Antitrust & Competition Policy Blog

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).

The General Court of the European Union Annuls the Decision of the European Commission’s Prohibition of a Four-to-Three Merger in the UK Telecoms Sector, in the First Judgment to Directly Deal With the Legal Test for ‘Gap Cases’

The General Court of the European Union Annuls the Decision of the European Commission’s Prohibition of a Four-to-Three Merger in the UK Telecoms Sector, in the First Judgment to Directly Deal With the Legal Test for ‘Gap Cases’

Simon Vande Walle

University of Tokyo - Graduate Schools for Law and Politics

Abstract

In May 2020, the General Court rendered its long-awaited judgment in the UK mobile merger case. At issue in this case was whether the Commission lawfully prohibited the acquisition by Hutchison of O2 (Telefónica UK) back in 2016. That deal would have reduced the number of mobile network operators in the UK from four to three.

Hutchison appealed the Commission's prohibition decision to the General Court and won, as the General Court annulled the Commission decision.The judgment contains a wealth of interesting holdings, among others on the standard of proof in merger cases, the legal test to prohibit mergers, the role of market shares and concentration levels, the notion of "important competitive force", the meaning of "close competitors" and on the probative value of a quantitative analysis of the effects of a merger.

Vertical Exclusion with Downstream Risk Aversion or Limited Liability

Vertical Exclusion with Downstream Risk Aversion or Limited Liability

Stephen Hansen

Imperial College Business School

Massimo Motta

Universitat Pompeu Fabra

Abstract

An upstream firm with full commitment bilaterally contracts with two ex ante identical downstream firms. Each observes its own cost shock, and faces uncertainty from its competitor’s shock. When they are risk neutral and can absorb losses, the upstream firm contracts symmetric outputs for production efficiency. However, when they are risk averse, competition requires the payment of a risk premium due to revenue uncertainty. Moreover, when they enjoy limited liability, competition requires the upstream firm to share additional surplus. To resolve these trade‐offs, the upstream firm offers exclusive contracts in many cases.

Patent Screening, Innovation and Welfare

Patent Screening, Innovation and Welfare

Mark Schankerman

London School of Economics & Political Science (LSE) - London School of Economics

Florian Schuett

Tilburg Law and Economics Center (TILEC); Tilburg University - Tilburg University School of Economics and Management

Abstract

Critics claim that patent screening is ineffective, granting low-quality patents that impose unnecessary social costs. We develop an integrated framework, involving patent office examination, fees, and endogenous validity challenges in the courts, to study patent screening both theoretically and quantitatively. In our model, some inventions require the patent incentive while others do not, and asymmetric information creates a need for screening. We show that the endogeneity of challenges implies that courts, even if perfect, cannot solve the screening problem. Simulations of the model, calibrated on U.S. data, indicate that screening is highly imperfect, with about forty percent of all patents issued on inventions that do not require the patent incentive. While we find that the current patent system generates positive social value, intensifying examination would yield large welfare gains. The social value of the patent system would also be larger if complemented by antitrust limits on licensing.

Unpatented Innovation and Merger Synergies

Unpatented Innovation and Merger Synergies

Messod D. Beneish

Indiana University - Kelley School of Business - Department of Accounting

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Ayung Tseng

Indiana University

Patrick Vorst

Maastricht University School of Business and Economics

Abstract

The increasingly service-based U.S. economy places a high reliance on innovation. While there is considerable research on the importance of certain innovative activities such as patents, less attention has been paid to un-patented innovation, about which there is naturally less publicly available information. Our research leverages a unique merger and acquisition database that reveals the fair values of targets’ innovative activities. We show that existing studies underestimate the contribution of innovation by exclusively focusing on patents. Our evidence, for example, shows that approximately three percent of merger synergy value is associated with patented innovation, whereas the less often studied un-patented innovation accounts for twelve percent of synergy gains.

Thirteenth Annual Federal Trade Commission Microeconomics Conference November 5-6, 2020

Thirteenth Annual Federal Trade Commission Microeconomics Conference

NOV 5, 202010:00AMNOV 6, 20209:00AM

 

TAGS:

 

• Bureau of Economics

EVENT DESCRIPTION

The Federal Trade Commission's Bureau of Economics and the Tobin Center for Economic Policy at Yale University will virtually host the 13th Annual FTC Microeconomics Conference on November 5 and 6, 2020. This event will bring together scholars working in areas related to the FTC’s antitrust, consumer protection, and public policy missions.

