Antitrust & Competition Policy Blog

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

Thursday, October 20, 2016

Citizen Petitions: Long, Late-Filed, and At-Last Denied

Michael A. Carrier, Rutgers Law School and Carl J. Minniti III, Rutgers University, Newark, Rutgers Law School, Rutgers School of Law, Students have interesting new work on Citizen Petitions: Long, Late-Filed, and At-Last Denied.

ABSTRACT: The pharmaceutical industry is ground zero for many of the most challenging issues at the intersection of antitrust and intellectual property (IP) law. It also presents a complex regulatory regime that is ripe for anticompetitive behavior. It thus should not be a surprise that the industry has been subject to rigorous antitrust scrutiny in recent years. While settlements between brand and generic firms and “product hopping” from one version of a drug to another have received attention, one behavior has avoided serious scrutiny. Brand firms’ filing of citizen petitions with the U.S. Food and Drug Administration (FDA) has almost entirely slipped beneath the radar. While citizen petitions in theory could raise concerns that a drug is unsafe, in practice they bear a dangerous potential to extend brand monopolies by delaying approval of generics, at a potential cost of millions of dollars per day. This Article offers an empirical study of “505(q)” citizen petitions, which ask the FDA to take specific action against a pending generic application. It analyzes every 505(q) petition filed with the FDA between 2011 and 2015, documenting (1) the number of petitions each year, (2) who files the petitions, (3) the success rate of the petitions, (4) the petitions’ length, (5) whether petitions were filed in close proximity to the expiration of a patent or data exclusivity date, and (6) occasions in which the FDA approved generics on the same day it decided petitions. The study finds that brand firms file 92% of 505(q) petitions. And it concludes that the FDA grants an astonishingly low 8% of petitions, rejecting a full 92%. Why is the grant rate so low? We consider several reasons. First, in the past 5 years, the average length of petitions has more than doubled, and the FDA almost never grants petitions with a length above the mean. Second, 39% of petitions are filed within 6 months of the expiration of a patent or FDA exclusivity date, with almost all of these petitions denied. Third, the FDA resolved a number of petitions on the same day it approved the generic, likely delaying generic entry. These three settings result in grants of only 3%, 2%, and 0%, respectively. The Article concludes by offering examples of serial petitions, late-filed petitions, and a combination of petitions with other behavior such as product-hopping and settlements. In short, citizen petitions represent a hidden tool in brands’ toolkit of entry-delaying activity, and when used inappropriately force consumers to pay high drug prices while providing no offsetting safety benefit.

October 20, 2016 | Permalink | Comments (0)

A Tale of Two Layers: Patents, Standardization, and the Internet

Jorge Contreras, University of Utah offers A Tale of Two Layers: Patents, Standardization, and the Internet.

ABSTRACT: vIn recent years, high-profile lawsuits involving standards-essential patents (SEPs) have made headlines in the United States, Europe, and Asia, leading to a heated public debate regarding the role and impact of patents covering key interoperability standards. Enforcement agencies around the world have investigated and prosecuted alleged violations of competition law and private licensing commitments in connection with SEPs. Yet, while the debate has focused broadly on standardization and patents in the information and communications technology (ICT) sector, commentators have paid little attention to differences among technology layers within ICT. This Article uses both existing and new empirical data to show that patent filing and assertion activity is substantially lower for Internet-related standards than for standards relating to telecommunications and other computing technologies. It analyzes historical and social factors that may have contributed to this divergence focusing on the two principal Internet standards bodies: the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). It counters the dominant narrative that standards and SEPs are necessarily fraught with litigation and thereby necessitate radical systemic change. Instead, it shows that standards policies that de-emphasize patent monetization have led to lower levels of disputes and litigation. It concludes by placing recent discussions of patenting and standards within the broader context of openness in network technologies and urges both industry participants and policy makers to look to the success of Internet standardization in a patent-light environment when considering the adoption of new rules and policies.

October 20, 2016 | Permalink | Comments (0)

Health Care Competition Law in the Shadow of State Action: Minimizing MACs

David Hyman, Georgetown Law and Bill Kovacic, GW Law and Kings College identify Health Care Competition Law in the Shadow of State Action: Minimizing MACs.

