Antitrust & Competition Policy Blog

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

Thursday, April 21, 2016

Assertion of Standards-Essential Patents by Non-Practicing Entities

Jorge Contreras, Utah has researched Assertion of Standards-Essential Patents by Non-Practicing Entities.

ABSTRACT: An extensive literature exists regarding the patent disclosure and licensing commitments made by participants in standard-setting organizations (SSOs), and the assertion of patents by non-practicing entities (NPEs). This study is the first to assess the degree to which NPEs have asserted standards-essential patents (SEPs), and the characteristics of these assertions. We present descriptive statistics regarding NPE and Producer assertions of SEPs pertaining to seven broadly-adopted standards in the telecommunications and networking sectors over a 16.5-year period. Twenty-six NPEs were identified as asserting SEPs pertaining to the standards studied. NPEs initiated 64% of all SEP cases and 77% of all unique patent-defendant assertion events involving these SEPs. NPEs initiated 82% of all defendant-assertion events relating to the five standards subject to FRAND licensing commitments, but only 25% of such events relating to the two standards subject to royalty-free (RF) licensing commitments. When NPEs asserted SEPs from FRAND-based SSOs, the large majority of these assertions (73%) were of unencumbered SEPs. Producers, however, generally asserted FRAND-encumbered SEPs. In the case of SEPs from RF SSOs, NPEs asserted only unencumbered SEPs, while Producers asserted both encumbered and unencumbered SEPs. And while NPE SEP assertions were resolved by settlement at approximately the same rate as Producer SEP assertions, Producer plaintiffs were almost five times as likely to prevail on the merits as NPE plaintiffs.

We conclude with a discussion of the implications of these findings for current debates regarding FRAND licensing and SSO policy limitations, particularly proposals to impose SSO-based licensing encumbrances on SEPs held by NPEs. We also observe that, while NPEs are responsible for a large number of assertions of unencumbered SEPs, the greater threat of hold-up and rent extraction, at least under U.S. law, appears to arise from assertions of unencumbered SEPs by Producers.

April 21, 2016 | Permalink | Comments (0)

The Effect of Entry on R&D Networks

Emmanuel Petrakis, University of Crete - Department of Economics and Nikolas Tsakas, University of Cyprus - Department of Economics describe The Effect of Entry on R&D Networks.

ABSTRACT: We study the effect of potential entry on the formation and stability of R&D networks considering farsighted firms. In particular, we seek to understand whether the incentives for forming R&D collaborations may be altered by the presence of a potential entrant, as well as which are the factors that affect these incentives. We find that an incumbent firm might be willing to sustain an otherwise undesirable collaboration in order to prevent the entry of a new competitor, as well as to refrain from establishing an otherwise desirable collaboration, expecting to form a more profitable collaboration with the entrant. We also find that entry may lead an inefficient incumbent firm to exit the market.

 

 

April 21, 2016 | Permalink | Comments (0)

Empirical Tools and Competition Analysis: Past Progress and Current Problems

Ariel Pakes, National Bureau of Economic Research (NBER); Harvard University - Department of Economics explores Empirical Tools and Competition Analysis: Past Progress and Current Problems.

ABSTRACT: I review a subset of the empirical tools available for competition analysis. The tools discussed are those needed for the empirical analysis of; demand, production efficiency, product repositioning, and the evolution of market structure. Where relevant I start with a brief review of tools developed in the 1990’s that have recently been incorporated into the analysis of actual policy. The focus is on providing an overview of new developments; both those that are easy to implement, and those that are not quite at that stage yet show promise.

April 21, 2016 | Permalink | Comments (0)

Wednesday, April 20, 2016

How the Sunk Costs of Incumbents Make Entrants Important for Innovation: A Model and Implications for Policy

Dimitry Rtischev, Gakushuin University explains How the Sunk Costs of Incumbents Make Entrants Important for Innovation: A Model and Implications for Policy.

ABSTRACT: The paper clarifies how sunk costs can lead a rational incumbent to innovate less than an entrant. It also demonstrates that competition among incumbents yields less adoption of new and more efficient production technology than competition which includes entrants. The results suggest that policy promoting adoption of next-generation production technology should distinguish among firms based on their sunk costs in current-generation technology and encourage entry by industry outsiders such as startups or firms from other industries.

 

 

April 20, 2016 | Permalink | Comments (0)

Comment of the Global Antitrust Institute, George Mason University School of Law, on the India Department of Industrial Policy and Promotion’s Discussion Paper on Standard Essential Patents

Koren W. Wong-Ervin, George Mason University School of Law - Global Antitrust Institute, Douglas H. Ginsburg, U.S. Court of Appeals for the District of Columbia Circuit; George Mason University School of Law, Bruce H. Kobayashi, George Mason University - School of Law, and Joshua D. Wright, George Mason University School of Law Comment of the Global Antitrust Institute, George Mason University School of Law, on the India Department of Industrial Policy and Promotion’s Discussion Paper on Standard Essential Patents.

