Monday, October 5, 2015
Xavier Mera (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Universite d'Angers) has penned A Note on the Limits to Monopoly Pricing.
ABSTRACT: Ludwig von Mises and Murray Rothbard tended to emphasize the same requirement for a monopoly price to emerge, as far as the demand schedule for the monopolized good is concerned, in the long run and in the immediate run. This is problematic because, as this paper explains, their criterion of a seller or a cartel of sellers facing an " inelastic demand " above the " competitive price " (Mises) or the " free-market price " (Rothbard) is only required in the immediate run. This has consequences in regard to the question of the limits to monopoly pricing. The inelasticity of demand criterion of both authors left less room for monopoly prices in their theoretical constructs of a hampered market economy than there really is. If one wants to spare the bulk of consumers from the effects of factor misallocation, refraining from granting monopolistic privileges becomes even more urgent than what both authors suggested.
Sunday, October 4, 2015
Hong Kong's New Competition Regime
- Rose Webb, Timothy Lear, Philip Monaghan, Derek Ritzmann, Sep 30, 2015
The early commencement of those parts of the Ordinance requiring the issue of guidelines reflected the Government’s undertaking that guidelines would be published by the HKCC prior to commencement of the competition rules. Rose Webb, Tim Lear, Philip Monaghan, & Derek Ritzmann (Competition Commission, Hong Kong)
- Clara Ingen-Housz, Anna Mitchell, Knut Fournier, Sep 30, 2015
Highlighting the intrinsic political nature of some of these exclusions and exemptions, a feature of the Hong Kong regime is the fact that exemptions and exclusions are not left to the exclusive discretion of the HKCC. Clara Ingen-Housz, Anna Mitchell, & Knut Fournier (Linklaters)
- Mark Jephcott, Adelaide Luke, Lisa Geary, Molly Herron, Sep 30, 2015
However, the compromise position reached in the Guideline provides relatively little in terms of legal certainty as to the circumstances in which RPM may be acceptable. Mark Jephcott, Adelaide Luke, Lisa Geary, & Molly Herron (Herbert Smith Freehills)
- Ping Lin, Sep 30, 2015
While recognizing the possible pro-competitive effect of RPM, however, the HKCC seems to have adopted a “near per se illegal approach” toward RPM. Ping LIN (Lingnan University)
- Danny Leung, Stephanie Tsui, Sep 30, 2015
The Hong Kong system is unique in the sense that its enforcement regime comprises of two separate bodies, namely the HKCC and the Tribunal. Danny Leung & Stephanie Tsui (Hogan Lovells)
- Sandra Marco Colino, Sep 30, 2015
The corporate and individual sanctions available, if used to their full potential, could really force businesses to think twice before colluding. Sandra Marco Colino (Chinese University of Hong Kong)
- Hong Kong Association of the Pharmaceutical Industry, Sep 30, 2015
With the coming into force of Hong Kong's competition law regime, many trade associations are reviewing their practices and such is the chilling effect of the many uncertainties inherent in competition law that some people are actively considering withdrawing their membership of associations. Henry Wheare (Hong Kong Association of the Pharmaceutical Industry)
Friday, October 2, 2015
COMMENT OF THE GLOBAL ANTITRUST INSTITUTE, GEORGE MASON UNIVERSITY SCHOOL OF LAW, ON THE NATIONAL DEVELOPMENT AND REFORM COMMISSION’S QUESTIONNAIRE ON INTELLECTUAL PROPERTY MISUSE ANTITRUST GUIDELINES
From left to right: Bill Page (University of Florida Law), Louis Kaplow (Harvard Law), Kai Uwe Kuhn (University of Michigan Economics), Roger Blair (University of Florida - Economics), Abe Wickelgren (University of Texas Law), Bob Lanzillotti (University of Florida - Business), David Sappington (University of Florida - Economics), and Danny Sokol (University of Florida Law).
I had forgotten that I had taken this picture on my phone.
ABSTRACT: Competitive pressure is lower in markets where goods are more differentiated. I analyze how a change in the degree of horizontal product differentiation affects the incentives of duopolists to disclose quality information. If disclosure is costly, then a firm discloses high qualities but conceals low qualities in equilibrium. The higher the disclosure cost, the higher the equilibrium threshold below which firms conceal quality information. I show that the effect of product differentiation on quality disclosure depends on the cost of disclosure. For low (high) disclosure costs, a firm discloses more (less) quality information if goods become more differentiated.
Join Innography as we host a distinguished panel and discuss the challenges and techniques for managing and mitigating Patent Assertion Entity (PAE) risk in today’s businesses.
