Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, October 26, 2020

Impact of Leniency Programs on Cartels: A Study with Reference to India

Impact of Leniency Programs on Cartels: A Study with Reference to India

Sneha Singh

Galgotias University, School of Law

Abstract

Cartels are considered as one of the infringement to the Competition Act. Section 2 of the Competition Act, 2002 clearly defines cartel however, Section 3 of the same Act prohibits anti- competitive agreements which include cartels. Leniency programs were introduced as an effective tool to reduce the punishment to the cartelists acting as whistle blower with reward of lesser penalties as compare to the other members in cartels. Section 46 of the Competition Act, 2002 empowers the Competition Commission of India to grant leniency. This paper studies the changes which have taken after the introduction of leniency program on cartels in India. Also an attempt has been made to study the usage of leniency programs by Competition Commission of India with reference to few cases decided by the said statutory body.

October 26, 2020 | Permalink | Comments (0)

Sunday, October 25, 2020

Presentation of the Sherman Award to the Honorable Judge Douglas H. Ginsburg Washington, DC ~ Friday, October 23, 2020

See here.

October 25, 2020 | Permalink | Comments (0)

Friday, October 23, 2020

Rising Markups, Common Ownership, and Technological Capacities

Rising Markups, Common Ownership, and Technological Capacities

 

Alexandra J. Gibbon

Duesseldorf Institute for Competition Economics (DICE)

Jan Philip Schain

Duesseldorf Institute for Competition Economics (DICE)

Abstract

This paper analyses the impact of common ownership on markups and innovation and adds to the discussion of the recently observed patterns of a long term rise in market power. We shed light on the inconclusiveness of results regarding the effects of common ownership on markups in the existing literature by exploiting industry technology classifications by the European Commission. Using a rich panel of European manufacturing firms from 2005 to 2016, we structurally infer markups and construct a measure of common ownership. Combining propensity score matching with a difference-in-differences estimator, we find an increase of firm markups by 3.1% after the first exposure to common ownership. While this effect is strongly pronounced in low-tech industries, we find no effect on markups in high-tech industries. In contrast, we measure a positive effect of common ownership on innovation activity in high-tech industries and no effect in low-tech industries. Both findings are consistent with recent theoretical findings in Lopéz and Vives (2019).

October 23, 2020 | Permalink | Comments (0)

The Revolution in Antitrust: An Assessment

The Revolution in Antitrust: An Assessment

 

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Kenneth Heyer

Abstract

In this essay we evaluate the impact of the revolution that has occurred in antitrust and in particular the growing role played by economic analysis. Section II describes exactly what we think that revolution was. There were actually two revolutions. The first was the use by economists and other academics of existing economic insights together with the development of new economic insights to improve the understanding of the consequences of certain forms of market structure and firm behaviors, as well as the application of advanced empirical techniques to large data sets. The second was a revolution in legal jurisprudence, as both the federal competition agencies and the courts increasingly accepted and relied on the insights and evidence emanating from this economic research. Section III explains the impact of the revolution on economists, consulting firms, and research in the field of industrial organization. One question it addresses is why, if economics is being so widely employed and is so useful, one finds skilled economists so often in disagreement. Section IV asks whether the revolution has been successful or whether, as some critics claim, it has gone too far. Our view is that it has generally been beneficial though, as with most any policy, it can be improved. Section V discusses some of the hot issues in antitrust today and, in particular, what some of its critics say about the state of the revolution. The final section concludes with the hope that those wishing to turn back the clock to the antitrust and regulatory policies of 50 years ago more closely study that experience, otherwise they risk having its demonstrated deficiencies be repeated by throwing out the revolution’s baby with the bathwater.

October 23, 2020 | Permalink | Comments (0)

Thursday, October 22, 2020

EU Competition and State Aid Soft Law in the Member States: Finland, France, Germany, Italy, the Netherlands, Slovenia and the UK

EU Competition and State Aid Soft Law in the Member States: Finland, France, Germany, Italy, the Netherlands, Slovenia and the UK

 

Oana Andreea Stefan

King's College London - The Dickson Poon School of Law; King's College London

Katri Havu

University of Helsinki

Liisa Tarkkila

Marie Lamoureux

CERIC, Aix-Marseille University

Nathalie Rubio

Aix-Marseille University

Andreas Hofmann

Free University of Berlin (FUB)

Jacopo Alberti

Filippo Croci

Universita' Degli Studi Di Milano

Caroline Cauffman

Maastricht University

Niels J. Philipsen

Maastricht University - Faculty of Law, Metro

Verena Rošic Feguš

Andrea Biondi

King's College London - The Dickson Poon School of Law

Abstract

This Fourth SoLaR Working Paper looks at the reception of EU competition and State aid soft law in selected Member States. The paper draws on interdisciplinary methodologies and combines case law research and interviews to show how national authorities and judges deal with EU soft law. The overall conclusions, authored by Oana Stefan, are presented first, followed by the national reports authored by national PIs.

