Wednesday, June 24, 2015
Francis O. Scarpulla, The Scarpulla Law Firm and Qianwei Fu, Zelle Hofmann Voelbel & Mason LLP. are Thinking globally about recovery actions in international cartel cases.
ABSTRACT: This article examines the legal and practical challenges that corporate claimants face in pursuing damages actions against international price-fixing cartels. It discusses the complex jurisdiction, choice-of-law, and related procedural issues central to corporate claimants’ litigation strategy in maximizing global recovery, with a focus on the relevant legal frameworks in the USA and Europe. The article also identifies trends in settlement and arbitration as potential alternatives to litigating damages claims in multiple national courts. The objective of this article is to provide productive inputs for corporate claimants to conduct a fair assessment of cross-jurisdictional claims in linked global cartel cases. In practice, corporate claimants should carefully weigh their recovery options with these complex issues in mind.
Tuesday, June 23, 2015
The Supreme Court decision in Kimble v Marvel came out yesterday. The Court suggested that in antitrust cases, stare decisis has limits in antitrust and that we should see a change in doctrine as we have a better understanding of economics to guide us for better case law. What are those areas most in need (based on how bad the underlying "good" case law is) of reform? I provide my top three terrible decisions previously endorsed by the Supreme Court:
1. criminal application of Robinson Patman
2. merger efficiencies are unlawful
3. tying is per se illegal
I open it up to readers to add their thoughts on bad antitrust doctrines and decisions. Please note that unless you use your real name, I am not posting your comment (this means you Dan Crane - aka, the "Wolverine Avenger").
Jorge Padilla, Compass Lexecon and Valerie Meunier, Compass Lexecon ask Should Reverse Payment Patent Settlements Be Prohibited Per Se?
ABSTRACT: Using the same competition test and counterfactual that has been used in the economic literature that is often cited to justify intervention against virtually all reverse payment patent settlements (RPPSs), we conclude that (1) RPPSs can benefit consumers and, therefore, it is wrong to presume that RPPSs are necessarily anticompetitive; (2) it is also incorrect to presume that RPPSs are by their very nature injurious to competition; (3) such a presumption is unjustified even for those involving reverse payments in excess of the originator’s expected litigation costs; (4) there is therefore no justification for treating RPPSs as per se illegal; (5) a case-by-case assessment of the effects on competition and consumer welfare of an RPPS that uses the expected date of entry as the standard of comparison in the counterfactual world, would necessarily require informed judgments as to (at a minimum) the strength of the patent at issue and the likelihood of patent infringement; (6) as a result, assessing RPPSs on a case by case basis using the expected date of entry standard for comparison is bound to lead to errors and reduce consumer welfare and, hence, cannot constitute an appropriate legal standard; and (7) RPPSs, even those involving reverse payments greater than the originator’s litigation costs, should be assessed under a rebuttable presumption of legality rule — i.e. they should be presumed legal unless there is direct evidence of a conspiracy to delay entry.
Lijun Pan, Nagoya University discusses Horizontal Merger of Big Firms with Product Choice in the Presence of Small Firms.
ABSTRACT: We extend Shimomura and Thisse (2012) to investigate how the bilateral merger between big firms with the choice on product range affects the competitive fringe and social welfare. The comparison of the marginal cost synergy to fixed cost determines whether the merged big firm (insider) withdraws a brand or maintains two brands. In addition, the insider's different product choices generate opposing impacts on the competitive fringe and social welfare.
Stefan Thomas, Eberhard-Karls-University - Faculty of Law examines Ex-Ante and Ex-Post Control of Buyer Power.
ABSTRACT: This paper considers the effects of buyer power under the antitrust laws. It focuses on EU antitrust law, namely Article 102 TFEU and the EU Merger Control Regulation, while taking into account the stance of US antitrust law. Recent investigations of several European antitrust authorities in the grocery sector have expressed concerns that concentration on the demand side can result in market foreclosure or anticompetitive exploitation of market participants. Also, in the US there is an ongoing debate about the anticompetitive and procompetitive effects of buyer power, which is inter alia reflected in the landmark decision of the US Supreme Court in Weyerhaeuser and in the merger control policies of the DOJ and the FTC. Against this background, the present paper starts with the definition of buyer power. It underscores the necessity to distinguish between single price monopsony on the one hand and individual bargaining power on the other hand, since the economic effects of these two types of buyer power deviate significantly. In subsequent steps, the paper analyses different theories of harm that can be raised with respect to buyer power. It discusses the effects of buyer power on allocative efficiency, dynamic efficiency as well as consumer welfare and draws conclusions from that for the enforcement of the antitrust laws.
Yong Chao, University of Louisville - College of Business - Department of Economics, Chen Yao, University of Warwick, and Mao Ye, University of Illinois at Urbana-Champaign discuss Tick Size Constraints, High-Frequency Trading, and Liquidity.