ABSTRACT:  How should we go about reconciling competition and consumer protection in health care, given the long shadow cast by the state action doctrine? We consider that issue, using a case study drawn from an obscure corner of the pharmaceutical reimbursement market to motivate and inform our analysis. We show how the balance between competition and consumer protection has been distorted by the political economy of health care regulation – compounded by the extension of the state action doctrine far past its defensible borders. If anything, considerations of political economy argue for much greater skepticism about the utility of regulation – and of the state action doctrine – in the health care space.

October 20, 2016 | Permalink | Comments (0)

Intellectual Property, Antitrust, and the Rule of Law: Between Private Power and State Power

Ariel Katz, University of Toronto explores Intellectual Property, Antitrust, and the Rule of Law: Between Private Power and State Power.

ABSTRACT: This Article explores the rule of law aspects of the intersection between intellectual property and antitrust law. Contemporary discussions and debates on intellectual property (IP), antitrust, and the intersection between them are typically framed in economically oriented terms. This Article, however, shows that there is more law in law than just economics. It demonstrates how the rule of law has influenced the development of several IP doctrines, and the interface between IP and antitrust, in important, albeit not always acknowledged, ways. In particular, it addresses some limitations on IP rights, such as exhaustion and limitations on tying arrangements, are grounded in rule of law principles restricting the arbitrary exercise of legal power, rather than solely in considerations of economic efficiency. The historical development of IP law has reflected several tensions, both economic and political, that lie at the heart of the constitutional order of the modern state: the tension between the benefits of free competition and the recognition that some restraints on competition may be beneficial and justified; the concern that power, even when conferred in the public interest, can often be abused and arbitrarily applied to advance private interests; and the tension between freedom of contract and property and freedom of trade. This Article explores how rule of law considerations have allowed courts to mediate these tensions, both in their familiar public law aspects but also in their less conspicuous private law dimensions, and how, in particular, they have shaped the development of IP doctrine and its intersection with antitrust law and the common law.

October 20, 2016 | Permalink | Comments (0)

Wednesday, October 19, 2016

Testing for Bias to Suppress Royalties for Standard-Essential Patents

Greg Sidak (Criteron Economics) is Testing for Bias to Suppress Royalties for Standard-Essential Patents.

ABSTRACT:The Institute of Electrical and Electronics Engineers (IEEE) is a standards-setting organization (SSO). In 2015, it ratified amendments to its patent policy to mandate that a reasonable and nondiscriminatory (RAND) royalty for a standard-essential patent (SEP)—more precisely, an Essential Patent Claim for an IEEE standard—exclude any value attributable to the standard, and to deny an SEP holder the right to seek an injunction against an unlicensed implementer until appellate review is exhausted. The amendments further say that the determination of a RAND royalty “should,” without limitation, (1) be derived from the value of the smallest salable compliant implementation of an IEEE standard that practices an SEP; (2) comport with a reasonable aggregate royalty burden of the relevant standard; and (3) disregard comparable license agreements obtained under the implicit or explicit threat of an injunction. Because the revisions place strict limitations on an SEP holder’s ability to enforce its patent rights against infringers, they truncate the upper range of the distribution of bilaterally negotiated RAND royalties and thus unambiguously reduce the compensation that the SEP holder may obtain for its technological contributions to the IEEE standards. The IEEE’s patent-policy revisions became effective in March 2015. The IEEE’s 2015 bylaw amendments are highly significant because each unambiguously reduces the compensation that an SEP holder can obtain for its technological contributions to the IEEE’s standards. Throughout the development of those bylaw amendments, sixteen companies submitted 680 comments on four drafts of the proposed amendments and two drafts of a supporting informational document that an ad hoc drafting committee of the IEEE released for public comment. The ad hoc committee responded to the suggested revisions in each comment, either accepting them and implementing them into the next draft, accepting them in principle, or rejecting them. I find a strong negative correlation between the comment submitter’s status as a firm initially opposed to the revisions (a group primarily consisting of net SEP licensors) and the ad hoc committee’s incorporation of the submitter’s proposed revision in the subsequently revised draft. The treatment of the comments by the ad hoc committee exhibits a statistically significant bias against the firms that opposed the bylaw amendments—primarily large SEP holders—and in favor of revisions designed to devalue SEPs.

