Wednesday, September 22, 2021




Snapshot: Drawing on extensive analysis of the FTC Act’s legislative record, a leading antitrust-law attorney and scholar debunks three FTC Commissioners’ justifications for eliminating a bipartisan guidance for how to pursue “unfair methods of competition” enforcement, and concludes that a drift away from first principles will stoke harmful uncertainty that chills competition. 

Executive Summary (click HERE for PDF of this summary)
For the last forty years, enforcement of the antitrust laws has been guided by the principle that the laws are meant to protect competition, not competitors, and thereby to protect consumer welfare. The framework the Supreme Court and lower courts have developed to enforce the antitrust laws with that larger goal in mind is a modern version of the rule of reason the Court first enunciated in 1911.

The Biden Administration’s senior antitrust appointments, and the “reform” views reflected in those individuals’ past academic writings, have placed the consumer-welfare approach to antitrust at substantial risk. The first clear sign of these appointees’ preference for a more forceful, structuralist approach was the Federal Trade Commission’s decision, taken along partisan lines and after little opportunity for public input, to rescind a 2015 policy statement. The statement provided guidance on how the FTC would interpret FTC Act § 5’s ban on “unfair methods of competition.” The three Commissioners asserted that the statement contravened the text, structure, and history of the FTC Act, and also that the statement’s challenging administrability would undermine enforcement.

This Working Paper explains why both reasons for rescinding the § 5 statement lack merit. First, the 2015 Statement is fully consistent with the principles Congress intended to guide enforcement of FTC Act § 5. Informed by an exhaustive review of the legislative record, the paper details these five principles which, at their core, reflect enforcement to protect competition and the public interest by applying the rule of reason.

Second, contrary to the Commissioners’ conclusion, the courts have successfully made the rule of reason more administrable and their approach provided the Commission guidance when making enforcement decisions. Notably, Supreme Court justices that firmly believe in strong antitrust enforcement, such as Justices Stevens and Breyer, have led the creation of a useful analytical framework for reviewing defendants’ actions or policies. That framework does not favor plaintiffs or defendants.  Instead, the framework seeks to balance the public’s interest in both competition and efficiency, just as Congress intended when it created the Federal Trade Commission.

Rescission of the 2015 Statement is a significant step toward expanding the FTC’s discretion and seemingly its ability to use antitrust as a tool to cure such social ills as income inequality and increased market concentration. But it’s far from clear whether antitrust policy can be blamed for these ills. . And it’s further unclear how an antitrust approach detached from the rule of reason and consumer welfare can be an effective tool in protecting competition without unduly impeding the efficient functioning of the market, much less for addressing broader societal problems.  

September 22, 2021 | Permalink | Comments (0)

The Antitrust Duty to Deal in the Age of Big Tech

The Antitrust Duty to Deal in the Age of Big Tech



Erik Hovenkamp

University of Southern California School of Law



The antitrust duty to deal is perhaps the most confounding and controversial form of antitrust intervention. It is sought by plaintiffs in situations where a monopolist controls a critical input (or “essential facility”) and unilaterally refuses to sell access to rivals. Courts have substantially narrowed the doctrine in recent decades. However, the prevalence of dominant platforms like Google, Facebook, and Amazon has provoked intense debate over whether the antitrust duty to deal needs a revival. Many such platforms are accused of refusing to deal with (or otherwise discriminating against) rivals in adjacent markets.

The debate centers mainly on what a plaintiff should have to show to trigger a duty to deal. However, I argue that this overlooks the most pressing problem, which is not the standard of liability but rather its domain: the set of cases in which it must be applied. At present, this domain is far too broad, conjoining two very different lines of cases that have no business being evaluated under a common standard. In one line of cases, the defendant’s refusal raises substantially the same theory of harm as tying or related vertical restraints. However, formalistic legal doctrine prevents plaintiffs from challenging them as such. As a result, these cases almost never receive meaningful scrutiny. This is problematic, because a large majority of meritorious refusal-to-deal cases fall into this category. It also happens to include almost all cases involving platform defendants.

