Saturday, December 24, 2016
Friday, December 23, 2016
Harmonising Private Enforcement of Competition Law in Central and Eastern Europe: The Effectiveness of Legal Transplants Through Consumer Collective Actions
Kati Cseres, University of Amsterdam - Amsterdam Centre for European Law and Governance and Amsterdam Center for Law & Economics is Harmonising Private Enforcement of Competition Law in Central and Eastern Europe: The Effectiveness of Legal Transplants Through Consumer Collective Actions.
ABSTRACT: The aim of this paper is to critically analyze the manner of harmonizing private enforcement in the EU. The paper examines the legal rules and, more importantly, the actual enforcement practice of collective consumer actions in EU Member States situated in Central and Eastern Europe (CEE). Collective actions are the key method of getting compensation for consumers who have suffered harm as a result of an anti-competitive practice. Consumer compensation has always been the core justification for the European Commission’s policy of encouraging private enforcement of competition law. In those cases where collective redress is not available to consumers, or consumers cannot apply existing rules or are unwilling to do so, then both their right to an effective remedy and the public policy goal of private enforcement remain futile. Analyzing collective compensatory actions in CEE countries (CEECs) places the harmonization process in a broader governance framework, created during their EU accession, characterized by top-down law-making and strong EU conditionality. Analyzing collective consumer actions through this ‘Europeanization’ process, and the phenomenon of vertical legal transplants, raises major questions about the effectiveness of legal transplants vis-à-vis homegrown domestic law-making processes. It also poses the question how such legal rules may depend and interact with market, constitutional and institutional reforms.
Yogesh Pai, National Law University Delhi, Centre for Innovation, IP and Competition (CIIPC) and Nitesh Daryanani, Centre for Innovation, Intellectual Property and Competition analyze Patents and Competition Law in India: CCI's Reductionist Approach in Evaluating Competitive Harm.
ABSTRACT: The objective of this paper is to examine the CCI’s reasoning and approach in patent – related cases, in light of (i) the legislative framework governing competition and patent law in India, (ii) the economic theories that govern the intersection between antitrust and patent law, and (iii) the manner in which competition agencies in comparative jurisdictions have dealt with similar agreements and conduct by a patent holder.
Part 1 of this paper deals with an analysis of the distinction between sections 3 and 4 of the Competition Act 2002, in light of the CCI’s tendency to conflate issues pertaining to abuse of dominance and evaluation of anti-competitive agreement involving patents. Part 2 deals with constraints on pricing imposed in several CCI rulings. Part 3 deals with nonprice licensing restrictions as constituting abuse of dominance. Part 4 deals with cases involving a refusal to deal where products are protected by IP rights or proprietary technologies. Part 5 deals with the practice of price discrimination in unified systems markets dominated by intellectual property.
Thursday, December 22, 2016
Ariel Ezrachi, University of Oxford - Faculty of Law observes The Ripple Effects of Online Marketplace Bans.
ABSTRACT: The strive for tighter control of distribution, quality and price - has led an increasing number of producers to include restrictions on the use of online marketplaces in their selective distribution agreements. This paper considers the effects of such restrictions and the legal approach they call for. While acknowledging the legitimacy of proportionate restrictions on distribution, the article illustrates how an absolute ban on the use of online marketplaces has a detrimental effect on market transparency, price competition, entry and expansion. The discussion illustrates how the legitimate interests of producers may be protected through less onerous means, without the increase in consumers’ search costs and the dampening of price competition. With that in mind, it is argued that these restrictions should be analysed on a case-by-case basis and should not benefit from the Vertical Block Exemption. Furthermore, the article considers whether absent proportionality and objective justification, the harmful effect of online marketplace bans, justifies their condemnation as anticompetitive by object.
Joshua D. Wright, George Mason University - Antonin Scalia Law School, Faculty and Douglas H. Ginsburg, U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty discuss The Costs and Benefits of Antitrust Consents.
