Wednesday, May 2, 2018
Accounting for Two-Sided Business Reality Reduces False Negatives as Well as False Positives in Antitrust Decisions Involving Platform Enterprises
David S. Evans (Global Economics Group) & Richard Schmalensee (Massachusetts Institute of Technology) are Accounting for Two-Sided Business Reality Reduces False Negatives as Well as False Positives in Antitrust Decisions Involving Platform Enterprises.
ABSTRACT: The two-sided analysis of platform businesses isn’t pro-defendant or pro-plaintiff. By accounting for business reality and modern economics, it helps courts and enforcement agencies reach the right decision and thereby reduce the likelihood of false negatives as well as false positives. Sometimes two-sided analysis is essential for uncovering how conduct harms competition and consumers. Other times it helps establish that conduct is innocuous or beneficial. Fears, and hopes, that two-sided analysis will discourage enforcement efforts are misplaced.
Thibault Schrepel, University Paris 1 Panthéon-Sorbonne offers Antitrust Conversations with Nobel Laureates.
ABSTRACT: This publication features three conversations on antitrust law with Nobel Prize laureates in Economics: Edward C. Prescott, Angus S. Deaton & Oliver D. Hart.
They aim at understanding how useful their work could be to antitrust law. Given the rigor and importance of their body of work, antitrust scholars, lawyers, officials, and anyone who's interested in antitrust would benefit from studying them even though their writings do not deal directly with antitrust-related issues. These conversations point out which articles should be read first, what they contain and to what extent they can improve antitrust law. They also offer ideas for papers to be developed in dedicated studies.
These experts offer nuanced, useful, and sometimes surprising insights on the evolving interface between antitrust law and economics. This is an exclusive window into the thoughts of Nobel Laureates, their current projects, and how their work can inform the antitrust enterprise.
Testing Art. 102 TFEU in the Digital Marketplace: Insights from the Bundeskartellamt’s investigation against Facebook
ABSTRACT: On 20th March 2016, the German Competition Authority launched a proceeding against Facebook for abuse of its dominant position in the market for social networks, based on its misleading terms and conditions for user data.1 In the view of the German antitrust authority, Facebook has a dominant position in the German market for social networks because it collects a vast amount of data from various sources and it uses this data for the creation of profiles enabling its advertisement customers to better target their advertisement activities. The BKA suspects that such market dominance enables Facebook to impose unclear and misleading terms and conditions on its users.
Case T-180/15 Icap v Commission: The Facilitator Doctrine and Other Cartel Concepts in Hybrid Settlements
ABSTRACT: While maintaining the Commission’s broad ability to make findings of liability against cartel facilitators, the General Court has questioned the Commission’s procedural operation of hybrid settlements, suggesting modifications to its current approach.
Tuesday, May 1, 2018
Anne C Wegner, Sophie Oberhammer, and Almuth Berger discuss Competition Law in the Automotive Industry in Europe: A Survey of Recent Developments.
ABSTRACT: The present survey covers relevant developments in competition law and the automotive industry that occurred between our last survey (end of June 2016) and the end of July 2017. As has been the case in our previous reports, the industry saw a high volume of activity at both the supranational level in the EU and the national level in member and non-member states. The lion’s share of the highlight cases arose from horizontal agreements. The European Commission and national authorities have continued to actively uncover cartels on most levels of the industry’s value chain and related markets. We also briefly report on an ongoing investigation that has received significant media attention: an alleged cartel in which five German carmakers may be involved.
ABSTRACT: This Survey of the growing interest in applying the EU competition rules to sport is set in the context of the decision of the European Commission on 8 December 2017 in relation to the complaint brought against the rules of the International Skating Union (ISU). The Survey examines the ISU decision in Parts I–III. The significance of the ISU decision is analysed in Part IV. The ISU decision suggests that the European Commission is willing to take a tough stance against practices of Sports Governing Bodies (SGB) that are not wholly related to the governance of the sport and may have implications for the development of competition in sports markets.
Effectiveness of Private Enforcement of European Competition Law in Case of Passing-on of Overcharges: Implementation of Antitrust Damages Directive in Germany, France, and Ireland
ABSTRACT: The term ‘passing-on’ in the framework of private enforcement of European competition law has been a point of discussion for a considerable period of time now. The debate has elevated to its peak following the judgments of the Court of Justice of the European Union (hereinafter CJEU, Court of Justice or the Court) in case Courage and later Manfredi. In those milestone cases the Court supported the idea that any individual who suffers harm as a result of competition law infringement ought to be able to claim damages. As a result of this jurisprudential development, it soon became clear that the EU legislator will have to catch up with the idea of strengthening the position of individuals in private enforcement proceedings.
