Tuesday, January 6, 2015
Justin Pierce, Lund University - Faculty of Law and Megi Medzmariashvili, Lund University ask Standards: Competition and Innovation?
ABSTRACT: In the European Union, the Commission has identified the use of standards as a mechanism of innovation sharing, European competitiveness and further economic integration within the Union. Additionally, the Union has developed and promoted a dynamic approach to research and development, largely supported by a robust intellectual property and antitrust exemption regime. The underlying purpose of which is to provide protection for inventions, facilitate cost recovery and enhance the exploitation of profits from the developed invention. Nonetheless, innovators face a continuous struggle not only to stay ahead of the pack but also to develop strategies to secure capital to continue research and development. The difficulties associated with technological advancement in standardised areas is exasperated given that the lack of guarantee the developed technology will be included within the standard, alongside other associated difficulties arising as a result of the existing standard. This paper explores whether driving standardisation in innovation markets is potentially counter effective and ultimately, an impediment to innovation and development.
Yu Awaya, Penn State University and Vijay Krishna, Penn State University offer thoughts On Tacit versus Explicit Collusion.
ABSTRACT: Antitrust law makes a sharp distinction between tacit and explicit collusion whereas the theory of repeated games -- the standard framework for studying collusion -- does not. In this paper, we study this difference in Stigler's (1964) model of secret price cutting. This is a repeated game with private monitoring since in the model, firms observe neither the prices nor the sales of their rivals. For a fixed discount factor, we identify conditions under which there are equilibria under explicit collusion that result in near-perfect collusion -- profits are close to those of a monopolist -- whereas all equilibria under tacit collusion are bounded away from this outcome. Thus, in our model, explicit collusion leads to higher prices and profits than tacit collusion.
Paolo Crosetto, Grenoble Applied Economics Laboratory and Alexia Gaudeul, Friedrich-Schiller-Universitat Jena are Choosing Whether to Compete: Price and Format Competition with Consumer Confusion.
ABSTRACT: We run a market experiment where firms can choose not only their price but also whether to present comparable offers. They are faced with artificial demand from consumers who make mistakes when assessing the net value of products on the market. If some offers are comparable however, some consumers favor the best of the comparable offers vs. non-comparable offers. We vary the number of such consumers as well as the strength of their preferences for the best of the comparable offers. In treatments where firms observe the past decisions of their competitors, firms learn not to present comparable offers especially when many consumers prefer comparable offers. This occurs after initial periods with strong competition and leads to lower welfare for all consumers. In treatments where firms cannot monitor the competition, firms end up having to present comparable offers, which leads to an improvement in welfare for all consumers.
Miguel Cuerdo Mir, Universidad Rey Juan Carlos and Pilar Grau-Carles, Universidad Rey Juan Carlos de Madrid discuss Networks, Cartels, and Antitrust Policy.
ABSTRACT: Despite multiple applications of network theory in different fields of social and legal sciences in general, the possibility of applying this theory to the economic analysis of the antitrust law and, more specifically, to the study of cartels has not yet been considered. This paper develops a set of distances, clustering and centrality measures, taken from network theory, and applies them to the specific case of a cartel sanctioned as such by the European Commission. This approach has enabled us to quantify some characteristic elements of the cartel, such as, for instance, a remarkable asymmetry between operators (nodes in the network), its different degree of influence (study of links), as well as the critical importance of some operators versus other cartelized agents, such that their elimination from the organization would not enable them to create their own cartel. This leads the authors to reconsider the antitrust policy based on leniency programmes.
Monday, January 5, 2015
Registration Still Open! GCR Live 4th Annual Antitrust Law Leaders Forum 6 February 2015 at 09:00 to 7 February 2015 at 18:00 (far warmer than much of Europe and the United States)
Most of the US has been hit with a very cold spell. Parts of Minnesota are hitting -50F tonight. Europe isn't so warm either. Ask yourselves - wouldn't you rather be in sunny Miami Beach with beautiful people, sun, beaches, tropical drinks and serious discussions of the latest developments of antitrust/competition law and policy? Yes! Of course you do!
