Wednesday, May 25, 2022
The Concentration of Digital Markets: How To Preserve the Conditions for Effective and Undistorted Competition?
The Concentration of Digital Markets: How To Preserve the Conditions for Effective and Undistorted Competition?
The policy initiatives announced on both sides of the Atlantic to complement competition rules focus on two key dimensions: the contestability of markets on the one hand and fairness in their functioning on the other. The underlying idea is that the market positions of Big Tech would be inexpugnable - insofar as high barriers to entry protect them from self-regulating competition and insofar as they would have regulatory power over their respective ecosystems. Competition for the market would no longer be free, and competition in the market would be distorted. Our purpose in this working paper is to discuss these two dimensions. Are digital markets still contestable, and is the competition in them still competition on the merits? Finally, we discuss the remedies proposed to address these two alleged phenomena.
May 25, 2022 | Permalink | Comments (0)
Tuesday, May 24, 2022
Who Killed the Radio Star? How Music Blanket Licensing Distorts the Production of Creative Content in Radio
Who Killed the Radio Star? How Music Blanket Licensing Distorts the Production of Creative Content in Radio
Abstract
According to popular and scholarly belief, video killed the radio star. The golden age of radio, culminating in the 1930s and 1940s, was gone with the rise of television in the 1950s and 1960s. In this Article, we advance the claim that television’s role in the “death” of the radio star has been more limited than commonly believed. A major culprit, we argue, is the common licensing practice of musical content for broadcasting, or more precisely, the blanket license issued by copyright collective management organizations (CMOs). By setting a zero marginal price for broadcasting additional songs from the CMO’s repertoire, CMOs’ blanket licensing drives commercial radio stations to dedicate a larger portion of their programming to the broadcasting of recorded songs and to reduce the time and resources spent on producing or procuring other content.
This Article makes three main contributions to three fields: competition law and policy; copyright law and policy; and cultural history. For competition law and policy, this Article reveals that the analysis of blanket licenses should not be limited to their static effects (i.e., the trade-off between lower transaction costs and supra-competitive pricing), but should also include the dynamic effect of blanket licensing on the type and quality of content production. This dynamic effect also poses a challenge for copyright law and policy: while collective licensing may be beneficial to one class of copyright holders, it may hinder the production of other content and harm creators of such content, by depriving them of important opportunities for market and cultural participation. Regarding cultural history, our Article provides a novel explanation for the well-documented phenomenon of the “death” of the radio star and re-evaluates some of the existing explanations. Finally, we discuss some alternative models for music licensing that can mitigate the distortion created by blanket licenses.
May 24, 2022 | Permalink | Comments (0)
Monday, May 23, 2022
Intersection of Competition and Regulation in Abuse of Dominance and Monopolization
Intersection of Competition and Regulation in Abuse of Dominance and Monopolization
As markets change due to new technologies, shifts in consumer preferences or other conditions, the legal and policy framework need to adjust, too. The dilemma legislators and policy makers face when such changes take place is whether and how to intervene in such market situations and if they intervene, what respective roles regulation and competition law should play.
There is a renewed interest in discussing and even reconceptualizing this relationship in light of current challenges such as the financial crisis, climate and health crisis, digitalization and rising corporate and political power. This chapter analyses how market power is controlled at the intersection between competition law and regulation in EU competition law and in US antitrust law. It traces back how this complex interplay has evolved in these two jurisdictions as well as look forward how this interface is changing in current law and policy making processes.
May 23, 2022 | Permalink | Comments (0)
Saturday, May 21, 2022
'Hipster Antitrust' Rules Are Dangerous, Summers Says
See his interview here.
May 21, 2022 | Permalink | Comments (0)
Friday, May 20, 2022
Mergers Involving Nascent Competition
Mergers Involving Nascent Competition
Abstract
Mergers involving nascent competition are a hot topic in antitrust circles, especially in light of the pending FTC case against Facebook; but the thinking about the topic is nascent, too. This paper is intended to contribute to that thinking and to discuss a variety of questions that have not previously been discussed together. It explains that, while the vast majority of such mergers are likely to be benign or procompetitive, some might be very harmful to competition and economic welfare. It argues that the latter can in principle be prohibited under existing Section 2 law, suggests criteria for doing so, and addresses policy concerns about merger efficiencies, error costs, the impact of heighted scrutiny of such mergers on venture capital investment, and post-acquisition challenges to such mergers.