We'll delve into the PAE issue, review trends and the impact of recent regulations, then hear from our panelists first hand on how they, and their colleagues are addressing the issue today and planning for tomorrow.
- How organizations are being impacted and dealing with the PAE challenge?
- How the issue is evolving?
- What changes are likely to help?
- How innovative approaches including the LOT Network are addressing the problem?
Don’t miss this opportunity to hear different perspectives and ask your questions in the Q&A session.
In this webinar, we will discuss:
Striking the proper balance between imagination, vision, and technical feasibility
The value of broadly worded vs. narrowly tailored patents
Identifying market openings that suit your talent and patent position
Making build vs. buy decisions based on your existing patent portfolio
Jos Jansen (Aarhus Universtity and Max Planck Institute for Research on Collective Goods) and Andreas Pollak (University of Cologne) undertake Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment.
ABSTRACT: We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where both firms receive information with some probability, we show that firms selectively disclose information in equilibrium in order to influence their competitor’s product-market strategy. Subsequently, we analyze the firms’ behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, in our experiment, subjects’ product-market conduct is largely consistent with theoretical predictions.
Lucas Herrenbrueck (Simon Fraser University) explores Instability of Endogenous Price Dispersion Equilibria: A Simulation.
ABSTRACT: Models of price posting by firms and search by consumers often feature equilibria with endogenous price dispersion. However, such equilibria are fragile in the sense that an individual firm’s decision problem is not concave (or even well-formed) outside of equilibrium. I simulate various procedures firms may use to update their prices sequentially. I find that the benchmark model performs surprisingly well, but that substantial differences in the level, volatility, and dispersion of profits remain even with as many as 100 firms. Certain procedures for price updating lead to “odd” results such as cyclicality or excessive volatility of prices and profits. When cost dispersion becomes large, prices become less volatile as they are more closely tied to costs.
Thursday, October 1, 2015
ABSTRACT: Our estimates, based on large firm-level and industry-level data sets from eighteen countries, suggest that FDI and trade have strong positive spillover effects on product and technology innovation by domestic firms in emerging markets. The FDI effect is more pronounced for firms from advanced economies. Moreover, our results indicate that the spillover effects can be detected with micro data at the firm-level, but that using linkage variables computed from input-output tables at the industry level yields much weaker, and usually insignificant, estimated effects. These patterns are consistent with spillover effects being rather proximate and localized.
Alexander Galetovic, Universidad de los Andes, Stephen Haber, Stanford University, Ross Levine, University of California, Berkeley provide AN EMPIRICAL EXAMINATION OF PATENT HOLDUP.
ABSTRACT: A large theoretical literature asserts that standard-essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP holdup hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.
Hans W. Friederiszick and Linda Grat discuss HIDDEN EFFICIENCIES: THE RELEVANCE OF BUSINESS JUSTIFICATIONS IN ABUSE OF DOMINANCE CASES.
ABSTRACT: This article assesses the relevance of efficiencies and other justifications in recent Article 102 TFEU cases. Based on a review of all EU decisions and openings between 2009 and mid-2013, we find that procompetitive justifications still play an unsatisfactory role in the EU Commission's evaluations, except in IT-related abuse cases. This stands in contrast to the policy goals expressed during the reform phase (from 2005 to 2009), the Guidance Paper, and the increasing relevance of efficiency considerations in merger proceedings. We argue that this development is due to a malfunctioning of the balancing test—that is, the weighting of pro- and anticompetitive effects, as pro- and anticompetitive effects are often non-separable and non-monotone in Article 102 TFEU cases. Policy options are discussed, and it is argued that a fully integrated analysis is the only policy option fully addressing the problem.
Paolo Buccirossi, Lear explores VERTICAL RESTRAINTS ON E-COMMERCE AND SELECTIVE DISTRIBUTION.
ABSTRACT: This paper discusses whether, when manufacturers choose to adopt a selective distribution system, vertical restraints imposed on electronic commerce (e-commerce) may work in the interest of consumers or have anticompetitive consequences that require an antitrust intervention. The paper presents the basic economic concepts that apply to vertical restraints, and identifies the efficiency reasons and the anticompetitive effects that may motivate their adoption. Then, the relevant economic literature is surveyed in order to understand how e-commerce influences retail competition, taking into account its impact on search costs, distribution costs, and information asymmetry. The paper examines the legal treatment of vertical restraints on e-commerce in the case of selective distribution; it summarizes the position expressed by the European Commission in the Block Exemption Regulation and the accompanying guidelines, and then discusses some cases decided by National Competition Authorities, National Courts, and the European Courts. From this overview emerges the risk that the antitrust analysis of vertical restraints on e-commerce in selective distribution systems may be guided by presumptions that do not have solid economic grounds. The paper argues that it is unwise to adopt a formal approach for the legal assessment of these vertical restraints and calls for a more economic effect-based approach.