6 February 2015 at 09:00 to 7 February 2015 at 18:00
Thursday, 5th February
8:00pm: Welcome Reception - Sponsored byBlake, Cassels & Graydon LLP
Friday, 6th February
7:30am – 8:30am:
Registration/ Light Breakfast
8:30am – 9:15am: (Plenary)
Chairpersons’ Opening Remarks
- Jason Gudofsky, Blake, Cassels & Graydon LLP (Toronto)
- Margaret Sanderson, Charles River Associates (Toronto)
- William Baer, Assistant Attorney General, Antitrust Division, US Department of Justice (Washington)
9:15am – 10:30am: (Plenary)
Roundtable with Agency Heads of Economics
- Margaret Sanderson, Charles River Associates (Toronto)
- Tim Brennan, Chief Economist, US Federal Communications Commission (Washington)
- Giulio Federico, Merger Coordinator, Chief Economist Team, DG Competition, European Commission (Brussels)
- Mike Walker, Chief Economic Advisor, Competition and Markets Authority (London)
- Nancy Rose, Deputy Assistant Attorney General for Economic Analysis, US Department of Justice (Washington)
- Francine Lafontaine, Director, Bureau of Economics, US Federal Trade Commission (Washington)
10:30am – 10:45am:
10:45am – 12:30pm: (Concurrent sessions)
Merger: Evidence in Merger Reviews – Handling Customer Views
This panel will discuss the relative and potentially changing importance of customer feedback and economic evidence to agencies conducting merger reviews in light of the court's discounting of the views of customers in BazaarVoice.
- Is it still an effective use of agency time to solicit the views of large numbers of customers, and if so, why?
- What is the value and what are the limitations of commissioning a customer survey, and how should surveys be best used by merging parties?
- How should agencies interpret economic evidence that is at odds with feedback from customers and other market participants?
- Are theories of harm about the exercise of bargaining power - whether resulting in exclusion of upstream suppliers or horizontal competitors e.g., water-bedding - economically provable in the merger context?
- If customer opinion is not capable of being determinative of a merger's legality in some instances, does this diminish the probative value of customer opinion in other circumstances?
- Olivier Antoine, Crowell & Moring LLP (New York)
- Jordan Ellison, Slaughter and May (Brussels)
- Scott Sher, Wilson Sonsini Goodrich & Rosati (Washington)
- David Wales, Jones Day (Washington)
- Carl Shapiro, University of California at Berkeley (Berkeley)
Antitrust: Sharing Technology and Facilitating Competitor Success as a Remedy in Innovation Markets
This panel will discuss the obligation to share technology with competitors and facilitate the success of competitors as a remedy in certain innovation markets, and the effectiveness of such remedies in restoring competitive market dynamics.
- Is there good evidence of a causal relationship between a lack of sharing and the achievement of dominance or exclusion in certain industries? If not, why is sharing a potentially appropriate remedy?
- In what circumstances is sharing with or facilitating a competitor likely to overcome tying and other exclusionary practices? In what circumstances is it likely to overcome entrenched business models that customers are accustomed to?
- What are the economic circumstances in which mandated sharing or facilitation is most likely to succeed? Is sharing an appropriate remedy in regulated industries (when other regulators are capable of ordering sharing)?
- Does the imposition of "net neutrality" regulations constitute a facilitation?
- Is "Big Data" an industry where sharing should be required, given the high barriers to entry (both for data accumulation and server capacity)?
- If sharing and facilitation is an effective and appropriate remedy, particularly in industries given to innovation, what does it mean if Aspen Ski is considered to be at the outer edge of monopolization/ abuse of dominance?
- Ilene Knable Gotts, Wachtell, Lipton, Rosen & Katz (New York)
- Sean Durkin, Charles River Associates (Chicago)
- Jenine Hulsmann, Clifford Chance LLP (London)
- Dina Kallay, Director, Intellectual Property and Competition, Ericsson, Inc. (Washington)
- James Keyte, Skadden, Arps, Slate, Meagher & Flom LLP (New York)
- Nikhil Shanbhag, Director, Competition, Google Inc. (California)
12:30pm – 1:45pm:
Introduction: William Kolasky, Hughes Hubbard & Reed LLP (Washington)
2:00pm – 3:45pm: (Concurrent sessions)
Merger: Merger Review in Rapidly Evolving Industries
This panel will discuss how agencies should approach the task of merger review when industries go through rapid consolidation and successive transactions, including a discussion of how innovation competition and portfolio effects can be reliably assessed in such circumstances.
- Industry consolidation, especially in the technology sector, may be driven by product evolution or technology convergence. How should agencies address relevant product market definition in such cases?
- Is rapid industry consolidation an appropriate time to apply theories of competitive harm that are more difficult to apply from an evidentiary perspective, including portfolio effects and innovation effects?