May 20, 2022 | Permalink | Comments (0)
Thursday, May 19, 2022
Competition and Concentration: Charting the Faultlines
Competition and Concentration: Charting the Faultlines
Abstract
This work addresses the widespread concern that the forces of competition are weakening worldwide. Much of the evidence for this comes from traditional concentration indices which are notoriously flawed: conceptually they derive from static theory and cannot discriminate between efficiency and market power; empirically, they employ over-aggregate market definitions and ignore international competition. This paper is the first in a programme of research with the objective of resolving some of these problems. The first part of the paper provides a succinct picture of the facts on the HHI index for over 300 UK industries at the 4-digit-level; given data constraints, these refer to producer concentration, ignoring imports and exports. We find that, on average, concentration rose steadily 1998-2011 and remained high thereafter, 2011-2018. About 30% of industries, defined at the 4-digit level, can be classified as “concentrated” or “highly concentrated” using traditional competition authority definitions. In the second part, we provide some indications of how this picture will likely change if we could recompute concentration indices at the more appropriate Anti-Trust Market level and incorporating information on trade competition and exports. High concentration is likely to be even more prevalent at the ATM level, but results might look very different for the sub-set of trade-intensive industries, if we could incorporate trade data into the concentration measures. In the third part, we turn to the major conceptual problem: how to measure competition avoiding the identification problems associated with concentration indices and incorporating a richer dynamic vision of competition as a process. Using an admittedly primitive measure (based on the persistence of leadership rankings within an industry), our early results suggest an increasing tendency for the largest firms to retain their leadership positions over this period. This points to reduced churn in market shares and weakening competition, especially as leadership persistence is found to be more pronounced in more concentrated industries.
May 19, 2022 | Permalink | Comments (0)
Wednesday, May 18, 2022
Bank Competition, Local Labor Markets, and the Racial Employment Gap
Bank Competition, Local Labor Markets, and the Racial Employment Gap
Abstract
This paper shows that a decrease in bank competition negatively affects local labor markets. Using bank mergers and anti-trust policy to obtain quasi-exogenous variation, I find that a 5% increase in county level bank concentration leads to a 6% decrease in small business lending, followed by a 0.4% drop in local employment and 1.4% decline in wages. These findings are stronger for areas with a larger fraction of black population. This race differential cannot be explained by differences in income or economic growth, but is consistent with theories predicting increase in lending discrimination following a drop in competitive pressures.
May 18, 2022 | Permalink | Comments (0)
Tuesday, May 17, 2022
How To Hide A Price-Fixing Conspiracy: Denial, Deception, and Destruction of Evidence
How To Hide A Price-Fixing Conspiracy: Denial, Deception, and Destruction of Evidence
Abstract
Price-fixing conspiracies overcharge consumers by billions of dollars every year. Although such collusion violates antitrust law, hundreds of price-fixing cartels continue to operate unimpeded because they successfully conceal their illegal collusion. Using examples from over 50 price-fixing conspiracies, this is the first scholarship to identify and catalog the various concealment measures that actual price fixers employ to hide their collusion.
When engaging in price fixing, respectable business executives use code names and encrypted messages; they register in hotels using aliases; they rendezvous secretly in seedy locations; they create fake trade associations; they hide or destroy incriminating documents; and they falsify their travel documents and expense reports. And if they are ever accused of collusion, they deny the charges and profess that they are reputable businesspeople who would never countenance illegal conduct. Then they tell false cover stories that they have coordinated in advance.
This Article explains how federal courts have unwittingly rewarded the various concealment methods commonly employed by price-fixing conspirators. For example, judges treat defendants’ documents as inherently accurate, even though price-fixing conspirators routinely fabricate exculpatory documents. Because they do not understand cartel concealment methods, many federal judges are too quick to dismiss price-fixing claims or grant summary judgment to price-fixing defendants. This Article analyzes dozens of cases, across most federal circuits, in which judges have been fooled by – or have failed to appreciate the significance of – cartel concealment methods.
