Antitrust & Competition Policy Blog

Sustainability and Net Zero Climate Agreements – A Transatlantic Antitrust Perspective

Sustainability and Net Zero Climate Agreements – A Transatlantic Antitrust Perspective

 

Maurits Dolmans

Cleary Gottlieb Steen & Hamilton LLP

Wanjie Lin

Cleary Gottlieb Steen & Hamilton LLP

Jessica Hollis

Cleary Gottlieb Steen & Hamilton LLP

Date Written: September 8, 2023

Abstract

The climate crisis requires a transition to a net zero economy. Such a transition is possible only through concerted public and private action. While a number of financial institutions and insurance companies had agreed to align their activities with net zero targets, reconsidering support for new coals and fossil fuel projects, these initiatives have come under attack under antitrust law from political groups in the US, who have labelled such agreements “collective boycotts.” Such accusations hinder private sector cooperation.

This article discusses the background to Net Zero Agreements, and the antitrust criticisms launched by anti-ESG partisans under US, EU and UK antitrust law and precedent. Net Zero Agreements can alleviate market failures, resolve collective action problems, and improve consumer welfare by lowering the potentially huge costs to consumers of an unmitigated climate crisis. Under a rule of reason, antitrust authorities and courts in the US, EU, and UK can and should give room for private sector cooperation between companies pursuing an effective transition to a clean economy, where these agreements correct market failures and resolve collective action problems.

Moderating Monopolies

Moderating Monopolies

 

 

Nikolas Guggenberger

University of Houston Law Center

Date Written: September 8, 2023

Abstract

Industrial organization predetermines content moderation online. At the core of today’s dysfunctions in the digital public sphere is a market power problem. Meta, Google, Apple, and a few other digital platforms control the infrastructure of the digital public sphere. A tiny group of corporations governs online speech, causing systemic problems to public discourse and individual harm to stakeholders. Current approaches to content moderation build on a deeply flawed market structure, addressing symptoms of systemic failures at best and cementing ailments at worst.

Market concentration creates monocultures for communication susceptible to systemic failures and raises the stakes for individual content moderation decisions, like takedowns of posts or bans of individuals. As these decisions are inherently prone to errors, those errors are magnified by the platforms’ scale and market power. Platform monopolies also harm individual stakeholders: persisting monopolies lead to higher prices, lower quality, or less innovation. As platforms’ services include content moderation, degraded services may increase the error rate of takedown decisions and over-expose users to toxic content, misinformation, or harassment. Platform monopolies can also get away with discriminatory and exclusionary conduct more easily because users lack voice and exit opportunities.

Stricter antitrust enforcement is imperative, but contemporary antitrust doctrine alone cannot hope to provide sufficient relief to the digital public sphere. First, a narrowly understood consumer welfare standard overemphasizes easily quantifiable, short-term price effects. Second, the levels of concentration necessary to trigger antitrust scrutiny far exceed those of a market conducive to pluralistic discourse. Third, requiring specific anticompetitive conduct, the focal point of current antitrust doctrine, ignores structural dysfunction mighty bottlenecks create in public discourse, irrespective of the origins or even benevolent exercise of their power.

In this Article, I suggest three types of remedies to address the market power problem behind the dysfunctions in the digital public sphere. First, mandating active interoperability between platforms would drastically reduce lock-in effects. Second, scaling back quasi-property exclusivity online would spur follow-on innovation. Third, no-fault liability and broader objectives in antitrust doctrine would establish more effective counterweights to concentrating effects in the digital public sphere. While these pro-competitive measures cannot provide a panacea to all online woes, they would lower the stakes of inevitable content moderation decisions, incentivize investments in better decision-making processes, and contribute to healthier pluralistic discourse.

Algorithms, Artificial Intelligence and Simple Rule Based Pricing

Algorithms, Artificial Intelligence and Simple Rule Based Pricing

 

Qiaochu Wang

Carnegie Mellon University - David A. Tepper School of Business

Yan Huang

Carnegie Mellon University - David A. Tepper School of Business

Param Vir Singh

Carnegie Mellon University - David A. Tepper School of Business

Kannan Srinivasan

 

Abstract

Automated pricing strategies in e-commerce can be broadly categorized into two forms - simple rule-based such as undercutting the lowest price, and more sophisticated artificial intelligence (AI) powered algorithms, such as reinforcement learning (RL) algorithms. Although simple rule-based pricing remains the most widely used strategy, a few retailers have adopted pricing algorithms powered by AI. RL algorithms are particularly appealing for pricing due to their abilities to autonomously learn an optimal policy and adapt to changes in competitors' pricing strategies and market environment. Despite the common belief that RL algorithms hold a significant advantage over rule-based strategies, our extensive pricing experiments demonstrate that when competing against RL pricing algorithms, simple rule-based algorithms may result in higher prices and benefit all sellers, compared to scenarios where multiple RL algorithms compete against each other.