- Where consolidation occurs rapidly (e.g., SeaGate/Samsung and Western Digital/Hitachi) how should agencies assess the likelihood of future coordinated effects? Will these circumstances bring about the first "tipping point" case?
- Susanne Zuehlke, Latham & Watkins LLP (Brussels)
- Deborah Feinstein, Director, Bureau of Competition, US Federal Trade Commission (Washington)
- Antonio Bavasso, Allen & Overy LLP (London)
- Ronan Harty, Davis Polk & Wardwell LLP (New York)
- Aviv Nevo, Northwestern University (Evanston)
- Scott Darling, Vice President, General Counsel, Trulia, Inc. (San Francisco)
Antitrust: Creating Transparency in Markets: Coordination and Information Exchange
This panel will discuss the recent antitrust scrutiny of coordination and information exchange practices used by market participants to create price discovery mechanisms and enhance price transparency as well as agency responses to information exchange and hub-and-spoke coordination.
- Industries that do not operate in open markets have little price transparency. How can this information gap be remedied in a pro-competitive manner? Is a lack of transparency necessarily a bad thing?
- In what cases can information exchanges be pro-competitive (e.g. Rx 360, Tristate Health Partners)? How can economic tools be used to make this determination?
- What steps have European regulators taken recently to reduce the risk of horizontal coordination and hub-and-spoke coordination in particular (e.g. Tesco, Post Danmark)? How have these efforts affected particular sectors, especially the food and textile sectors?
- What benefit do these antitrust cases have for consumers (e.g. Libor, Gold Investigation)? What are the economic benefits?
- How has the US approach to coordination and information exchange to enhance price transparency differed from the European approach?
- Katrin Gaßner, Freshfields Bruckhaus Deringer LLP (Düsseldorf)
- Matthew Reilly, Simpson Thacher & Bartlett LLP (Washington)
- Matthew Bennett, Charles River Associates (London)
- James Mutchnik, Kirkland & Ellis LLP (Chicago)
- Cecilio Madero Villarejo, Deputy Director-General for Antitrust, DG Competition, European Commission (Brussels)
- Kyriakos Fountoukakos, Herbert Smith Freehills LLP (Brussels)
3:45pm – 4:00pm:
4:00pm – 5:30pm: (Concurrent sessions)
Merger: Clean Up in Aisle 3 – New Approaches to Merger Review in the Retail Sector
This panel will discuss competition and consolidation in the retail sector and how the rise of online sales platforms and other disruptive technologies have influenced the development of merger analysis.
- In a world with Amazon, are mergers in the retail sector (outside of groceries) ever likely to be anti-competitive again?
- How are agencies approaching the effects of retail mergers on upstream suppliers? How can economics be used to further our understanding of these effects?
- How should merger analysis (both as presented by the parties and as performed by the agencies) reflect the rapid (and continuing) evolution of distribution structures?
- How do antitrust agencies approach the general problem of disruptive new entrant retailers when performing merger review?
- Rebecca Farrington, White & Case LLP (Washington)
- George Cary, Cleary Gottlieb Steen & Hamilton LLP (Washington)
- James Fishkin, Dechert LLP (Washington)
- Paul Collins, Stikeman Elliott LLP (Toronto)
- Peter Boberg, Charles River Associates (Boston)
- Mike Walker, Chief Economic Advisor, Competition and Markets Authority (London)
Antitrust: "Sir, please step out of line" - Extraterritoriality and Extradition in the Antitrust Context
This panel will discuss the implications for clients of the US DOJ demonstrating its ability to extradite a foreign national for participation in a cartel and explore the limits of extraterritoriality in cartel enforcement today as well as the incentives of those subject to extradition.
- Is the risk of extradition to the United States more significant than previously? Is this a general risk, or specific to the country in which individuals reside?
- What influences the incentives of individuals who are potentially subject to extradition?
- Do antitrust laws properly capture the risk profiles of individuals who engage in cartel behaviour that could potentially subject them to extradition?
- What is an appropriate threshold for "dual criminality" under antitrust law?
- In trans-national cartels, in which jurisdiction should individuals plead guilty, and where should they serve their sentences?
- How can corporate counsel best handle potential extradition proceedings against one of its employees? Should those employees be carved out of plea agreements? Should they be advised to retain separate counsel? Should they enter cooperation agreements?
- What are the limits on extraterritoriality in US law and what are the implications for individuals and companies likely to arise out of Motorola Mobility LLC v. AU Optronics Corp.?
