Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Thursday, November 20, 2014

Health care demand in the presence of discrete price changes

Michael Gerfin, Boris Kaiser & Christian Schmid analyze Health care demand in the presence of discrete price changes.

ABSTRACT: Deductibles in health insurance generate nonlinear budget sets and dynamic incentives. This paper uses detailed individual claims data from a large Swiss insurance company to estimate the response in health care demand to the discrete price increase that is generated by resetting the deductible at the start of each calendar year. We use a regression discontinuity type framework based on daily data to estimate the change in health care demand right before and right after the turn of the year. We find that for individuals with high deductibles health care demand drops by 27%, which translates into an elasticity of −.21. The decrease is most pronounced for inpatient care and prescription drugs. By contrast, for individuals with low deductibles there is no significant change in health care demand (except for prescription drugs). A remaining open question is whether the observed behavioral responses can be attributed to intertemporal substitution or whether they constitute a classic moral hazard effect.

November 20, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

CALL FOR PAPERS: Patent Pledges (Patent Pledges Symposium: June 15, 2015 at American University)

CALL FOR PAPERS: Patent Pledges



Abstract Submission Deadline: January 20, 2015 Final Paper Deadline: June 1, 2015 Patent Pledges Symposium:  June 15, 2015

Patent holders are increasingly making voluntary, public commitments to limit the enforcement and other exploitation of their patents. The best-known form of patent pledge is the so-called FRAND commitment, in which a patent holder commits to license patents to manufacturers of standardized products on terms that are “fair, reasonable and non-discriminatory.” But patent pledges have been appearing in fields and environments well beyond technical standard-setting, including open source software, green technology and the biosciences. Pledges include FRAND commitments, as well as commitments not to assert patents against specified technologies or entities, and not to transfer patents to non-practicing entities.

A one-day public symposium that explores the legal, economic and policy implications of patent pledges will be held on June 12, 2015 at American University Washington College of Law in Washington, DC. Research papers are solicited on all aspects of patent pledges, including:

  • Historical Comparisons
  • Empirical Studies
  • Economic Theories
  • Antitrust/Competition Theories
  • Contract Theories
  • Patent Law Theories
  • Equitable Theories
  • Property Law Theories
  • Remedies
  • Organizational/Institutional Theory
  • Comparative/International
  • Regulatory Approaches
  • Legislative Approaches
  • Administrative Approaches

For additional background on patent pledges, see Jorge Contreras, Patent Pledges (, and the database of non-SDO pledges contained at

A limited number of papers will be selected for presentation at the symposium. Papers will be selected by an expert committee on the basis of originality, methodology, diversity of viewpoints, and contribution to the field. We invite papers from experienced scholars as well as graduate students and junior scholars.

The authors of selected papers will receive an honorarium of US$1,500 plus travel expenses to attend the symposium (to be split among multiple authors). Payment will be contingent upon delivery of the accepted final paper by the stated deadline and presentation of the paper at the symposium.


Jan. 20, 2015   Deadline for submission of abstract (500 words maximum) together with CV or biographical summary

Feb. 15, 2015  Notification of acceptance/rejection

June 1, 2015   Completed papers (5,000 word minimum) must be submitted

June 12, 2015 Patent Pledges Symposium in Washington, DC

All submissions should be in Microsoft Word format and sent via email to:

There is no publication commitment associated with the symposium, but we may arrange for a law review special issue or edited volume to include the accepted papers.

November 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Classical Competition and Freedom of Contract in American Laissez Faire Constitutionalism

Nicola Giocoli, University of Pisa surveys Classical Competition and Freedom of Contract in American Laissez Faire Constitutionalism.

ABSTRACT: It is impossible to tell the history of American antitrust law and economics during the so-called formative era (1890-1915) without a preliminary understanding of the economic rationale underlying that major phase of American constitutional law commonly called laissez faire constitutionalism, or Lochner era. The essay is a preliminary effort to locate such a rationale in the almost perfect overlap between classical political economy, especially the notion of competition as the supreme organizing principle of thriving societies, and classical liberalism, in particular the notion of liberty of contract. It is argued that the well-known Progressive interpretation of the Lochner era fails to recognize the true meaning and extent of this overlap. The protagonists of our story are economists Adam Smith, John Stuart Mill and Francis Wayland, and Supreme Court Justices James Wilson, Oliver Wendell Holmes and Rufus Peckham.

November 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Should Auctions be Transparent?

Dirk Bergemann (Cowles Foundation, Yale University) and Johannes Horner (Cowles Foundation, Yale University) ask Should Auctions be Transparent?