ABSTRACT: Over the last three decades, the United States Federal Trade Commission and the Antitrust Division of the Department of Justice have undergone a dramatic shift toward greater reliance upon consent decrees rather than litigation to resolve antitrust disputes. As many national competition agencies examine the desirability of adopting a similar approach, we focus upon identifying and analyzing the costs and benefits associated with a marginal shift along the continuum from an enforcement model of agency behavior to a regulatory regime. We rely upon the U.S. experience to substantiate our claim that the costs associated with such a marginal shift toward the regulatory model, including the potential distortion in the development of substantive antitrust doctrine, are often under appreciated and discernable only in the long run. We acknowledge that consent decrees can and should be a part of an antitrust agency’s toolkit for resolving antitrust disputes. We contend merely that a full accounting of the benefits and costs of reliance upon consent decrees is necessary to inform this important strategic decision for competition agencies.
Pinar Akman, University of Leeds offers A COMPETITION LAW ASSESSMENT OF PLATFORM MOST-FAVORED-CUSTOMER CLAUSES.
ABSTRACT: Most-favored-customer (MFC) clauses adopted by online platforms in their relevant contractual relationships guarantee to an online platform that a supplier will treat the platform as favorably as the supplier's most-favored-customer concerning price, availability, and similar terms of a given transaction. These clauses are a fundamental aspect of the business models of some of the world's leading companies such as Apple, Amazon, Expedia, and the like. The competition law implications of these clauses have been one of the key concerns of more than a dozen competition authorities around the world in recent years. The competition authorities involved have adopted different approaches and reached different substantive and procedural outcomes, sometimes in proceedings that concern the application of the same legal rule to the same practice of the same company. This is best demonstrated by the line of investigations against certain online travel agents in Europe. This article posits that such diverging approaches lead to legal and business uncertainty, as well as to procedurally unfair and substantively incorrect assessments. In an effort to rectify this suboptimal situation, this article provides a comprehensive, principled approach for the assessment of platform MFC clauses under competition law—in particular, under EU competition law.
Wednesday, December 21, 2016
Communiqué that has been prepared for the last edition of the Rome Antitrust Forum (organized by Alberto Heimler, Giorgio Monti and Mel Marquis)
Communiqué of 25 November 2016
ROME ANTITRUST FORUM
Summary of the third annual meeting of the Forum on 25 November 2016
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 could lead to a more effective system of antitrust enforcement in Italy.
This year the Forum considered two issues: the role of priority setting in antitrust enforcement and the challenges associated with the ex post evaluation of antitrust enforcement decisions.
Below we set out some of the major questions that emerged from the discussions among the Forum participants. We conclude with some policy suggestions.
Priority setting: what are the options for the AGCM?
The Italian Authority does not set explicit priorities. Since the initial implicit priority to promote competition in public utility industries (1990-1997), the AGCM has prioritised rigorous enforcement of antitrust law based on European established practices (1998-2005), an adoption of a consumer oriented enforcement agenda (2005-2011) and a return to addressing more established practices, such as price-fixing cartels (2011 to present). Furthermore, over the years the Authority tried in its annual report to rationalise the enforcement record by identifying a common thread across decided cases, but this has been more an ex post exercise than a guide for action.
Other authorities do it differently. They explicitly identify a set of priorities which are then made public and are meant to solicit complaints and signal likely ex officio cases. A prominent example is set by the UK Competition and Markets Authority (CMA). The CMA formalises its priorities by assessing each possible action in light of four factors: the likely market impact of the action, its costs, the risks that would be incurred, and the strategic significance of the matter at hand. This approach ensures that all likely action is assessed internally using a common metric. In addition to this prioritisation of specific actions, the CMA also sets out its annual priorities. For example, in 2016 the CMA identified the following as strategic priorities: favouring consumer access to markets and eliminating unjustified barriers to their freedom of choice, and promoting competition in online and digital markets, in regulated and infrastructure markets, in markets for public services and in sectors that are important to economic growth. More specifically, the CMA “seek[s] a balanced portfolio of cases – including large cases that have wider impact, and smaller, more local cases, that send the message that no business is beyond the reach of competition enforcement”.
There are great advantages in making public the priorities that are being set by the Authority. First, the process of identifying priorities and making them public may lead to a debate on the competitive constraints of the Italian economy and on the benefits of antitrust interventions. Furthermore, making priorities public may induce the public to report to the Authority possible violations. At the same time, firms would be discouraged from violating the law in sectors where the Authority’s interventions may be more probable. Finally, setting priorities may make the Authority more accountable as regards both the quality of the priorities it sets and its capacity to sustain them.
