Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, July 7, 2014

The evolving IP–antitrust interface in the USA—the recent gradual weakening of patent rights

Alden Abbott (Heritage) describes The evolving IP–antitrust interface in the USA—the recent gradual weakening of patent rights.

ABSTRACT: The relationship between patent law and antitrust enforcement has undergone pendulum swings in the USA over the past century, alternating between periods of antitrust deference to patent rights and subordination of patent rights to antitrust concerns. The ‘pro patent’ era that began in the 1980s appears to be ending, as US public officials increasingly are raising concerns about potential patent-related abuses that are deemed harmful to competition. These concerns are backed by recent economic research that characterizes patents as ‘probabilistic’ property rights, and by studies that highlight social costs alleging stemming from the proliferation of ‘low quality’ patents and patent-related litigation abuses. This research, however, is far from definitive. Transactions cost and commercialization theories justifying robust patent protection, combined with research finding a positive relationship between economic growth and strong patents, suggest that enforcers should tread cautiously before unleashing new antitrust challenges to heretofore accepted efforts by patentees to maximize returns to their holdings. In short, a rush to impose new antitrust constraints on patents could prove harmful, rather than beneficial, to social welfare.

July 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, July 4, 2014

Institutional Change and Competition Authorities 11-12 JULY 2014

EU Competition Law and Policy Workshop:

Institutional Change and Competition Authorities

 

ORGANIZED BY PHILIP LOWE, MEL MARQUIS and GIORGIO MONTI

 

EUROPEAN UNIVERSITY INSTITUTE

DEPT. LAW, 11-12 JULY 2014

Florence, Italy

Participation by invitation

 

Introduction

 

In this annual series we examine a range of subjects relevant to academic research and to administrative and judicial competition law practice. Responding to a wave of institutional reform that has re-moulded competition agencies in numerous countries, the Workshop will focus on the transformation of institutional structures across jurisdictions, particularly those in the EU but going beyond Europe as well. The discussion will trace the causes of institutional change, the character of chosen solutions (e.g., the expanding breadth of agencies’ portfolios), and their intended and unintended consequences. In the context of the EU we will examine how emerging institutional structures impact on long-standing assumptions of a system of parallel competences, and how principles of EU law (as well as non-legal factors) shape national law and institutions. We will draw on the expertise of authorities in major global jurisdictions, taking account of legal and economic and policy-making perspectives. We pursue three general objectives: to elicit principles that can be used to evaluate institutional reform in this field; to consider the institutional permutations best tailored to the enforcement needs of different jurisdictions; and to evaluate options and possible instruments relevant for institutional evolution at the level of the European Commission and as concerns the multi-tiered enforcement system that has emerged through hard and soft instruments and practice.     

Discussion sessions: 

 

Session I: Introduction. Institutional change in complex regulatory environments  

 

Session II: Competition agencies: Institutional structure and context

 

Session III: Institutional structure and change across jurisdictions

                                            

Session IV: Institutional structure and change in the European Union: causes, impact and limits

 

Session V: The European Commission and the ECN, past and future  

                           

Session chairs:           

 

John Fingleton, Philip Lowe, Giorgio Monti

 

Participants:

                                         

Rafael Allendesalazar                                   Partner, Martínez Lage, Allendesalazar & Brokelmann, Madrid

Jochen Burrichter                                          Partner,Hengeler Müller, Düsseldorf

Cristina Caffarra                                             Vice-President, CRA International, Brussels and London

David Currie                                                    Chairman, UK Competition and Markets Authority, London

Dorothe Dalheimer                                       Deputy Head of Unit, European Commission, Brussels

Kris Dekeyser                                                  Director, European Commission, Brussels

Berend Jan Drijber                                         Partner, Pels Rijcken, The Hague                                             

Adrian Emch                                                   Partner, Hogan Lovells and Peking University, Beijing

Allan Fels                                                          Professor, University of Melbourne School of Law; Visiting Fellow, Oxford

Cani Fernandez                                              Partner, Cuatrecasas Gonçalves Pereira, Madrid

Ian Forrester                                                   Partner, White & Case, Brussels

Isolde Goggin                                                 Chairperson, Irish Competition Authority, Dublin

Paola Gonzalez Sanz                                     International Dept, National Authority of Markets & Competition, Madrid