The scientific committee for the conference is:

• Andrew Caplin (New York University)
• Philip Haile (Yale University)
• Justine Hastings (Brown University)

Organizers: Ted Rosenbaum (FTC) and Yan Lau (FTC)

Staff Contact: Alexander Avramov (202-326-3003)

In light of the ongoing coronavirus pandemic, this year’s conference will be held virtually.

SPONSORS

This conference is sponsored by the Federal Trade Commission’s Bureau of Economics and the Tobin Center for Economic Policy at Yale University.

REGISTRATION

To register, please fill out the registration form with your name, email, and affiliation. You will receive a confirmation email when your registration is complete containing the Zoom conference information. We will use your email address to contact you with information about the conference and will share your name and email address with the conference co-sponsors. The FTC Act and other laws we administer permit the collection of your pre-registration contact information and the comments you file to consider and use in this proceeding as appropriate. For additional information, including routine uses permitted by the Privacy Act, see the Commission's system for mailing lists. For more details, please see the FTC Privacy Policy.

ATTENDING THE WORKSHOP

The conference is free and open to the public. In light of the ongoing coronavirus pandemic, this year’s conference will be held virtually. Please register using the information above.

EVENT DETAILS

HIDEAGENDA

Thursday, November 5

10:00 a.m.	Welcome Andrew Sweeting (Federal Trade Commission) and Steven Berry (Yale University & Tobin Center for Economic Policy)
10:15 a.m.	Paper Session Chaired by Ted Rosenbaum & Yan Lau (Federal Trade Commission) Runshan Fu (Carnegie Melon University) with Manmohan Aseri (University of Pittsburgh), Param Vir Singh (Carnegie Melon University), and Kannan Srinivasan (Carnegie Melon University), “Un”Fair Machine Learning Algorithms Discussant: Susan Athey (Stanford Graduate School of Business) Brett Hollenbeck (UCLA) with Renato Zaterka Giroldo (Cornerstone Research), Winning Big: Scale and Success in Retail  Discussant: Nancy Rose (MIT)
11:45 a.m.	Break
1:00 p.m.	Keynote Address, "Fact-Based Policy: New Opportunities to Improve Policy with Data, Science and Technology" Justine Hastings (Brown University)
1:40 p.m.	Break
2:00 p.m.	Paper Session Chaired by Justine Hastings (Brown University) Christopher M. Whaley (RAND Corporation) with Daniel R. Arnold (University of California – Berkeley), Who Pays for Health Care Costs? The Effects of Health Care Prices on Wages Discussant: Robert Town (University of Texas at Austin) Leemore Dafny (Harvard Business School) with David Cutler (Harvard University), David C. Grabowski (Harvard Medical School), Steven Lee (Brown University), and Christopher Ody (Analysis Group), Do Self-Referrals Help Patients or Providers? The Case of Hospital-Owned Skilled Nursing Facilities Discussant: Benjamin Handel (University of California – Berkeley)
3:30 p.m.	First Day of Conference Concludes

 

Friday, November 6

9:00 a.m.	Keynote Address, "Identifying Demand through Quasi-Experimental Variation" Phil Haile (Yale University)
9:40 a.m.	Break
10:00 a.m.	Paper Session Chaired by Phil Haile (Yale University) Chenyu Yang (University of Maryland) with Ying Fan (University of Michigan), Product Repositioning and Firm Entry in the California Craft Beer Market Discussant: Katja Seim (Yale University) Alexander MacKay (Harvard Business School) with Zach Y. Brown (University of Michigan), Competition in Pricing Algorithms Discussant: John Asker (UCLA)
11:30 a.m.	Break
1:00 p.m.	Keynote Address, "Using Choice Data to Regulate Product Presentation" Andrew Caplin (New York University)
1:40 p.m.	Break
2:00 p.m.	Paper Session Chaired by Andrew Caplin (New York University) Megan Hunter (Boston College Carroll School of Management), Chasing Stars: Firms' Strategic Responses to Online Consumer Ratings Discussant: Greg Lewis (Microsoft) Patrick J. Kehoe (Stanford University) with Bradley J. Larsen (Stanford University) and Elena Pastorino (Stanford University), Dynamic Competition in the Era of Big Data Discussant: Benjamin Shiller (Brandeis University)
3:30 p.m.	Conference Concludes