The process by which priorities are set is particularly important. Priorities should not simply be declared based on a priori convictions. The Authority should make an effort to consult producers and consumers in critical sectors, together with the relevant regulators, in order to better understand the competition issues involved and in order to intervene in a more focussed manner. Publishing its draft priorities may help the Authority to acquire relevant information from the public and arrive at greater precision and coherence.
Of course, the AGCM has a general obligation to pursue any case brought to its attention. Priority setting should not be an instrument for denying a complainant’s request for a necessary intervention; rather, it should be an instrument for enlarging the information set at the disposal of the AGCM, and for inducing complainants who might not otherwise do so to report their case to the AGCM. Setting priorities thus expands the possibilities of the Authority, it does not reduce them.
Ex post evaluation: case selection and lessons learned
The OECD Competition Committee has produced guidance for ex post evaluation exercises and has conducted two seminars on practical experiences with regard to ex post evaluation. In the course of the drafting process, most OECD Member State delegations showed a great interest in the issue, but then, when the guidance was made public, very few decided to undertake ex post evaluations. Indeed, ex post evaluation of antitrust decisions is strongly advocated by the academic community but it is unfortunately still considered almost irrelevant by most authorities, case handlers and policy makers. At most, the perception seems to be that ex post evaluation mainly has a marketing function: it can show how good and relevant the Authority has been, and it ensures that the Government will support of the institution.
But there are many other benefits associated with ex post evaluation, and these are of a strategic nature.
First of all, ex post evaluation can answer questions that are outside the sphere of control of the judge. In a world of mechanical rules - it is prohibited to drive faster than 50 km per hour - the only role for ex post evaluation of decisions is to promote a change in the rules. But in a world of qualitative prohibitions - it is prohibited to drive dangerously - ex post evaluation can challenge existing preconceptions or hypotheses, which may relate, for example, to dominance and to restrictions of competition. Ex post evaluation can also measure the benefits resulting from enforcement. Such an exercise differs from that undertaken by a judge evaluating the legality of a decision on the basis of rules, facts and precedents.
The main objective of ex post evaluation in antitrust is to improve decision-making: learning from experience, building on techniques that work, and correcting mistakes. Two large series of ex post evaluations by the US Federal Trade Commission (hospital mergers and the petroleum industry) led to policy improvements in both areas. Results from retrospective studies helped the UK CMA to shape institutional details (e.g., merger assessment guidelines). At the level of the EU, the Commission in 2005 generated a valuable ex post study on merger remedies which informed significant revisions of the Commission’s Remedies Notice. More recently, the Commission completed a detailed analysis of all its interventions in the energy market which will probably affect the future approach of the EU in that area. In the telecoms sector, the Netherlands Authority for Consumers and Markets partnered with the Austrian sectoral regulator and with the Commission to study price effects following two mergers, approved in 2006 and 2007, which affected each of the two countries concerned.
Econometric techniques are particularly suitable for comparing situations where antitrust interventions have resulted in a change: a merger has been authorized, a cartel has been prohibited, or an abuse has been stopped.
The choice of the data to be used in the analysis is crucial, as the data heavily influence the exact design of the evaluation framework. Very often, data are available but they may be particularly costly to gather. This is why rigorous quantitative analysis could be complemented by qualitative analysis that could shed some light on the validity of past decisions. Sometimes qualitative analysis can be a substitute for rigorous econometric analysis.
For example, the Competition Authority of New Zealand recently decided to examine whether or not anticipated market developments that were key to a number of its merger decisions materialised as predicted. The purpose was to refine and improve the techniques and types of evidence used in forming those expectations.
The Competition Authority selected all merger decisions in which mergers were cleared primarily because strong expectations were formed around one or more of four clear-cut issues:
- barriers to entry in the market were low and entry was likely;
- there would have been enough effective competition in the market after the merger;
- divestiture would satisfy competition concerns; or
- buyers had countervailing power because they could sponsor entry.
The study thus does not seek to determine whether the decisions were appropriate; instead, the aim is to test the validity of the main expectations about the evolution of the market that had led to the merger clearances. The Competition Authority considers this to be easier to achieve in terms of time, data availability and resources, and it expects that the exercise will lead to an evaluation, although incomplete, of the appropriateness of the decision making process.