ABSTRACT: We investigate the role of market transparency in repeated first-price auctions. We consider a setting with independent private and persistent values. We analyze three distinct disclosure regimes regarding the bid and award history. In the minimal disclosure regime each bidder only learns privately whether he won or lost the auction. In equilibrium the allocation is efficient and the minimal disclosure regime does not give rise to pooling equilibria. In contrast, in disclosure settings where either all or only the winner’s bids are public, an inefficient pooling equilibrium with low revenues exists.

November 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Equilibrium downstream mark-up and upstream free entry

Ioannis N. Pinopoulos (Department of Economics, University of Macedonia, Greece) theorizes on Equilibrium downstream mark-up and upstream free entry.

ABSTRACT: We consider a successive Cournot oligopoly model where firms freely enter into the upstream market. We show that, under specific conditions, a higher number of downstream firms can lead to a higher mark-up in the downstream market. Although downstream market power may increase, consumer prices still decrease with the number of downstream firms implying that higher market power does not necessarily imply lower consumer surplus.

November 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Procedural Rights in EU Administrative Competition Proceedings: Ex Ante Mergers

Anca Daniela Chirita, Durham University - Department of Law explores Procedural Rights in EU Administrative Competition Proceedings: Ex Ante Mergers.

ABSTRACT: The present contribution has two inter-related purposes: first, to analyse the context and legal framework of procedural rights in EU competition law, in particular, the administrative notification of mergers, and second, to critically review any perceived flaws in the substantive, institutional design or exercise of these procedural rights in practice, thereby offering proposals for institutional reform. The first and second sections provide an overview of the purpose and scope of application of the EU Merger Control Regulation 139/2004, including its Implementing Regulation 1269/2013, highlighting the major principles underpinning the informal stage, Phase I and II investigations, and procedural deadlines. The third section goes on to question why procedural rights in mergers are contestable and offers constructive reviews of the criticism of the current system. This section questions primarily whether there should be social responsibility for corporations’ procedural rights as is the case under the ECHR regime. Since the administrative procedure of notification of mergers aims to protect the public choice of individual consumers before the corporatist intentions to merge and expand, the EU Merger Regulation produces a contrasting ‘vertical’ rather than ‘horizontal’ effect (supra-national competition law protecting the public, not the individual citizen). The section also prepares the ground for the fourth section, which thoroughly examines whether a human rights inspired catalogue is also feasible for corporations in merger proceedings. The fourth section offers a comparative analysis of the ECHR system to distinguish ‘original’ or ‘express’ procedural rights in mergers, such as the right to good administration of justice, namely, the right to a fair hearing, within a reasonable time, and before an independent and impartial tribunal; ‘implied’ rights, such as the right to due process, including the right to a fair presentation of evidence through the sending of the statement of objections, the right to an adversarial hearing by replying to the statement of objections, the right to have access to one’s file, and the right to a reasoned decision; and ‘derived’ rights, such as the right not to give evidence against oneself. The most heated debate concerns the independence of the European Commission as public administration and the decision-making process in merger cases, which demands institutional reform, both from inside because of a strongly hierarchical administration of justice, thus combining both investigative and prosecutorial functions, and from outside because of the perception of politicisation of economic merger decisions by the College of Commissioners and by the mandate of the Commissioner for Competition. The paper argues in favour of a de-centralisation of such internal and external administrative competences, including a Public Hearing Office. The fifth section concludes.

November 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 18, 2014

Google's Anti-Competitive and Unfair Practices in Digital Leisure Markets

Anca Daniela Chirita, Durham University - Department of Law describes Google's Anti-Competitive and Unfair Practices in Digital Leisure Markets.

ABSTRACT: The purpose of this article is to reflect on the critical use of commitments in the Google case and to analyse and review the matrix of facts that have been highlighted in the academic and practitioner literature. Therefore, the core area of reflection in this contribution are relevant markets; barriers to entry; network and lock-in effects; dominance; and potential anti-competitive, as well as unfair practices as regards commercial advertisements. The analysis of the online search-engine market is complemented by the comparative insights offered by the US class action against Google’s Android mobile applications. In the EU, a similar trend is noticeable in the complaining tone of Google’s competitors. Coupled with the transitional period of the mandate of the newly appointed Commissioner for Competition and the political sensitivity over the potential to misuse search-engine users’ personal data to serve commercial purposes, such as boosting its advertising revenues, the giant Google swims in uncertain waters.