The Article concludes by proposing changes to antitrust doctrine and antitrust enforcement that would better serve the twin goals of holding price-fixing conspirators accountable while protecting innocent firms against improper findings of antitrust liability. Such changes are warranted because the current judicial deference to price-fixing defendants undermines deterrence and thwarts the goal of compensating victims of illegal price fixing.
May 17, 2022 | Permalink | Comments (0)
Monday, May 16, 2022
Common Ownership, Executive Compensation, and Product Market Competition
Common Ownership, Executive Compensation, and Product Market Competition
Abstract
The negative effects of common ownership on competition have received significant attention, but many proposed mechanisms for institutional investor influence seem implausible. We develop and test an analytical model of optimal compensation in an oligopoly with common ownership, focusing on revenue-based pay as a plausible channel through which institutional investors might influence competition. Our model implies a negative effect of common ownership on firms' use of revenue-based pay. Using both associative analyses and an event study difference-in-differences design based on plausibly exogenous institutional mergers, we find that common ownership has zero (or a marginally positive) effect on the use of revenue-based pay. Results involving relative performance incentives are similar. Collectively, our results provide no support for the notion that cross-owning block-holders influence compensation contracts in order to soften executives' incentives to compete aggressively.
May 16, 2022 | Permalink | Comments (0)
Friday, May 13, 2022
Measuring Market Power: Macro and Micro Evidence from Italy
Measuring Market Power: Macro and Micro Evidence from Italy
Abstract
In this paper, we provide an assessment of the evolution of markups in Italy in the last twenty years. To this aim, we resort to both macro and micro data and estimation techniques, namely reduced forms accounting measures (price-cost margins) and production function model-based indicators. When using aggregate data, we adopt a comparative approach and analyse markup dynamics in the four main euro area countries, whereas the micro-level analysis is focused on Italy. According to our findings i) markups have shown flat/slightly decreasing dynamics in the last decades in the major EU countries, settling on average in level at 1.1; ii) aggregate dynamics hide substantial across sector and firms heterogeneity in markups patterns; iii) the micro-level analysis for Italy indicates the within-firms component as the most relevant in explaining markups behavior; iv) no top firms-driven dynamics emerge; v) our evidence conflicts with the results obtained in De Loecker and Eeckhout (2018) because the latter suffers of two main sources of bias: a strong sample selection, and the assumption of a common technology parameter across countries. Finally, we propose an encompassing measure of market power, summarizing the several indices investigated in a principal component framework. This synthetic indicator describes the markups evolution for the Italian economy and we confirm its effectiveness based on a set of validation variables.
May 13, 2022 | Permalink | Comments (0)
Competition and Co-Operation When Consumers' Sustainability Preferences Depend on Social Norms
Competition and Co-Operation When Consumers' Sustainability Preferences Depend on Social Norms
Abstract
We posit that consumers' preferences for more sustainable products depend on the perceived social norm, which in turn is shaped by average consumption in society. We explore the implications of such preferences for firms' incentives to introduce more sustainable products and to co-operate in order to either foster or forestall their introduction. Our main motivation lies in the increasing pressure put on antitrust authorities to exert more leniency towards horizontal agreements that are motivated by sustainability considerations.
May 13, 2022 | Permalink | Comments (0)
Thursday, May 12, 2022
Discriminatory Antitrust in the Realm of Potential and Nascent Competition
Discriminatory Antitrust in the Realm of Potential and Nascent Competition
Abstract
How should competition agencies and courts consider acquisitions by “big tech” (that is, Amazon, Apple, Google, Facebook, and Microsoft) of smaller, startup companies? There are several competing visions. On one end of the spectrum is the view that these companies have strong incentives to engage in anticompetitive acquisitions of nascent and potential competitors; consequently, agencies and courts should implement strong presumptions of harm. On the other end of the spectrum is the view that there is little reason to change current merger presumptions or to treat acquisitions by big tech companies differently than “medium tech” or “small tech” companies.