C. Scott Hemphill, New York University School of Law and Nancy L. Rose, Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER) provide thoughts on Mergers That Harm Sellers.
ABSTRACT: This article examines the antitrust treatment of mergers that harm sellers. We separately consider two mechanisms of harm, increased classical monopsony power and increased bargaining leverage. We show that lost upstream competition is a cognizable harm to the competitive process. Our central claim is that harm to sellers in an input market is sufficient to support antitrust liability. We defend this conclusion against the contrary view that demonstrated harm to the merging firms’ downstream purchasers or final consumers is an essential element of any antitrust claim. We further argue that claimed “efficiencies” premised on a reduction in buy-side competition are not efficiencies at all.
Monday, April 30, 2018
Selective Distribution and Online Marketplace Restrictions Under EU Competition Rules after Coty Prestige
Giuseppe Colangelo, University of Basilicata, Department of Mathematics, Computer Science and Economics; Stanford Law School; LUISS Guido Carli, Department of Business and Management; Bocconi University - Department of Law and Valerio Torti, LUISS University of Rome; European University of Rome analyze Selective Distribution and Online Marketplace Restrictions Under EU Competition Rules after Coty Prestige.
ABSTRACT: Given the impressive growth of Internet shopping, one may wonder how the antitrust rules on selective distribution systems might fit in the context of online sales. Indeed, the online sales phenomenon has attracted significant attention in recent years in several Member States, mainly by the question on the extent to which restrictions limiting the ability of retailers to sell via online marketplaces are compatible with competition rules. No wonder the Coty Prestige judgment is so much-awaited. The ruling is expected to shape the future of EU e-commerce affecting online markets, the luxury industry and Internet platforms.
Ioana Marinescu, University of Pennsylvania - School of Social Policy & Practice, and Herbert Hovenkamp, University of Pennsylvania Law School; University of Pennsylvania - The Wharton School; University College London have a new paper on Anticompetitive Mergers in Labor Markets.
ABSTRACT: Mergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase. Although that principle is widely recognized, very few litigated cases have applied merger law to buyers. This article concerns an even more rarefied subset, and one that has barely been mentioned. Nevertheless, its implications are staggering. Some mergers may be unlawful because they injure competition in the labor market by enabling the post-merger firm anticompetitively to suppress wages or salaries. To the best of our knowledge no court has ever condemned a merger for this reason.
Cento Veljanovski has written on Credit Cards, Counterfactuals and Antitrust Damages: The UK MasterCard litigations.
ABSTRACT: Arising from the European Commission’s MasterCard decision but not necessarily relying on it in law, there are about 25 separate standalone and group follow-on retailer actions in the English courts seeking damages from MasterCard for excessive interchange fees including a collective action against MasterCard on behalf of all UK consumers. The first of these retailers’ actions was decided in July 2016 when the Competition Appeal Tribunal (CAT) in Sainsbury’s v MasterCard(‘Sainsbury’s’) found that MasterCard had infringed Article 101 (and the equivalent UK Competition Act 1998 s 2) and was ordered to pay Sainsbury’s £68 million plus interest in damages. Six months later the England and Wales High Court in Asda v MasterCard(‘Asda’) found that MasterCard had not infringed Article 101.
Leigh Hancher, Adrien de Hauteclocque, and Francesco Maria Salerno have edited State Aid and the Energy Sector.
BOOK ABSTRACT: This important new work offers a comprehensive and compelling account of State aid law and policy and its application to the energy sector. Clearly structured and offering meticulous detail and robust analysis, it is required reading for all practitioners in the field. The volume explores general questions from the definition of State aid to its application in Member States by national courts. It also examines questions of procedure, questions of compatibility, and State aid and the EEA. It is an invaluable tool for lawyers, policymakers and tax professionals specialising in State aid law and energy law, written by a team of leading practitioners and academics in the field.