Michiyo Hamada                                           (formerly) Japan Fair Trade Commission, Tokyo

Toshiko Igarashi                                             Deputy Director, Japan Fair Trade Commission, Tokyo

Alexander Italianer                                        Director General, European Commission, Brussels

Frederic Jenny                                                Professor, ESSEC Business School; OECD, Paris

Juhani Jokinen                                               Director General, Finnish Competition and Consumer Authority, Helsinki

Hussein Kassim                                               Professor, University of East Anglia

Bill Kovacic                                                      Professor, GWU Law School, Washington; UK CMA, London

Andrea Lofaro                                                Partner, RBB Economics, Brussels

Frederic Louis                                                 Partner, WilmerHale, Brussels

Paul Lugard                                                     Partner, Baker Botts, Brussels

Imelda Maher                                                 Professor, University College Dublin

Jose Maria Marin Quemada                       President, National Authority of Markets and Competition, Madrid

Mel Marquis                                                   Co-Director, EU Competition Law and Policy Workshop, Florence

Andreas Mundt                               President, Bundeskartellamt, Bonn; Chair, ICN Steering Group

Maureen Ohlhausen                                     Commissioner, U.S. Federal Trade Commission, Washington

Mart Ots                                                           Director General, Estonian Competition Authority, Talinn

 

Jorge Padilla                                                    Senior Managing Director, Compass Lexecon, various cities

Sharis Pozen                                                   Partner, Skadden Arps, Washington

Mario Siragusa                                               Partner, Cleary Gottlieb, Rome

Jim Venit                                                          Partner, Skadden Arps, Brussels

Sven Volcker                                                   Partner, Latham & Watkins, Brussels

Mark Williams                                                Professor, University of Melbourne School of Law

Johan Ysewyn                                                 Partner, Covington & Burling, Brussels

Fabien Zivy                                                      Référendaire, European General Court, Luxembourg

July 4, 2014 | Permalink | Comments (0) | TrackBack (0)

Towards optimal merger notification regimes: evidence from Switzerland

Yavuz Karagok, Swiss Competition Commission and Samuel Rutz, Avenir Suisse write Towards optimal merger notification regimes: evidence from Switzerland.

ABSTRACT: The literature on ex post assessment of merger cases, and particularly on those contributions evaluating the ‘correctness’ of specific merger decisions by competition authorities, has grown in recent years. However, the question of whether notifications regimes are efficient, ie whether competition authorities are in a position to review the set of mergers that potentially raises competitive concerns, has largely been neglected so far. This article attempts to fill this gap by evaluating the effectiveness of the Swiss merger notification regime, focusing, in particular, on the level of turnover thresholds that trigger notification duties.

July 4, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 3, 2014

Anatomy of a Great Conference

What makes a conference great?  There are a number of factors in my mind:

1. Good topics,

2. Good presenters,

3. A mix of academics, government enforcers, and practitioners from in-house, law firms and economics consulting firms,

4. Opportunities for meaningful conversation outside of the conference setting such as breakfast, drinks, etc. where the organizers have made an attempt to foster such interaction, and

5. Nice location.

I have been to a number of such conferences (last year's GCR Live in Miami Beach stands out).  One of the less well known gems of this variety is an annual conference I attended last weekend at Oxford sponsored by the Oxford Centre for Competition Law and Policy with the Journal of Antitrust Enforcement (editors Bill Kovacic and Ariel Ezrachi).

I include some pictures from the conference.

  007_5658

007_5662
007_5665

July 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Collaborate or Consolidate: Assessing the Competitive Effects of Production Joint Ventures

Nicolas Aguelakakis, Washington University in Saint Louis and Aleksandr Yankelevich, Federal Communications Commission discuss Collaborate or Consolidate: Assessing the Competitive Effects of Production Joint Ventures.

ABSTRACT: We analyze a symmetric joint venture in which two firms facing external competition collaborate in input production. Under certain regularity conditions, such a collaboration leads to higher profits than a horizontal merger between these two firms, whereas the effect on prices and quantities depends on the form of downstream competition. When firms compete in prices, downstream prices for all firms are higher following a joint venture than those following a horizontal merger. The reverse result may obtain when firms compete in quantities. Nevertheless, prices and profits remain larger in a Cournot equilibrium than in a Bertrand equilibrium.