In a separate line of cases, intervention is much harder to justify on economic policy grounds, as it carries a serious risk of chilling investment in valuable new technologies. Courts often acknowledge this investment concern in dicta, but the operative liability standard—which focuses myopically on exclusion—ignores it. Consequently, there is a major disconnect between what courts say in dicta and what the underlying standard of liability says. The dicta says that a duty to deal is almost never warranted. But simple economic arguments show that the refusals in these cases are routinely exclusionary in precisely the sense that the law purports to condemn. This internal conflict has led courts to erect suffocating proof requirements that bear little logical connection to exclusion. These evidentiary rules do most of the heavy lifting in practice, and they excel at avoiding excessive liability. The problem is that they also kill off all the meritorious cases.

This paper argues that any effective reform must begin by disentangling these distinct lines of cases. As I explain, there is a natural way to do this that would help to address many of the key concerns raised on both sides of the debate. This approach offers many policy benefits. First, it protects investment incentives without needlessly stifling antitrust enforcement in meritorious cases. Second, it naturally limits antitrust scrutiny to those cases in which intervention is most likely to be administrable. Third, it is exactly analogous to the way antitrust already treats other forms of unilateral conduct. Finally, in contrast to the status quo, this approach would allow for meaningful antitrust scrutiny of unilateral conduct by dominant platforms—an objective that has recently received bipartisan support in Congress.

September 22, 2021 | Permalink | Comments (0)

Tuesday, September 21, 2021

Cartel Activity and Recidivism

Cartel Activity and Recidivism

Research Handbook on Cartels (Edward Elgar, Peter Whelan, ed.)


Catarina M. P. Marvão

Technological University Dublin; Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)


The existence and extent of recidivism have been highly debated in the last few years. This chapter examines the current theoretical, experimental and empirical literature on recidivism and related issues. It also presents novel evidence on: (i) the amount of recidivism in the EU between 1998 and December 2020 (up to 19% of cartel members, depending on how recidivism is defined); (ii) the trend of EU “leniency inflation” noticed by Marvão and Spagnolo (2018b), which is even steeper for multiple offending firms; and (iii) the ability of recidivists to use leniency programs strategically by rotating reports and using multi-market contact. While “true recidivism” seems to have been eliminated in the US (Werden et al., 2011), it appears to be on the rise in the EU. Although it represents only 2% of the cartel members, it should be interpreted as a lower bound estimate since many cartels may remain undeterred and undetected (Ormosi, 2013).

September 21, 2021 | Permalink | Comments (0)

Monday, September 20, 2021

New Retail: Implications for Channel Choices under Competition

New Retail: Implications for Channel Choices under Competition



Ping Tang

University of Texas at Dallas

Jianqing Chen

The University of Texas at Dallas, Jindal School of Management

Srinivasan Raghunathan

University of Texas at Dallas - Naveen Jindal School of Management



The Internet and online retailing has disrupted traditional brick-and-mortar retailing immensely. In recent years, a hybrid omnichannel structure referred to as “New Retail” that promises to take advantage of the positive aspects of online and physical channels has emerged within the industry, and some industry experts tout New Retail as the future of retailing. In this paper, we provide insights into competing firms' retail-channel choices among online channel, physical channel, and omnichannel. The online and physical channels could differ in terms of geographical market coverage, consumer shopping cost, and consumer valuation—an online channel can serve both city and remote (suburban) consumers whereas a physical channel may be able to serve only city consumers, and consumers have a lower shopping cost in the online channel than the physical channel but can have a higher valuation for either the physical or the online channel. We find that an equilibrium in which at least one firm operates the omnichannel emerges only when consumers have a higher valuation for the physical channel. Moreover, neither firm would operate only the online channel in this case. In contrast, when consumers have a higher valuation for the online channel than the physical channel, neither firm is likely to operate the omnichannel. The market and channel characteristics have nonuniform and counterintuitive impacts on firms' profits under different equilibria. For instance, neither increasing the differentiation between the channels within a firm nor increasing the differentiation between channels across firms necessarily benefits firms. Furthermore, an increase in the number of city consumers relative to the suburban consumers can hurt the firm that serves only city consumers. The tradeoffs among interfirm competition, market expansion, consumer segmentation, and intrafirm-cannibalization effects of firms' channel choices are the driving forces that lead to our findings.