Wednesday, September 30, 2015
J. Gregory Sidak Criterion Economics, L.L.C. discusses Apportionment, FRAND Royalties, and Comparable Licenses After Ericsson v. D-Link.
ABSTRACT: Standard-setting organizations (SSOs) usually require that their members clarify whether they are willing to provide access to their technology essential to a standard under development on fair, reasonable, and nondiscriminatory (FRAND) terms and conditions — or, in American parlance, reasonable and nondiscriminatory (RAND) terms and conditions. After the patent holder has agreed to license its standard-essential patents (SEPs) on FRAND terms, a licensor and a licensee negotiate the exact licensing terms for the use of the SEP portfolio. In the few cases in which parties cannot agree on the exact terms, they might ask a court or an arbitration tribunal to determine a FRAND royalty. The decision of the U.S. Court of Appeals for the Federal Circuit in Ericsson, Inc. v. D-Link Systems, Inc. identifies important economic principles for determining a FRAND royalty for the use of SEPs. Ericsson is the owner of several patents essential to the 802.11(n) standard — the standard promulgated by the Institute of Electrical and Electronics Engineers (IEEE) that is commonly known as Wi-Fi — and committed to license those patents on RAND terms. When negotiations between Ericsson and several manufacturers of multicomponent devices that incorporated the Wi-Fi standard failed to result in a license, Ericsson sued in the U.S. District Court for the Eastern District of Texas and demanded a jury trial to determine the RAND royalty that the manufacturers should pay to use Ericsson’s SEPs. Relying on evidence from comparable licenses — that is, licenses that Ericsson had signed with third parties similarly situated to the defendants to use Ericsson’s patents essential to the Wi-Fi standard — the jury awarded damages of roughly $10 million to Ericsson. In reviewing the case on appeal, the Federal Circuit confirmed that royalties specified in comparable licenses provide accurate and reliable evidence of the value of a patented technology for calculating a FRAND royalty. The Federal Circuit rejected the defendants’ argument that a chipset (rather than the mobile device) should represent the royalty base to calculate a FRAND royalty. (In simple terms, one typically calculates total damages by multiplying a royalty rate by a royalty base). The Federal Circuit also reiterated the fundamental principle that a party should support allegations about abstract conjectures, such as patent holdup and royalty stacking, with relevant evidence. Unsupported allegations about the SEP holder’s supposedly opportunistic licensing practices should not influence the determination of a FRAND royalty. Finally, the Federal Circuit said that a FRAND royalty should not include the value that a technology acquires by virtue of its inclusion in a standard. Although the Federal Circuit was correct in reiterating that a FRAND royalty, like any other royalty for the use of a patented technology, should compensate the SEP holder for the incremental value of its patented technology, the Federal Circuit’s decision should not be interpreted as excluding any of the standard’s value from a FRAND royalty. To the contrary, when a patented technology creates part of the standard’s value, only a FRAND royalty that includes part of that value will adequately compensate the SEP holder for its contribution.
Liyang Hou, Shanghai Jiao Tong University (SJTU) - KoGuan Law School discusses Antitrust Regulation of Intellectual Property Rights in China.
ABSTRACT: This article reviews the practice of competition agencies, including NDRC, Mofcom and SAIC, and courts in China regarding the application of antitrust law to intellectual property rights related anti-competitive conduct. It covers all the cases and regulations coming out after the adoption of China's Anti-monopoly Law. Although China has progressed considerably in this domain, there are still some imperfections.
Sebastian Peyer UEA Law School identifies Compensation and the Damages Directive.
ABSTRACT: The EU Damages Directive came into force in December 2014. One of its objectives is to ensure the effective private enforcement of competition law by facilitating damages claims in the courts of the EU Member States. This paper looks closely at the Directive’s compensation goal and the key arrangements that are to encourage victims to seek redress in the courts. The paper uses a simple framework to demonstrate that the Damages Directive is unlikely to foster compensation because it fails to create incentives for harmed individuals to commence legal action. If more compensation claims are desired, the Member States should devise a framework for private antitrust actions that goes beyond the Directive’s remit by, for example, allowing class actions.
Liran Einav, Stanford University - Department of Economics; National Bureau of Economic Research (NBER), Chiara Farronato, Stanford University, and Jonathan Levin, Stanford University - Department of Economics; Stanford Graduate School of Business; National Bureau of Economic Research (NBER) examine Peer-to-Peer Markets.
