Monday, May 29, 2017
Richard J. Pierce Jr., George Washington University Law School is Comparing the Competition Law Regimes of the United States and India.
ABSTRACT: In this article, Professor Pierce compares the oldest system of competition law — the U.S. system — with one of the youngest systems of competition law — the Indian system. He identifies several strengths and weaknesses of the U.S. system. He then gives the Indian Parliament high marks for creating an institutional environment that has the potential to produce an excellent body of law.
Friday, May 26, 2017
Juliane Scholl asks Why the New Merger Control Thresholds in Germany?
ABSTRACT: The Ninth Amendment to the German Act against Restraints of Competition is about to enter into force. Adapting the German competition law to the developments of the digital economy figures among the key issues of the amendment. Besides, the amendment will also transpose the EU directive on cartel damage claims 2014/104/EU, and align the German competition penalty system to the EU rules.
Thomas Jaeger asks Tax Concessions for Multinationals: In or Out of the Reach of State Aid Law?
ABSTRACT: The Fiat1 and Apple2 Decisions are part of a number of state aid procedures opened by the Commission in the wake of the so-called LuxLeaks affair. LuxLeaks is the popular name for a widespread scheme of advance tax ruling arrangements uncovered by journalists in late 2014. The scheme uncovered concerned over three hundred large multinational corporations – among them Fiat – and had been applied from 2002 onward. Large multinationals were allegedly offered very favorable tax treatment by national tax authorities on a case-by-case basis: Authorities issued binding written advance interpretations of the law in relation to the undertaking concerned (so-called advance tax rulings).
DEI v Commission: Application of Article 106 TFEU to Preferential Rights for Electricity Incumbent Post-market Liberalisation
Kyriakos Fountoukakos, Herbert Smith describes DEI v Commission: Application of Article 106 TFEU to Preferential Rights for Electricity Incumbent Post-market Liberalisation.
ABSTRACT: Judgments of the General Court of 15 December 2016 in cases T-169/08 RENV and T-421/09 RENV – DEI v Commission In a referral back by the Court of Justice of the European Union (the ‘CJEU’) on the remaining pleas in the Greek lignite appeals, the General Court of the European Union (the ‘General Court’) held that the EU Commission had not erred in its assessment of the relevant market and of the inequality of opportunity in favour of state-owned electricity incumbent Dimosia Epicheirisi Ilektrismou AE (‘DEI’) which was distortive of competition, had respected the fundamental EU principles of legal certainty, legitimate expectations and proportionality and had complied with its duty to state reasons.
Thursday, May 25, 2017
It's a Conspiracy! Or Is It? The Difficulty With the Economic Torts as ‘Alternative’ Causes of Action for Competition Law Damages Actions in UK Courts
ABSTRACT: The cause of action upon which damages actions brought in the UK courts under either EU or UK competition law are generally founded is breach of statutory duty. In two cases from recent years, however—both follow-on actions brought against parties held under regulatory decisions to have partaken in illegal cartels—an attempt has been made to invoke the torts of conspiracy by unlawful means and/or unlawful interference, as causes of action. This article asks why a claimant might attempt to found an action in unlawful means conspiracy or unlawful interference, in addition to, or as an alternative to, an action for breach of statutory duty, when bringing a damages action against a cartelist.
Toshiba v Commission: Court of Justice Eases Burden on Commission to Fine Parent Companies for Competition Law Infringements by Joint Ventures
Jacquelyn MacLennan and Aqeel Kadri examine Toshiba v Commission: Court of Justice Eases Burden on Commission to Fine Parent Companies for Competition Law Infringements by Joint Ventures.
ABSTRACT: Case C-623/15 P Toshiba v Commission EU:C:2017:21 The Court of Justice confirms that companies with minority stakes in joint ventures are at risk of liability even where they play a minor role in the management of the joint venture.
Collusion in Public Contracts Procurement: Suppliers of School Cleaning Services Fined for Bid Rigging (Italy)
Michele Giannino describes Collusion in Public Contracts Procurement: Suppliers of School Cleaning Services Fined for Bid Rigging (Italy).
ABSTRACT: Over the past years the Italian Competition Authority (ICA) has taken an aggressive enforcement stance against bid rigging arrangements. To establish a bid rigging, the ICA is subject to the same evidentiary onus as the European Commission, having to prove anomaly bidding patterns, the lack of alternative plausible explanation for such conducts as wells as contacts and exchange of sensitive information between the colluders. In School Cleaning Services, the ICA found that a consortium of operators and three other firms breached Article 101 TFEU for collusive tendering and imposed fines amounting to the impressive sum of 113 million.