September 20, 2021 | Permalink | Comments (0)

Sunday, September 19, 2021

2022 Next Generation of Antitrust, Data Privacy and Data Protection Scholars Conference Call for papers Friday, January 28, 2022 | 8:20 AM - 5:30 PM EST NYU School of Law

2022 Next Generation of Antitrust, Data Privacy and Data Protection Scholars Conference
Friday, January 28, 2022 |  8:20 AM - 5:30 PM EST
NYU School of Law


Call for papers

The NYU School of Law and the American Bar Association Antitrust Law Section proudly announce that the 7th biennual Next Generation conference, which has expanded beyond Antitrust to include Data Privacy and Data Protection, will be held on January 28, 2022. This day-long conference provides an opportunity for professors in law, economics, accounting, finance, management, information systems, operations management, and marketing who began their full-time tenure-track career in or after 2014 to present their latest research. Senior scholars and practitioners in the field will comment on the papers.  The conference is co-sponsored by NYU School of Law and the American Bar Association -- Antitrust Law Section.


For the agenda of the 2020 conference, see  


NYU has not yet announced whether there will be restrictions on conferences to be held next semester.  We hope that the conference will be held in-person, but it is possible that it will be held online.  If the conference is held in person, every particpant will be expected to cover their travel and lodging costs.  


The paper submissions are due on November 1, 2021 and acceptance decisions will be made on December 1, 2021.  Please email Daniel Sokol ( with your submission.


Conference co-organizers


Edward Cavanagh, St. John's

Judy Chevalier, Yale

Daniel Sokol, USC

Katherine Strandburg, NYU

September 19, 2021 | Permalink | Comments (0)

Friday, September 17, 2021

Academic Roundtable Talk: What I learned during my stint in government Sep 23, 2021 09:00 AM in Pacific Time/12pm EST

I am thrilled to be leading this amazing webinar as part of the USC Initiative on Digital Competition of the University of Southern California - Marshall School of Business on "Academic Roundtable Talk: What I learned during my stint in government"


Leemore Dafny (Harvard Business School)
Nancy L. Rose (Massachusetts Institute of Technology)
Guofu Tan (University of Southern California)

I think that this talk will be of interest to academics and practitioners interested in what chief economists do in agencies and how it reshapes research.
Sep 23, 2021 09:00 AM/ 12:00 PM PM

September 17, 2021 | Permalink | Comments (0)

Platform Competition and Differentiation: Business Choices in Mobile Platforms

Platform Competition and Differentiation: Business Choices in Mobile Platforms


Tejaswi Channagiri

University of Florida

Mark A Jamison

University of Florida - Warrington College of Business Administration, Public Utility Research Center



This paper examines firms’ choices to use mobile platforms — namely iOS and Android. Using Crunchbase data on startups seeking external funding, we find that 16 of 47 business categories are likely to use mobile platforms. 10 of these 16 exhibit no platform preferences, implying substitutability. Businesses that are unlikely to use mobile platforms view the platforms as differentiated. iOS was more popular than Android: 60 percent of businesses choosing to be on mobile platforms chose to be only on iOS. In contrast, only 8 percent chose to be on Android only. Our finding of platform substitutability holds when accounting for businesses belonging to multiple categories.