 2020 FTC Microeconomics Conference Agenda (798.84 KB)

The Draft for the 10th Amendment of German Competition Law: Towards a new Concept of 'Outstanding Relevance across Markets'?

The Draft for the 10th Amendment of German Competition Law: Towards a new Concept of 'Outstanding Relevance across Markets'?

Oliver Budzinski

Ilmenau University of Technology

Sophia Gaenssle

Ilmenau University of Technology

Annika Stöhr

Ilmenau University of Technology

Abstract

The ministerial proposal for a 10th amendment of the German competition law particularly addresses abuse control and seeks to tighten this pillar of competition policy against the background of the challenges from the digital economy. Next to extending the classic policy instruments of abuse control, the reform proposal suggests to introduce an additional and novel type of market power: the outstanding relevance across markets (ORAM). From an economic perspective, such an institution is interesting as it emphasizes non-horizontal and less direct anti-competitive abuses of market power. We review what type of cases could be subject to such a concept of systemic market power. Furthermore, we address the question whether merger control could also benefit from an ORAM-style conception.

Regulation 2: Remedies in Antitrust Cases under EU Competition Law

Regulation 2: Remedies in Antitrust Cases under EU Competition Law

Vanessa Turner

Remedies in antitrust enforcement often seem to have been treated as a bit of a poor relation in the heady rush of finding an infringement.¹ This article argues that under ‘Regulation 2’ this should change. The value of bringing an antitrust case would be materially damaged if it does not actually bring the infringement and its effects to an end.

The House Judiciary Committee Report on Antitrust - a whole lot of non-tech wish list

Below I have pulled the language from the House Judiciary Committee report on the non-tech recommendations.  Unlike the BigTech part of the report, which was largely consistent with the various hearings, many of these recommendations are not at all related to BigTech at all and many advocate for a significant departure from antitrust as it has been understood for at least a generation.  The business press seems to have almost totally ignored this part of the report.

Bill Kovacic and I are hosting virtual workshop tomorrow with some leading practitioners (including a former federal judge) to discuss these issues.  

We have a great cast of panelists.

Topic

The House Judiciary Report – Implications Beyond BigTech

Description

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

Time

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

Register here.

 

I copy and paste from the report.

• Codifying bright-line rules for merger enforcement, including structural presumptions. Under a structural presumption, mergers resulting in a single firm controlling an outsized market share, or resulting in a significant increase in concentration, would be presumptively prohibited under Section 7 of the Clayton Act.
• Strengthening the Clayton Act to prohibit acquisitions of potential rivals and nascent competitors
• a presumption that vertical mergers are anticompetitive when either of the merging parties is a dominant firm operating in a concentrated market, or presumptions relating to input foreclosure and customer foreclosure.
• extending the Sherman Act to prohibit abuses of dominance (whatever that means).
• creation of a statutory presumption that a market share of 30% or more constitutes a rebuttable presumption of dominance by a seller, and a market share of 25% or more constitute a rebuttable presumption of dominance by a buyer.
• overriding the legal requirement that monopoly leveraging “actually monopolize” the second market, as set out in Spectrum Sports, Inc. v. McQuillan.
• proof of recoupment is not necessary to prove predatory pricing or predatory buying, overriding the Supreme Court’s decisions in Matsushita v. Zenith Ratio Corp., Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., and Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co.
• overriding judicial decisions that have treated unfavorably essential facilities- and refusal to deal-based theories of harm
• conditioning access to a product or service in which a firm has market power to the purchase or use of a separate product or service is anticompetitive under Section 2, as held by the Supreme Court in Jefferson Parish Hosp. Dist. v. Hyde
• making a design change that excludes competitors or otherwise undermines competition should be a violation of Section 2, regardless of whether the design change can be justified as an improvement for consumers
• Overriding Ohio v. American Express by clarifying that cases involving platforms do not require plaintiffs to establish harm to both sets of customers
•  Overriding United States v. Sabre Corp., clarifying that platforms that are “two-sided,” or serve multiple sets of customers, can compete with firms that are “one-sided”
• Clarifying that market definition is not required for proving an antitrust violation, especially in the presence of direct evidence of market power
• Clarifying that “false positives”—or erroneous enforcement—are not more costly than “false negatives”—or erroneous non-enforcement—and that, in relation to conduct or mergers involving dominant firms, “false negatives” are costlier.
• Eliminating court-created standards for “antitrust injury” and “antitrust standing,” which undermine Congress’s grant of enforcement authority to “any person . . . injured . . . by reason of anything forbidden in the antitrust laws;”
• Reducing procedural obstacles to litigation, including through eliminating forced arbitration clauses and undue limits on class action formation
• Lowering the heightened pleading requirement introduced in Bell Atlantic Corp. v. Twombly