To validate our findings, we estimate a non-sequential search structural demand model using individual-level data from a large e-commerce platform and conduct counterfactual simulations. The results show that in a real-world demand environment, simple rule-based algorithms outperform RL algorithms when facing other RL competitors. Our research sheds new light on the effectiveness of automated pricing algorithms and their interactions in competitive markets, and provides practical insights for retailers in selecting the appropriate pricing strategies.

In The Light Of Dynamic Competition: Should We Make Merger Remedies More Flexible?

In The Light Of Dynamic Competition: Should We Make Merger Remedies More Flexible?

 

Patrice Bougette

Université Côte d'Azur, CNRS, GREDEG

Oliver Budzinski

Ilmenau University of Technology

Frédéric M. Marty

Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG) / Université Nice Sophia Antipolis; OFCE; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Abstract

Mergers and acquisitions shape industry competition. Effective merger remedies are important for market efficiency and consumer welfare. This paper explores the need for more flexible remedies to address changing markets after mergers. While the EU permits some flexibility with less restrictive remedies, we conceptually advance the design elements of a dual-phase, bifurcated merger control system. This system integrates ex-ante processes with more systematic and comprehensive ex-post measures. Such an approach can address the shortcomings of the current system and, consequently, holds the potential to enhance merger control in dynamic markets.

Welfare-Optimal Rewards and Royalties for a Full Stack of Standard-Essential Patents

Welfare-Optimal Rewards and Royalties for a Full Stack of Standard-Essential Patents

 

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

 

Abstract

This paper studies the problem of determining the optimal size and structure of royalties for a full stack of standard-essential patents (SEPs). Conditioning on a full stack sidesteps many complicated and contested issues that typically arise when determining fair, reasonable and non-discriminatory (FRAND) royalties for SEPs. This focuses attention on an important question---what should be the total cost of licensing SEPs for a particular standard to incentivize both standard development and adoption? To study this problem, I adapt a workhorse general equilibrium model to capture the behavior of firms that invent and implement new technology standards, and derive the welfare-optimizing level and structure of royalty-based rewards for the full stack. This model shows that a new standard can emerge and yield higher welfare as long as the reward satisfies two "guardrail" conditions. As a fraction of income spent on standard-compliant goods, the reward: (1) must exceed the unrecovered invention cost margin; and (2) must be less than the welfare contribution margin of the standardized technology. If the first condition does not hold, invention of standardized technology is unprofitable; if the second does not hold, product variety and/or output per variety is so low that welfare would not improve. Multiple reward structures can optimize economic welfare. With an optimal reward structure, a one-percentage-point increase in reward size decreases product variety by one percentage point.

Antitrust Without Competition

Antitrust Without Competition

 

 

Daniel Francis

New York University School of Law

 

Abstract

Competition is everywhere in antitrust. Courts, agencies, and scholars routinely insist that antitrust can, does, and should measure the legality of conduct by asking whether it has harmed or promoted "competition." The idea that competition is a coherent value that can be increased or reduced-and used to guide the development and application of antitrust rules-has dominated doctrine for a century, and is deployed freely by judges, enforcers, and writers across the political spectrum. This does more harm than good, and it should stop. There is no single value or quantity, in economics or antitrust law, that competition just is. It has long been essentialized, in both disciplines, in countless inconsistent ways. And its enduring dominance in antitrust doctrine causes real harms: indeterminacy and confusion, because the purported criterion cannot resolve concrete cases; utopianism, because it conceals antitrust's fundamental need for hard choices among desirable goals; and bluntness, because today's courts respond to antitrust's vague tests by erring in favor of defendants. Antitrust would be better off without competition as a purported orienting value or criterion. There are multiple meaningful and plausible evaluative criteria available to which doctrine might turn instead. One such measure, "harm-centric antitrust," would orient antitrust to guard against welfare harms resulting from the unprivileged suppression of rival incentive or ability to meet demand. This is not the only option: there are plenty of other plausible orientations for the antitrust project. But the "promotion of competition" is not among them. It is time to let it go.