ABSTRACT: This comment is submitted in response to the India Department of Industrial Policy and Promotion’s Discussion Paper on Standard Essential Patents and Their Availability on FRAND Terms.

April 20, 2016 | Permalink | Comments (0)

How Antitrust Law Could Reform College Football: Section 1 of the Sherman Act and the Hope for Tangible Change

Marc Edelman, City University of New York - Baruch College explains How Antitrust Law Could Reform College Football: Section 1 of the Sherman Act and the Hope for Tangible Change.

ABSTRACT: This speech discusses how the absurdity came to pass where college football has become a multibillion dollar business, yet a majority of college football players live below the poverty line. This speech also discusses how antitrust litigation against the National Collegiate Athletic Association and its member colleges could serve as the much-needed impetus for reform to the system, and why a proper antitrust remedy could yield economic reform and tangible change in college sports. Overall, this is a speech built on optimism, but only optimism presuming that the courts properly recognize that the NCAA’s current mode of business violates federal antitrust laws, and only if the courts ultimately require changes to better protect the legal rights of all stakeholder groups within the collegiate sports industry.

April 20, 2016 | Permalink | Comments (0)

Canada Drops Google Antitrust Probe

The Wall Street Journal reports that Canada Drops Google Antitrust Probe.

April 20, 2016 | Permalink | Comments (0)

Imperfect Cartelization in OPEC

Samuel Jovan Okullo, VU University Amsterdam - Institute for Environmental Studies (IVM) and Frederic Reynes, VU University Amsterdam - Institute for Environmental Studies (IVM) study Imperfect Cartelization in OPEC.

ABSTRACT: A model of global oil production is applied to study cartelization by OPEC countries. Writing out the shadow price on quota allocations so as to draw correspondence to coefficients of cooperation (Cyert et al. 1973), we examine the incentives that different OPEC members to collude. We find that heterogeneity in OPEC and the supplies of the non-OPEC fringe create strong incentives against OPEC cooperation. OPEC’s optimal supply strategy although observed to be substantially more restrictive than that of a Cournot-Nash oligopoly, is found to still be more accommodative than that of a perfect cartel. The strategy involves allocating larger than proportionate quotas to smaller and relatively costlier producers as if to bribe their participation in the cartel. This is contrary to predictions of the standard cartel model that such producers should be allocated relatively more stringent quotas. Furthermore, we find that cartel collusion is likely to be sustained for elastic than inelastic demand. Since global oil demand is well known to be inelastic, this observation provides another structural explanation for why OPEC behavior is inconsistent with that of a perfect cartel. Our study points to multiple headwinds that limit OPECs ability to raise long-run global oil prices.

April 20, 2016 | Permalink | Comments (0)

Tuesday, April 19, 2016

Competitive Price Targeting with Smartphone Coupons

Jean-Pierre Dube, University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER), Zheng Fang, Sichuan University - Business School, Nathan M. Fong, Temple University - Department of Marketing and Supply Chain Management; MIT Sloan School of Management, and Xueming Luo, Temple University - Department of Management Information Systems are Competitive Price Targeting with Smartphone Coupons.

ABSTRACT: We conduct a large-scale field experiment to study competitive price discrimination in a duopoly market with two rival movie theaters. The firms use mobile targeting to offer different prices based on location and past consumer activity. A novel feature of our experiment is that we test a range of relative ticket prices from both firms to trace out their respective best-response functions and to assess equilibrium outcomes. We use our experimentally-generated data to estimate a demand model that can be used to predict the consumer choices and corresponding firm best-responses at price levels not included in the test. We find an empirically large return on investment when a single firm unilaterally targets its prices based on the geographic location or historical visit behavior of a mobile customer. However, these returns can be mitigated by competitive interactions whereby both firms simultaneously engage in targeting. In practice, firms typically test only their own prices and do not consider the competitive response of a rival. In our study of movie theaters, competition enhances the returns to behavioral targeting but reduces the returns to geo-targeting. Under geographic targeting, each theater offers a discount in the other rival's local market, toughening price competition. In contrast, under behavioral targeting, the strategic complementarity of prices coupled with the symmetric incentives of the two theaters to raise prices charged to high-recency customers softens price competition. Thus, managers need to consider how competition moderates the profitability of price targeting. Moreover, field experiments that hold the competitor's actions fixed may generate misleading conclusions if the permanent implementation of a tested action would likely elicit a competitive response.