October 19, 2016 | Permalink | Comments (0)

Competition and Globalization in Developing Economies - Friday, October 28, 2016 from 8:30 AM to 6:30 PM

Competition and Globalization in Developing Economies

Concurrences Review + NYU School of Law

Friday, October 28, 2016 from 8:30 AM to 6:30 PM (EDT)

Event Details

8.30 – 8.45am

Welcome Remarks 

Trevor W. MORRISON | Dean, New York University School of Law

Introductory Remarks  

Eleanor M. FOX | Professor, New York University School of Law

8.45 – 9.15am

Opening Keynote: The Place of Competition and Development in the Global Trade and Economic Architecture

Jonathan FRIED |  Ambassador and Permanent Representative of Canada, World Trade Organization, Geneva

9.15 – 10.45am

Globalization and the Rise of Regionalism: TPP, ASEAN, COMESA, MINT and Coherence in the World   

Tembinkosi BONAKELE | Commissioner, South Africa Competition Commission, Pretoria

Gönenç GÜRKAYNAK | Managing Partner, ELIG, Attorneys-at-Law, Istanbul

R. Ian McEWIN | Managing Partner, Competition Consulting Asia, Singapore | Arndt-Corden Dept of Economics, ANU

Randolph W. TRITELL | Director, Office of International Affairs, FTC, Washington, DC

Moderator: Eleanor M. FOX | Professor, New York University School of Law

Coffee Break

11.00am – 12.30pm

Pricing and Development Issues: Exploitation and Collusion

Dennis DAVIS | President, South African Competition Appeal Court, Cape Town

Assimakis KOMNINOS | Partner, White & Case, Brussels

Janusz ORDOVER | Senior Consultant, Compass Lexecon, New York

Alvaro RAMOS | Head Global Antitrust, Qualcomm, San Diego

Moderator: Harry FIRST | Professor, New York University School of Law

12.30 – 1.30pm

Lunch Keynote  

Dennis DAVIS | President, South African Competition Appeal Court, Cape Town

1.30 – 3.20pm

Mergers: Anatomy of a Clearance in Younger Jurisdictions 

Alejandro CASTAÑEDA SABIDO | Commissioner, COFECE, Mexico City

Sabine CHALMERS | Chief Legal & Corporate Affairs Officer, Anheuser-Busch InBev, New York

Vani CHETTY | Partner, Baker & McKenzie, Johannesburg

George LIPIMILE | Director, COMESA Competition Commission, Lusaka

Tembinkosi BONAKELE | Commissioner, South Africa Competition Commission, Pretoria

Jonathan NYSTROM | Executive Director, Ernst & Young, Washington, DC 

Moderator: Frédéric JENNY | Chairman, OECD Competition Committee, Paris

Coffee Break

3.30 – 5.00pm

Innovation and Development: Licensing and Antitrust/IP Rules and Guidelines 

Jay JURATA | Partner, Orrick, Herrington & Sutcliffe, Washington, DC

Dina KALLAY | Director, Intellectual Property & Competition, Ericsson, Washington, DC

Christopher MEYERS | Associate General Counsel, Microsoft, Redmond 

Susan NING | Partner, King & Wood Mallesons, Beijing

Moderator: Daniel RUBINFELD | Professor, New York University School of Law

5.00 – 6.30pm

Enforcers' Roundtable: What's under the Radar?

Tembinkosi BONAKELE | Commissioner, South Africa Competition Commission, Pretoria

Alejandro CASTAÑEDA SABIDO | Commissioner, COFECE, Mexico City

George LIPIMILE | Director, COMESA Competition Commission, Lusaka

Pablo TREVISÁN | Commissioner, Argentine Competition Commission, Buenos Aires 

Moderator: William E. KOVACIC | Non-Executive Director, Competition and Markets Authority, London

October 19, 2016 | Permalink | Comments (0)

The Price and Variety Effects of Vertical Mergers

Awi Federgruen, Columbia Business School - Decision Risk and Operations and Ming Hu, University of Toronto - Rotman School of Management examine The Price and Variety Effects of Vertical Mergers.