October 22, 2020 | Permalink | Comments (0)

The Economics of Online Ad-Supported Services

The Economics of Online Ad-Supported Services

Gregory K. Leonard

 

Abstract

The Internet did not create the ad-supported business model. However, a larger variety of ad-supported services have arisen and flourished online because the Internet’s functional and economic characteristics have made the ad-supported business model attractive in many online contexts. The existence of such services has provided substantial benefits for both users and advertisers. Government antitrust authorities should resist any temptation to modify antitrust policy toward online ad-supported services, as doing so would put these benefits at risk. There is nothing unique or special about online ad-supported services that would justify treating them differently than other types of businesses. Conduct in this context should be assessed by its effects on consumer welfare, and the same economic techniques used in other contexts are readily applicable to online ad-supported services.

October 22, 2020 | Permalink | Comments (0)

The Future of Regulation No. 1/2003: New Relations Between EU and National Laws

October 22, 2020 | Permalink | Comments (0)

Antitrust and Data: What Your Car Knows and Who It Should Tell

Antitrust and Data: What Your Car Knows and Who It Should Tell

 
Although road vehicles have been generating electronic data since the 1980s, technological developments in a number of areas have recently combined to bring the issue to the fore. The quantity and types of data are increasing rapidly as new sensors are built in, Electronic Control Units (ECUs) become more capable, and the maximum capacity of the CAN bus1 increases. Meanwhile, vehicles have become more connected, partly in response to the need to integrate with emergency and route-management systems. A further, and often overlooked, development is that data storage costs have declined by several orders of magnitude.

October 22, 2020 | Permalink | Comments (0)

Wednesday, October 21, 2020

Regulation 2.0: A Few of the Hard Questions

Even if there is a lot of debate around competition policy and the goals of competition law today, there is a broad consensus that competition is essential to well-functioning markets. Competition creates wealth and reduces poverty by fostering innovation, productivity, and growth. Also from a theoretical standpoint, there is much agreement about the scope of competition law when it comes to the core part of anticompetitive agreements and abuse of dominance. From a practitioner’s point of view, however, some of the most important questions concern less high-flying and more nitty gritty issues. In the following text I will discuss three

October 21, 2020 | Permalink | Comments (0)

For a Socially Sensitive Competition Law Enforcement

The European Union (EU) has been big on social promises. Its social dimension features in several key provisions of the founding Treaties. One needs to look no further than Article 2 of the Treaty on European Union (TEU), which enlists solidarity as one of the values on which the Union is founded. Article 3, paragraph 3, TEU contains another hugely important programmatic statement: the Union shall be based on a highly competitive social market economy, aiming at full employment and social progress, promoting social justice and protection, as well as social cohesion. 

October 21, 2020 | Permalink | Comments (0)

Flogging the Wrong: EU Corporate Fines Violate the Fundamental Rights of Shareholders

Flogging the Wrong: EU Corporate Fines Violate the Fundamental Rights of Shareholders

Reuter Alexander

Key Points
  • EU corporate fines economically hit the shareholders.

  • Shareholders are typically unable to prevent management’s illicit conduct.

  • Corporate fines are therefore unsuitable to reach their legislative purpose.

  • Because of their ineffectiveness, EU corporate fines violate shareholders’ fundamental rights.

 

October 21, 2020 | Permalink | Comments (0)

Nonlinear Pricing in Oligopoly: How Brand Preferences Shape Market Outcomes

Nonlinear Pricing in Oligopoly: How Brand Preferences Shape Market Outcomes

 

73 PagesPosted: 12 Sep 2020

Renato Gomes

University of Toulouse 1 - Toulouse School of Economics (TSE); CNRS; Centre for Economic Policy Research (CEPR)

Jean-Marie Lozachmeur

University of Toulouse 1 - Toulouse School of Economics (TSE)

Lucas Maestri

University of Toulouse 1 - Toulouse School of Economics (TSE)

Abstract

We study oligopolistic competition by firms engaging in second-degree price discrimination. In line with the large empirical literature on demand estimation, our theory allows for comovements between consumers' taste for quality and propensity to switch brands. If low-type consumers are sufficiently less (more) brand loyal than high types, (i) quality provision is inefficiently low at the bottom (high at the top) of the product line, and (ii) informational rents are negative (positive) for high types, while positive (negative) for low types. We produce several testable comparative statics on pricing and quality provision, and show that more competitive markets (in the sense that consumers are less brand-loyal) may produce lower welfare. Interestingly, pure-strategy equilibria fail to exist whenever brand loyalty is sufficiently different across consumers types. Accordingly, our theory identifies a new rationale for price/quality dispersion; namely, the interplay between self-selection constraints and heterogeneity in brand loyalty.