September 17, 2021 | Permalink | Comments (0)

Thursday, September 16, 2021

Common Institutional Ownership and Corporate Social Responsibility

Common Institutional Ownership and Corporate Social Responsibility



Xin Cheng

Renmin University of China - School of Business

He (Helen) Wang

West Virginia University - Department of Finance

Xianjue Wang

Southwestern University of Finance and Economics (SWUFE); Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick


We examine relationship between common institutional ownership and corporate social responsibility (CSR). We find that common institutional ownership is negatively associated with the level of CSR, which supports an anti-competitive view. We conduct a propensity score matching (PSM) analysis and a difference-in-differences (DiD) analysis based on a quasi-natural experiment of financial institution mergers. The results alleviate concerns about endogeneity. Using the DiD setting, we find further support for the anti-competitive channel, and can rule out alternative explanations. Additional analyses on investor characteristics show that our results come mainly from common owners with long-term investment horizons or low social inclination. Moreover, we find that the anti-competitive effect is more pronounced for mature firms, and for firms in industries with lower labor intensity and low customer sensitivity.

September 16, 2021 | Permalink | Comments (0)

Wednesday, September 15, 2021

The Competitive Effects of Mergers with Cournot Competition

The Competitive Effects of Mergers with Cournot Competition

Markus Reisinger

Frankfurt School of Finance & Management - Economics Department; CESifo (Center for Economic Studies and Ifo Institute)

Hans Zenger

European Union - Directorate General for Competition


This paper provides a full characterization of the price effects of horizontal mergers in the Cournot model with heterogeneous firms and constant returns to scale. We show that the price change brought about by a merger only depends on the smaller merging firm's share and the number of firms, but is independent of the distribution of shares among other firms. Price effects are determined by factors that are either directly observable by competition authorities or can be bounded under relatively mild assumptions on demand curvature or pass-through. Estimates based on concentration measures can instead be seriously misleading. We also provide closed-form solutions for calibration that approximate merger effects on the basis of simple pre-merger parameters.

September 15, 2021 | Permalink | Comments (0)

Tuesday, September 14, 2021

Call for Papers: 15th Digital Economics Conference, Toulouse, Jan. 13-14, 2022

Background and objective

The objective of the conference, organized by the TSE Digital Center at the Toulouse School of Economics, with the help of CEPR, is to discuss recent contributions to the understanding of the digitial economy and its consequences for modern societies. Keeping the spirit of previous years, the conference will feature contributions in economics, theoretical, econometric, experimental and policy oriented, as well as contributions from other social sciences and computer and data science.

Keynote speakers

Petra Moser (New York University), John Van Reenen (London School of Economics)

Organizing committee

Alexandre de CornièreJacques Crémer and Daniel Ershov

Conference venue

Toulouse School of Economics (new building)

1 Esplanade de l'Université

31080 Toulouse cedex 06


Conference secretariat: Florence Chauvet


September 14, 2021 | Permalink | Comments (0)

Loyalty Rebates under EU Competition and US Antitrust Law

Loyalty Rebates under EU Competition and US Antitrust Law



Viktoria H.S.E. Robertson

Vienna University of Economics and Business; University of Graz



The present chapter investigates the antitrust rules applicable to loyalty or fidelity rebate schemes under EU competition and US antitrust law. It finds that antitrust liability for a dominant company will more readily be established in the EU, where the applicability of economics-based tests is still being navigated. In the US, rebates by a monopoly player will usually be found to be anti-competitive where they constitute predatory pricing, although they might also run into antitrust liability where they constitute exclusive dealing arrangements. This divergence can be explained by the different ideological underpinnings in the two jurisdictions. Overall, however, the (case) law on loyalty rebates is still in a state of flux in both jurisdictions. In recent years, both jurisdictions have gradually moved to a little more convergence in their treatment of exclusivity rebates. At this point, however, both the US Supreme Court and the European Court of Justice will need to weigh in on the future of the antitrust assessment of loyalty-inducing rebates.