November 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Mergers in Medicare Part D: Decomposing Market Power, Cost Efficiencies, and Bargaining Power

Anna Chorniy, Clemson University, Daniel Miller, Clemson University, and Tilan Tang, Clemson University analyze Mergers in Medicare Part D: Decomposing Market Power, Cost Efficiencies, and Bargaining Power.

ABSTRACT: We examine horizontal mergers amongst Part D insurers with the aim of decomposing market power, cost efficiency, and bargaining power merger effects. We apply a differences-in-differences identification strategy to panel data on plans offered between 2006 and 2012 to document the effects of mergers on plan premiums and drug coverage characteristics. The results indicate substantial market power as mergers cause premiums to rise. But, premiums fall and drug coverage improves for merging insurers that restructure plans and renegotiate contracts with drug suppliers by consolidating existing plans. We attribute these effects to improved cost efficiencies and increased bargaining power.

November 18, 2014 | Permalink | Comments (0) | TrackBack (0)

The Antirust Bulletin Vol 59, No. 3/Fall2014 is out

Volume 59, Number 3/Fall 2014

The Antitrust Bulletin Journal of Antitrust Law and Trade Regulation



Introduction        By Malcolm B. Coate and Kent Bernard


From Rockford to Joplin and Back Again: The Impact of Economics on Hospital Merger Enforcement       By Cory S. Capps

Unresolved Questions Relating to Market Definition in Hospital Mergers       By Sean May and Monica Noether

Competitive Effects Analyses of Hospital Mergers: AreWe Keeping Pace with Dynamic Healthcare Markets?       By Margaret E. Guerin-Calvert

The Importance of Substitution in Assessing Health Care Provider Mergers       By Brett W. Wendling and Nathan E. Wilson


When the Price Isn’t Right – The Lundbeck Case and a Path to Analyze Competition in Drug Research and Development       By Kent Bernard

FTC v. Lundbeck: Is Anything in Antitrust Obvious, Like, Ever? By Chris Sagers and Richard M. Brunell

Nonprice Competition in “Substitute” Drugs: The FTC’s Blind Spot       By Gregory Dolin, M.D.

Predicting Competitive Effects From Prescription Drug Mergers: How Standard Economic Analysis Can Go Wrong       By Gregory J. Werden


United States v. H&R Block: Market Definition in Court Since the 2010 Merger Guidelines       By Marc Remer and Frederick R. Warren-Boulton

Market Definition in Differentiated GoodsWhen the Final Consumer Buys the Good: Insights from the H&R Block Case       By Malcolm B. Coate


Market Power in Battery Separators: In re Polypore       By John Simpson and J. Robert Robertson Market Definition—Achieving an Integrated Analysis       By Henry J. Kahwaty and Cleve B. Tyler

November 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Consolidation or Fragmentation? European Competition Law in the EU Air Transport Sector: A Policy Analysis

Dr. Jakub Kociubinski, University of Wroclaw - Faculty of Law, asks Administration and Economics Consolidation or Fragmentation? European Competition Law in the EU Air Transport Sector: A Policy Analysis.

ABSTRACT: This article analyses the priorities of European competition law in the air transport sector in the light of the ongoing process of the industry’s consolidation. The oligopolistic nature of the airline business results in a natural tendency towards its concentration. From the standpoint of regulatory oversight, the question is how to manage or counteract this tendency in order to achieve defined policy goals. In this vein, European competition law has departed from the model whereby the competitive process in itself is the priority and turned to an instrumental approach, with preference given to the welfare of customers.
This analysis will highlight three policy areas relevant to the discussed subject. It begins with antitrust law, with special emphasis on the sector-specific phenomenon of airline alliances; then discusses merger control, especially in the context of pro-competitive remedies, and finally State aid, with particular focus on the effects of the compensatory scaling-down of operations which are imposed on recipients of a rescue and restructuring aid grant.

November 18, 2014 | Permalink | Comments (0) | TrackBack (0)

U.S. Court Finds that an Athletics Association's Rules Restricting Payments to Student-Athletes Violate Antitrust Laws (O’Bannon v. NCAA)

Michael Carrier, Rutgers Camden describes U.S. Court Finds that an Athletics Association's Rules Restricting Payments to Student-Athletes Violate Antitrust Laws (O’Bannon v. NCAA).

ABSTRACT: In O'Bannon v. NCAA, the court found that the NCAA violated antitrust law by enacting rules preventing student-athletes from being paid for the use of their names, images, and likenesses in videogames, live game telecasts, and other television footage.
This short article examines the opinion, in particular the court's discussion of (1) the plaintiffs' showing of anticompetitive effects, (2) the NCAA's inability to justify the restraint, (3) less restrictive alternatives, and (4) an injunction blocking the NCAA's rules.
The article concludes by situating the opinion in the context of other recent developments, including the Jenkins and Alston cases, Northwestern unionization case, congressional hearings, and changes made by individual schools and conferences.