October 21, 2020 | Permalink | Comments (0)

Tuesday, October 20, 2020

Information Spillovers in Experience Goods Competition

Information Spillovers in Experience Goods Competition

 

Zhuoqiong (Charlie) Chen

Harbin Institute of Technology - Shenzhen Graduate School

Christopher Stanton

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Catherine Thomas

London School of Economics & Political Science (LSE)

Abstract

When experience goods compete, consuming one product can be informative about value for similar untried products. We study duopoly competition in markets that have this feature and where firms can price discriminate between consumers based on purchasing history. Price dynamics, firm profits, and consumer surplus depend on how information spillovers shape demand from the consumers who have trialed the rival product-the potential switchers. Rather than competing intensely in the first period for all future profits, firms compete for the difference in profits between repeat and switching consumers. Demand-side information spillovers offer an explanation of how competing firms in new product markets can be profitable in all periods even when selling ex ante homogeneous products.

October 20, 2020 | Permalink | Comments (0)

Labor Organization in Ride Sharing – Unionization or Cartelization?

Labor Organization in Ride Sharing – Unionization or Cartelization?

 

Mark Anderson

University of Idaho

Max Huffman

Indiana University Robert H. McKinney School of Law

Abstract

The sharing economy brings together the constituent parts of a business enterprise into a structure that on its surface resembles a business firm, but in crucial ways is nothing like the traditional firm. This includes the ownership of the primary capital assets used in the business, as well as one of the most fundamental features of a firm – the relationship with its labor force. Sharing economy workers are formally contractors, running small businesses as sole entrepreneurs, with the effect that they are excluded from many of the protections made available to workers across the economy. The result is a seeming disparity across the market, with consumers realizing benefits of choice and price that did not exist before, and platforms possibly poised to turn profits as the hubs of massive enterprises with few of the burdens of a dependent workforce.

Proposals for protecting sharing economy workers come in two primary forms. One is to treat the workers as employees, despite their failing to meet the common law “control” test for employment, and impose on the platforms the obligation to provide pay and benefits consistent with state employment laws. Another is to identify exceptions to antitrust laws that would otherwise make illegal efforts by contractors to combine and bargain collectively over wages, hours, and other terms. (A third approach, which some jurisdictions have floated in response to failures of collective bargaining efforts, may be to impose a minimum wage for non-employee sharing economy workers.)

The article engages the antitrust question surrounding collective bargaining. It shows that existing law, both in terms of the basic prohibition of price fixing and the labor exemption, would not allow labor organization by sharing economy workers. Even under a possible Rule of Reason approach, the worker protection goals that underlie collective bargaining are not benefits to competition in the traditional sense, so would not be cognizable as efficiency justifications for collective bargaining. However, the article also shows that existing law ignores the well-developed economic theory that supports labor organization as a response to monopsony, and how that theory supports the idea of labor organization as having pro-consumer effects.

The article applies this understanding of labor organization and its consumer effects to the specifics of sharing economy labor markets. It identifies two primary market structures – the fallow-assets model and the locked-in model – and shows how in the first case the effect of organization would be to increase output in the labor market, leading to increased output and lower price in the consumer market. In the second case the effect of organization is likely to be neutral or negative in terms of labor market output, with the effect that prices will increase and output either decrease or stay static in the consumer market. The ambiguity of outcomes, as well as the newness of the enterprise structure, militate for a Rule of Reason treatment of labor organization in ride sharing. The operation of the Rule of Reason leads to the uncomfortable conclusion that the workers least needing labor protections are most likely to succeed in overcoming antitrust scrutiny, while those most in need of protections are most likely to be subjected to damages and injunctions. As a result, non-antitrust labor protections remain an essential backdrop.

October 20, 2020 | Permalink | Comments (0)

The House Judiciary Report – Implications Beyond BigTech Oct 29, 2020 12:00 PM EST

The House Judiciary Report – Implications Beyond BigTech
Sponsored by the University of Florida Levin College of Law, the University of Florida Competition Policy Initiative, and the George Washington Law School Competition Law Center.

Hon. Katherine Forrest (frm.) – Cravath, Swain & Moore, LLP
Eric Grannon – White & Case, LLP
William Kovacic – George Washington University Law School
Belinda Lee – Latham & Watkins, LLP
D. Daniel Sokol – University of Florida Levin College of Law

Oct 29, 2020 12:00 PM Eastern Time (US and Canada)

Register here.

October 20, 2020 | Permalink | Comments (0)

Do We Need to Regulate Equal Treatment? The Google Shopping Case and the Implications of its Equal Treatment Principle for New Legislative Initiatives

This article will explain why we believe that the Shopping case does not support calls for new regulation. To the contrary, our experience in Shopping suggests that intervention in complex technologies requires careful and fact-specific consideration.