ABSTRACT:  Vertical mergers within a multi-echelon market result in equilibrium price changes, for wholesalers and retailers, alike. They may also impact the product variety that is available to the consumer, i.e., the equilibrium product assortment sold in the market. In this paper, we consider the simultaneous price and variety effects of vertical mergers in a general two-echelon base model, in which an arbitrary number of firms compete at each echelon; each of the upstream suppliers offers one or multiple products to some or all of the retailers or directly to the end consumer. We assume linear price or two-part tariff contracts, with prices selected sequentially, in a sequence of oligopolistic price competitions: the process starts with the firms at the upper echelon, followed by simultaneous price selections by the retailers in the downstream echelon. To assess the impact on product variety, we employ a demand model with the characteristic that, depending on the selected retail prices, a smaller or larger subset of all potential products is sold in the market. For an arbitrary merger of a supplier with a group of retailers, we characterize the post-merger equilibrium behavior and show how the changes of all performance measures of interest, i.e., wholesale and retail price equilibria, product assortment, sales volumes, the firms' profit levels and consumer welfare, can be computed efficiently. When the merger is strictly vertical, i.e., involves a single retailer (organization) with whom the supplier deals on an exclusive basis, we prove that the merger results in a (weak) reduction of all equilibrium prices, along with a (weak) shrinkage of the product assortment.

October 19, 2016 | Permalink | Comments (0)

Market power and media revenue allocation in professional sports: The case of formula one

Budzinski, Oliver; Müller-Kock, Anika focus on Market power and media revenue allocation in professional sports: The case of formula one.

ABSTRACT: Recent allegations from participants of the FIA Formula One World Championship (F1) suggest that the promoter of F1 (possibly together with the sports association) violates European competition law in two ways. First, it alleged-ly abuses its market power by deducting an inappropriate high share from the rev-enues of the collective sale of media rights in order to boost the profits of its pri-vate equity parent company (vertical allocation of media revenue). Second, it alleg-edly forms a cartel with selected top teams at the detriment of smaller teams by providing both unjustified extra payments to these teams and enforcing a heavily biased horizontal allocation of media revenues, benefitting the cartel teams. Pro-fessional sports championships typically receive common revenue, for instance, from trademark rights and marketing, but often also from the sale of broadcasting and other media rights. This common revenue needs to be allocated in two ways: (i) v! ertical allocation between the sports authority and the participants, and (ii) hor-izontal allocation among the participants. Different professional sports champion-ships employ vastly differing schemes for both types of allocation. In this paper, we present an empirical assessment whether the current antitrust allegations against F1 may be valid. We employ concentration measures from empirical economics, like the Hirshman-Herfindahl-Index (HHI), the concentration ratio and the standard de-viation in order to assess different allocation schemes from different commercial sports. With the help of these indices we show that the allocation scheme em-ployed in F1 considerably differs from such used in other professional sports championships. We find the empirical picture to be consistent with an anticompetitive interpretation of F1 media revenue structures and policies. We conclude that there is merit in starting an in-depth antitrust investigation of Formula One motor racing, w! hich would also represent an opportunity for the European Commission to cor-rect earlier mistakes.

October 19, 2016 | Permalink | Comments (0)

Offering Energy Efficiency under Imperfect Competition and Consumer Inattention

Christian Tode is Offering Energy Efficiency under Imperfect Competition and Consumer Inattention.

ABSTRACT: Energy efficiency is considered to be a win-win situation for both the economy and the environment. Producing products and services at lower energy input and related input costs can contribute to climate change abatement and economic competitiveness. Actual implementation of energy efficiency falls short to expectations, though. For one thing, research suggests that consumer inattention is an underlying force for underinvestments. For another thing, energy supply markets are often characterized by imperfect competition. Do firms in the energy retail market have incentives to voluntarily introduce energy efficiency? Or should informational regulation inform inattentive consumers? In this article I show that consumer inattention and imperfect competition are the crucial drivers for firms' decisions to introduce or conceil energy efficiency to customers. I find two symmetric equilibria: One in which both firms introduce energy efficiency and one in which! both firms conceil energy efficiency. Equilibrium coordination depends on the distribution of consumers that are attentive to energy effienciency and consumers that are not. Further, mandatory disclosure laws are found to be weakly welfare increasing.