ABSTRACT: Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and the resulting impact on existing firms. Finally, we consider the regulation of peer-to-peer markets, and the economic arguments for different approaches to licensing and certification, data, and employment regulation.
Tuesday, September 29, 2015
Communiqué of 18 September 2015 Summary of the second annual meeting of the Forum on 18 September 2015
Summary of the second annual meeting of the Forum on 18 September 2015
The Rome Antitrust Forum is an initiative co-organised by the Scuola Nazionale dell’Amministrazione (Rome) and the Law Department of the European University Institute (Florence). The purpose of the Forum is to bring together distinguished antitrust practitioners (both lawyers and economists), leading figures in antitrust enforcement from abroad and representatives of the Italian Competition Authority to discuss, on a non-attributable basis, the way in which the Italian system of antitrust enforcement operates. The Forum facilitates an exchange of views among participants in order to identify key challenges confronting antitrust enforcement in Italy. The Forum ends with some suggestions and recommendations which, if taken on board, could lead to a more effective system of antitrust enforcement in Italy.
This year the Forum considered two issues: the role of indirect evidence in proving the existence of a cartel, including in the context of public procurement, and the challenges facing the Italian Authority in the promotion of a pro-competitive system of regulation.
Below we set out some of the major challenges that emerged from the reflections of the Forum participants and conclude with some suggestions.
Vivek Ghosal, Georgia Institute of Technology; Center for Economic Studies and Ifo Institute for Economic Research (CESifo) and Jiayao Ni, Georgia Institute of Technology - School of Economics examine Competition and Innovation in Automobile Markets.
ABSTRACT: Using data from the U.S. automobile market, we empirically examine the link between competition and innovation. Consistent with a large literature, we use patent counts as a measure of innovation. The combination of the U.S. market’s economic importance, market dynamics, and the significant intertemporal fluctuations in firms’ market shares and patents make this an interesting market to examine the link between competition and innovation. We use firm-level time-series data over a long horizon (1969-2012) for nine well established firms selling in the U.S. market (GM, Ford, Chrysler, Toyota, Honda, Nissan, Volkswagen, BMW, and Daimler). Some of our key findings are: (1) increase in firms’ market shares result in higher patenting, and the relationship is reasonably non-linear; (2) higher market-wide competition results in an increase in patenting, and the relationship is weakly non-linear; (3) the (absolute) quantitative impact on patents is larger for firms’ market share effect as compared to market-wide competition; (4) there is relatively strong path-dependence in firms’ patenting behavior; and (5) we find interesting results linking patents to GM’s bankruptcy, the Daimler-Chrysler merger, environmental regulations, voluntary export restraints, and firms’ patenting over business cycles.
International Trade, Intellectual Property and Competition Rules: Multiple Cases for Global 'Regulatory Co-Opetition'?
Rostam J. Neuwirth, University of Macau - Faculty of Law and Alexandr Svetlicinii, University of Macau - Faculty of Law ask International Trade, Intellectual Property and Competition Rules: Multiple Cases for Global 'Regulatory Co-Opetition'?
ABSTRACT: At the global level, the respective legal regimes governing international trade, intellectual property and competition matters have evolved separately or at different speeds and without closer mutual connection and adequate institutional support and coordination. The global economy and some of its most innovative industries, however, are being in a trend of convergence manifest in so-called “convergence products”, i.e. products combining two or more features of formerly separate devices or industries. The convergence of various business branches or industries, however, appears to meet with an increasing divergence of fragmentation of the international legal regimes governing them. As a result, the present chapter advocates the approach of “regulatory co-opetition” as the optimal mix between regulatory competition and regulatory cooperation in the governance of international trade and commerce in the future. Most of all, it understands “regulatory co-opetition” as to not only include the better coordination between governmental and non-governmental actors but notably between the inter-governmental or international organizations in the closely related fields of international trade, intellectual property and competition matters. Based on this understanding, the present chapter features six selected case studies which are used to assess the need for greater coordination between the respective international legal regimes of international trade, intellectual property and competition matters as covered mainly by the WTO, the WIPO, UNCTAD, UNCTIRAL, and the OECD.
Liyang Hou Shanghai Jiao Tong University (SJTU) - KoGuan Law School asks The Qualcomm Decision: Protectionism? And for Whom?
ABSTRACT: This essay reviews the Qualcomm decision made by the NDRC in 2015, a case about abusing standard essential patents. It observes that this decision essentially assessed conduct of abusing dominant positions under the framework of per se illegal. As a result, it, though possibly aiming to protect domestic smartphone producers, may quickly fail its purpose.