September 14, 2021 | Permalink | Comments (0)

Monday, September 13, 2021

Regulating Platforms as Utilities? A Business Model Perspective

Regulating Platforms as Utilities? A Business Model Perspective

Tobias Kretschmer

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Sven Werner

Ludwig Maximilian University of Munich (LMU)


Current discussions about how to regulate platforms revolve around the extent to which existing frameworks can and should be applied to modern-day platform firms and business models. We outline and explain the economic and strategic features of platforms, and compare and contrast them to utility industries often considered structurally similar. We will then outline the manner in which these industries have been regulated and the rules for regulatory intervention and assess how these approaches and others currently being discussed are likely to affect competition and innovation on modern-day platforms.

September 13, 2021 | Permalink | Comments (0)

Economic Consequences of Hospital Closures

Hospitals anchor much of US health care and receive a third of all medical spending, including various subsidies. Nevertheless, some become insolvent and exit the market. Research has documented subsequent access problems; however, less is understood about broader implications. We examine over 100 rural hospital closures spanning 2005-2017 to quantify the effects on the local economy. We find sharp and persistent reductions in employment, but these localize to health care occupations and are largely driven by areas experiencing complete closures. Aggregate consumer financial health is only modestly affected, and housing markets were already depressed prior to hospital closures.

September 13, 2021 | Permalink | Comments (0)

Sunday, September 12, 2021

Empirical Evidence of the Value of Privacy

Empirical Evidence of the Value of Privacy

September 12, 2021 | Permalink | Comments (0)

Friday, September 10, 2021

Concentration and Resilience in the U.S. Meat Supply Chains

Supply chains for many agricultural products have an hour-glass shape; in between a sizable number of farmers and consumers is a smaller number of processors. The concentrated nature of the meat processing sectors in the United States implies that disruption of the processing capacity of any one plant, from accident, weather, or as recently witnessed – worker illnesses from a pandemic – has the potential to lead to system-wide disruptions. We explore the extent to which a less concentrated meat processing sector would be less vulnerable to the risks of temporary plant shutdowns. We calibrate an economic model to match the actual horizontal structure of the U.S. beef packing sector and conduct counter-factual simulations. With Cournot competition among heterogeneous packing plants, the model determines how industry output and producer and consumer welfare vary with the odds of exogenous plant shutdowns under different horizontal structures. We find that increasing odds of shutdown results in a widening of the farm-to-retail price spread even as packer profits fall, regardless of the structure. Results indicate that the extent to which a more diffuse packing sector performs better in ensuring a given level of output, and thus food security, depends on the exogenous risk of shutdown and the level of output desired; no horizontal structure dominates. These results illustrate the consequences of policies and industry efforts aimed at increasing the resilience of the food supply chain and highlight that there are no easy solutions to improving the short-run resilience by changing the horizontal concentration of meat packing.

September 10, 2021 | Permalink | Comments (0)

Thursday, September 9, 2021

Anticompetitive Merger Review

Anticompetitive Merger Review


Samuel Weinstein

Yeshiva University - Benjamin N. Cardozo School of Law



U.S. antitrust law empowers enforcers to review pending mergers that might undermine competition. But there is growing evidence that the merger-review regime is failing to perform its core procompetitive function. Industry concentration and the power of dominant firms are increasing across key sectors of the economy. In response, progressive advocates of more aggressive antitrust interventions have critiqued the substantive merger-review standard, arguing that it is too friendly to merging firms. This Article traces the problem to a different source: the merger-review process itself. The growing length of reviews, the competitive restrictions merger agreements place on acquisition targets during review, and the targets’ resulting loss of strength harm competition and consumers. As a result, an enforcement regime designed to protect competition is damaging it instead. The rise of antitrust reverse termination fees (“ARTFs”)—payments from the acquirer to the target if the merger fails antitrust review—demonstrates the anticompetitive effect of the review process. This Article argues that these fees represent the parties’ negotiated prediction of the competitive costs to the target of entering the merger agreement (and therefore the competitive gains to the acquirer and other rivals in the relevant market). ARTFs also indicate the possibility of anticompetitive manipulation of the merger-review process. Knowing that reviews sometimes take over a year to resolve, acquirers can enter a merger agreement and use an ARTF to buy competitive peace—even when they expect the merger will be rejected—all the while harming consumers. Reform proponents have suggested several ways potentially to shorten merger investigations, such as limiting enforcement agencies’ discovery demands, but these modifications only reduce the problem at the margins. This Article proposes a more effective reform: a requirement that the antitrust enforcement agencies announce a group of highly concentrated markets in which they will challenge any proposed merger, unless one of the firms is failing. This strategy, which the antitrust agencies have employed in an ad hoc fashion in the past, will discourage anticompetitive mergers and eliminate lengthy reviews that harm consumers.