- Peter Niggemann, Freshfields Bruckhaus Deringer LLP (Düsseldorf)
- José Carlos da Matta Berardo, Barbosa, Müssnich & Aragão Advogados (São Paulo)
- Kenneth O’Rourke, O’Melveny & Myers LLP (Los Angeles)
- Kathryn Hellings, Hogan Lovells US LLP (Washington)
- Yusuke Nakano, Anderson Mori & Tomotsune (Tokyo)
- Matthew Boswell, Senior Deputy Commissioner of Competition, Criminal Matters, Competition Bureau (Ottawa)
7:30pm: Conference Dinner - Sponsored by Charles River Associates
Saturday, 7th February
8:15am - 8.45am:
8:45am – 10:30am: (Plenary)
A Retrospective on the Term of Commissioner Joaquín Almunia, and a Look Ahead
GCR Miami 2015 will be one of the first opportunities to reflect on the accomplishments of Joaquín Almunia's term as EU Commissioner of Competition, and to look ahead at the challenges facing the new Commission.
- What are the key accomplishments of the European Commission under Joaquín Almunia?
- In what areas has the European Commission under Joaquín Almunia failed to advance enforcement? How should the next Commissioner address enforcement?
- How do these accomplishments and failures match against those of US agencies during the same time period? What are the lessons that other agencies can take from Joaquín Almunia’s term?
- What ought to be the priorities of the next Commissioner? How do these proposed priorities compare to trends in other jurisdictions?
- Paula Riedel, Linklaters LLP (London)
- Rachel Brandenburger, Senior Advisor to Hogan Lovells US LLP (New York)
- William Blumenthal, Sidley Austin LLP (Washington)
- Cristina Caffarra, Charles River Associates (London)
- Frédéric Jenny, Chairman, OECD Competition Law and Policy Committee (Cergy-Pontoise)
10:30am – 10:45am:
10:45am – 12:15pm: (Concurrent sessions)
Merger: A Vertical Tide in Merger Review
This panel will discuss recent trends in vertical theories of harm in merger review.
- Are vertical concerns the new horizontal?
- Are questions of vertical effects more important to the exercise of market power in certain industries?
- What strategies should merging parties consider in the context of a vertical merger?
- How does the analysis of vertical mergers differ across jurisdictions?
- Navin Joneja, Blake, Cassels & Graydon LLP (Toronto)
- Ian John, Kirkland & Ellis LLP (New York)
- Joshua Soven, Gibson, Dunn & Crutcher LLP (Washington)
- Ulrich Denzel, Gleiss Lutz (Stuttgart)
- Steven Salop, Georgetown University (Washington)
- Sophie Moonen, Head of Unit, European Commission (Brussels)
Antitrust: Compliance and Crisis Management: A Global Perspective
This panel will discuss the qualities that make up effective antitrust and anti-corruption compliance programs and their growing importance, and consider how those policies help (or hinder) in a crisis situation.
- What are the key substantive and procedural aspects of an effective compliance program?
- How can economics help clients in determining their damage exposure and be used effectively in settlement discussions with the agency or private parties?
- In what circumstances is compliance risk estimable for reserve purposes?
- In what circumstances can compliance programs aggravate corporate liability? How can such circumstances be prevented?
- How can compliance programs help/ hinder after an investigation has been commenced? What economics tools can be used to gauge the scale of damages?
- Daniel Sokol, Levin College of Law, University of Florida (Gainesville)
- Alfredo O’Farrell, Marval, O'Farrell & Mairal (Buenos Aires)
- Fiona Schaeffer, Milbank, Tweed, Hadley & McCloy LLP (New York)
- Helen Bardell, Director, Competition Team, Barclays Bank (London)
- Claire Debney, Vice President & General Counsel, Group Legal Affairs & Compliance, Reckitt Benckiser Group plc (Slough)
- Robert Topel, University of Chicago (Chicago)
12:15pm – 1:00pm: Chairpersons' Concluding Remarks and Lunch
- Jason Gudofsky, Blake, Cassels & Graydon LLP (Toronto)
- Margaret Sanderson, Charles River Associates (Toronto)
Vlad Radoias (Department of Economics, Towson University) describes When Price Discrimination Fails - A Principal Agent Problem with Social Influence.
ABSTRACT: I develop a theoretical model of price discrimination under social influence. I find that social influence gives sellers the incentive to artificially create and maintain excess demand on the market. The rationing occurs mainly at the low end of the market, and sometimes results in full rationing of the low end. Furthermore, the incidence of price discrimination under social influence is much lower than in the absence of it. Social influence lowers the profitability of price discrimination and incentivizes sellers to reduce product variety and to only target the high end of the market, a fact that is consistent with many empirical observations.