Falling Through the Cracks no More? Article 102 TFEU and Sustainability I – the Nexus Between Dominance, Environmental Degradation, and Social Injustice

Falling Through the Cracks no More? Article 102 TFEU and Sustainability I – the Nexus Between Dominance, Environmental Degradation, and Social Injustice

Marios Iacovides

University of Oxford - Institute of European and Comparative Law; Swedish Competition Authority

Chris Vrettos

Stockholm University - Stockholm Resilience Center

Abstract

With the climate and environment emergency as backdrop, we ask whether EU competition law and in particular Article 102 TFEU can and should be part of a holistic EU solution to solving the crisis and if so how it can contribute to ensuring that our social, economic, and ecological systems are not entrenched into further perpetuating and mutually reinforcing crises. This question relates to the existing debate about the goals of EU competition law and the relationship between antitrust and sustainability, but we broaden the perspective through the combination of legal with socioecological research.

As shown in this paper, there is a significant sustainability gap in EU competition law, in particular when it comes to enforcing Article 102 TFEU as a 'sword' vis-a-vis dominant undertakings' conduct that has an impact on the environment. By using EU constitutional theories of 'mainstreaming', we show that a case can be made for including environmental and social sustainability goals in those that are pursued by EU competition law in order to hinder 'unsustainable business conduct' that harms people and planet.

With research that cuts across law and socioecological studies, we offer an original and unique perspective that identifies hermeneutically and empirically a nexus between market power and business practices that harm people and planet. We do this, by demonstrating empirically, that undertakings that have in the past been found to be dominant by the Commission, also engage in unsustainable business practices.

We show that this nexus is significant, as it demonstrates that addressing unsustainable business practices through the enforcement of Article 102 TFEU is not only a theoretical possibility mandated by EU constitutional law. It is a real opportunity to address environmental and social injustices and thereby contribute to tackling the most important existential threat currently facing humanity, climate change, by reading the relevant competition law test for ‘abuse’ through the constitutional law lens.

Technology Diffusion: The Case of Internet Banking

Technology Diffusion: The Case of Internet Banking

Richard J. Sullivan

Federal Reserve Bank of Kansas City

Zhu Wang

Federal Reserve Banks - Federal Reserve Bank of Richmond

Abstract

Taking internet banking as an example, we study diffusion of cost-saving technological innovations. We show that the diffusion of internet banking follows an S-shaped logistic curve as it penetrates a log-logistic bank-size distribution. We test the theoretical hypothesis with an empirical study of internet banking diffusion among banks across fifty U.S. states. Using an instrument-variable approach, we estimate the positive effect of average bank size on internet banking diffusion. The empirical findings allow us to examine the technological, economic, and institutional factors governing the diffusion process and explain the variation in diffusion rates across geographic regions.

