their implications for antitrust thought and practice. The interdisciplinary day-long symposium will be held June 11, 2013 at the National Press Club, Washington D.C. The day will include presentations by noted scholars, business leaders, and experienced practitioners with expertise in antitrust law, economics, strategic management, marketing and related disciplines. Presentations will examine the evolving role of economics in competition policy and antitrust together with relevant trends and developments occurring in the business disciplines of strategic management and marketing. A concluding roundtable will invite participants to share their ideas and to discuss others.

Registration to the invitational symposium is now open.  Seating is limited.  To request an invitation, email aai@antitrustinstitute.org.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

American Antitrust Institute 14th Annual Conference: Counseling Antitrust Compliance on the Frontier

Posted by D. Daniel Sokol

American Antitrust Institute 14th Annual Conference: Counseling Antitrust Compliance on the Frontier

Event Date: Wednesday, June 12, 2013
Location: National Press Club, Washington DC

Fee: Tuition for this program is $500 with a discounted rate of $120 for government employees, educators, public interest advocates, and students.

CLE: Four CLE credits are anticipated.

Link:
http://www.antitrustinstitute.org/2013Conference

The AAI's 14th Annual Conference will cover a variety of issues relating to antitrust compliance. This conference will focus on the changing role of in-house counsel and of counseling generally with respect to antitrust compliance, taking special account of international enforcement trends affecting global competitive strategies.

Attendees can expect this conference to be different from other compliance programs.  Panelists and expert speakers will detail both pitfalls to avoid and the strategies that work, from a variety of enforcement perspectives. They will also focus on government perceptions of and policies toward compliance.

Register Here: http://www.antitrustinstitute.org/2013Conference

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

How Do Hospitals Respond to Market Entry? Evidence from A Deregulated Market for Cardiac Revascularization

Posted by D. Daniel Sokol

Suhui Li and Avi Dor (both GW) ask How Do Hospitals Respond to Market Entry? Evidence from A Deregulated Market for Cardiac Revascularization.

ABSTRACT: Regulatory entry barriers to hospital service markets, namely Certificate of Need (CON) regulations, are enforced in many states; although no longer federally mandated, policy makers in other states are considering reinstating CON policies in tandem with service expansions mandated under the Affordable Care Act. While numerous studies have examined the impacts of CON on hospital volumes, demand responses to actual hospital entry into local hospital markets are not well understood. In this paper, we empirically examine the demand-augmenting, demand-redistribution, and risk-allocation effects of hospital entry by studying the cardiac revascularization markets in Pennsylvania, a state in which dynamic market entry occurred after repeal of CON in 1996. Our findings with respect to demand-augmentation are mixed: we find robust evidence that high entrant market share mitigated the declining incidence of coronary artery bypass graft (CABG), but it had no significant effect on the rising trend in percutaneous coronary intervention (PCI) procedures, among patients with coronary artery disease. Consequently, incumbent hospitals experienced a decrease in the likelihood of PCI due to entry, thereby indicating a shift in demand away from incumbents to entrants, namely business-stealing. Results of our analyses further indicate that entry by new cardiac surgery centers tended to sort high-severity patients into the more invasive CABG procedure and low-severity patients into the less invasive PCI procedures. Thus, from a welfare perspective our results are mixed: on the one hand, free-entry may lead to improved access rather than business stealing for CABG procedures; on the other hand, the empirical evidence is in favor of business-stealing for PCI procedures. Moreover, free-entry improves the match between underlying medical risk and treatment intensity. These findings underscore the importance of considering market-level strategic responses by hospitals when regulatory barriers to entry are rescinded.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

Coming in From the Cold: Improving Cartel Detection and Reporting

Posted by D. Daniel Sokol

The C.D. Howe Institute Competition Policy Council has a new report out on Coming in From the Cold: Improving Cartel Detection and Reporting.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

Convergence of Procedural Standards in the European Competition Proceedings

Posted by D. Daniel Sokol

Maciej Bernatt, University of Warsaw, Centre for Antitrust and Regulatory Studies describes Convergence of Procedural Standards in the European Competition Proceedings.