October 19, 2016 | Permalink | Comments (0)

Tuesday, October 18, 2016

Unprofitable horizontal mergers, external effects, and welfare

Budzinski, Oliver and Kretschmer, Jurgen-Peter study Unprofitable horizontal mergers, external effects, and welfare.

ABSTRACT: Standard analysis of mergers in oligopolies along the lines of the popular Farrell-Shapiro-Framework (FSF) relies regarding its policy conclusions sensitively on the assumption that rational agents will only propose privately profitable mergers. If this assumption held, a positive external effect of a proposed merger would represent a sufficient condition to allow the merger. However, the empirical picture on mergers and acquisitions reveals a significant share of unprofitable mergers and economic theory, moreover, demonstrates that privately unprofitable mergers can be the result of rational action. Therefore, we drop this restrictive assumption and allow for unprofitable mergers to occur. This exerts a considerable impact on merger policy conclusions: while several insights of the original analysis are corroborated (f.i. efficiency defence), a positive external effect does not represent a sufficient condition for the allowance of a merger anymore. Apply! ing such a rule would cause a considerable amount of false decisions.

October 18, 2016 | Permalink | Comments (0)

The Nash bargaining solution in vertical relations with linear input prices

Aghadadashli, Hamid ; Dertwinkel-Kalt, Markus ; Wey, Christian examine The Nash bargaining solution in vertical relations with linear input prices.

ABSTRACT: We re-examine the Nash bargaining solution when an upstream and a downstream firm bargain over a linear input price. We show that the profit sharing rule is given by a simple and instructive formula which depends on the parties' disagreement payoffs, the profit weights in the Nash-product and the elasticity of derived demand. A downstream firm's profit share increases in the equilibrium derived demand elasticity which in turn depends on the final goods' demand elasticity. Our simple formula generalizes to bargaining with N downstream firms when bilateral contracts are unobservable.

October 18, 2016 | Permalink | Comments (0)

Journal of Antitrust Enforcement Agency Effectiveness Study

The new Journal of Antitrust Enforcement Agency Effectiveness Study is out.

ABSTRACT: The Agency Effectiveness Study explores a wide range of the daily concerns faced by competition agency heads and their staff, with an emphasis on the formal and informal ways in which they are addressed. Managing and operating a competition agency is very much a process of learning-by-doing. The aim of the study is, therefore, to capture and make available the know-how that competition agency officials accumulate during their service. In particular, it aims to provide a candid account of the practical challenges encountered and solved by heads of agencies and their staff as they navigate through changing legal, social, political, and organizational landscapes.

As part of the study, current and former agency heads and competition law officials, of both young and more established agencies, were interviewed and asked for their views on a wide range of topics linked to agency effectiveness. A qualitative method was adopted to capture the knowledge and first-hand experience of competition officials. The data were collected through both face-to-face interviews and questionnaires with the aim of exploring practical, managerial, and structural challenges, which may influence an agency’s effectiveness.

October 18, 2016 | Permalink | Comments (0)

Does Organizational Form Drive Competition? Evidence from Coffee Retailing

Brian Adams, Bureau of Labor Statistics, Joshua S. Gans, University of Toronto - Rotman School of Management; NBER, Richard Hayes, Government of New South Wales - Department of Primary Industries, Ryan Lampe, California State University, East Bay - Department of Economics have a caffeine infused paper - Does Organizational Form Drive Competition? Evidence from Coffee Retailing.

ABSTRACT: This article examines patterns of entry and exit in a relatively homogeneous product market to investigate the impact of entry on incumbent firms and market structure. In particular, we are interested in whether the organizational form of entrants matters for the competitive decisions of incumbents. We assess the impact of chain stores on independent retailers in the Melbourne coffee market using annual data on the location and entry status of 4,768 coffee retailers between 1991 and 2010. The long panel enables us to include market fixed effects to address the endogeneity of store locations. Logit regressions indicate that chain stores have no discernible effect on the exit or entry decisions of independent stores. However, each additional chain store increases the probability of another chain store exiting by 2.5 percentage points, and each additional independent cafe increases the probability of another independent cafe exiting by 0.5 percent. These findings imply that neighboring independents and chains operate almost as though they are in separate markets. We offer additional analysis suggesting consumer information as a cause of this differentiation.