September 9, 2021 | Permalink | Comments (0)

Wednesday, September 8, 2021

Patents Are Not Probabilities: Refuting the Probabilistic Patent Theory

Patents Are Not Probabilities: Refuting the Probabilistic Patent Theory


Bryan Gant

White & Case LLP



The probabilistic patent theory espoused by Carl Shapiro and Mark Lemley suggests that the lawful term of a patent is limited by the probability that the patent will be held valid and enforceable. For example, under this theory a patent with a 60% chance of being held valid and enforceable would lawfully grant 60% of a statutory patent term; any enforcement beyond that point would risk violating the antitrust laws.

This article—the first to meaningfully challenge the probabilistic patent theory in nearly 20 years—explains that Shapiro and Lemley’s theory has at least three fatal flaws: First, it depends on a “judicially-created” view of patents the Supreme Court has since rejected in Oil States Energy Services v. Greene’s Energy Group. Second, it mistakes a decrease in the value of property in light of litigation risk for a decrease in the ownership or scope of the property; as with all other forms of litigation regarding property, patent litigation may be “probabilistic” but the property in dispute is not. Third, because no patent is without some (often undefinable) level of risk, this theory would shorten the enforceable term of every patent—and would moreover do so to an un undeterminable extent.

Finally, the article refutes the suggestion, accepted by the California Supreme Court, that the U.S. Supreme Court adopted the probabilistic patent theory in its 2013 decision in FTC v. Actavis, Inc. As the article demonstrates, Actavis instead adopted a theory based only on the probabilities of litigation, not the probabilities of a patent.

September 8, 2021 | Permalink | Comments (0)

Tuesday, September 7, 2021

Happy Rosh Hashana



September 7, 2021 | Permalink | Comments (0)

Decision Theory and Legal Process in EU Competition Law

Decision Theory and Legal Process in EU Competition Law


Jorge Padilla

Compass Lexecon


In this brief essay I set out my views on the way in which competition assessments should be conducted so that they be consistent with the standard of proof in EU competition cases and Easterbrook’s error cost minimization principle. My goal is to develop a normative benchmark against which to assess the European Commission’s actual decision-making practice. I conclude by discussing whether actual practice is consistent with such a benchmark.

September 7, 2021 | Permalink | Comments (0)

Monday, September 6, 2021

How is Rock and Roll different than Antitrust?

Unlike Rock & Roll, where the creativity of seminal groups and individuals peaks in their 20s and 30s, we have a number of antitrust law stars in the same age range as Paul McCartney, Paul Simon, Bob Dylan, Jimmy Page, Eric Clapton, Debbie Harry, and Bruce Springsteen.  The 70+ group in antitrust continues to produce important work.  This is a time to salute some of these pioneers who continue to rock on and rock hard: Eleanor Fox (NYU), Harry First (NYU), Herb Hovenkamp (Penn), Steve Salop (Georgetown), Tim Muris (George Mason), Doug Ginsburg (George Mason), among others.  They are just as creative and productive now as thirty years ago.  

September 6, 2021 | Permalink | Comments (0)