Jaime Barahona has written on Confidentiality of Leniency Material vis-à-vis Criminal Prosecution (Chile).
ABSTRACT: This article describes the institutional setting and the legal arguments that were confronted by the interested parties before the Constitutional Tribunal of Chile (‘Constitutional Tribunal’ or ‘the tribunal’) in the 2016 decision that rejected a request for criminal prosecutors to have full access to leniency material and confidential information.
Wednesday, May 24, 2017
Romano Subiotto QC David R. Little Romi Lepetska describe The Application of Article 102 TFEU by the European Commission and the European Courts.
ABSTRACT: The Commission's most high-profile Article 102 investigations of 2015—Gazprom, Google, and Qualcomm—remained open at the end of 2016. Each of these companies received Statements of Objections (‘SO’) shortly after Commissioner Vestager took office. The Gazprom and Qualcomm investigations appear close to resolution. Conversely, the Commission's Google investigations seem no closer to a final outcome. In 2016, the Commission issued two SOs addressed to Google: one relating to Google's advertising and intermediation service, AdSense, and the other relating to the Android operating system. The Commission also issued a Supplementary SO in relation to the Google ‘Shopping’ service. A number of other investigations that were opened in 2015 or in which an SO was issued are ongoing, with no major developments announced in 2016.
Itai Rabinovici explores The Application of EU Competition Rules in the Transport Sector.
ABSTRACT: In 2016 the centre of attention in the transport industry was the upheavals in the shipping industry and the dramatic changes in its landscape. The collapse of the South Korean giant Hanjin sent shock waves through the industry and caused significant disturbances in logistical chains around the world. The alignment of alliances in the industry has changed with the rearrangement of the three mega-alliances G5, Ocean 3 and CKYHE into Ocean Alliance and THE Alliance. EU regulators focused on the clearance procedures of new significant mergers (CMA CGM/NOL and Hapag-Llyod/UASC; UASC, United Arab Shipping Company) and the adoption of the commitments decision in the Container Shipping case.
Gobillon, Laurent and Milcent, Carine investigate Competition and hospital quality: Evidence from a French natural experiment.
ABSTRACT: We evaluate the effect of a pro-competition reform gradually introduced in France over the 2004-2008 period on hospital quality measured with the mortality of heart-attack patients. Our analysis distinguishes between hospitals depending on their status: public (university or non-teaching), non-profit or for-profit. These hospitals differ in their degree of managerial and financial autonomy as well as their reimbursement systems and incentives for competition before the reform, but they are all under a DRG-based payment system after the reform. For each hospital status, we assess the benefits of local competition in terms of decrease in mortality after the reform. We estimate a duration model for mortality stratified at the hospital level to take into account hospital unobserved heterogeneity and censorship in the duration of stays in a flexible way. Estimations are conducted using an exhaustive dataset at the patient level over the 1999-2011 period. We find that non-profit hospitals, which have managerial autonomy and no incentive for competition before the reform, enjoyed larger declines in mortality in places where there is greater competition than in less competitive markets.
Is information diffusion a threat to market power for financial access? Insights from the African banking industry
Asongu, Simplice ; Batuo, Enowbi ; Nwachukwu, Jacinta ; and Tchamyou, Vanessa ask Is information diffusion a threat to market power for financial access? Insights from the African banking industry.
ABSTRACT: This study assesses how information diffusion dampens the adverse effect of market power on the price and quantity of loans provided by a panel of 162 banks from 39 African countries for the period 2001-2011. The empirical evidence is based on three endogenity-robust estimation techniques, namely: (i) Two Stage Least Squares (2SLS), (ii) Generalised Method of Moments (GMM) and (iii) Instrumental Variable Quantile Regressions (QR). Three key results emerge. First, from the GMM results, a mobile phone penetration rate of 54.29, rising to 57 per 100 people are predicted to neutralise the adverse effect of market power on the average loan price and quantity respectively. Second, from the QR, mobile phone penetration rates of 56.20, 52.04 and 42.76 per 100 people is needed to nullify the negative effect of market power on loan quantity at the 0.10th, 0.25th and 0.90th quintiles respectively. Third, a considerably lower internet penetration rate of 9.49 per 100 people is required to counteract the negative impact of market power on loan quantity at the 0.90th quintile.