July 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Enforcement Policy of the Egyptian Competition Law: Vertical Relations

Mohamed Elfar, Queen Mary - University of London describes Enforcement Policy of the Egyptian Competition Law: Vertical Relations.

ABSTRACT: This article is intended to overview the enforcement policy of the Egyptian Competition Authority (ECA) regarding vertical agreements in general and those related to distribution in particular. This assessment comes almost nine years after enacting Law number 3 of 2005 on the Protection of Competition and the Prohibition of Monopolistic Practices (ECL) and the establishment of the ECA in August 2005.

July 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Bundling and Joint Marketing by Rival Firms

Thomas D. Jeitschko, Michigan State University - Department of Economics, Yeonjei Jung, Michigan State University - Department of Economics and Jaesoo Kim Indiana University Purdue University Indianapolis (IUPUI) - Department of Economics theorize Bundling and Joint Marketing by Rival Firms.

ABSTRACT: We study joint marketing arrangements by competing firms who engage in price discrimination between consumers who patronize only one firm (single purchasing) and those who purchase from both competitors (bundle purchasers). Two types of joint marketing are considered. Firms either commit to a component-price that applies to bundle-purchasers and then firms set stand-alone prices for single purchasers; or firms commit to a rebate off their stand alone price that will be applied to bundle-purchasers, and then firms set their stand alone prices. Both methods allow firms to raise prices and earn higher profits. However, the effect of price discrimination on social welfare depends on how prices are chosen. The rebate joint marketing scheme increases joint purchasing, whereas bundle pricing diminishes bundle purchases. If the marginal social value of a bundle over a single purchase is large, the former increases total welfare. However, welfare can also increase with bundle pricing compared to non-discriminatory pricing.

July 3, 2014 | Permalink | Comments (0) | TrackBack (0)

On the Public-Law Character of Competition Law: A Lesson from Asian Capitalism

Michael W. Dowdle, National University of Singapore (NUS) - Faculty of Law describes On the Public-Law Character of Competition Law: A Lesson from Asian Capitalism.

ABSTRACT: This article argues that competition law is best seen as a form of public law – ‘the law that governs the governing of the state – and not as simply a form of private market regulation. It uses the experiences of ‘Asian capitalism’ to show how capitalist economies are in fact much more variegated than the orthodox model of competition law presumes, and that this demands a form of regulation that is innately political rather than simply technical. Orthodox competition regimes address this complexity by segregating non-standard capitalisms into alternative doctrinal jurisprudences, but this renders conceptually invisible the innately political balancing that these different forms of capitalism, and their different dynamics of competition, require and provoke. Recognizing that competition law is ultimately a form of public law allows us to visualize this inevitable process of political balancing, and thereby begin to address the issues it raises.

July 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 2, 2014

Naked Exclusion with Private Offers

Jeanine Miklos-Thal, University of Rochester - Simon Graduate School of Business and Greg Shaffer, University of Rochester - Simon Graduate School of Business describe Naked Exclusion with Private Offers.

ABSTRACT: We consider the ability of an incumbent seller to deter a potential entrant by offering exclusive contracts to its downstream buyers. Rasmusen, Ramseyer, and Wiley (1991) showed that this can be a profitable strategy if there is a coordination failure on the part of the buyers, but Segal and Whinston (2000) showed that discriminatory "divide and-conquer" offers do not need to rely on coordination failure. These papers and the literature that followed has assumed that all offers are public. We show that if buyers cannot observe each other's offers and have passive or wary out-of-equilibrium beliefs, the divide-and-conquer exclusion strategy fails. Coordination failure on the part of the buyers, however, still can make exclusion profitable.

July 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Inter-Agency Evidence Sharing in Competition Law Enforcement

Marek  Martyniszyn, Queen's University Belfast - School of Law addresses Inter-Agency Evidence Sharing in Competition Law Enforcement.

ABSTRACT: While transnational antitrust enforcement is becoming only more common, the access to foreign-based evidence remains a considerable practical challenge. This article appraises considerations and concerns surrounding confidentiality, and looks into ways of their possible accommodation. It further identifies and critically evaluates the existing mechanisms allowing for inter-agency confidential information/ evidence sharing in competition law enforcement. The article outlines the shortcomings of the current framework and points to novel unilateral approaches. In the latter regard the focus is devoted to Australia, where the competition agency is empowered to share confidential information with foreign counterparts, also without any underlying bilateral agreement and on a non-reciprocal basis. This solution shows that a pragmatic and workable approach to inter-agency evidence sharing can be achieved.