Friday, April 27, 2018
AAI 19th Annual Conference "Antitrust at a Crossroads - Plotting the Course for the Next Decade" Date: June 21, 2018
AAI 19th Annual Conference "Antitrust at a Crossroads - Plotting the Course for the Next Decade"
On Thursday June 21, 2018, the American Antitrust Institute will host its 19th Annual Conference “Antitrust at a Crossroads: Plotting the Policy Course for the Next Decade.” Experts from law, economics, and policy will offer insight via four panels:
- Antitrust and Workers — Agreements, Mergers, and Monopsony
As American workers struggle to navigate an economy characterized by increasing corporate concentration, experts have begun to focus greater attention on anticompetitive conduct in labor markets. This panel will explore applications of the antitrust laws to prohibit the exercise of buyer power that harms competition and suppresses wages and salaries. Among other things, panelists will discuss landmark civil cases challenging employer no-poaching and no-hiring agreements, the Department of Justice’s movement toward prosecuting naked wage-fixing and no-poaching agreements criminally, and recent scholarship addressing the role of merger enforcement in preserving buy-side competition.
- Innovation and Antitrust — Sword or Shield?
Promoting innovation is widely recognized to be a critical, if not the most important, goal of antitrust law. In practice, however, harm to innovation is just as often used as a defense to antitrust claims, particularly where intellectual property rights are involved. This panel of experts will address several hot topics at the edge of this divide, including: antitrust claims involving product redesign and product hopping, developments in the Noerr-Pennington doctrine and sham litigation, the antitrust treatment of FRAND breaches and SSO rules, and the use of the potential competition doctrine as a means to protect nascent competition and promote innovation.
- Vertical Merger Enforcement — Competitive Effects, Remedies, and Guidelines
Vertical merger proposals in key sectors such as telecommunications, media, agricultural biotechnology, and healthcare continue to pile up. Once a lower-profile area of enforcement, vertical mergers are now a hot topic that have generated debate over competitive effects and past remedies. This panel will take up three important, interrelated topics in vertical merger enforcement. Panelists will first discuss recent developments in framing theories of harm around bargaining leverage and exclusionary effects and anticompetitive coordination. In light of controversy in past vertical merger cases, panelists will then turn to how enforcement should address the question of effectiveness of conduct remedies. Finally, the panel will take up the question of whether more guidance on how the antitrust agencies will evaluate vertical mergers is warranted, through an update and/or formalization of the 1984 vertical merger guidelines.
- Oyez! Antitrust and the Supreme Court
This term at the Supreme Court has been a busy one for antitrust cases and could be quite significant. The leading case, Ohio v. Amex, may have wide ramifications beyond its practical implications for credit-card merchant fees and two-sided markets. Fundamental antitrust issues of market definition and the operation of the rule of reason are at stake. Animal Science v. Hebei raises important questions involving international comity and export cartels. And Salt River v. Tesla indicates that the Court is poised to resolve a split in the circuits over the state-action doctrine. Our panel of leading Supreme Court advocates will address these cases and other antitrust developments at the Court, including potentially momentous cert petitions.
The conference will include a gala luncheon featuring a keynote address, the 2018 AAI Antitrust Achievement Award, and the Jerry S. Cohen Award for Antitrust Scholarship. CLE credits will be available. This program was made possible by support from our 2018 Sponsors.
Early Bird (until May 18): $450
Government and Academic Rate: $150
Members of the media are present at most AAI events. Speakers and participants should be aware that the media are on background during AAI events. If a member of the media wishes to quote or cite from the live proceedings of AAI events, they are asked to contact specific sources for permission.
Simon P. Anderson, University of Virginia - Department of Economics, Øystein Foros, Norwegian School of Economics (NHH) - Department of Business and Management Science, and Hans Jarle Kind, Norwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute); Norwegian School of Economics (NHH) - Department of Economics study Competition for Advertisers and for Viewers in Media Markets.
ABSTRACT: Standard models of advertising‐financed media assume consumers patronise a single‐media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi‐home. The principle of incremental pricing implies that multi‐homing consumers are less valuable to platforms. Then entry of new platforms decreases advertisement prices, while a merger increases them, and advertisement‐financed platforms may suffer if a public broadcaster carries advertisements. Platforms may bias content against multi‐homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.
ABSTRACT: Vertical restrictions have theoretically ambiguous efficiency effects. Marketplace evidence is, therefore, required to reveal the presence of anticompetitive foreclosure. The bundling of mobile phones with cellular network service offers one such market test. One EU member, Finland, prohibited tying arrangements for mobile service and mobile handsets in wireless broadband markets, and then cleanly ended this prohibition in April 2006. We compare the growth in Finnish third-generation (3G) uptake against other European markets using quarterly data from first quarter 2006 through fourth quarter 2012. An output effects model adjusting for market-specific factors suggests 3G penetration growth in Finland increased substantially following market reform.