These qualitative analyses are much less costly and burdensome than rigorous econometric ones. However, if a competition agency should decide to undertake them, especially because of the lack of sufficient resources (both financial and technical), the results achieved should still be made public in appropriate forms and subject to academic and scientific control.
In brief, the recommendations by the Forum on priority setting and ex post evaluation are as follows:
- Undertaking a participatory process of priority setting would help the Italian Authority to identify (what are perceived to be) the most severe restraints of competition in the Italian economy;
- Market players, academics, governments and EU Commission officials could all be asked to provide input for the process of priority setting, and to comment on initial drafts;
- Setting strategic priorities could be undertaken for example every seven years when a new Chair is nominated and the Authority’s priorities could be adapted on a yearly basis according to what has been learned from experience;
- Publishing priorities would signal to the public the importance of complaints and the fact that such complaints will be part of a strategic process undertaken by the Authority;
- Publishing priorities would make the Authority more aware of the importance of ex officio cases;
- Publishing priorities would make the Authority more accountable and enhance its ability to deliver value for money;
(Ex post evaluation)
- Outside the context of cartels, most decisions and most remedies are based on some speculation as to how the market will respond. Therefore, ex post evaluation of antitrust decisions should be undertaken in order to learn from experience and to be better able in the future to anticipate market responses;
- Ex post evaluation is complementary to judicial review, and it is particularly relevant in understanding the effectiveness of remedies and commitments and in evaluating the effects of an authorised merger;
- Quantitative ex post evaluation is possible when data are available, both before and after the triggering event (i.e., the antitrust decision), and the use of econometrics techniques can help to draw rigorous conclusions about what happened;
- While the decision regarding which cases to subject to an ex post evaluation should be made internally, econometric analysis can also be done by external consultants - with the direct involvement of the Authority in all stages of the process;
- In any case, in order to guarantee its quality, the whole process and results should be subject to the control by the scientific community;
- Qualitative ex post evaluation is also very important, and it can verify or falsify the hypotheses on which the Authority’s decisions were based: barriers to entry, the extent of the geographic and product markets, countervailing market power, etc.;
- Qualitative analysis is best done internally. Its results should be made public so as to provide a guide for future decisions and a strategic tool for evolution in antitrust enforcement.
 See Prioritisation principles for the CMA, 2014, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299784/CMA16.pdf.
 See Competition and Markets Authority Annual Plan 2016/17, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508136/AP2016-17-final_PRINT.pdf, paragraph 2.7.
 See DG COMP, Merger Remedies Study (public version), 2005, http://ec.europa.eu/competition/mergers/legislation/remedies_study.pdf; Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004,  OJ C 267/1.
 See Commission, The economic impact of enforcement of competition policies on the functioning of EU energy markets, 2016, http://ec.europa.eu/competition/publications/reports/kd0216007enn.pdf.
 See https://www.acm.nl/en/publications/publication/15090/Effect-study-of-two-telecom-mergers-in-Austria-and-the-Netherlands/.
 See OECD, Reference guide on ex-post evaluation of competition agencies’ enforcement decisions, 2016, http://www.oecd.org/daf/competition/reference-guide-on-ex-post-evaluation-of-enforcement-decisions.htm.
H. Peter Boswijk, University of Amsterdam - Amsterdam School of Economics; Tinbergen Institute, Maurice J. G. Bun, University of Amsterdam (UVA) - Department of Quantitative Economics; Tinbergen Institute, and Maarten Pieter Schinkel, University of Amsterdam - Amsterdam Center for Law & Economics (ACLE); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) are Cartel Dating.
ABSTRACT: The begin and end dates of cartels are often ambiguous, despite competition authorities stating them with precision. The legally established infringement period(s), based on documentary evidence, need not coincide with the period(s) of actual cartel effects. In this paper, we show that misdating cartel effects leads to a (weak) overestimation of but-for prices and an underestimation of overcharges. Total overcharges based on comparing but-for prices to actual prices are a (weak) underestimation of the true amount overcharged, irrespective of the type and size of the misdating. The bias in antitrust damage estimation based on predicted cartel prices can have either sign. We extend the before-during-and-after method with an empirical cartel dating procedure that uses multiple structural break tests to determine the actual begin and end date(s) of the effects of collusive agreements. Empirical findings in the European Sodium Chlorate cartel corroborate our theoretical results.