November 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, November 17, 2014

Antitrust Law Journal Volume 79 Issue 3 is now out

Defining Section 5 of the FTC Act: The Failure of the Common Law Method and the Case for Formal Agency Guidelines

Jan M. Rybnicek, Federal Trade Commission and Joshua D. Wright, Federal Trade Commission; George Mason University School of Law are Defining Section 5 of the FTC Act: The Failure of the Common Law Method and the Case for Formal Agency Guidelines.

ABSTRACT: As the Federal Trade Commission ("FTC" or the "Commission") celebrates its 100th anniversary, it does so amid a renewed interest in finally defining what constitutes a standalone "unfair method of competition" under Section 5 of the FTC Act. For a century, the business community and agency staff have been without any meaningful guidance about what conduct violates the Commission’s signature competition statute. As consensus begins to build about the appropriate parameters of Section 5, some commentators have opposed articulating a principled standard for the application of the FTC’s authority to prosecute standalone unfair methods of competition for fear that doing so would too severely restrict the agency’s enforcement agenda. These commentators prefer for Section 5 to develop though the common law method, and point to the successful development of the traditional antitrust laws as evidence that the common law approach is the standard and preferred means for developing competition law. This Article discusses why, after a century-long natural experiment, it is clear that the common law method cannot be expected to define the scope of the FTC’s unfair methods of competition authority. This Article explains that the failure of the common law process in the Section 5 context is due to fundamental differences between the inputs and outputs associated with traditional litigation and those associated with Section 5 enforcement actions. In particular, this Article explains that Section 5 disputes have almost always been resolved through settlements and, unlike reasoned judicial decisions, that such settlements do not help the public distinguish between what conduct is lawful and unlawful and generally are not treated as binding precedent by the FTC. As a result, this Article argues that the Commission should issue formal agency guidelines to serve as a superior analytical starting point and finally give meaning and purpose to Section 5.

November 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Manufacturers Mergers and Product Variety in Vertically Related Markets

Chrysovalantou Milliou, Athens University of Economics and Business and Joel Sandonis, Universidad de Alicante explore Manufacturers Mergers and Product Variety in Vertically Related Markets.

ABSTRACT: We study final product manufacturers’ incentives to introduce new products into the market and how they are affected by a merger among them. We show that when manufacturers distribute their products through multi-product retailers, a manufacturers merger, although it leads to an increase in the wholesale prices, it can enhance product variety. The merger generated product variety efficiencies though arise only when vertical relations are present: when manufacturers sell directly their products to consumers, a merger never results into more product variety. Still, both in the presence and in the absence of vertical relations, a manufacturers merger is harmful to consumers and welfare.

November 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Provider Competition and Over-Utilization in Health Care

Jan Boone, Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); TILEC and Rudy Douven, CPB Netherlands Bureau for Economic Policy Analysis; CPB Netherlands Bureau for Economic Policy Analysis analyze Provider Competition and Over-Utilization in Health Care.

ABSTRACT: This paper compares the welfare effects of three ways in which health care can be organized: no competition (NC), competition for the market (CfM) and competition on the market (CoM) where the payer offers the optimal contract to providers in each case. We argue that each of these can be optimal depending on the contracting environment of a speciality. In particular, CfM is optimal in a clinical situation where the payer either has contractible information on provider quality or can enforce cost efficient protocols. If such contractible information is not available NC or CoM can be optimal depending on whether patients react to decentralized information on quality differences between providers and whether payer's and patients' preferences are aligned.

November 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Raising Awareness of Anticompetitive Behavior in the Financial Sector of the PRC

The Asian Development Bank is Raising Awareness of Anticompetitive Behavior in the Financial Sector of the PRC.

ABSTRACT: The Anti-Monopoly Law, in effect since August 2008, seeks to encourage competition, maintain market order, and facilitates the allocation of resources through open markets in the People’s Republic of China (PRC). Studies on the impact of this law on the PRC’s financial industry have been limited in scope, hence, the research as published was conducted to fill the gap. This study examines the provisions of the law and the legislation process for them, followed by a discussion of the role of the PRC’s anti-monopoly authorities in enforcing the law in the banking, insurance, and securities industries. It looks at monopolistic practices in the financial industry and the mechanisms instituted for supervising and regulating those practices. It then makes conclusions about the current monopoly situation in the PRC’s financial industry and policy recommendations for a more effective and efficient enforcement of the said ! law.