To inform the issue, this Article reviews a recent FTC report on acquisitions by the largest technology platforms. While the report is largely descriptive using aggregated data and, therefore, offers modest insights, there is little in the findings that raise alarms. As a point of contrast, the Article examines several recent acquisitions by Spotify, a technology company that sits outside of the “big tech” classification. Specifically, Spotify has expanded beyond its core music streaming business through a series of startup acquisitions—namely, into podcasts and audiobooks. Interestingly, these acquisitions have not raised concerns from agencies, practitioners, or academics. Consequently, if Spotify’s recent series of acquisitions can reasonably be considered procompetitive, then why is the same not true for Apple and Amazon, who are chasing Spotify in music streaming services and podcasts? Administering antitrust laws based on the mere identity or market capitalization of a company—rather than on specific market factors—is engaging in what could be called “discriminatory antitrust.”
May 12, 2022 | Permalink | Comments (0)
Wednesday, May 11, 2022
USC Global Competition Law Thought Leadership Conference, Friday, June 3rd, 2022 - Saturday, June 4th, 2022
USC Global Competition Law Thought Leadership Conference
Friday, June 3rd - Saturday, June 4th, 2022
University of Southern California, UPC
665 West Exposition Blvd.
Los Angeles, CA 90089
Please join us for our inaugural two-day USC Global Competition Law Thought Leadership Conference, with a particular focus on issues related to the state of play in Asia-Pacific and the US West Coast antitrust and competition issues.
In collaboration with our friends at Analysis Group, we have developed an impressive agenda, with several notable antitrust experts, including government officials, practitioners and academics.
To request an invitation/register for this program
Agenda
Friday, June 3, 2022
| 7:30 - 8:30 AM | |
|
Registration and Breakfast |
| 8:30 - 8:45 AM | |
|
Welcome and Opening Remarks by Co-Chairs
|
| 8:45 - 9:15 AM | |
|
Morning Keynote Address by Richard A. Powers, Deputy Assistant Attorney General, Department of Justice |
| 9:15 - 10:45 AM | |
|
Global Mergers: Where Do We Go From Here? (Session I)
|
| 10:45 - 11:15 AM | |
|
Coffee Break |
| 11:15 - 12:45 PM | |
|
Cartels (Session II)
|
| 12:45 - 2:00 PM | |
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Lunch and Afternoon Keynote Address by Andy Chen, Vice Chairperson, Taiwan Fair Trade Commission |
| 2:00 - 3:15 PM | |
|
The Current State and Future of Antitrust IP Issues (Session III)
|
| 3:15 - 3:45 PM | |
|
Coffee Break |
| 3:45 - 5:00 PM | |
|
Digital Platforms: Recent Antitrust Cases and Proposed/Enacted Legislation (Session IV)
|
| 5:00 - 5:30 PM | |
|
BREAK |
| 5:30 - 6:00 PM | |
|
Cocktail/Networking Reception |
| 6:00 PM | |
|
Dinner |
Saturday, June 4, 2022
| 7:30 - 8:30 AM | |
|
Registration and Breakfast |
| 8:30 - 9:45 AM | |
|
The Intersection of Antitrust Issues and Politics (Session V)
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| 9:45 - 11:00 AM | |
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Competition in the Media Space (Session VI)
|
| 11:30 AM | |
|
Optional Group Activity |
May 11, 2022 | Permalink | Comments (0)
Can the UK be start-up nation 2.0? Kings College Thu, 26 May 2022 12:30 – 14:00 BST
Can the UK be start-up nation 2.0?
Kings College
Thu, 26 May 2022 12:30 – 14:00 BST
About this event
This is a in person seminar that will discuss empirical research and policy options concerning the acquisition of start-ups in the digital and tech sector and the challenges and opportunities for the UK when looking at possible interventions in this area.