Tuesday, May 23, 2017
L. Chauvet and L. Jacolin study Financial Inclusion, Bank Concentration and Firm Performance.
ABSTRACT: This study focuses on the impact of financial inclusion and bank concentration on the performance of firms in developing and emerging countries. Using firm-level data for a sample of 55,596 firms in 79 countries, we find that financial inclusion, i.e. the distribution of financial services across firms, has a positive impact on firm growth. This positive impact is magnified when bank markets are less concentrated, a proxy for more competition among banks. We also find that more competitive banks favor firm growth only at high levels of financial inclusion, while bank concentration is particularly favorable to foreign and state-owned firms, and increases firm growth for low levels of financial inclusion. In countries with limited financial deepening, the quality of the banking system (financial inclusion and bank competition) may be as important to promote firm performance as its overall size.
ABSTRACT: This paper attempts to determine if beer is a separate relevant product market from rum and soft drinks. Three conventional statistical tests - Pearson’s correlation, unit root and Granger causality - are applied to average monthly retail price data from Barbados for the three categories of beverages for the period January 2012 to July 2015. The results of both the correlation and Granger causality tests suggest that beer is a distinct product market from rum and soft drinks, while the result of the unit root test was inconclusive. The results of the paper should interest practitioners of competition law in the Caribbean region as it shows that price tests could be used as quantitative proof on market boundaries to support the intuition and evidence the traditional Small but Significant Non-transitory Increase in Price (SSNIP) test provides.
Jan De Loecker and Paul T. Scott are Estimating Market Power: Evidence from the US Brewing Industry.
ABSTRACT: While inferring markups from demand data is common practice, estimation relies on difficult-to-test assumptions, including a specific model of how firms compete. Alternatively, markups can be inferred from production data, again relying on a set of difficult-to-test assumptions, but a wholly different set, including the assumption that firms minimize costs using a variable input. Relying on data from the US brewing industry, we directly compare markup estimates from the two approaches. After implementing each approach for a broad set of assumptions and specifications, we find that both approaches provide similar and plausible markup estimates in most cases. The results illustrate how using the two strategies together can allow researchers to evaluate structural models and identify problematic assumptions.
Jeanjean, François and Houngbonon, Georges Vivien discuss Optimal Market Structure in the Mobile Industry.
ABSTRACT: The optimal market structure in the mobile industry is an important topic in the mobile industry. In this paper, we use two theoretical frameworks and a structural estimation approach to assess the effects of market structure on consumer surplus in symmetric mobile markets. When mobile services are viewed as homogeneous products under Cournot competition, we find that consumer surplus falls with the number of operators. However, when mobile services are considered as differentiated products under Salop competition, we find an inverted-U relationship between consumer surplus and the number of mobile operators. These findings call for a case-by-case analysis of the optimal market structure in the mobile industry.
Monday, May 22, 2017
Hviid, Morten ; Izquierdo Sanchez, Sofia ; Jaques, Sabine discuss From publishers to self-publishing: The disruptive effects of digitalisation on the book industry.
ABSTRACT: This paper explores the structure of the book publishing industry post- digitalisation. We argue that the introduction of successful e-book readers has belatedly given digitalisation the characteristics of a disruptive technology by making self-publishing a serious option for authors. This has been supported by the entry of new types of intermediaries and the strengthening of others. These changes have reduced the overall complexities for an author to get a book self-published. As a result, a larger share of the surplus from the book industry is likely going to authors, explaining the significant increase in the supply of books. The potential over-supply of books has created a new problem by making consumer search more difficult. We argue that digitalisation has shifted the potential market failure from inadequate supply of books to asymmetric information about quality. It remains to be seen whether the market will provide appropriate intermediaries to solve the associated asymmetric information problem and, if not, what appropriate interventions should be contemplated.
Practical contribution for the assessment and monitoring of product market competition in the Portuguese Economy – estimation of price cost margins
Luis Folque (NOVA – School of Business and Economics) has written Practical contribution for the assessment and monitoring of product market competition in the Portuguese Economy – estimation of price cost margins.
ABSTRACT: This work project estimates price-cost margins for 163 Portuguese markets (defined at 3-digit level of CAE), with the aim of assessing the degree of product market competition. During the Economic and Financial Assistance Program of 2011-14, a set of product market reforms was implemented, with the objective of increasing competition in output markets. We provide a first assessment of the effectiveness of these reforms. We use Portuguese firm-level data to estimate price-cost margins, allowing for worker’s bargaining power. By then aggregating markets into sectors, our results allow us to conclude that the degree of competition did increase in most sectors