The Influence of Labor Market Power in the Audit Profession

The Influence of Labor Market Power in the Audit Profession

 

Daniel Aobdia

Pennsylvania State University - Smeal College of Business

Qin Li

Hong Kong Polytechnic University

Ke Na

Cheung Kong Graduate School of Business

Hong Wu

Fudan University

 

Abstract

This paper examines the influence of labor market power in the audit profession. Using a dataset of online job postings, we confirm that audit offices in more concentrated labor markets have greater labor market power and exercise it in the form of higher skill requirements and greater required effort from their auditors, at similar or slightly lower wages. We then show that client firms of audit offices in more concentrated labor markets are less likely to restate their earnings and have lower absolute discretionary accruals. These findings are only present when employees have lower mobility across professions and geographies, consistent with audit offices’ power in the local labor market explaining the results. Collectively, our findings highlight the importance of labor market power in understanding audit quality.

Retail Pricing and Ownership Structure

Retail Pricing and Ownership Structure

 

 

Semyon Tabanakov

University of Chicago - Booth School of Business

Ali Goli

University of Washington - Michael G. Foster School of Business

Pradeep K. Chintagunta

University of Chicago

 

Abstract

Previous research has documented the prevalence of uniform pricing by U.S. food retail chains, but it has not accounted for multiple chains being owned by the same parent company. This could understate the extent of price discrimination, if e.g., parents vary prices across (i) chains they own, and/or (ii) geographies. This paper provides a comprehensive analysis of pricing strategies at the parent level. We first infer chain ownership using the NielsenIQ Retail Measurement Service (RMS) data. Next, by conducting cluster analysis on store-level product prices for 800 UPCs, we categorize parent companies into those relying on uniform, zone, and store-level pricing. We find that the majority of parent companies employ uniform pricing; however, these parents own only 19% of the total number of stores. Importantly, the majority of stores belong to parent companies using zone pricing. Further, the price zones we uncover align with the parent companies' geographical divisions, which is consistent with some degree of decentralization in pricing decisions. We then explore how parent companies set prices in chains with overlapping geographies. Prices are either uniform across chains or substantially lower in some of them, suggesting price discrimination across "traditional" and "discounter" banners within a parent. Finally, we examine a large merger between two parent companies and find that the "merged parent" adjusted the price zones over three years, aiming to restore the geographic contiguity of price zones. Our findings underscore the importance of accounting for ownership structure in the analysis of retailers' pricing strategies.

Retail Concentration and Wages

Retail Concentration and Wages

 

Timothy J. Richards

Arizona State University W. P. Carey School of Business

Keenan Marchesi

Arizona State University (ASU) - Morrison School of Agribusiness and Resource Management

Ujjwol Paudel

Arizona State University (ASU), W.P. Carey School of Business, Students

 

Abstract

Antitrust policy in the U.S. now explicitly includes labor-market outcomes as measures of interest when considering the potential anticompetitive effects of mergers or acquisitions. Concentration in the food retailing industry is of particular concern due to several recent high-profile mergers, and a troubling increase in concentration at the national and local levels. We study this problem using both causal reduced-form models and a structural model of search, match, and bargaining. Our reduced-form models show no relationship between concentration and wages, but our structural model finds that concentration is associated with substantial wage suppression.

From Innovation to Market: A Competitive Analysis of R&D, Licensing, and Product Strategies

From Innovation to Market: A Competitive Analysis of R&D, Licensing, and Product Strategies

 

Weizhe Yang

School of Management, University of Science and Technology of China

Yaozhong Wu

National University of Singapore - Business School

 

Abstract

This paper uses a multi-stage game-theoretical model to examine the strategic interplay between research and development (R&D), licensing, and product strategies in competitive markets. Firms compete in the downstream product market as well as in upstream R&D activities related to new technologies used for developing new consumer products, and there are cooperation opportunities that derive from the interfirm licensing of those new technologies. We investigate how varying consumer preferences for uniqueness (the “snob effect”), different R&D efficiencies among firms, and the presence of older alternative technologies all influence strategic decisions concerning R&D investment, product pricing, and market entry. We identify diverse strategies that firms can adopt in licensing agreements and then explore their effects on competitive dynamics and firm profitability. Our findings suggest that licensing between competing firms can have a paradoxical effect on the market leader, potentially reducing its profitability despite enhancing a competitive advantage in R&D. This study highlights the nuanced trade-offs that firms face in multi-stage competition, and it offers insights into the optimal strategic paths for firms characterized by different product qualities and technological capabilities.

