Wednesday, September 28, 2005
Several merchant associations filed an antitrust suit against Visa and Mastercard as well as several major banks challenging the system intercharge fees. The suit alleges that the fees are set at supercompetitive levels and are the result of collusions among the banks and the credit card companies.
Neelie Kroes, the new EU competition commissioner, announced earlier this week that she proposes to move EU merger analysis towards the US model with a more careful analysisof efficiencies and effects on consumers. The Wall Street Journal of September 26, 2005 (article by Adam Cohen and Mary Jacoby) quotes:
"I like aggressive competition, including by dominant companies," Ms. Kroes told the conference, in remarks intended to signal the EU's evolution and her own views. "I don't care if it may hurt competitors, as long as it ultimately benefits consumers."
Thursday, September 22, 2005
Overruling a finding of patent misuse by an ITC administrative law judge, the Federal Circuit upheld a patent pool arrangement involving Philips' CD-R and CD-RW technologies. More information can be found at Dennis Crouch's blog. The Fed Circuit's opinion discusses the limitations on patent misuse under 271(d), referring specifically to its Independent Ink decision last term (currently under review before the Supreme Court). In citing Independent Ink, the Fed Circuit reasoned that the presumption of market power in antitrust tying arrangement that arose from patent ownership did not extend to patent misuse. The Fed Circuit, furthermore, agreed with Philip's argument that it had not licensed "non-essential technologies" under its licensing scheme and held that the ALJ's reliance on the block booking cases (Loew's and Paramount) was not appropriate. Unlike Loew's and Paramount, Philips was not holding its licensees to an all or nothing offer. This case is one of the most important patent pooling cases in recent years.
Tuesday, September 20, 2005
Friday, September 16, 2005
Paul Caron passed on this link to a review of The Abolition of Antitrust, by gary Hull, apparently someone with a deep commitment to the Objectivist philosophy of Ayn Rand. The arguments in the book seem provocative, although a bit tried and worn. Interestingly, the criticisms of antitrust in the volume are based in philosophy rather than economics, which perhaps explains why the articles seem less than convincing. Post-Chicago School theories or advocates of democratic theory would, I think, be the appropriate response to the arguments in this volume.
Joshua Claybourn posted the following query on the Indiana Barrister:
"[M]ore than 10 years ago the two major newspapers began a formal sharing in which each would send the other their next day's front pages. The sharing allegedly began as a courtesy between Post Executive Editor Leonard Downie Jr. and former Times Executive Editor Joseph Lelyveld. The sharing between the famous competitors raises an interesting legal question that no one has appeared to ask yet - is this agreement a violation of antitrust laws?"
Without knowing more, my intitial reaction is that sharing stories in this fashion would not violate the antitrust laws. It is not clear how this activity, as described, would have adversely affected competition and market price. My guess is that the practice was a way of assuring some degree of diversity in news reporting and to ensure that one paper did not look too much like the other. Any thoughts on possible antitrust violations?
Tuesday, September 6, 2005
A suit filed in New York on August 11, 2005, by consumers against several banks issuing credit cards alleges that the institutions engaged in collusive activity by requiring customers to engage in mandatory arbitration in lieu of remedies in court. Since many consumer complaints stem from excessive fees and interest rates, the mandatory arbitration clause facilitates the ability of the banks to set fees and engage in other price fixing behavior.
Hanno Kaiser posts an important argument that merger analysis needs to consider the effects of non-price competition as well as price competition. Specifically, merger analysis needs to consider the effect of product repositioning by both the merged and non-merged firms on consumer welfare.
Benjamin Klein of UCLA and Joshua Wright of George Mason have posted an interesting article on SSRN analyzing the economics of slotting allowances. The conclude that "these arrangements are a consequence of the normal competitive process when shelf space primarily promotes incremental manufacturer sales rather than shifts sales between retailers."