Babur De los Santos (Indiana University) and Matthijs Wildenbeest (Indiana University examine E-book Pricing and Vertical Restraints.
ABSTRACT: This paper empirically analyzes how the use of vertical price restraints has impacted retail prices in the market for e-books. In 2010 five of the six largest publishers simultaneously adopted the agency model of book sales, allowing them to directly set retail prices. This led the Department of Justice to file suit against the publishers in 2012, the settlement of which prevents the publishers from interfering with retailers' ability to set e-book prices. Using a unique dataset of daily e-book prices for a large sample of books across major online retailers, we exploit cross-publisher variation in the timing of the return to the wholesale model to estimate its effect on retail prices. We find that e-book prices for titles that were previously sold using the agency model decreased by 18 percent at Amazon and 8 percent at Barnes & Noble. Our results are robust to different specifications, placebo tests, and synthetic control groups. Our findings illustrate a case where upstream firms prefer to set higher retail prices than retailers and help to clarify conflicting theoretical predictions on agency versus wholesale models.
Matthias Firgo (WIFO) and Agnes Kugler are Detecting Collusion in Spatially Differentiated Markets.
ABSTRACT: The empirical literature on mergers, market power and collusion in differentiated markets has mainly focused on methods relying on output and/or panel data. In contrast to this literature we suggest a novel approach that allows for the detection of collusive behaviour among a group of firms making use of information on the spatial structure of horizontally differentiated products. By estimating best response functions using a spatial econometrics approach, we focus on differences in the strategic interaction in pricing between different groups of firms as well as on differences in price levels. We apply our method to the market for ski lift tickets using a unique data set on ticket prices and detailed resort-specific characteristics covering all ski resorts in Austria. We show that prices of ski resorts forming alliances are higher and increase with the size and towards the spatial center of an alliance. Strategic interaction in pricing is higher within than outside alliances. All results are in line with the findings of theoretical models on collusion in horizontally differentiated markets.
Edward John Dorrell Webb (Department of Economics, Copenhagen University) asks Do we see monopoly or duopoly? The influence of perception on entry deterrence.
ABSTRACT: Consumers have bounded perception and treat similar goods as homogeneous. The interaction between this bias and the structure of firms is studied in a vertically differentiated duopoly with market entry. With fixed costs of quality, natural monopoly and entry deterrence occurs at lower entry costs and incumbent profit is higher. With marginal costs of quality, natural monopoly occurs at higher entry costs or not at all. Deterrence occurs at higher entry costs for mild perceptual limitations and at lower costs for severe limitations. Incumbent profit is generally lower, although for a narrow range of parameter values it may be higher. The incumbent may opt not to enter and no market is created.
Sunday, January 4, 2015
Opportunity for DC area lawyers looking to deepen their understanding of antitrust merger analysis
Professor Jonathan Baker will be teaching Advanced Antitrust: Mergers (Law-693) at American University Washington College of Law during Spring 2015. This advanced antitrust course is open to practitioners who wish to audit, as well as to law students taking the class for credit.
Students will study the substantive economic issues that arise during the enforcement agency review and litigation of horizontal mergers. One goal is to prepare students to join a team investigating (for the government) or advocating (for the merging firms) a proposed merger and contribute immediately. It will combine traditional classroom discussions with multi-class simulation exercises based on a recent government merger challenge. Topics include market definition, the presumption of harm from market concentration, unilateral and coordinated competitive effects, entry, and efficiencies.
Class will meet on Mondays from 6 pm to 7:50 pm beginning on January 12 through late April. Auditors will be encouraged to participate in class discussions and assignments but will not receive a grade or course credit.
Comments from past auditors (from an anonymous survey):
“The course was extremely useful to my legal practice, instilling knowledge on how to conceptually approach merger investigation and litigation.”
“I would highly recommend this class to other attorneys.”
“Professor Baker is fantastic. It seems like he has seen everything in the antitrust world – he was a great person from whom to learn.”
Practitioners who wish to audit should contact the instructor for more information about the course and fees, and to arrange to enroll, at firstname.lastname@example.org or 202-274-4315.
Saturday, January 3, 2015
Someone just forwarded me work by the World Bank that suggests that economic papers that get profiled in blogs get higher dissemination and higher citation counts. For all of you who have noticed a spike in SSRN downloads and citations to your paper due to this blog, we have some empirical evidence that it is not just your personal hunch that is at work.