Chair:
- Professor Renato Nazzini, King’s College London
Speaker:
- Professor D. Daniel Sokol, Carolyn Craig Franklin Chair in Law, USC Gould School of Law
Discussants:
- Nicholas Levy, Partner, Clearly Gottlieb Steen & Hamilton LLP
- Nicole Kar, Partner, Linklaters
- Claire Jeffs, Partner, Slaughter and May
May 11, 2022 | Permalink | Comments (0)
The Role of Intent in Abuse of Dominance and Monopolization
The Role of Intent in Abuse of Dominance and Monopolization
Abstract
Under Section 2 of the Sherman Act and Article 102 TFEU, antitrust decision-makers use firms’ intent for evidentiary purposes, i.e., to understand if the conduct under their scrutiny is likely to harm competition. This practice raises two main concerns. First, one can question – as the international community has often done – if the analysis of firms’ intent may actually reveal the competitive impact of a given behaviour. Second, one may discuss – and this is the original contribution that the chapter offers – if and why antitrust decision-makers should ever be permitted to use firms’ intent to prove the occurrence of a conduct capable of harming competition under Section 2 and Article 102. The chapter answers these questions, while giving food for thought for future research.
May 11, 2022 | Permalink | Comments (0)
Tuesday, May 10, 2022
Prospective Welfare Analysis - Extending Willingness-to-Pay Assessment to Embrace Sustainability
Prospective Welfare Analysis - Extending Willingness-to-Pay Assessment to Embrace Sustainability
Abstract
In this paper, we outline how a future change in consumers' willingness-to-pay can be accounted for in a consumer welfare effects analysis in antitrust. Key to our solution is the prediction of preferences of new consumers and changing preferences of existing consumers in the future. The dimension of time is inextricably linked with that of sustainability. Taking into account the welfare of future cohorts of consumers, concerns for sustainability can therefore be integrated into the consumer welfare paradigm to a greater extent. As we argue in this paper, it is expedient to consider changes in consumers' willingness-to-pay, in particular if society undergoes profound changes in such preferences, for example, caused by an increase in generally available information on environmental effects of consumption, and a rising societal awareness about how consumption can have irreversible impacts on the environment. We offer suggestions on how to conceptionalize and operationalize the projection of such consumers' changing preferences in a "prospective welfare analysis." This increases the scope of the consumer welfare paradigm and can help to solve conceptual issues regarding the integration of sustainability into antitrust enforcement while keeping consumer surplus as a quantitative gauge.
May 10, 2022 | Permalink | Comments (0)
Monday, May 9, 2022
Fourteenth Annual Northwestern Conference on Antitrust Economics and Competition Policy: Call for Papers May 20, 2022
Fourteenth Annual Northwestern Conference on
Antitrust Economics and Competition Policy
Sponsored by Compass Lexecon
Call for Papers
Friday, September 16—Saturday, September 17, 2022
Submission Deadline: May 20, 2022
The Northwestern Center on Law, Business, and Economics at Northwestern Pritzker School of Law and the Center for the Study of Industrial Organization at Northwestern are issuing a call for original research papers to be presented in-person at the Fourteenth Annual Conference on Antitrust Economics and Competition Policy. This year’s conference will return to the in-person two-day event format and will run from approximately 9:00 AM (Central) on Friday, September 16, 2022 to 12:30 PM (Central) on Saturday, September 17, 2022.
We are delighted to announce that Compass Lexecon has agreed to provide the funding to support both this year’s conference. As always, conference organizers will be solely responsible for choosing papers and speakers.
The goal of this conference is to provide a forum where leading scholars from across the world can gather together with Northwestern’s own distinguished faculty to present and discuss high quality research relevant to antitrust economics and competition policy. Both theoretical and empirical submissions are welcome. Papers in industrial organization or applied microeconomic theory that address issues relevant to antitrust policy are welcome even if they do not directly focus on particular antitrust policy issues or institutions. While papers on all topics are welcome, we especially encourage submissions related to the following topic areas:
- digital platforms and competition policy
- privacy, data security, and competition policy
- innovation and competition policy
- vertical mergers/integration
- vertical contracting, foreclosure/exclusion
- the effectiveness of behavioral remedies
- buyer power and monopsony power
- EU platform regulation
We hope to involve leading thinkers from the government, non-profit, and private sector, as well as leading academics from economics departments, business schools, law schools and public policy schools. While most of the conference will be devoted to presentation and discussion of original academic research, we also expect to schedule a small number of panels on important current topics or policy issues.