October 18, 2016 | Permalink | Comments (0)

Monday, October 17, 2016

Review of Industrial Organization Call for papers: “Competition Policy in Developing Countries”

Call for papers:

Papers are being solicited for a special issue of the Review of Industrial Organization on the topic of “Competition Policy in Developing Countries”.   The special issue will be guest-edited by Yannis Katsoulacos (Athens University of Economics and Business), William Kovacic (George Washington University) and Thomas W. Ross (University of British Columbia).  The editors welcome the submission of papers in all areas of competition policy with application to, or focus on, developing countries.   Specific areas of interest include (but are not limited to):

  • Differences between the appropriate application of competition policy in developing, as opposed to developed, countries.
  • Studies of the development of competition policy, or of specific competition cases, in particular developing counties that have lessons that extend beyond the studied countries.
  • The appropriate design of competition policy institutions in developing countries, and challenges associated with current actual designs.

Papers may be submitted to any of the three guest editors:  Katsoulacos at; Kovacic at; or Ross at tom.ross@sauder.ubc.caThe deadline for submissions is July 31, 2017

October 17, 2016 | Permalink | Comments (0)

Regulatory Leveraging: Problem or Solution?

William E. Kovacic, George Washington University - Law School; King's College London – The Dickson Poon School of Law and David A. Hyman, University of Illinois College of Law ask Regulatory Leveraging: Problem or Solution?

ABSTRACT: Worldwide, there are approximately 130 jurisdictions with competition laws. The governmental entities charged with enforcing these laws are typically called “competition agencies,” but many of these entities do things other than competition law. Of the 36 agencies listed in the Global Competition Review’s 2015 annual review, half have responsibilities beyond their competition portfolio. Assume a competition agency that has significant regulatory power, such as the right to review certain mergers before they are consummated. Pursuant to this authority, the agency determines how quickly mergers are cleared, or whether they can proceed at all. This regulatory power is the functional equivalent of the market power that some private firms enjoy. Further assume that the agency has responsibilities beyond its competition portfolio — say, with regard to privacy and data security. A firm seeks the approval of the agency to merge with another company. What should we think if the agency uses its regulatory power in policy domain A (i.e., merger approval) to extract concessions with respect to policy domain B (i.e., privacy and data security)? Is that a good idea or a bad idea? Does your response differ if the agency is using its regulatory authority in policy domain A to obtain concessions that it could not obtain, or could realize only with great difficulty, if it focused solely on the behavior of the firm in policy domain B? What if the agency is using its regulatory authority in policy domain A to obtain concessions in policy domain B that would be unconstitutional if it sought to impose them directly? Does it make a difference if the agency has no regulatory authority over policy domain B? Stated bluntly, is regulatory leveraging a troublesome problem — or a useful solution? We describe leveraging in the private and public sectors; analyze four case studies of public sector leveraging; consider the costs and benefits of regulatory leveraging; and offer several suggestions for increasing the likelihood that leveraging is used for pro-social ends. We also briefly describe the leveraging of regulators.

October 17, 2016 | Permalink | Comments (0)

DOJ’s Catch-22: Corporate Criminal Antitrust Targets Walk A Blurry Line with Culpable Employees

Craig P. Seebald, Vinson & Elkins analyzes DOJ’s Catch-22: Corporate Criminal Antitrust Targets Walk A Blurry Line with Culpable Employees.

ABSTRACT: Recent DOJ policy, including the September 9, 2015 Memorandum from Deputy Attorney General Sally Yates regarding “Individual Accountability for Corporate Wrongdoing” (commonly known as the Yates Memo)2 and speeches delivered by Antitrust Division leadership create another related dilemma for companies under scrutiny. This tension exists between the Division’s desire for companies to fire or demote individuals who potentially engaged in wrongdoing and the DOJ’s demand that, “in order for a company to receive any consideration for cooperation . . . the company must completely disclose to the Department all relevant facts about individual misconduct.”