I started the blog as a way to centralize information about developments in antitrust and related competition policy issues. It has allowed me to follow scholarship on particular topics and of particular scholars more closely. It has become a broader community with a linkedin group and a way for people to get to know each other.
Friday, January 2, 2015
Paolo Crosetto (INRA) and Alexia Gaudeul (DFG) are Choosing whether to compete: Price and format competition with consumer confusion.
ABSTRACT: We run a market experiment where subjects take the role of firms and can choose not only their price but also whether to present comparable offers. Firms are faced with artificial demand whereby consumers make mistakes in assessing the net value of products on the market. Some of those consumers are however able to identify the best of the comparable offers if some offers are comparable, and favor that offer vs. non-comparable offers. We vary the portion of such consumers and the strength of their preferences for the best of the comparable offers. In treatments where firms observe the past decisions of their competitors, firms learn to collude in not presenting comparable offers. This occurs after initial periods with strong ! competition. Collusion lowers welfare for all consumers and is most frequent when many consumers prefer comparable offers. In treatments where firms cannot monitor competitors however, firms respond to the preference of a portion of consumers for comparable offers. This leads to an improvement in welfare for all consumers.
Thursday, January 1, 2015
John Kwoka has published Mergers, Merger Control, and Remedies - A Retrospective Analysis of U.S. Policy with MIT Press.
BOOK ABSTRACT: In recent decades, antitrust investigations and cases targeting mergers—including those involving Google, Ticketmaster, and much of the domestic airline industry—have reshaped industries and changed business practices profoundly. And yet there has been a relative dearth of detailed evaluations of the effects of mergers and the effectiveness of merger policy. In this book, John Kwoka, a noted authority on industrial organization, examines all reliable empirical studies of the effect of specific mergers and develops entirely new information about the policies and remedies of antitrust agencies regarding these mergers. Combined with data on outcomes, this policy information enables analysis of, and creates new insights into, mergers, merger policies, and the effectiveness of remedies in preventing anticompetitive outcomes.
After an overview of mergers, merger policy, and a common approach to merger analysis, Kwoka offers a detailed analysis of the studied mergers, relevant policies, and chosen remedies. Kwoka finds, first and foremost, that most of the studied mergers resulted in competitive harm, usually in the form of higher product prices but also with respect to various non-price outcomes. Other important findings include the fact that joint ventures and code sharing arrangements do not result in such harm and that policies intended to remedy mergers—especially conduct remedies—are not generally effective in restraining price increases. The book’s uniquely comprehensive analysis advances our understanding of merger decisions and policies, suggests policy improvements for competition agencies and remedies, and points the way to future research.
Federico Boffa (Free University of Bolzano) and Lapo Filistrucchi (University of Florence) derive Optimal Cartel Prices in Two-Sided Markets Access.
ABSTRACT: We study optimal cartel prices in a two-sided market. We present a simple model showing that prices above the two-sided monopoly price may prevail on one side of a two-sided market as a means to enhance the sustainability of the cartel. We prove that in such a case a higher benefit from the network effect may compensate customers on that side of the market for the higher prices they are charged. We then provide both sufficient and necessary conditions for these results to hold in more complex models of two-sided markets. Our analysis extends to cartels in two-sided markets a result previously known for cartels selling complementary products, despite the fact that products in a two-sided market are not complements for customers, since customers typically buy only one of the two products (e.g. in the case of newspapers, advertisers buy advertising slots while readers buy content) and products on each side are substitutes (e.g. newspapers publishers compete for readers and for advertisers).
Wednesday, December 31, 2014
Volker Nocke (Mannheim) and Patrick Rey (Toulouse) explore Exclusive Dealing and Vertical Integration in Interlocking Relationships.
ABSTRACT: We develop a model of interlocking bilateral relationships between upstream manufacturers that produce differentiated goods and downstream retailers that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, at the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.