Louis Kaplow has a fascinating article On the Relevance of Market Power. Worth downloading!
ABSTRACT: Market power is the most important determinant of liability in competition law cases throughout the world. Yet fundamental questions on the relevance of market power are underanalyzed, if examined at all: When and why should we inquire into market power? How much should we require? Should market power be viewed as one thing, regardless of the practice under scrutiny and independent of the pertinent anticompetitive and procompetitive explanations for its use? Does each component of market power have the same probative force? Or even influence optimal liability determinations in the same direction? This Article’s ground-up investigation of market power finds that the answers often differ from what is generally believed and sometimes are surprising — notably, higher levels of certain market power measures or particular market power components sometimes disfavor liability. This gulf between conventional wisdom and correct understanding suggests the need to redirect research agendas, agency guidance, and competition law doctrine.
Tuesday, December 20, 2016
On the Use of Price-Cost Tests in Loyalty Discounts and Exclusive Dealing Arrangements: Which Implications from Economic Theory?
Chiara Fumagalli, Bocconi University - Department of Economics; Centre for Economic Policy Research (CEPR) and Massimo Motta, Universitat Pompeu Fabra ask On the Use of Price-Cost Tests in Loyalty Discounts and Exclusive Dealing Arrangements: Which Implications from Economic Theory?
ABSTRACT: Recent cases in the US (Meritor, Eisai) and in the EU (Intel ) have revived the debate on the use of price-cost tests in loyalty discount cases. We draw on existing recent economic theories of exclusion and develop new formal material to argue that economics alone does not justify applying a price-cost test to predation but not to loyalty discounts. Still, the latter contain features (they reference rivals and allow to discriminate across buyers and/or units bought) that have a higher exclusionary potential than the former, and this may well warrant closer scrutiny and more severe treatment from antitrust agencies and courts.
Josh Lerner, Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER), Haris Tabakovic, Harvard Business School and Jean Tirole, University of Toulouse 1 - Industrial Economic Institute (IDEI); University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ); Centre for Economic Policy Research (CEPR) examine Patent Disclosures and Standard-Setting.
ABSTRACT: A key role of standard setting organizations (SSOs) is to aggregate information on relevant intellectual property (IP) claims before deciding on a standard. This article explores the firms’ strategies in response to IP disclosure requirements — in particular, the choice between specific and generic disclosures of IP — and the optimal response by SSOs, including the royalty rate setting. We show that firms with a stronger downstream presence are more likely to opt for a generic disclosure, as are those with lower quality patents. We empirically examine patent disclosures made to seven large SSOs, and find results consistent with theoretical predictions.
Monday, December 19, 2016
Thomas Cheng (HKU) and Kelvin Kwok (HKU) offer A neglected theory of harm: joint ventures as facilitators of collusion across markets.
ABSTRACT: While there has been extensive discussion in the antitrust literature on the procompetitive and anticompetitive effects of joint ventures, there is a lack of systematic analysis on the potential of a joint venture to have collusive harm beyond its home market. This article aims to fill the gap in the literature by systematically accounting for the possible ways in which a joint venture can facilitate collusion by its members outside of the venture’s home market, namely: (i) as a punitive mechanism for the cartel; (ii) as a provider of an important input; and (iii) as a facilitator of information exchange. In addition to discussing these theories of harm, this article will attempt to offer some ways in which such anticompetitive concerns raised by joint ventures can be alleviated or addressed under US antitrust law, including ex ante behavioural remedies and ex post conduct enforcement. The proposals are intended to preserve the efficiency-enhancing potential of joint ventures by permitting them as long as their collusion facilitating potential can be reasonably contained.
Mark Armstrong, Oxford analyzes Ordered Consumer Search.
ABSTRACT: The paper discusses situations in which consumers search through their options in a deliberate order, in contrast to more familiar models with random search. Topics include: the existence of ordered search equilibria with symmetric sellers (all consumers first inspect the seller they anticipate sets the lowest price, and a seller which is inspected first by consumers will set the lowest price); the use of price and non-price advertising to direct search; the impact of consumers starting a new search at their previous supplier; and the incentive a seller can have to raise its own search cost. I also show how ordered search can be reformulated as a simpler discrete choice problem without search frictions or dynamic decision making.