Are We Dropping the Crystal Ball? Understanding Nascent & Potential Competition in Antitrust

 

Are We Dropping the Crystal Ball? Understanding Nascent & Potential Competition in Antitrust

John M. Yun

Abstract

We root for the underdog, and nascent and potential competitors are the antitrust version of underdogs. They introduce a promising product and innovation with the hopes of challenging the incumbent for supremacy in a market. Yet, are those hopes cancelled before they even begin with powerful incumbents acquiring these nascent and potential competitors? Some even refer to these acquisitions as “killer.” However, is this the full story? Assessments of nascent and potential competition are ultimately about “what if.” What if the upstart competitor grows into the next dominant platform or develops the next blockbuster drug? What if the incumbent knows its market position has a weakness that the entrant will exploit so the incumbent must end the competition before it even begins? On the other hand, what if the nascent competitor never fully develops its potential and engages in a series of missteps? What if the nascent competitor’s innovation can be improved upon and reach the market faster and more widely through the well-oiled machinery of the incumbent? These are all possible scenarios. The problem is that the counterfactual world is never actually observable. Thus, speculative “what ifs” cannot guide antitrust policy—whether in an overly permissive or aggressive manner. What are we left with? What should agencies and courts do in face of such uncertainty? This Article offers a number of propositions to address these concerns and questions in regard to competition that has not been fully realized. First, the Article offers a clear legal and analytical delineation between the doctrines of nascent and potential competition—as there has recently been a degree of “semantic satiation” between these two concepts. Second, some have argued that the acquisition of nascent competitors should be adjudicated using legal standards developed under the Sherman Act, Section 2, which covers monopolization, rather than under the traditional Clayton Act, Section 7, which governs mergers and acquisitions. Yet, the counterfactual exercise is fundamentally different between ex ante merger evaluations (Section 7) and ex post monopolization claims (Section 2). Consequently, based on this fact alone, courts should be cautious to adopt Section 2 approaches to Section 7 issues. Third, when evaluating the wider set of proposals to address the nascent and potential competition problem, which the Article comments on, we must ask whether there is a problem in the first place. To that end, the Article examines a number of recent merger retrospectives. Finally, while using the past to predict the future can be a difficult and uncertain exercise even within mature markets, these hinderances can be overstated. Economic tools are available to frame our approach, and agencies and courts should focus particularly on whether the characteristics and nature of the acquired nascent competitor are sufficiently differentiated from the remaining competitors to warrant increased scrutiny.

Patent Screening, Innovation and Welfare

Patent Screening, Innovation and Welfare

Mark Schankerman

London School of Economics & Political Science (LSE) - London School of Economics

Florian Schuett

Tilburg Law and Economics Center (TILEC); Tilburg University - Tilburg University School of Economics and Management

Abstract

Critics claim that patent screening is ineffective, granting low-quality patents that impose unnecessary social costs. We develop an integrated framework, involving patent office examination, fees, and endogenous validity challenges in the courts, to study patent screening both theoretically and quantitatively. In our model, some inventions require the patent incentive while others do not, and asymmetric information creates a need for screening. We show that the endogeneity of challenges implies that courts, even if perfect, cannot solve the screening problem. Simulations of the model, calibrated on U.S. data, indicate that screening is highly imperfect, with about forty percent of all patents issued on inventions that do not require the patent incentive. While we find that the current patent system generates positive social value, intensifying examination would yield large welfare gains. The social value of the patent system would also be larger if complemented by antitrust limits on licensing.

Private Enforcement in the UK: Effective Redress for Consumers?

Private Enforcement in the UK: Effective Redress for Consumers?

Barry James Rodger

University of Strathclyde - School of Law

Abstract

This chapter assesses how private enforcement of competition law rights has developed in the UK over the last twenty years. Key legislative developments, inter alia the Competition Act 1998, Enterprise Act 2002 and Consumer Rights Act 2015, have transformed the private enforcement architecture, notably with the introduction, and increasingly significant role, of the specialist tribunal, the Competition Appeal Tribunal, and the availability of an opt-out collective redress mechanism. This chapter will assess the key UK statutory and case-law developments, in comparison with the USA private antitrust enforcement model, to consider in particular the extent to which an effective system for consumer redress has been instituted. The chapter concludes that the anticipated Supreme Court ruling in Merricks should help to determine whether the opt-out collective proceedings scheme will provide effective consumer redress and ensure that the vibrant private enforcement framework in the UK translates from business claimants to consumers in the third decade of the modern UK competition law.