If you have questions about the appropriateness of your topic for the conference, or suggestions for panel subjects, please contact Professor William Rogerson, Professor of Economics and CLBE Research Director on Competition, Antitrust and Regulation at wrogerson@northwestern.edu.
Papers prepared for the Fourteenth Annual Conference on Antitrust Economics and Competition Policy will be permanently hosted on the Center on Law, Business, and Economics website as part of our Working Papers Series: http://www.law.northwestern.edu/research-faculty/clbe/workingpapers/.
Authors will be free to publish their work in other venues.
RESEARCH PROPOSALS: SUBMISSION, REVIEW PROCEDURE AND TIMELINE
Research Proposals should include an abstract (300 words maximum) and c.v.
Proposal Submission Deadline: Research Proposals should be submitted to clbe@law.northwestern.edu by close of business on May 20, 2022.
Notification Deadline: Research Proposals will be reviewed by a committee. Authors will be notified of the committee’s decisions on or around June 15, 2022.
May 9, 2022 | Permalink | Comments (0)
GDPR and the Lost Generation of Innovative Apps
Using data on 4.1 million apps at the Google Play Store from 2016 to 2019, we document that GDPR induced the exit of about a third of available apps; and in the quarters following implementation, entry of new apps fell by half. We estimate a structural model of demand and entry in the app market. Comparing long-run equilibria with and without GDPR, we find that GDPR reduces consumer surplus and aggregate app usage by about a third. Whatever the privacy benefits of GDPR, they come at substantial costs in foregone innovation.
May 9, 2022 | Permalink | Comments (0)
Anti-Collusion Leniency Programs and the Pricing of IPOs: International Evidence
Anti-Collusion Leniency Programs and the Pricing of IPOs: International Evidence
Abstract
We provide evidence that anti-collusion leniency legislations around the world reduce IPO underpricing. The effect is amplified (mitigated) among IPOs with more prominent agency concerns (lower level of information asymmetry) and is mitigated in countries with stringent financial reporting regulations and strong external governance mechanisms. Following the passage of the legislations, IPOs have higher float, manifest a stronger link between proceeds raised and post-IPO operating performance, and are more likely to disclose the use of proceeds and to be oversubscribed. Our results are consistent with the view that leniency legislations mitigate informational and agency-related frictions, resulting in less underpriced IPOs.
May 9, 2022 | Permalink | Comments (0)
Friday, May 6, 2022
The Role of Competition Law in Regulating Data in China's Digital Economy
The Role of Competition Law in Regulating Data in China's Digital Economy
Abstract
As the digital economy has grown and data has become a more valuable and critical resource, the collection, use, and sharing of data by companies have come under increasingly intense regulatory scrutiny. The relevance and appropriateness of antitrust and competition laws to deal with data, particularly in the context of the digital economy, are being examined and considered by antitrust and competition regulators and governments around the world. Similar discussions and issues are also becoming prominent in China. Not only has China been developing an increasingly sophisticated legal regime to regulate and enable the state to exercise control over data, it has also clearly tightened and increased regulatory scrutiny and control over Internet and technology companies. In particular, competition law has played a conspicuous role in China’s regulatory campaign to clamp down on the Internet and technology sector.
This article examines whether and how China’s competition laws might apply to regulate the data and data practices of Internet and technology companies. It does so by undertaking a political economy and contextual exploration of China’s data regulatory environment and its relationship and interaction with China’s competition laws. The nature of China’s political economy, as well as of its competition laws, means that a variety of interests, goals, and priorities – which might encompass concerns that other jurisdictions might regard as being beyond the purview of competition law – are considered and balanced in the enforcement of competition law, under the macroeconomic supervision and guidance of the state.
May 6, 2022 | Permalink | Comments (0)