October 17, 2016 | Permalink | Comments (0)

CRESSE Lawyers Course: “The Role of Economics in Competition Law and Practice” Friday, June 30th – Monday, July 3rd, 2017


CRESSE Lawyers Course

"The Role of Economics

in Competition Law and Practice"

Friday, June 30th – Monday, July 3rd, 2017

Heraklion, Crete, Greece


Details are here.


October 17, 2016 | Permalink | Comments (0)

A Review of Korean Competition Law and Guidelines for Exercise of Standard-Related Patents

Dae Sik Hong, Sogang University offers A Review of Korean Competition Law and Guidelines for Exercise of Standard-Related Patents.

ABSTRACT: The purpose and main scope of this paper is to focus on the types of specific conduct with potential issues, the standards for them, and the applicable factors to be considered that were provided with respect to the exercise of patent rights-related technology standards in the Review Guidelines on the Unfair Exercise of Intellectual Property Right (IPR Guidelines), review the methods to identify the types of such conduct and relevance of such proposed standards, and propose alternatives thereto.

This paper concludes with suggestions as follows: Firstly, the Korea Fair Trade Commission (KFTC) will use its guidelines as a primary framework to enforce the Monopoly Regulation and Fair Trade Act (MRFTA) by the KFTC officials even though it has no legislative basis; therefore, it is very important to carefully review its contents. Secondly, in order to regulate non-disclosure of relevant patent technology under the MRFTA, the IPR Guidelines needs to specifically provide that both the intent and effect of the non-disclosure on the standard setting process are required. Thirdly, provisions on imposing unreasonable or discriminatory royalties should be improved to take necessary considerations into account, provide specific factors or standards under the special circumstances where the patented technology is included in a standard. Fourthly, whether procedures for the disclosure of patent information and the ex ante negotiation for licensing terms have been complied with, which are provided as important factors to be considered in judging illegality, does not bear causation or close relationship with the violation of the MRFTA and failure to comply with such procedures should not be considered more seriously than other factors. Lastly, the standard for determining whether an FRAND-encumbered SEP holder’s filing for injunctive relief may be anti-competitive can be considered acceptable compared with the recent practical developments in other jurisdictions.

October 17, 2016 | Permalink | Comments (0)

Vertical Relations, Opportunism, and Welfare

Germain Gaudin, Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) models Vertical Relations, Opportunism, and Welfare.

ABSTRACT: This paper revisits the opportunism problem faced by an upstream monopolist contracting with several retailers over secret agreements, when contracts are linear. We characterize the equilibrium under secret contracts and compare it to that under public ones in a setting which allows for general forms of demand and retail competition. We find that market distortions are more severe under secret contracts than public ones if and only if retailers' actions are strategic complements. We also investigate the effect of opportunism on firms' profits. Our main results remain robust whether retailers hold passive or wary beliefs. Finally, we discuss the implications of our results for the antitrust analysis of information exchange between competing retailers, and for the empirical analysis of 'Nash-in-Nash' models.



October 17, 2016 | Permalink | Comments (0)

Sunday, October 16, 2016

Online RPM and MFN Under Antitrust Law and Economics

Pinar Akman, University of Leeds and D. Daniel Sokol, University of Florida - Levin College of Law discuss Online RPM and MFN Under Antitrust Law and Economics.

ABSTRACT: Depending on the legal framing, behavior that might in some circumstances resemble online resale price maintenance (RPM) agreements in other circumstances may instead resemble online most favored nation (MFN) agreements. Together, the cases that involve online RPM and MFN can be viewed as a natural experiment of how antitrust economics and law can adapt to an online world. Thus far, enforcement across jurisdictions has been based on economic theories that do not always match up with legal doctrine. Doctrinal confusion can thwart business practices that may be efficient.

This paper makes a number of contributions. We distinguish issues of online RPM from traditional RPM and online RPM from online MFN. Then, we apply the economic learning on RPM and analyze the antitrust cases of online RPM and MFN to date across the United States, Europe and Australia. The last part of this paper offers policy recommendations that reduce the confusion in current legal doctrine.

October 16, 2016 | Permalink | Comments (0)