Tuesday, December 30, 2014
2014 was a busy year for me with four edited books published. This year there were:
The Oxford Handbook of International Antitrust Economics Volume 1 (Oxford University Press 2014)
INTRODUCTION AND INSTITUTIONAL ISSUES
1. Rationales for Antitrust: Economics and Other Bases
Daniel A. Crane
2. Antitrust Enforcement Regimes: Fundamental Differences
Keith N. Hylton
3. Economic Analysis of Antitrust Exemptions
4. Healthcare Provider and Payer Markets
Cory S. Capps and David Dranove
5. International Antitrust Institutions
6. Competition Policy in Public Choice Perspective
Fred S. McChesney, Michael Reksulak, and William F. Shughart II
7. Antitrust Settlements
Daniel L. Rubinfeld
8. The Economics of Antitrust Class Actions
Roger D. Blair and Christine Piette Durrance
9. Behavioral Economics and Antitrust
Mark Armstrong and Steffen Huck
10. Experimental Economics in Antitrust
Wieland Müller and Hans-Theo Normann
11. Optimal Antitrust Remedies: A Synthesis
William H. Page
12. Private Antitrust Enforcement in the United States and the European Union: Standing and Antitrust Injury
Jeffrey L. Harrison
13. Freedom to Trade and the Competitive Process
Aaron Edlin and Joseph Farrell
II. MONOPOLY: STRUCTURAL CONSIDERATIONS
14. Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches
Lawrence J. White
15. Market Definition
16. Bilateral Monopoly: Economic Analysis and Antitrust Policy
Roger D. Blair and Christina DePasquale
17. Antitrust and the Economics of Networks
Daniel F. Spulber and Christopher S. Yoo
18. The Antitrust Analysis of Multi-Sided Platform Businesses
David S. Evans and Richard Schmalensee
19. Efficiency Claims and Antitrust Enforcement
20. Unilateral Effects
Bryan Keating and Robert D. Willig
21. Coordinated Effects: Evolution of Practice and Theory
Jith Jayaratne and Janusz Ordover
22. Buyer Power in Merger Review
Dennis W. Carlton, Mary Coleman, and Mark Israel
23. Vertical Mergers
Michael A. Salinger
Oxford Handbook of International Antitrust Economics Volume 2 (Oxford University Press 2014)
I. MONOPOLIZATION: CONDUCT
1. A Framework for the Economic Analysis of Exclusionary Conduct
B. Douglas Bernheim and Randal Heeb
2. Predatory Pricing
Kenneth G. Elzinga and David E. Mills
3. Raising Rivals' Costs
David T. Scheffman and Richard S. Higgins
4. Predatory Buying
John E. Lopatka
5. Competitive Discounts and Antitrust Policy
Kevin M. Murphy, Edward A. Snyder, and Robert H. Topel
6. Squeezing Claims: Refusals to Deal, Essentials Facilities, and Price Squeezes
Barak Orbach and Raphael Avraham
7. Innovation and Antitrust Policy
Thomas F. Cotter
8. Continental Drift in the Treatment of Dominant Firms: Article 102 TFEU in Contrast to § 2 Sherman Act
Pierre Larouche and Maarten Pieter Schinkel
9. Treatments of Monopolization in Japan and China
Ping Lin and Hiroshi Ohashi
10. Monopolization in Developing Countries
Alberto Heimler and Kirtikumar Mehta
11. Business Strategy and Antitrust Policy
Michael J. Mazzeo and Ryan C. McDevitt
II. VERTICAL INTEGRATION AND CONTRACTUAL EQUIVALENTS
12. Resale Price Maintenance of Online Retailing
13. Exclusive Dealing
14. Tying Arrangements
Erik Hovenkamp and Herbert Hovenkamp
15. Vertical Restraints Across Jurisdictions
Ralph A. Winter and Edward M. Iacobucci
16. Franchising and Exclusive Distribution: Adaptation and Antitrust
Francine Lafontaine and Margaret E. Slade
III. COLLUSION AMONG OSTENSIBLE COMPETITORS
17. Cartels and Collusion: Economic Theory and Experimental Economics
Jay Pil Choi and Heiko Gerlach
18. Cartels and Collusion: Empirical Evidence
Margaret C. Levenstein and Valerie Y. Suslow
19. Tacit Collusion in Oligopoly
Edward J. Green, Robert C. Marshall, and Leslie M. Marx
20. Auctions and Bid Rigging
Ken Hendricks, R. Preston McAfee, and Michael A. Williams
21. Screening for Collusion as a Problem of Inference
Michael J. Doane, Luke M. Froeb, David S. Sibley, and Brijesh P. Pinto
22. Competition Policy for Industry Standards
23. Antitrust Corporate Governance and Compliance
Rosa M. Abrantes-Metz and D. Daniel Sokol
Global Antitrust Compliance Handbook (Oxford University Press 2014)
- Written with the specific aim of assisting firms in their global compliance efforts
- Covers 43 jurisdictions across Europe, the Western Hemisphere, Asia and Pacific and Africa
- Consistent chapter structure allows for easy comparison
8. United States
Asia and Pacific
11. Hong Kong
15. New Zealand
16. South Korea
20. Czech Republic
23. European Union
42. United Kingdom
43. South Africa
Competition and the State (Stanford University Press 2014)
Competition and the State analyzes the role of the state across a number of dimensions as it relates to competition law and policy across a number of dimensions. This book re-conceptualizes the interaction between competition law and government activities in light of the profound transformation of the conception of state action in recent years by looking to the challenges of privatization, new public management, and public-private partnerships. It then asks whether there is a substantive legal framework that might be put in place to address competition issues as they relate to the role of the state. Various chapters also provide case studies of national experiences.