April 19, 2016 | Permalink | Comments (0)

The competitive effects of parity clauses on online commerce

Ariel Ezrachi (Oxford) examines The competitive effects of parity clauses on online commerce.

ABSTRACT: Parity clauses, also known as most-favoured-nation clauses, are designed to address the hold-up problem in vertical relations and facilitate investments and efficiencies by the downstream platform. However, when designed too broadly, they have the potential of undermining the dynamics of competition and reducing consumer welfare. This paper explores the welfare effects of parity clauses and reflects on the level of intervention they may call for. It reviews the possible theories of harm associated with parity clauses and draws a dividing line between the effects generated by narrow and wide parity.

April 19, 2016 | Permalink | Comments (0)

Disruptive Change in the Taxi Business: The Case of Uber

Judd N. L. Cramer, Princeton University - Department of Economics and Alan B. Krueger, Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); Institute for the Study of Labor analyze Disruptive Change in the Taxi Business: The Case of Uber.

ABSTRACT: In most cities, the taxi industry is highly regulated and utilizes technology developed in the 1940s. Ride sharing services such as Uber and Lyft, which use modern internet-based mobile technology to connect passengers and drivers, have begun to compete with traditional taxis. This paper examines the efficiency of ride sharing services vis-à-vis taxis by comparing the capacity utilization rate of UberX drivers with that of traditional taxi drivers in five cities. The capacity utilization rate is measured by the fraction of time a driver has a fare-paying passenger in the car while he or she is working, and by the share of total miles that drivers log in which a passenger is in their car. The main conclusion is that, in most cities with data available, UberX drivers spend a significantly higher fraction of their time, and drive a substantially higher share of miles, with a passenger in their car than do taxi drivers. Four factors likely contribute to the higher capacity utilization rate of UberX drivers: 1) Uber’s more efficient driver-passenger matching technology; 2)the larger scale of Uber than taxi companies; 3) inefficient taxi regulations; and 4) Uber’s flexible labor supply model and surge pricing more closely match supply with demand throughout the day.

April 19, 2016 | Permalink | Comments (1)

Competition and Innovation in the Presence of Financial Constraints

William David Grieser, Tulane University and Zack Liu, University of Texas at Austin examine Competition and Innovation in the Presence of Financial Constraints.

ABSTRACT: We use inter-firm patent citations to identify competitors and examine the relation between a firm's investment decisions and competitor financial constraints. We find that a one standard deviation increase in competitor constraints is associated with 8.8-13.9% more patent applications. Furthermore, firms appear to shift spending to compete more with constrained competitors. To mitigate endogeneity concerns, we exploit the 2004 AJCA tax holiday and the 1989 junk bond crisis as exogenous shocks to competitor financing constraints and find corroborating evidence. Our findings suggest that ignoring competitor feedback effects when assessing financing related investment distortions underestimates the consequences of being financially constrained.

April 19, 2016 | Permalink | Comments (0)

Monday, April 18, 2016

Galp Energía España: Limitations on the General Court's Unlimited Jurisdiction to Review Decisions Imposing Fines

Paloma Martinez-Lage, Martínez Lage Allendesalazar & Brokelmann has written on Galp Energia Espana: Limitations on the General Court's Unlimited Jurisdiction to Review Decisions Imposing Fines.

ABSTRACT: The General Court's unlimited jurisdiction to review decisions imposing fines concerns solely the assessment of the fine imposed by the Commission, to the exclusion of any alteration of the constituent elements of the infringement determined in the Commission's decision.                   

April 18, 2016 | Permalink | Comments (0)

Recent Developments in EU Merger Remedies

Christopher Cook, Vladimir Novak and Sven Frisch (all Cleary Gottlieb) describe Recent Developments in EU Merger Remedies.

ABSTRACT: Commission practice in 2015 suggests a tougher stance on remedies when compared with the previous administration, particularly in telecoms and pharmaceuticals mergers.

The Commission has increasingly focused on innovation-related concerns and insisted on divestitures to address them.

Up-front buyers have remained the Commission's preferred structure in most divestitures.

April 18, 2016 | Permalink | Comments (0)

The Application of Article 102 TFEU by the European Commission and the European Courts

Romano Subiotto QC, David R. Little, and Romi Lepetska (all Cleary Gottlieb) explore The Application of Article 102 TFEU by the European Commission and the European Courts.

ABSTRACT: DG COMP accelerated its Article 102 enforcement work in 2015, opening five new investigations and issuing provisional adverse findings (Statement of Objections) in six cases—companies implicated in these investigations include Amazon, Gazprom, Google, and Qualcomm.

In Post Danmark II and Huawei v. ZTE, the Court of Justice provided clarity on its approach to controversial areas of the law but left several important questions unanswered.