October 20, 2020 | Permalink | Comments (0)

The Emerging Contribution of Director Disqualification in UK Competition Law

The Emerging Contribution of Director Disqualification in UK Competition Law

Peter Whelan

University of Leeds

Abstract

The enforcement of UK competition law is deterrence-focused and comprises both criminal and non-criminal (i.e., civil/administrative) elements. This chapter critically evaluates a particular non-criminal enforcement mechanism that has been gaining increasing importance throughout the recent development of UK competition enforcement practice: the use of director disqualification. It first establishes the normative role of director disqualification in the UK’s armory of non-criminal antitrust sanctions (i.e., its complementing of the deterrent function of corporate antitrust fines), following which it highlights its potential for performing this role effectively. It then outlines the legal basis for the use of director disqualification within the UK and evaluates the policy and enforcement practice to date with respect to such orders, before proceeding to outline some of the insights that the UK director disqualification regime can provide to other jurisdictions. Ultimately it concludes that, on the basis of the promising, albeit nascent, UK experience to date, director disqualification should be seriously considered by jurisdictions that wish to operate a robust competition law enforcement regime.

October 20, 2020 | Permalink | Comments (0)

Monday, October 19, 2020

Fairness and the Challenge of Making Markets Work Better

Abstract

This article explores the revival of fairness as the lodestar of EU competition enforcement. It considers the theory and evolving discourse of fairness, then identifies and evaluates examples of fairness‐oriented enforcement activity. Concluding that fairness represents a distinct development from the ‘hipster antitrust’ movement, the article suggests reasons to explain the shift, including a need to rehabilitate the social market economy in an age of market‐scepticism, and to facilitate the progressive expansion of competition law to address modern market failures.

October 19, 2020 | Permalink | Comments (0)

Big Tech and antitrust: Assessing the House Judiciary Committee staff report Technology and Innovation Monday, October 26, 2020 | 1:00 PM to 2:00 PM ET

America’s historical approach to antitrust has promoted economic competition for the consumer’s benefit. Decades of scholarship and careful legal practice created this approach and formulated rigorous analytical tools to support it, enabling a vibrant, dynamic, and market-oriented economy.

Recently, a new movement has arisen that seeks to undo this approach and replace it with policies that allow antitrust enforcers latitude to take action for any number of reasons. This movement’s philosophies dominate the House Judiciary Committee staff proposals — the most recent of which endorses significant regulatory measures against Big Tech.

Please join AEI as a panel of experts discusses what is at stake in the House Judiciary Committee’s recent report.

REGISTER HERE

LIVE Q&A: Submit questions to William.Rau@AEI.org or on Twitter with #AskAEITech.

Agenda

1:00 PM
Introduction:
Mark Jamison, Visiting Scholar, AEI

1:05 PM
Panel discussion

Panelists:
Thomas W. Hazlett, H. H. Macaulay Endowed Professor of Economics, Clemson University
Maureen K. Ohlhausen, Chair, Global Antitrust and Competition practice, Baker Botts LLP
D. Daniel Sokol, Professor of Law, Fredric G. Levin College of Law, University of Florida

Moderator:
Mark Jamison, Visiting Scholar, AEI

1:45 PM
Q&A

2:00 PM
Adjournment

Related Material

House antitrust report on Big Tech recommends punishing business success
Mark Jamison | AEIdeas | October 8, 2020

Contact Information

Event: Matt Au | Matt.Au@AEI.org | 202.862.5918
Media: MediaServices@aei.org | 202.862.5829

Panelist(s)

Thomas W. Hazlett

H. H. Macaulay Endowed Professor of Economics
Clemson University

Mark Jamison

Visiting Scholar
AEI

Maureen K. Ohlhausen

Chair, Global Antitrust and Competition practice
Baker Botts LLP

D. Daniel Sokol

Professor of Law, Fredric G. Levin College of Law
University of Florida

October 19, 2020 | Permalink | Comments (0)

Let's Collude

Let's Collude

 

Hamid Aghadadashli

Marsh & McLennan Companies - Brussels Office

Patrick Legros

Université Libre de Bruxelles (ULB)

Abstract

Managers have imperfect information about each other's willingness to collude and may signal this willingness through direct communication or market actions. Owners offer bonuses to managers and trade off productive effort provision, higher profits if managers coordinate on high prices, and the risk of antitrust fines if managers explicitly communicate. Our model shows that the distribution of fines between the owners and the managers is crucial for com- munication to be informative. High or low bonuses can reflect the willingness of owners to induce managers to explicitly communicate, and are red flags for corporate responsibility when collusion is supported by direct communication.

October 19, 2020 | Permalink | Comments (0)