ABSTRACT: In the article I argue that there is a need for the greater convergence of European procedural standards applicable in competition proceedings before the European Commission and competition proceedings before the National Competition Authorities. In order to prove this I use three main arguments. To begin with, I show that the differences in procedural standards applicable in the case of these two proceedings exist and influence the level of protection of entities participating in these proceedings. In this respect, I conduct the analysis of the EU and Polish competition procedure and I conclude that Polish competition procedure offers a lower level of protection of procedural rights. Additionally, I observe that in the EU free circulation of evidence among the members of European Competition Network takes place despite the differences in procedures that are used when collecting this evidence. I analyse also critically the rules governing allocation of cases in the ECN. Next, I show that the applicability of Article 6 of the ECHR to both the proceedings before the European Commission and the proceedings before the NCAs require the recognition and observance of the similar procedural standards. I argue the introduction of such standards is indispensable as the competition proceedings concern criminal accusations in the sense of Article 6 of ECHR. Finally, I observe the recognition and observance of similar procedural standards in competition proceedings is the consequence of binding character of the EU Charter of Fundamental Rights. In the conclusions I discuss how a convergence of procedural standards may be achieved.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

Corporate Leniency Programs When Firms Have Private Information: The Push of Prosecution and the Pull of Pre‐Emption

Posted by D. Daniel Sokol

Joseph E. Harrington Jr, University of Pennsylvania discusses Corporate Leniency Programs When Firms Have Private Information: The Push of Prosecution and the Pull of Pre‐Emption.

ABSTRACT: A corporate leniency program provides relief from government penalties to the first member of a cartel to cooperate with the authorities. This study explores the incentives to apply for leniency when each cartel member has private information as to the likelihood that the competition authority will be able to convict them without a cooperating firm. A firm may apply for leniency because it fears being convicted (‘prosecution effect’) or because it fears another firm will apply (‘pre‐emption effect’). Policies by the competition authority to magnify concerns about pre‐emption - and thereby induce greater use of the leniency program - are also explored.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)

Achieving the Most Effective Outside Counsel and Client Relationship for Both Transactional Issues and Merger Reviews

Posted by D. Daniel Sokol

Michael McFalls (Ropes & Gray) describes Achieving the Most Effective Outside Counsel and Client Relationship for Both Transactional Issues and Merger Reviews.

ABSTRACT: Transactional work can provide outside antitrust counsel immense opportunities to create, cement, and expand relationships with in-house counsel. For IP-intensive businesses, antitrust counsel can provide a useful and often essential complement to the role that lead IP counsel often play as consigliore to a patentholder. For run-of-the-mill antitrust work associated with horizontal acquisitions, antitrust counsel can learn a significant amount about core businesses of the client in a very short period of time. For tough antitrust issues arising from high-stakes mergers and acquisitions, antitrust counsel can create enduring relationships with counsel with significant spillover to other types of antitrust work, particularly counseling on nonmerger issues involving related businesses, and, if necessary, related antitrust litigation. Just as these engagements can create opportunities for antitrust counsel to expand their relationships, they can just as easily lead to the end of relationships between outside counsel and clients. Obviously, poor or subpar results should always lead counsel to reconsider their relationship with the lead outside lawyer, and, in some circumstances, with the related law firm. But results are not necessarily the only or even most significant driver of client satisfaction. The process of reaching a result can be often more important than the result itself in serving clients, especially when that process involves a Second Request and months of tense engagement with the government, external stakeholders, and the merging parties themselves.

This process involves a series of decisions that outside antitrust counsel and in-house counsel make during the course of an engagement about how to divide certain responsibilities in the course of the antitrust engagement. Although those decisions (and the process of reaching them) may have an important impact on client relationships, we do not discuss those implications here. Nor do we describe our thoughts on the best way to allocate those responsibilities to maintain or enhance client relationships. Instead, we simply catalogue the variety of roles that either external or in-house counsel (or other client employees) can assume over the course of a transactional antitrust engagement.

Our assumption is that an effective outcome with the agencies or opposing counsel is the primary goal shared by external and in-house counsel. And our experience is that there are no hard-and-fast rules on how these roles should be allocated. Ultimately, the best way to divide responsibilities depends on what the situation may demand, what the client prefers, and, most importantly, what particular strengths external and in-house counsel can bring to a particular engagement. Certain default rules can be useful, but rigid playbooks are often not.

May 8, 2013 | Permalink | Comments (0) | TrackBack (0)