Following criticism that it has been too quick to resolve cases through the Article 9 commitments mechanism, the Commission has announced an ex-post evaluation of the effectiveness and efficiency of past Article 9 decisions.

April 18, 2016 | Permalink | Comments (0)

Strategy Revision Opportunities and Collusion

Matthew Embrey, University of Sussex, Department of Economics, Friederike Mengel, University of Essex; Maastricht University, and Ronald Peeters, Maastricht University explore Strategy Revision Opportunities and Collusion.

ABSTRACT: This paper studies whether and how strategy revision opportunities affect levels of collusion in indefinitely repeated two-player games. Consistent with standard theory, we find that such opportunities do not affect strategy choices, or collusion levels, if the game is of strategic substitutes. In contrast, there is a strong and positive effect for games of strategic complements. Revision opportunities lead to more collusion. The latter cannot be explained by renegotiation or standard risk-dominance considerations, but is consistent with a notion of fear of miscoordination based on minmax regret.

April 18, 2016 | Permalink | Comments (0)

Saturday, April 16, 2016

Passover 2016 Videos

Once again the girls have worked to watch a number of Youtube videos to bring you some interest Passover videos.  

  1. Shtar - Ma Nishtana (to the tune of When I'll See You Again)

 

 

2. The Adele/Bieber Passover Mashup

 

3. Chad Gadya

 

4. Y-Studs - Seder - Passover 

 

5. Six13 - Uptown Passover (An "Uptown Funk" for Pesach)

 

6. Six13 - Chozen (A Passover Tribute)

 

April 16, 2016 | Permalink | Comments (0)

Friday, April 15, 2016

Attorney General Loretta E. Lynch Announces Renata B. Hesse to Serve as Head of Antitrust Division

It is official. Renata Hesse has replaced Bill Baer as head of the Antitrust Division. See the press release here.  I think Renata is a deep thinker and someone who is highly capable.  I think incredibly highly of her  

April 15, 2016 | Permalink | Comments (0)

The Images of the ‘Consumer’ in EU Competition Law

Alison Jones, King's College London – The Dickson Poon School of Law and Albertina Albors-Lloren,s University of Cambridge, Faculty of Law explore The Images of the ‘Consumer’ in EU Competition Law.

ABSTRACT: This paper examines the different images of the 'consumer(s)' drawn in EU Competition Law and seeks to identify exactly who those consumers are.

The competition provisions in the TFEU make several express references to consumers without defining the term. Further, a number of allusions to the consumer can be found in the jurisprudence, secondary legislation and the Commission’s guidance documents. These sources suggest, at first sight, that, as is the case in other areas of EU law, the image of the consumer painted by the law is not a uniform or monochrome one, but a colourful one, evoking a landscape of diversity. This chapter considers this diversity of images and argues that when the apparently differing approaches are set within the broader context in which they are used, and against the overarching goals of EU Competition law, it can be seen that the interpretations adopted in each scenario are not in fact inconsistent with one another. Rather, the question of how the consumer is characterised and defined in the competition law sphere is dependent upon the context and the part of the competition law process in which it is used. In particular, the meaning of the term ‘consumer’ adopted fluctuates depending upon whether it is used in the context of:

(i) describing the objectives of the competition laws and the consumers that those competition law rules are designed to protect;
(ii) identifying persons during the process of determining whether the competition law rules have been infringed and, consequently, their objectives thwarted: for example, when deploying analytical tools or identifying whether particular persons, or groups of persons, have been harmed or benefited by the conduct at issue; or
(iii) referring to some of the actors who participate in the enforcement of the substantive competition provisions.

The chapter concludes by proposing a taxonomy of the images of the consumer(s) and by recognising that, despite the overarching objective of EU Competition Law, the final consumer is more likely to be a distant, rather than a direct, beneficiary of the rules.

April 15, 2016 | Permalink | Comments (0)

How High (and Far) Can You Go? On Setting Fines in Cartel Cases Involving Vertically-Integrated Undertakings and Foreign Sales

Marek Martyniszyn, Queen's University Belfast - School of Law asks How High (and Far) Can You Go? On Setting Fines in Cartel Cases Involving Vertically-Integrated Undertakings and Foreign Sales.

ABSTRACT: This article examines the recent developments concerning the treatment of internal sales (intra-group or captive sales) in the process of setting fines for violations of EU Competition Law. In particular, it looks into Guardian Industries, LG Display and InnoLux, in which the Court of Justice recognised the European Commission’s right to take into account internal sales, also in the transnational setting (when infringement-affected components are sold and incorporated into the finished products outside the EU), and to impose fines which more accurately reflect the scale and significance of the investigated infringements.

April 15, 2016 | Permalink | Comments (0)