ABSTRACT: U.S. exchange operators compete for order flow by setting “make” fees for limit orders and “take” fees for market orders. When traders can quote continuous prices, fee breakdown is neutral and exchanges compete on the total fee. The one-cent minimum tick size constraints prevent perfect neutralization and create a role for exchanges to differentiate otherwise-identical trading platforms through their fee breakdowns. This product differentiation creates an incentive for an operator to establish multiple platforms for second-degree price discrimination, and leads to mixed-strategy equilibria with positive profits for competing operators. Fees can improve social welfare in the presence of tick-size constraints.
Monday, June 22, 2015
Niamh Dunne, Kings College has written on Competition Law and Economic Regulation Making and Managing Markets.
BOOK ABSTRACT: Niamh Dunne undertakes a systematic exploration of the relationship between competition law and economic regulation as legal mechanisms of market control. Beginning from a theoretical assessment of these legal instruments as discrete mechanisms, the author goes on to address numerous facets of the substantive interrelationship between competition law and economic regulation. She considers, amongst other aspects, the concept of regulatory competition law; deregulation, liberalisation and 'regulation for competition'; the concurrent application of competition law in regulated markets; and relevant institutional aspects including market study procedures, the distribution of enforcement powers between competition agencies and sector regulators, and certain legal powers that demonstrate a 'hybridised' quality lying between competition law and economic regulation. Throughout her assessment, Dunne identifies and explores recurrent considerations that inform and shape the optimal relationship between these legal mechanisms within any jurisdiction.
Ron Adner, Dartmouth College - Strategy & Management Area, Jianqing Chen, University of Texas at Dallas - Jindal School of Management and Feng Zhu, Harvard University - Harvard Business School discuss Frenemies in Platform Markets: The Case of Apple's iPad vs. Amazon's Kindle.
ABSTRACT: We study the compatibility decisions of two competing platforms that generate profits through both hardware sales and royalties from content sales. We consider a game-theoretic model in which the platform hardware may offer different standalone utilities to users who have different preferences over the two platforms. We find that incentives to establish one-way compatibility — the platform with smaller standalone value allows users of the competing platform to access its content — can arise from the difference in their profit foci. As the difference in the standalone utilities increases, royalties from content sales become less important to the platform with greater standalone value but becomes more important for the other platform. Compatibility increases asymmetry between the platforms’ profit foci and, when the difference in the standalone utilities is sufficiently large, yields greater profits for both platforms. We further show that social welfare is greater under one-way compatibility than under incompatibility, and there exist no incentives for either platform to establish one-way compatibility the other way round. We investigate as well how factors such as different platform production costs, exclusive content, and endogenized royalty rates affect compatibility incentives.
Robin Feldman, University of California Hastings College of the Law and Mark A. Lemley, Stanford Law School ask Does Patent Licensing Mean Innovation?
ABSTRACT: A commonly offered justification for patent trolls or non-practicing entities (NPEs) is that they serve as a middleman facilitating innovation, bringing new technology from inventors to those who can implement it. We survey those involved in patent licensing to see how often patent licenses actually led to innovation or technology transfer. We find that very few patent licenses from assertion actually lead to new innovation; most are simply about paying for the freedom to keep doing what the licensee was already doing. Surprisingly, this is true not only of NPE licenses but even of licenses from product-producing companies and universities. Our results cast significant doubt on one common justification for patent rights.
Kings College Dickson Poon of Law, the premier competition law program in Europe (and by the number of academics on the faculty - the world) hosted the Herbert Smith Freehills Competition Law Moot 2015. The results are in and congrats to the following students and schools:
Best Oralist: Lisa Tan.
Runner ups: Jeremiah Lau, Michael Craig, Vesna Tezak, Benjamin Wong.
Overall Team Rankings
1. The University of Hong Kong
2. King’s College London
3. National University of Singapore
4. University of Amsterdam
5. University of Leeds
6. University of Leicester
7. Utrecht University
8. University of Nottingham
9. University of Wroclaw
10. Maastricht University
11. University of East Anglia
12. Helsinki University
Victoria Daskalova, TILEC; Tilburg Law School asks Consumer Welfare in EU Competition Law: What is It (Not) About?
ABSTRACT: More than a decade after the proclamation of consumer welfare as a goal of EU competition law, a fundamental question remains unanswered: namely, what is the content of the EU consumer welfare standard? What types of benefits and harms count respectively as welfare and as harm? Whose harm and whose benefit is included in the definition? Few answers have been available to these crucial, from a legal perspective, questions.