Antitrust Law and Coordination Through Al-Based Pricing Technologies

Antitrust Law and Coordination Through Al-Based Pricing Technologies

 

 

Maria José Schmidt-Kessen

Central European University (CEU) - Department of Legal Studies

Max Huffman

Indiana University Robert H. McKinney School of Law

 

Abstract

Price is the core element of commercial transactions and an important parameter of competition. One of antitrust law’s aims is to ensure that market prices form under the laws of supply and demand, and not after the whims of monopolists or cartelists. Innovations in computer and data science have brought about pricing technologies that rely on advanced analytics or machine learning (ML) techniques, which could strengthen existing bargaining power disparities in part by supporting price coordination among competitors.

Existing research establishes a theoretical framework for competitive harm through coordination, showing that pricing technologies can lead to near-cartel price levels while avoiding anti-cartel prohibitions. This contribution builds on that framework, taking into account up to date empirical, game-theoretic, and computer science literature on pricing technologies to produce a taxonomy of those technologies. We then employ a comparative approach to identify the legal effects of various pricing technologies at a more granular level under EU and US antitrust law. The contribution supports greater understanding between economists and policy- makers regarding the analysis and treatment of AI-based pricing technologies.

Learning From Online Ratings

Learning From Online Ratings

By:	Xiang Hui; Tobias J. Klein; Konrad Stahl
Abstract:	Online ratings play an important role in many markets. However, how fast they can reveal seller types remains unclear. We propose a simple model of rating behavior where learning about the seller type influences the rating decision. We calibrate the model to eBay data and find that ratings can be very informative. After 25 transactions, the likelihood of correctly predicting the seller type is above 95 percent.
URL:	http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_532&r=ind

A Dynamic Model of Predation

 

A Dynamic Model of Predation

By:	Patrick Rey; Yossi Spiegel; Konrad Stahl
Abstract:	We study the feasibility and profitability of predation in a dynamic environment, using a parsimonious infinite-horizon, complete information setting in which an incumbent repeatedly faces potential entry. When a rival enters, the incumbent chooses whether to accommodate or predate it; the entrant then decides whether to stay or exit. We show that there always exists a Markov perfect equilibrium, which can be of three types: accommodation, monopolization, and recurrent predation. We then analyze and compare the welfare effects of different antitrust policies, accounting for the possibility that recurrent predtion may be welfare improving.
URL:	http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_529&r=ind

Trust in Vertical Relations

Trust in Vertical Relations

By:	Giacomo Calzolari; Leonardo Felli; Johannes Koenen; Giancarlo Spagnolo; Konrad Stahl
Abstract:	Using data from a unique survey on all buyers and crtical suppliers in German automotive production, we explore the role of trust in long-term procurement relationships. Higher trust leads to higher quality of the automotive parts, and to more competition among suppliers. These effects are significant for low-tech parts only, and not for high tech ones, even when the buyer procures parts from the same supplier. We rationalize these unexpected findings within a relational contracting model, where technology-specific differences in the cost of switching suppliers determine the bargaining power in part-specific procurement relationships.
URL:	http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_530&r=ind

Call for Papers: Reform of Competition Law Standards

Call for papers: The Reform of the competition law standards for unilateral conduct: retrospective and prospective

The Journal of Competition Law and Economics (JCLE) will be publishing in 2025 a special issue on the reform of competition/antitrust law standards for unilateral conduct, principally focusing on competition law enforcement in Europe and the United States. The special issue will aim to provide a retrospective and a prospective of the processes of reform undertaken in the European Union (EU) and the United States the last fifteen years. The first reform process refers to the prevalence of the “more economic” consumer-welfare driven approach in interpreting and implementing the law, a process culminating with the US Antitrust Modernization Commission’s report in 2007 and the European Commission’s Priority Guidance in 2009. The second process, which is still in operation, and its outcomes are still uncertain, relates to the recent evolution of the law beyond traditional understandings of consumer welfare and economic efficiency.  This includes the renewed interpretation of exclusionary abuses in the EU as put forward in the Commission’s Draft Guidelines on Article 102 TFEU, and the impact of the New Brandeis School on the evolution of the US antitrust law enforcement with regard to unilateral conduct with a more active enforcement than the previous period at the level of the federal agencies. The courts are involved in this process as well, as evidenced by recent judgments of the CJEU and the EU General Court and the recent United States and State of Colorado et al.  v. Google judgment in the US.There is a vibrant policy discussion in the EU and the US about the boundaries of competition law intervention against unilateral conduct, the way the law has dealt with the emergence of digital platforms and ecosystems, the recent challenges posed by new technologies (e.g. Big Data, AI) and the increasing concentration and profit margins across the economy, the focus on innovation and particularly the emphasis on industrial and economic transition, restrictions of competition in labour markets, and the emphasis put on broader goals, such as environmental and social sustainability, resilience, democracy.