Friday, December 16, 2016
Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions
John Asker, New York University - Leonard N. School of Business - Department of Economics and Heski Bar-Isaac, University of Toronto - Rotman School of Management have a fascinating paper on Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions.
ABSTRACT: We consider vertical contracts where the retail market may involve search frictions. Minimum advertised price restrictions (MAP) act as a restraint on customers' information and so can increase search frictions in the retail sector. Such restraints, thereby, soften retail competition - an impact also generated by resale price maintenance (RPM). However, by accommodating (consumer or retailer) heterogeneity, MAP can allow for higher manufacturer profits than RPM. We show that they can do so through facilitating price discrimination among consumers; encouraging service provision; and facilitating manufacturer collusion. Thus, welfare effects may be positive or negative compared to RPM.
Bruce A. Blonigen, University of Oregon & NBER and Justin R. Pierce, Board of Governors of the Federal Reserve System have an interesting paper on Evidence for the Effects of Mergers on Market Power and Efficiency.
ABSTRACT: Study of the impact of mergers and acquisitions (M&As) on productivity and market power has been complicated by the difficulty of separating these two effects. We use newly-developed techniques to separately estimate productivity and markups across a wide range of industries using detailed plant-level data. Employing a difference-in-differences framework, we find that M&As are associated with increases in average markups, but find little evidence for effects on plantlevel productivity. We also examine whether M&As increase efficiency through reallocation of production to more efficient plants or through reductions in administrative operations, but again find little evidence for these channels, on average. The results are robust to a range of approaches to address the endogeneity of firms’ merger decisions.
Thursday, December 15, 2016
Arbitrability of EU Competition Law-Based Claims: Where Do We Stand after the CDC Hydrogen Peroxide Case?
Damien Geradin, Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws and Emilio Villano ask Arbitrability of EU Competition Law-Based Claims: Where Do We Stand after the CDC Hydrogen Peroxide Case?
ABSTRACT: In this paper, we discuss the extent to which EU competition rules are arbitrable. There is a wide consensus that Articles 101 and 102 TFEU are fully arbitrable and we share that opinion. More challenging questions may, however, arise when the dispute subject to arbitration raises issues under the other competition provisions of the TFEU, i.e., Articles 106 to 108, as well as in secondary EU competition legislation (e.g., the EU Merger Control Regulation). Moreover, in the recent CDC Case, the question has arisen as to whether arbitration is a suitable method to settle claims for damages arising from breaches of competition law made by one of the parties to a contract containing an arbitration clause. We discuss AG Jääskinen’s controversial Opinion, the judgment of the CJEU, and their possible implications on the arbitrability of damages actions based on breaches of EU competition rules.
Wednesday, December 14, 2016
Prayogo Serevin Wisnumurti, Center for Trade Competition and Policy Studies, Faculty of Law, University of Indonesia describes Collective Dominance: Its Intepretation and Assesment after Airtour in Merger Control.
ABSTRACT: On 6 June 2002, the European Court of Justice made its landmark judgment about collective dominance, in stated that for collective dominance to exist need the three criteria to be fulfilled. The Commission on is an assessment in merger control using a legal approach which was proving the market structure, to strengthen of collective dominance that can significantly impede competition which prohibited in the European Union legal order.
After the Judgement in which the way the Commission assess collective dominance in proposed concentration criticized by the Court. The Commission finally embrace economic nature in their assessment. It started to make the term collective dominance redundant in assessing the distortion on the market after the concentrations. Finally, the Commission focused on discovering implicit collusion. In summary, the analyses of the cases show that the assessments of collective dominance prior and then afterward the Airtours case are much varied.
Inara K. Scott, Oregon State University, College of Business asks Antitrust and Socially Responsible Collaboration: A Chilling Combination?