The goal of this article is to explore the meaning of consumer welfare in terms of these questions. In particular, considering the assumption that the notion of consumer welfare in EU competition law is borrowed from economics, the article will attempt to verify to what extent consumer welfare coincides with the notion of consumer surplus in economics. The focus is therefore on 1) whether consumer can be taken to mean the final consumer or the intermediary purchaser and 2) whether the notion of harm refers primarily to price effects. Part I of the paper focuses on the definition of consumer welfare in antitrust law and in economics. Part II considers the definitions of consumer welfare in the Commission’s soft law and argues that a finding of an end user surplus cannot be supported. Part III turns to the jurisprudence of the European Courts and argues that support for end-user surplus cannot be found in the Court’s case law. The paper concludes that although we do not find support for an end-user surplus standard in the Court’s jurisprudence, the change in language in the 2012 Post Danmark ruling leaves us wondering as to whether and in what direction the Court’s approach might change.
Sunday, June 21, 2015
We spent father's day in Clearwater, Florida, at the Clearwater Marine Aquarium, home of dolphins Winter and Hope from the movies Dolphin Tale and Dolphin Tale 2. Hannah and the girls had lots of fun although it was quite hot. It was a rewarding father's day for me because the girls were happy.
Today we also skyped with my father in the morning and called him and my mother when we got home (because they worry - and if your parents' still don't ask you to call them, you are missing out). I love my father José Sokol very much. He is kind, caring and very loving. He worked hard all of his life to provide for us and instilled in us the importance of education, hard work and and giving back to the community - my mom did too but more on that for Mother's Day. Both of my parents are my role models. Hannah and I both hope to be as good to our girls as my parents are to me and my brother. I should add that Hannah speaks more to my parents per day than I do.
For the first time (as a father's day present - he has always wanted to watch me), my father will hear me present at an antitrust conference. For those in DC and who plan to attend the World Bank conference Promoting Effective Competition Policies for Shared Prosperity and Inclusive Growth on Tuesday, you can meet him.
Saturday, June 20, 2015
Teaching Antitrust Effectively
- Spencer Weber Waller, Jun 12, 2015
I am convinced that there are effective ways to introduce more simulations, role playing, active learning, and a greater air of reality to teaching antitrust law. Spencer Weber Waller (Loyola University Chicago School of Law)
- Steven Cernak, Jun 12, 2015
Beyond necessary legal skills, many of my students can use an antitrust course to learn needed lessons about how the economy and businesses function. Steven J. Cernak (Schiff Hardin LLP)
- Andrew Gavil, Jun 12, 2015
But the challenge for teaching antitrust is not just the volume of newer cases, but also their analytical content and the evolving role of the antitrust lawyer. Andrew I. Gavil (Howard University School of Law)
- Max Huffman, Jun 12, 2015
My single most successful innovation in recruiting students and teaching antitrust has been to move one class, and particular lessons from another, out of the classroom and online. Max Huffman (Indiana University Robert H. McKinney School of Law)
- Philip Marsden, Jun 12, 2015
It is better that the students realize early on how fact-specific antitrust law is, how important (and even determinative) economic analysis is, and how underneath the case law are small “p”—political or philosophical—approaches to the respective roles of markets and government intervention. Philip Marsden (College of Europe, Bruges & U.K. CMA)
- Paul Nihoul, Jun 12, 2015
Should students be aware of subtle cultural distinctions, if the purpose is to teach them how to exercise their legal profession and, ultimately, as some would reckon, make money? My answer is that cultural differences matter to legal education—they matter a lot. Paul Nihoul (Université Catholique de Louvain, Belgium)
Friday, June 19, 2015
Ali Nazemi (University of Economic Sciences) and Anahita Farsaee (University of Economic Sciences) describe Non-Competitive Potential in the Iranian Electricity Market.
ABSTRACT: The electricity markets worldwide have distinctive particularities due to some political and historical reasons. However, principal guidelines of market design remain very similar. The Iranian electricity market has been inaugurated as a pay-as-bid market in 2004. Although the Iranian electricity market has had positive consequences, the economic discussion about proper market design and architecture is in its infancy. The main goal of this paper is analyzing market power and efficiency in the Iranian electricity market.Generally, in spite of the fact that Iranian electricity market is not a high concentrated market, it has potential for non-competitive results. Analyzing results and other facts of the market shows that the most important reason for this is the urgent shortage of supply threshold in this market, rather than the extent of concentration in the industry.
Promoting Effective Competition Policies for Shared Prosperity and Inclusive Growth
June 23, 2015
- Where: Room MC 13-121, World Bank, 1818 H street NW, Washington, DC
- When: 9:00am-6:30pm, June 23, 2015
- CONTACT: Martha Martinez Licetti email@example.com
In partnership with the Organisation for Economic Co-operation and Development (OECD), the World Bank Group is hosting a full-day conference to explore the role of competition policy as a tool to promote more sustainable and inclusive economic growth.