Proportional Restraints in Horizontal Patent Settlements

Proportional Restraints in Horizontal Patent Settlements

Erik Hovenkamp

University of Southern California School of Law

Jorge Lemus

University Of Illinois Urbana Champaign

Abstract

Patent settlements between rivals restrain competition in many different ways. Antitrust requires them to be "proportional" in that their anti-competitive effects are commensurate with the firms’ expectations about (counterfactual) patent litigation. Because these expectations are private and non-verifiable, this standard is hard to apply; it has been successfully applied only within a very narrow class of agreements. We show that, even if firms’ private beliefs are ambiguous, an antitrust regulator can apply the standard universally by policing the economic structure of the firms’ (observable) settlement contract. This structure determines whether private settlement outcomes will be proportional for any private beliefs.

The System for EU Antitrust Enforcement is Misguided and Unfair—Let’s Change it

The System for EU Antitrust Enforcement is Misguided and Unfair—Let’s Change it

Miguel Sousa Ferro

One of the most striking features of the system that we currently have in place for the enforcement of competition law in the EU is how it is so manifestly ineffective, unfair, and unsuitable to achieve its goals. Assuming, of course, we agree that, at the most basic level, the goal of the enforcement system should be to ensure that, throughout the EU, Articles 101 and 102 Treaty on the Functioning of the European Union (TFEU) are complied with and interpreted uniformly, that infringements are dissuaded and detected, and that injured persons have access to justice and are duly redressed.

University of Pennsylvania Center for Technology, Innovation and Competition and Warren Center for Network and Data Sciences Call for Grant Proposals on the Economics of Digital Services

University of Pennsylvania
Center for Technology, Innovation and Competition and
Warren Center for Network and Data Sciences
Call for Grant Proposals on the Economics of Digital Services

Download Call for Grant Proposals.Knight

The University of Pennsylvania’s Center for Technology, Innovation and Competition and Warren Center for Network and
Data Sciences will fund grants to support research on the economics of digital services. This program is made possible by a
grant from the John S. and James L. Knight Foundation.
The grant program encompasses research examining the issues raised by the economics of digital services from either an
economic or legal perspective. Proposed research may be either theoretical or empirical and can have public policy and
antitrust implications. Proposals examining the impact of digital platforms’ greater reliance on algorithms and data and the
implications of vertical integration and other emerging business models employed by tech companies are particularly
welcome.
Each funded proposal may receive up to $10,000 in financial support, which may be used for data acquisition, research
assistants, or travel to work with coauthors. Successful proposals will receive 1/2 of the awarded funds when the project is
approved for funding by the CTIC and the remaining 1/2 of the funds upon successful completion of the project and delivery
of the output of the research. Grants cannot be used for work that is complete or nearly complete.
Grantees will be expected to attend and present their work at a conference to be held in Philadelphia in May/June 2021. They
will also be expected to produce a short blog post summarizing their work.
The deadline for proposals is October 30, 2020. Decisions will be announced by November 16, 2020. The expected output
of funded research should be available by May 14, 2021.
Proposals submitted by young researchers will receive a strong preference. Funded research is expected to be published in
top academic research journals. Proposals should include the following:
 A description of the proposed project, including an executive summary; a description of the project’s objectives and
expected output; the analytical techniques expected to be used in the proposed project, including data, models, and
modeling techniques.
 A discussion of the paper’s motivation and contribution.
 The curriculum vitae of the researcher.
 A budget for the proposed research.
 For graduate students, a letter of recommendation from the student’s advisor regarding the student’s research ability
and ability to complete the proposed project on time.
Proposals and all supporting materials must be submitted electronically through this link in either Portable Document Format
(“.pdf”) format, MS-Word formats (“.docx”), or Rich Text Format (“.rtf”). Submit all the relevant materials together in one
file in the following order: executive summary, proposal, CV, and any other materials. Please name the file as
LastName_FirstName_2020.ext, where “ext” refers to the format file extension. We will only consider one proposal per
researcher, so please submit your best one.
We look forward to your submission. Please direct any questions to Christopher Yoo (csyoo@upenn.edu).
Please note that this project is also looking for a Fellow to help to staff the project. Additional information is available in the
attached document and is available here.