Marie-Laure Allain (Ecole Polytechnique), Claire Chambolle (INRA) and Patrick Rey (Toulouse) discuss Vertical Integration as a Source of Hold-up.
ABSTRACT: While vertical integration is traditionally seen as a solution to the hold-up problem, this paper highlights instead that it can generate hold-up problems — for rivals. We first consider a successive duopoly where competition among suppliers eliminates any risk of hold-up; downstreamfirms thus obtain the full return from their investments. We then show that vertical integration creates hold-up concerns for the downstream rival, by affecting the integrated supplier’s incentives from both ex ante and ex post standpoints. We also provide illustrations in terms of standard industrial organization models and of antitrust cases, and discuss the robustness of the insights.
Monday, December 29, 2014
Einer Elhauge, Harvard advocates Treating RAND Commitments Neutrally.
ABSTRACT: This Article argues that the same legal standards should apply to RAND commitments whether they are made to standard-setting organizations or not. The arguments for concluding that RAND commitments should limit injunctive patent relief or trigger antitrust liability turn on whether the commitment reasonably induces lock-in that generates hold-up effects or market power when that commitment is breached. But RAND commitments can induce such lock-in effects when they are made outside of standard-setting organizations and do not always induce them when they are made to standard-setting organizations. Thus, any special legal rules for RAND commitments should turn on whether the commitments induced such lock-in, rather than on the institutional context. The arguments against using special legal rules for RAND commitments turn on the extent to which lock-in might fail to generate holdup problems, denying patent injunctions might generate reverse-holdup problems, and contract or promissory estoppel remedies might obviate the need for antirust liability. But those arguments likewise apply equally inside and outside of standard-setting organizations. Thus, however one resolves the arguments for and against applying special legal rules to RAND commitments, the resulting legal standards should be the same whether or not the commitment is made to a standard-setting organization.
Friday, December 26, 2014
Rehabilitating Jefferson Parish: Why Ties Without a Substantial Foreclosure Share Should Not Be Per Se Legal
Einer Elhauge has a fascinating new paper on Rehabilitating Jefferson Parish: Why Ties Without a Substantial Foreclosure Share Should Not Be Per Se Legal.
ABSTRACT: Current tying law uses a bifurcated rule of reason, condemning ties that have either tying market power or a substantial tied foreclosure share, absent an offsetting procompetitive justification. Many critics of tying law advocate overruling the first branch, commonly called the quasi per se rule, thus making all ties without a substantial foreclosure share per se legal. This article shows they are mistaken. Even without a substantial foreclosure share, ties with market power restrain competition in ways that are likely to harm both consumer welfare and total welfare as long as they foreclose a substantial dollar amount of sales. Critics claim that these effects do not legally count as anticompetitive because they do not impair rivals, but their claim conflicts with precedents that rule otherwise and with the principle that antitrust protects competition, not competitors. Both precedents and economics also show that critics are wrong in claiming that there is no valid distinction between setting a profit-maximizing price and extracting the remaining consumer surplus through tying agreements. Because even the critics admit that consumer welfare and total welfare are harmed by some ties with market power that lack a substantial foreclosure share, even their own analysis fails to support their position of per se legality for such ties. It would instead support the current doctrine that sorts out the ties with market power that harm consumer welfare from those that do not.
Thursday, December 25, 2014
Comparative Legal Principles for the Formation of a Group of Persons in the Russian Competition Legislation
Maria A. Egorova, Russian Presidential Academy of National Economy and Public Administration (RANEPA) - M.M. Speransky Department of Law discusses Comparative Legal Principles for the Formation of a Group of Persons in the Russian Competition Legislation.
ABSTRACT: The article analyzes the main criteria systematization group of persons, existing in the legal doctrine, and serves original criteria for determining the formation of a group of persons for the purposes of competition law.