The special issue will aim to provide a critical analysis of these policy developments, particularly of the European Commission’s Draft Guidelines on Exclusionary Abuses, and to discuss the impact of the most recent case law in the EU and US and of the decisional practice of the European Commission and National Competition Authorities in this area, as well of the enforcement initiatives of the US FTC and the US DOJ.

Possible research questions include, but are not limited to the following: Is the new approach suggested fit for purpose in an economy in constant technological evolution? Are these parallel processes of reform in the EU and the US moving in the same or different directions, and what is the role of national actors in the EU and state actors in the US? Has the first reform process towards a more economic approach been a success or a failure (in the EU and the US)? Are there any similarities, or differences, both in terms of the methodology and the substantive foundations of the law, with the reform of the antitrust standards for collusive conduct/agreements that occurred in parallel during both reform periods? Have the economic foundations/toolkit and the political economy setting of the law changed? Which parts of the old consensus are still relevant, and which have been or need to be abandoned? What is the role of the agencies/competition authorities and that of the courts in “driving” these reform processes, and what could be the institutional factors that influence the direction of change in the EU and the US? What is the balance achieved between, on the one hand, sophistication/complexity and, on the other, expediency and effectiveness of enforcement and remedies, and should this be changed? How much will the recent changes impact on the business models, private governance arrangements and product design decisions of dominant undertakings or monopolizing firms? How static or dynamic have each of these reform processes been in their assessment of anticompetitive conduct, and why, if at all, does that matter for public and private competition enforcement?

Articles following the comparative law methodology and critical legal studies approaches will be particularly valued, as well as those engaging with the economic foundations of the law, or providing an empirical dimension to the topic.

Of particular interest will also be the analysis of these changes and of the interaction of the current business tort-based model of monopolization law with other legal regimes that may regulate also from a competition perspective unilateral conduct, such as abuse of economic dependence and the DMA in the EU, or the Robinson-Patman Act and Section 5 FTC Act in the US, which raise interesting questions about the boundaries of antitrust law and the need eventually for new legislation in this area.

The Journal of Competition Law & Economics launches this call for papers bringing together scholarship addressing the changes introduced and their implications for competition law scholarship and practice. The selected papers will be published as a special issue of the Journal of Competition Law & Economics. We will aim to publish accepted articles online in 2024 and within an issue in 2025.

To submit a paper for consideration in the special issue, please follow the formatting and style instructions on the JCLE Author Guidelines page and submit your paper via the journal’s online submission system by Wednesday, October 23d, 2024 at 17.00 CET. You will be asked to declare any potential conflict of interests (see the ASCOLA Declaration of Ethics, available at https://ascola.org/declaration-of-ethics/).

The review process will take place in October and November and we aim for the accepted papers to publish online at the JCLE website by the end of 2024.

Special issue editors: Prof. Ioannis Lianos (UCL Faculty of Laws), Prof. Inge Graef (Tilec, Tilburg University), Prof. Filippo Lancieri (Georgetown Law)

A Field Experiment on Antitrust Compliance

A Field Experiment on Antitrust Compliance

By:	Kei Kawai; Jun Nakabayashi
Abstract:	We study the effectiveness of firms' compliance programs by conducting a field experiment in which we disclose to a subset of Japanese firms that the firm is potentially engaging in illegal bid-rigging. We find that the information that we disclose affects the bidding behavior of the treated firms: our test of bid-rigging is less able to reject the null of competition when applied to the bidding data of the treated firms after the intervention. We find evidence that this change is not the result of firms ceasing to collude, however. We find evidence suggesting that firms continue to collude even after our intervention and that the change in the bidding behavior we document is the result of active concealment of evidence by cartelizing firms.
JEL:	K21 L41
URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:32347&r=ind

Merger Analysis with Latent Price

Merger Analysis with Latent Price

By:	Paul Koh
Abstract:	Standard empirical tools for merger analysis assume price data, which may not be readily available. This paper characterizes sufficient conditions for identifying the unilateral effects of mergers without price data. I show that revenues, margins, and revenue diversion ratios are sufficient for identifying the gross upward pricing pressure indices, impact on consumer/producer surplus, and compensating marginal cost reductions associated with a merger. I also describe assumptions on demand that facilitate the identification of revenue diversion ratios and merger simulations. I use the proposed framework to evaluate the Staples/Office Depot merger (2016).
URL:	http://d.repec.org/n?u=RePEc:arx:papers:2404.07684&r=ind