Assistant Attorney General Makan Delrahim Delivers Remarks at the Antitrust Division's Second Roundtable on Competition and Deregulation
See here for the speech.
I am happy to report that several initiatives are now underway at the Division: An emphasis on structural relief in remedying anticompetitive mergers as the Supreme Court has emphasized repeatedly; improvements to consent decrees to make them more enforceable and less regulatory; the establishment of the Office of Decree Enforcement; and an initiative to terminate legacy antitrust judgments.
Robin Feldman, University of California Hastings College of the Law, John Gray, University of California Hastings College of the Law, and Giora Ashkenazi, University of California Hastings College of the Law offer Empirical Evidence of Drug Companies Using Citizen Petitions to Hold Off Competition.
ABSTRACT: The FDA’s citizen petition process was created in the 1970s as part of an effort to fashion more participatory regimes, in which ordinary citizens could access the administrative process. The theoretical underpinnings hypothesize that a participatory structure will prevent regulatory agencies from being captured by the very industries they were intended to police. Anecdotal evidence suggests, however, that the FDA’s citizen petition process may have taken a different turn. This empirical study explores whether pharmaceutical companies are systematically using citizen petitions to try to delay the approval of generic competitors. Delaying generic entry of a drug — even by a few months — can be worth hundreds of millions of dollars of additional revenue, a cost ultimately borne by consumers and government agencies in the form of high drug prices.
The study provides empirical evidence that the citizen petition process at the FDA has now become a key avenue for strategic behavior by pharmaceutical companies to delay entry of generic competition. It is a far cry from the “participatory citizen” notion that fueled the creation of such avenues at regulatory agencies. The article concludes by examining the nature of the problem and exploring the feasibility of three types of approaches to curb the behavior. These include: 1) a simple prohibition, if one were to conclude that most behavior in the category is likely to be inappropriate; 2) procedural blocks to ensure that the behavior cannot create sub-optimal results; or 3) punitive measures as a deterrent.
Thursday, April 26, 2018
M. Niefer, Antitrust Div., US Dept. of Justice has written on Donald Turner, Vertical Restraints, and the Inhospitality Tradition of Antitrust.
ABSTRACT: Donald Turner famously said that he approached territorial and customer restraints on distribution “not hospitably, in the tradition of the common law, but inhospitably, in the tradition of antitrust law.” That statement has become emblematic to many commentators of a crude approach to non-price vertical restraints that improperly considered them per se illegal, denying businesses and consumers the benefits of pro-competitive practices. Turner, however, was more hospitable toward such restraints than his remark suggests. In each of the three most important Supreme Court cases that dealt with non-price vertical restraints—White Motor, Schwinn, and Sylvania—Turner argued for rule of reason treatment because he believed the restraints could be pro-competitive. His work as an academic, a policy maker, and an advocate over the course of more than fifteen years helped move the Court and antitrust enforcers toward the rule of reason. His work also illustrates the way in which Turner influenced the evolution of antitrust more generally by infusing it with economics, tempered by an appreciation of the practical difficulties of administering the law. This approach to antitrust led Turner to advocate for the use of presumptions grounded in economics to give structure to the rule of reason, anticipating later commentary on the “limits” of antitrust.
Marek Martyniszyn, Queen's University Belfast offers Japanese Approaches to Extraterritoriality in Competition Law.
ABSTRACT: Extraterritorial application of domestic competition law is an important feature of the current regulatory framework governing anticompetitive conduct. Japan was initially hesitant to apply its Anti-Monopoly Act in such a manner. However, the last two decades show a significant shift in its approach. Japan has gradually embraced extraterritoriality and the Japan Fair Trade Commission has actively enforced competition law in a purely offshore context. This article investigates this evolution as well as the most recent and controversial cases in which Japan applied its laws in a distinctive manner unseen to date.
Pablo Ibáñez Colomo, London School of Economics looks into The Future of Article 102 TFEU after Intel.
ABSTRACT: The Court judgment in Intel clarifies two crucial aspects relating to the interpretation of Article 102 TFEU. As a matter of principle, the provision is only concerned with the exclusion of rivals that are as efficient as the dominant firm. Dominant firms can adduce evidence rebutting the presumption that exclusive dealing and loyalty rebates are capable of having anticompetitive effects. It is possible to infer from the judgment an analytical framework applying to all abusive practices.