July 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Retail Price MFNs: Are they RPM ‘at its worst'?

Amelia Fletcher and Morten Hviid (both University of East Anglia) ask Retail Price MFNs: Are they RPM ‘at its worst'?

 

July 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Collusion at the Extensive Margin

Martin C. Byford (RMIT) and Joshua S. Gans (Toronto) discuss Collusion at the Extensive Margin.

ABSTRACT: We augment the multi-market collusion model of Bernheim and Whinston (1990) by allowing for firm entry into, and exit from, individual markets. We show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement: Collusion at the extensive margin whereby firms collude by avoiding entry into each other’s markets or territories. We characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart. Specifically, it is demonstrated that Where duopoly competition is fierce collusion at the extensive margin is always sustainable. The model predicts new forms of market sharing such as oligopolistic competition with a collusive fringe, and predatory entry. We also provide a theoretic foundation for the use of a proportional response enforcement mechanism.

July 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 1, 2014

Sanctions in EU Competition Law: Principles and Practice

Michael J Frese (ACLE) has written on Sanctions in EU Competition Law: Principles and Practice.

BOOK ABSTRACT: In the early decades of European integration the enforcement of EU competition law was highly centralised. Virtually all enforcement actions under Articles 101 and 102 TFEU were initiated by the European Commission. More recently the enforcement of EU competition law has become less centralised - many would say even decentralised. In 2004, essentially in an effort to increase enforcement capacity in the wake of EU enlargement, the involvement of Member State competition authorities was significantly reinforced by national authorities being given power to pursue infringements of EU competition law largely on the basis of their domestic enforcement regimes.

This combination of decentralisation and enforcement autonomy raises questions about the relationship between EU law and national law, as well as about the costs of enforcement. This new book links these questions by analysing how competences in the area of sanctions are distributed between EU and national law, and how this influences the costs of enforcement. The author's conclusions, which highlight the economic implications of the choices made by competition authorities, courts and legislators, will be of use to all the above in further developing EU competition policy.

July 1, 2014 | Permalink | Comments (0) | TrackBack (0)

IPPP – Risks and opportunities An economic perspective

Julie de Brux (Sorbonne Business School) and Frederic Marty (French National Centre of Scientific Research (CNRS) senior fellow, Research Group on Law, Economics and Management, University of Nice Sophia-Antipolis and OFCE, Innovation and Competition Department Sciences Po) analyze IPPP – Risks and opportunities An economic perspective.

ABSTRACT: This article analyzes some of the issues raised by institutionalized public-private partnerships in an economic perspective. We demonstrate that although they may address some of the main limits of purely contractual public-private partnerships, such as the issues of control, know-how transfer, or additional financial cost, they may induce some intrinsic risks, related to alterations of the contractual incentive structure and judicial challenges. Based on economic theory, we stem some recommendations and comments about the adequacy of legal requirements with economic normative views.

July 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Mergers, Agency Costs, and Social Welfare

Jean-Etienne de Bettignies, Queen’s University and Thomas W. Ross, UBC have an interesting paper on Mergers, Agency Costs, and Social Welfare.

ABSTRACT: We examine the impact of a merger to monopoly in a Cournot duopoly framework where managers make cost-reducing investment or effort decisions prior to choosing output. A well-established result is that, absent agency costs, the merger leads to greater investment and lower production costs. We show that, when agency costs are present, this result may be reversed, with mergers leading instead to lower investment/effort, higher production costs, and lower social welfare. (JEL L40, L13, D21, D82)

July 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Regulatory Monopoly and Differential Pricing in the Market for Patents

Neel U. Sukhatme, Princeton University, Department of Economics discusses Regulatory Monopoly and Differential Pricing in the Market for Patents.