When Uber Eats Its Own Business, and Its Competitors’ Too: Resource Exclusivity, Oscillation, and Cannibalization following Platform Diversification

When Uber Eats Its Own Business, and Its Competitors’ Too: Resource Exclusivity, Oscillation, and Cannibalization following Platform Diversification

Hyuck David Chung

University of Michigan, Stephen M. Ross School of Business

Yue Maggie Zhou

University of Michigan, Stephen M. Ross School of Business

Christine Choi

Abstract

How will a platform firm’s diversification affect its existing business? While platform diversification enables complementors to share some resources across businesses, it may also create opportunities for complementors to oscillate other complementary resources to maximize utilization, thereby hurting the platform firm’s existing business. In addition, it may divert complementors away from competing platform firms. Such sharing-enabled resource oscillation may be due to exclusivity in the use of some complementor resources at the transaction level and the lack of control by platform firms over them at the organizational level. Using datasets on the rideshare and food delivery businesses in New York City, we find that the launch of Uber Eats reduced Uber’s and Lyft’s rideshare trip volumes. These effects were weaker during rush hours.

In The Light Of Dynamic Competition: Should We Make Merger Remedies More Flexible?

In The Light Of Dynamic Competition: Should We Make Merger Remedies More Flexible?

Patrice Bougette

Université Côte d'Azur, CNRS, GREDEG

Oliver Budzinski

Ilmenau University of Technology

Frédéric M. Marty

Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG) / Université Nice Sophia Antipolis; OFCE; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Abstract

Mergers and acquisitions shape industry competition. Effective merger remedies are important for market efficiency and consumer welfare. This paper explores the need for more flexible remedies to address changing markets after mergers. While the EU permits some flexibility with less restrictive remedies, we conceptually advance the design elements of a dual-phase, bifurcated merger control system. This system integrates ex-ante processes with more systematic and comprehensive ex-post measures. Such an approach can address the shortcomings of the current system and, consequently, holds the potential to enhance merger control in dynamic markets.

An Antitrust Analysis of the NCAA Transfer Policy

An Antitrust Analysis of the NCAA Transfer Policy

 

Michael A. Carrier

Rutgers Law School

Marc Edelman

City University of New York - Baruch College, Zicklin School of Business; Fordham University School of Law

Abstract

The National Collegiate Athletic Association (NCAA) is no stranger to antitrust law. As a trade association composed of nearly all U.S. colleges offering competitive sports, its rules are regularly challenged under antitrust law. In the past 40 years, the NCAA has faced challenges to rules limiting televised game broadcasts, curtailing assistant coaches’ pay, and restraining players’ compensation, among other issues. Restraints on college athlete transfers also could subject the association to reasonable legal scrutiny.

Restrictions on an ability to transfer can harm athletes by preventing their immediate eligibility even though transferring could allow them to be closer to family, enroll in more academically rigorous schools, or escape abusive coaches. Transfer restraints have an especially restrictive effect on players hoping to one day play in the National Football League (NFL). For these individuals, the college football system is the primary opportunity to showcase talent before declaring for the league’s draft. The NCAA’s transfer rules keep many of these elite players on their teams’ benches. This hurts their ability to prepare for careers in the NFL. And it denies football fans the opportunity to watch them perform in college.

The NCAA’s rules that prevent football players from freely transferring between schools have changed over time. Why? Because of the changing preferences of members of the NCAA Division I Council (NCAA Council), a group of college athletic directors and conference commissioners. In April 2021, the NCAA Council changed its rules to facilitate the movement of football players between schools, allowing athletes who had not previously switched schools to pursue transfer opportunities by entering a portal within a 60-day window. On October 4, 2023, the NCAA Council reduced the transfer window from 60 to 45 days.

In this essay, we explore the antitrust consequences of this latest action by the NCAA Council, as well as the broader competitive effects of limits on college football player movement. We conclude that: (1) the NCAA’s transfer limits impose substantial anticompetitive effects; (2) the NCAA could offer (but would need to prove) a justification based on reduced fan interest from a lack of team stability; (3) less restrictive alternatives (including the 60-day transfer window) are available; and (4) the restraint’s anticompetitive effects are likely to outweigh its procompetitive effects.