As part of the World Bank Group's Global Engagement on Competition Policy, this conference will include leading academics, policy makers, and practitioners from across the world, as well as senior officials from international organizations. This event will contribute to inform the joint efforts of the Trade & Competitiveness and Poverty Global Practices of the World Bank Group to understand the relationship between (lack of) competition and the Bank Group's twin goals.
This conference follows an international call for papers to foster empirical research in order to better understand the effects of lack of competition on welfare and contribute to World Bank Group’s efforts towards increasing effectiveness of competition policy implementation in client countries.
In addition, this one-day event will feature a roundtable discussion of award-winning stories from the 2014-2015 Competition Advocacy Contest: Inclusive growth for shared prosperity organized by the World Bank Group in collaboration with the International Competition Network (ICN).8:30 – 9:00Coffee and registration
- Microeconomic Policies, Macroeconomic Implications
- Competition Policy as a tool to foster shared prosperity and inclusive Growth
- Effects of market power on poverty and distribution of wealth
- Antitrust enforcement as a tool for private sector development
- Gains and losses of antitrust enforcement in key economic sectors
- The true impact of cartels: quantifying actual damages
- Achieving shared prosperity through pro-competitive policies,
- Bridging innovation, trade and competition
- Tackling anticompetitive effects in key sectors: agribusiness, telecommunications and retail
- Promoting pro-competitive reforms that foster growth and reduce inequality
- Promoting awareness of competition benefits in a time of crisis
- Promoting cooperation with relevant public bodies in order to balance other public interests with competition goals
Hulisi Ogut (TOBB Economics and Technology University); Asunur Cezar (TOBB University of Economics and Tehnology); and Merve Guven (Agricultural and Rural Development Support Institution) explore Market Share Analysis of Mobile Operators in Turkey.
ABSTRACT: We investigate the factors influencing the demand for mobile voice services in Turkey using firm level data which spans from January 2008 to December 2012. The competition in mobile telecommunication market in Turkey has become more intense as a result of mobile number portability (MNP) service introduced in 2008 and 3G technology introduced in 2009. The intense competition not only helps to keep prices down but also supports subscriber growth. Besides prices, we believe that network effects have an impact on market growth. Approximating sales levels using subscription levels and churn rates and using revenue per minute (RPM) as a price measure, we find that while price has a significant negative impact on the demand for mobile services, network effects has a significant positive impact on demand for mobile services. We also estimate own and cross price elasticities of the firms operating in mobile telecommunication market.
TANER SEKMEN, Eskisehir Osmangazi University, TURKEY, OMER AKKUS, Anadolu University, TURKEY, and ILYAS SIKLAR, Anadolu University, TURKEY describe Competitive Conditions in the Turkish Banking Systems.
ABSTRACT: In this paper, we investigate competition in Turkish banking sector over the period 2003-2012. In order to understand the competitive condition in Turkish banking sector, we use the well-known Panzar-Rosse model based on a nonstructural estimation of the H-statistic by employing the quarterly panel data set. The emiprical evidences indicate that the Turkish banking sector operates under conditions of monopolistic competition. Therefore, although there have been growing structural changes in the Turkish banking sector since 2000s, there is no remarkable change in the market structure of the Turkish banking sector as compared to previous studies and it can still be characterized by the monopolistic competition.
Thursday, June 18, 2015
Brendan Coffman, Wilson Sonsini Goodrich & Rosati LLP
Angela Diveley, Office of Commissioner Joshua D. Wright, Federal Trade Commission
Abbott (Tad) Lipsky, Latham & Watkins LLP
Janusz Ordover, Compass Lexecon
Henry Su, Office of Chairwoman Edith Ramirez, Federal Trade Commission
Latham & Watkins
555 11th Street,NW
Ste 1000, Washington, DC 20004
and the Mergers & Acquisitions Committee of the ABA Section of Antitrust Law, in partnership with the International Committee and Mergers Committee of the CBA National Competition Law Section,
Bill Baer - DOJ has a new speech on Politicization of Competition Policy –Myth or Reality?
His speech was excellent. One short excerpt provides guiding principles for jurisdictions around the world:
Competition policy and competition enforcement succeed where they are based on an unwavering commitment to the competitive process and to protecting consumer welfare. Enforcement decisions need to be fact-based, analytically sound, and legally grounded. When competition enforcement stays tethered to those principles, decisions have a certain predictability and credibility. If competition enforcers stretch to advance noncompetition goals, we risk losing our hard-earned legitimacy. We must not wield our substantial enforcement powers to protect or advance certain competitors or industries. We must call it like we see it, without undue influence from any quarter. Our focus needs to be on ensuring that consumers benefit from a vibrant competitive process. Of course, this commitment to sound antitrust enforcement must be paired with transparency and due process
I think it is telling that he gave this speech in Europe, where there have been instances of politicization. The focus on politics in competition policy has been on East Asia but it is in fact a global problem.