ABSTRACT: Patent law is inextricably tied to the economics of monopolies, as patents are legal monopolies awarded to inventors to incentivize innovation. Yet legal scholars have largely ignored another crucial monopoly at the heart of patent law: the monopoly of the U.S. Patent and Trademark Office (PTO) over the granting of patents. The present Article remedies this oversight and introduces the broader concept of a regulatory monopoly ― a single governmental actor with the power to set prices in a regulatory area. Using insights from both neoclassical and behavioral economics, the Article explains how regulatory monopolies like the PTO can enhance social welfare via differential pricing ― that is, by charging regulated entities differing fees based on their willingness or ability to pay. In particular, the Article shows how the PTO could increase its revenues and promote innovation by charging different patent “prices” for inventions in different industries. Such pricing could also be used to tailor effective patent term across industries, an emergent goal for many patent scholars.

The Article discusses how recent empirical and legal developments have made differential patent pricing possible. It then generates differential prices by leveraging new empirical research that measures the relative importance of patent protection across industries. The Article concludes by discussing how recent patent reform (the America Invents Act of 2011) provides the legal basis for the PTO to conduct differential pricing, and estimates the welfare gains from shifting to a differential pricing regime.

July 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, June 30, 2014

State Aid, National Courts and the Separation of Powers: Should Judges be Bound to the European Commission's Unfinished State Aid Business?

Thomas Lubbig (Freshfields) and Tom Morgan ask State Aid, National Courts and the Separation of Powers: Should Judges be Bound to the European Commission's Unfinished State Aid Business?

ABSTRACT: This article considers a Court of Justice of the European Union (CJEU) State aid judgment that seemingly binds national courts to find State aid in cases where the Commission has already initiated its own formal investigation. In future the situation may be much easier for complainants who allege their competitors are recipients of State aid in national courts, even though the Commission still has significant doubts in its own investigation. Arguably the judgment infringes national courts' discretion and independence to make their own assessment in State aid matters.

June 30, 2014 | Permalink | Comments (0) | TrackBack (0)

Football broadcasting business in the EU: towards fairer competition?

Sara Moya Izquierdo and Miguel Troncoso Ferrer, Gomez-Acebo & Pombo Abogados, S.L.P. ask Football broadcasting business in the EU: towards fairer competition?

ABSTRACT: Broadcasting of major football events is now one of the most profitable businesses related to sports, and the number of Competition law cases related thereto has increased in recent years. European competition authorities have shaped the regulatory framework under which football broadcasting rights are negotiated, modifying the landscape of the market of media rights for top competitions. Nevertheless, recent European Court judgments seem to open the door to new market definitions, which are expected to continue changing during the coming decade, mainly due to developments in technology and consumer preferences. This new landscape will have a direct impact on the terms and conditions to be negotiated between holders of the rights (football clubs and/or federations) and broadcasters.

June 30, 2014 | Permalink | Comments (0) | TrackBack (0)

Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?

Andreea Cosnita, Universite Paris I Pantheon-Sorbonne - Maison des Sciences Economiques and Lars Sorgard, Norwegian School of Economics and Business Administration (NHH); Norwegian School of Economics (NHH) - Department of Economics ask Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?

ABSTRACT: This paper deals with the enforcement of merger policy, and aims to study how merger remedies affect the deterrence accomplished by controlling mergers. We determine the optimal frequency of investigations launched by the agency, and identify situations where the introduction of remedies can lead to a lower welfare. We find that the potential for remedies can make it less likely that the worst mergers are deterred. Even if the worst mergers are deterred, the potential for remedies can lead to more mergers with a negative impact to be proposed, and eventually to more decision errors by the antitrust authorities.

June 30, 2014 | Permalink | Comments (0) | TrackBack (0)

More than a cookie cutter: the global influence of European competition law

Marcus Pollard explains More than a cookie cutter: the global influence of European competition law.

ABSTRACT: As I now leave the JECLAP editorial team, and depart from private practice and Europe for new challenges in Asia, it seems an opportune moment to reflect on the growing influence of European competition laws on the rest of the world. Readers will be aware that in recent years there has been a significant proliferation of new and credible antitrust agencies. Across Africa, Latin America, and Asia, many countries are actively taking steps to introduce competition laws or revise existing provisions to ensure they keep apace with the more sophisticated regimes active in, for example, South Africa, Brazil, China, India, and Singapore. In designing their new systems, many non-European agencies have turned to European principles (as opposed to United States) for their guiding influence. New agencies have been able to seek inspiration and be willingly influenced by the tome of Commission guidelines and block exemptions—as well as detailed publicly available decisions and the ever-burgeoning case law from the European courts.

June 30, 2014 | Permalink | Comments (0) | TrackBack (0)