November 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, November 14, 2014

Meeting Technologies and Optimal Trading. Mechanisms in Competitive Search Markets

Benjamin Lester (Federal Reserve Bank of Philadelphia), Ludo Visschers (The University of Edinburgh & Universidad Carlos III, Madrid), and Ronald Wolthoff (University of Toronto) explain Meeting Technologies and Optimal Trading. Mechanisms in Competitive Search Markets.

ABSTRACT: In many markets, sellers advertise their good with an asking price. This is a price at which the seller will take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the seller receives no better offers. Despite their prevalence in a variety of real world markets, asking prices have received little attention in the academic literature. We construct an environment with a few simple, realistic ingredients and demonstrate that using an asking price is optimal: it is the pricing mechanism that maximizes sellers’ revenues and it implements the efficient outcome in equilibrium. We provide a complete characterization of this equilibrium and use it to explore the positive implications of this pricing mechanism for transaction prices and allocations.

November 14, 2014 | Permalink | Comments (0) | TrackBack (0)

The competition assessment framework for the retail energy sector: some concerns about the proposed interpretation

Stephen Littlechild, Cambridge discusses The competition assessment framework for the retail energy sector: some concerns about the proposed interpretation.

ABSTRACT: The framework proposed by Ofgem, OFT and CMA invokes a well-functioning market, but the Competition Commission has not always used such a concept, and when it has done so it has been problematic. Here, the well-functioning market is Ofgem’s vision of a successful market, not anchored in any actual market. Ofgem’s indicators of a competitive market have changed since 2002: tariff variety and products tailored to different customer groups are now a harmful complexity rather than a potential benefit of competition. The proposed “theories of harm” ignore regulatory policy and coordinated conduct facilitated by regulation. The analysis of weak customer response fails to distinguish between competition as an equilibrium state and as the Competition Commission's rivalrous discovery process over time. The framework thus reflects Ofgem’s perspective, but the assessment needs to be independent because regulation is at is! sue, and because Ofgem is no longer capable of a competition assessment.

November 14, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 13, 2014

Information Exchange: Productive Cooperation or Harmful Collusion? CPI Antitrust Chronicle Issue

Information Exchange: Productive Cooperation or Harmful Collusion?

  1. Jarod Bona, Nov 11, 2014

    “But the Bridge Will Fall” is Not a Valid Defense to an Antitrust Lawsuit

    An antitrust case is not the place to debate the merits of competition. Jarod Bona (Bona Law)

  2. Pedro Callol, Nov 11, 2014

    Information Exchanges and Competition Law: A Few Comparative Law Thoughts

    Grey is most often the color of information exchanges. Pedro Callol (Callol Law)

  3. Neha Georgie, Nov 11, 2014

    Collusion Versus Collaboration: Getting It Right

    In considering how collaboration differs from collusion, it is useful to think of form-based versus effects-based approaches. Neha Georgie

  4. Mark Jephcott, Tom Kemp, Nov 11, 2014

    Trade Associations in Asia: A Predictable Focus of the Authorities

    Trade associations have been an enforcement focus of antitrust authorities in Asia, particularly in China, in recent years. Mark Jephcott & Tom Kemp (Herbert Smith Freehills)

  5. Mark Katz, Nov 11, 2014

    Trade and Professional Associations in Canada: An Update

    What is needed, above all, is the commitment to make competition compliance a priority. Mark Katz (Davies Ward)


Of Special Interest

November 13, 2014 | Permalink | Comments (0) | TrackBack (0)

Price Asymmetry in Farm-Retail Price Transmission in the Turkish Dairy Market

Bor, Ozgur (Atilim University/Department of Economics), Ismihan, Mustafa (Atilim University/Department of Economics) and Bayaner, Ahmet (Akdeniz University/Department of Management) describe Price Asymmetry in Farm-Retail Price Transmission in the Turkish Dairy Market.

ABSTRACT: This study investigates the price asymmetry in farm-retail price transmission in the Turkish milk market. An asymmetric error correction model is applied on the monthly price data, and the results suggest that there is a positive price asymmetry in the farm-retail price transmission in the Turkish dairy market. That is, the retail prices tend to adjust more quickly to the input price increases than to its decreases which yield welfare losses to the consumers. In addition, cointegration results imply that there is a significant market power in the dairy market.

November 13, 2014 | Permalink | Comments (0) | TrackBack (0)