ABSTRACT: Antitrust and Socially Responsible Collaboration: A Chilling Combination? by Inara K. Scott :: Businesses are increasingly using collaboration to address concerns about sustainability, transparency, human rights, and labor conditions in global markets. Such collaborations include the development of certifications and standards, the sharing of information about factories and suppliers, and agreements to share facilities, like less than full delivery trucks. Yet at the same time, federal antitrust policies broadly prohibit agreements that restrain trade or commerce, creating the potential for innovative collaborations to result in legal prosecution. This article applies antitrust law to socially responsible and sustainable business collaboration in an effort to determine whether antitrust law chills potentially beneficial agreements. The article concludes that careful structuring of agreements can avoid many antitrust violations, but also finds that certain types of agreements, including those that could have the most impact on scarce resources and vulnerable commodity producers, are forbidden. Accordingly, this article argues that per se rules forbidding certain practices, including price fixing and resource sharing, be reconsidered in light of current economic and environmental conditions. It also questions certain assumptions about the benefits of competition in light of current environmental, human rights, and sustainability challenges.
Einer Elhauge, Harvard Law School and Barry Nalebuff, Yale School of Management discuss The Welfare Effects of Metering Ties.
ABSTRACT: Critics of current tying doctrine argue that metering ties can increase consumer welfare and total welfare without increasing output and that they generally increase both welfare measures. Contrary to those claims, we prove that metering ties always lower both consumer welfare and total welfare unless they increase capital good output. We further show that under market conditions we argue are realistic (which include a lognormal distribution of usage rates that are independently distributed from per-usage valuations), metering ties always harm consumer welfare, even when output increases. Whether metering ties raise or lower total welfare depends on the dispersion of desired usage, the cost structure, and the dissipation of profits caused by metering. For realistic cost values, metering ties will reduce total welfare if the dispersion in desired usage of the metered good is below 0.62. (For comparison, 0.74 is the dispersion of income in the United States.) If 5% of metering profits are dissipated, metering will reduce total welfare for all cost levels unless the dispersion in desired usage exceeds 150% of the dispersion of income in the United States.
Samuel N. Weinstein, U.C. Berkeley School of Law asks Rigged Results? Antitrust Lessons from Keyword Auctions.
ABSTRACT: Bid rigging is quintessential criminal antitrust conduct. Yet search-engine optimization experts publicly advise firms to agree with competitors not to bid on each other’s trademarks in search-engine keyword auctions and evidence indicates that companies enter such agreements. Why would these experts feel confident counseling firms to suppress bids in these auctions? The answer might be a belief that bid suppression (or other anticompetitive conduct) is lawful if it involves a putative intellectual property (“IP”) right, in this case a trademark or brand-related term. Under this logic, an agreement not to bid on another firm’s trademarked terms in search-engine keyword auctions is efficient because it amounts to a commitment not to perpetrate an unlawful act ― infringing a trademark. Firms and their advisers might even believe that such agreements are procompetitive because they conserve party and judicial resources and diminish potential consumer confusion. This reasoning assumes that bidding on a competitor’s trademark for use as a keyword constitutes infringement. However, no court has found trademark liability solely based on auctioning, bidding on, or purchasing a trademarked keyword. Parties have litigated this issue repeatedly and the law is in flux. This legal uncertainty puts firms contemplating such bid-suppression agreements and courts evaluating them in a difficult position, one that requires navigating the borders between antitrust law and IP rights. Indeed, these agreements raise the broader question of how to analyze potentially anticompetitive IP settlements when it is unclear if the rights involved are valid and infringed. This is an important issue: IP settlements are common and affect billions of dollars of commerce. Achieving an appropriate balance between the exercise of IP rights, which are crucial to many forms of innovation and help spur economic expansion, and the antitrust laws, which protect competitive markets, is critical. This Article proposes a novel framework for analyzing search-engine keyword bid-suppression agreements and other forms of settlements involving uncertain IP rights. Drawing from settlement theory, this framework takes into account the value of decisional law in promoting competition and challenges the assumption many courts rely upon that settlement is necessarily procompetitive. The Article argues that courts should apply the antitrust laws to keyword bid suppression agreements and other potentially unlawful IP settlements where the validity or infringement of the underlying IP right is in question and that uncertainty affects a class of cases. It details the factors courts should take into account in undertaking this antitrust analysis. This new framework is more administrable than current approaches to IP settlements and provides increased clarity to marketplace actors. It also better balances the policy preferences inherent in the IP and antitrust laws.