University of Pennsylvania Center for Technology, Innovation and Competition and Warren Center for Network and Data Sciences Call for Grant Proposals on the Economics of Digital Services

University of Pennsylvania
Center for Technology, Innovation and Competition and
Warren Center for Network and Data Sciences
Call for Grant Proposals on the Economics of Digital Services

Download Call for Grant Proposals.Knight

The University of Pennsylvania’s Center for Technology, Innovation and Competition and Warren Center for Network and
Data Sciences will fund grants to support research on the economics of digital services. This program is made possible by a
grant from the John S. and James L. Knight Foundation.
The grant program encompasses research examining the issues raised by the economics of digital services from either an
economic or legal perspective. Proposed research may be either theoretical or empirical and can have public policy and
antitrust implications. Proposals examining the impact of digital platforms’ greater reliance on algorithms and data and the
implications of vertical integration and other emerging business models employed by tech companies are particularly
welcome.
Each funded proposal may receive up to $10,000 in financial support, which may be used for data acquisition, research
assistants, or travel to work with coauthors. Successful proposals will receive 1/2 of the awarded funds when the project is
approved for funding by the CTIC and the remaining 1/2 of the funds upon successful completion of the project and delivery
of the output of the research. Grants cannot be used for work that is complete or nearly complete.
Grantees will be expected to attend and present their work at a conference to be held in Philadelphia in May/June 2021. They
will also be expected to produce a short blog post summarizing their work.
The deadline for proposals is October 30, 2020. Decisions will be announced by November 16, 2020. The expected output
of funded research should be available by May 14, 2021.
Proposals submitted by young researchers will receive a strong preference. Funded research is expected to be published in
top academic research journals. Proposals should include the following:
 A description of the proposed project, including an executive summary; a description of the project’s objectives and
expected output; the analytical techniques expected to be used in the proposed project, including data, models, and
modeling techniques.
 A discussion of the paper’s motivation and contribution.
 The curriculum vitae of the researcher.
 A budget for the proposed research.
 For graduate students, a letter of recommendation from the student’s advisor regarding the student’s research ability
and ability to complete the proposed project on time.
Proposals and all supporting materials must be submitted electronically through this link in either Portable Document Format
(“.pdf”) format, MS-Word formats (“.docx”), or Rich Text Format (“.rtf”). Submit all the relevant materials together in one
file in the following order: executive summary, proposal, CV, and any other materials. Please name the file as
LastName_FirstName_2020.ext, where “ext” refers to the format file extension. We will only consider one proposal per
researcher, so please submit your best one.
We look forward to your submission. Please direct any questions to Christopher Yoo (csyoo@upenn.edu).
Please note that this project is also looking for a Fellow to help to staff the project. Additional information is available in the
attached document and is available here.

CK Telecoms UK Investments v Commission—the Judgment That Defines a Significant Impediment to Effective Competition in Oligopolistic Merger Cases

CK Telecoms UK Investments v Commission—the Judgment That Defines a Significant Impediment to Effective Competition in Oligopolistic Merger Cases

On 28 May 2020, the General Court of the European Union handed down a landmark judgment clarifying for the first time its interpretation of the significant impediment of effective competition test and the standard of proof that the European Commission needs to meet when establishing it. This judgment is expected to have a significant impact on European Union (EU) merger control and related policies across the EU.

Unpatented Innovation and Merger Synergies

Unpatented Innovation and Merger Synergies

Messod D. Beneish

Indiana University - Kelley School of Business - Department of Accounting

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Ayung Tseng

Indiana University

Patrick Vorst

Maastricht University School of Business and Economics

Abstract

The increasingly service-based U.S. economy places a high reliance on innovation. While there is considerable research on the importance of certain innovative activities such as patents, less attention has been paid to un-patented innovation, about which there is naturally less publicly available information. Our research leverages a unique merger and acquisition database that reveals the fair values of targets’ innovative activities. We show that existing studies underestimate the contribution of innovation by exclusively focusing on patents. Our evidence, for example, shows that approximately three percent of merger synergy value is associated with patented innovation, whereas the less often studied un-patented innovation accounts for twelve percent of synergy gains.