Antitrust & Competition Policy Blog

Patent Pools, RAND Commitments, and the Problematics of Price Discrimination

Posted by D. Daniel Sokol

Daniel Crane of Cardozo Law School offers insightful analysis in Patent Pools, RAND Commitments, and the Problematics of Price Discrimination.

ABSTRACT: This is a book chapter forthcoming in Working Within the Boundaries of Intellectual Property Law (Harry First, Rochelle Dreyfuss, and Diane Zimmerman, eds., Oxford University Press), which will collect papers from the NYU Engelberg Center's 2007 conference at La Pietra, Florence. The paper highlights the complexities and potential abuses that arise when patent pools are used to implement standards created by standard setting organizations (SSOs). It summarizes the antitrust fixes that have been proposed by the patentees and generally approved by the antitrust agencies. The paper then explores the meaning of the chief antitrust fix - the patentees' commitment to license their patents on reasonable and nondiscriminatory (RAND) terms. The paper concludes by arguing that at least three conditions must be satisified for RAND commitments to be effective fixes: (1) understanding the RAND commitment as a contract enforceable by third parties; (2) placing the burden of justifying the proferred licensing terms on the patent pool; and (3) allowing for meaningful judicial review of licensing decisions by private arbitrators.

A Practical Application of Event Studies in Merger Assessment: Successes and Failures

Posted by D. Daniel Sokol

Ioannis Kokkoris of the OFT and City University weighs in on A Practical Application of Event Studies in Merger Assessment: Successes and Failures.

ABSTRACT:  The stock market‘s reaction to news can be a particularly valuable source of information that may lead to inferences about the nature of a merger or a take-over. The idea underlying event studies is that the reaction of share prices - which reflect expectations about a firm‘s stream of future profits - will allow alternative hypotheses as to the consequences of a merger to be tested. By examining who gains and loses when mergers or merger challenges are announced, different hypotheses can be tested regarding expectations about market power or efficiency. Conducting an event study analysis for the merging parties as well as for rival firms, by comparing their actual stock price returns around the announcement date with a counterfactual measure of what the return would have been had the merger not taken place, would provide useful insights of the likely expectation of the market of the profitability in the post-merger market. This article will analyse the usefulness and efficiency of event studies for mergers and present a tractable way of implementing such analysis. It will include examples of efficient implementation of event studies, as well as, cases where the event study led to less satisfactory results.

The Role of Economic Evidence in Merger Control in Ireland: Current and Future Practice

Posted by D. Daniel Sokol

A new article on The Role of Economic Evidence in Merger Control in Ireland: Current and Future Practice by Brendan O'Connor, Commission for Aviation Regulation; Cormac Keating, The Competition Authority; and Paul K. Gorecki, Competition Authority, Dublin provides us an overview of developments in the Celtic Tiger.

ABSTRACT: Having reviewed some 311 cases notified to the Irish Competition Authority during 2003-2006 this paper examines economic evidence and how it relates to factual and opinion evidence in testing for SLC. The analysis focuses on the use of economic evidence in the assessment of horizontal mergers with unilateral effects and sets out a framework for the application of economic evidence. The authors note that economic evidence was only relied on in a minority of cases, and never in isolation from factual and/or opinion evidence. Having reflected on some of the economic techniques used in Irish merger cases the authors conclude that there may be no more than a limited role for merger simulation models and analysed why, despite an extensive literature on their relevance to merger review, efficiencies have played only a minor role in merger notifications and have not been supported by quantitative evidence. Finally the authors discuss the incentives the underlie competitor and customer opinion evidence and how biases in opinion evidence can be controlled for.

An International Competition Fund For the Developing World?

Posted by D. Daniel Sokol

CUTS is floating an interesting proposal to fund developing world competition agencies through a fund made up of money from fines for developing world cartel overcharges.  See their policy report below.

Download INCSOC_briefing_IntCompFund.pdf 

Thirty Years of Solitude: Antitrust Law and Physican Cartels

Posted by D. Daniel Sokol

Tim Greaney of St. Louis University Law School has an interesting essay on Thirty Years of Solitude: Antitrust Law and Physican Cartels.

ABSTRACT: For over thirty years the United States Department of Justice and Federal Trade Commission (“Agencies”) have confronted bands of businessmen who have steadfastly refused to pay attention to legal precedent, repeated governmental pronouncements, and administrative sanctions imposed on their colleagues. The conduct revealed in these cases evidences a willingness to blatantly disregard the law by repeatedly undertaking arrangements already deemed illegal by the enforcers or by concocting schemes that raise untested but dubious justifications. Who are these lawbreakers? Organized criminals? Internet spam artists? Boiler-room operators? No, these cases involve physicians, some grouped in associations numbering in the thousands and almost always proceeding with the advice of business consultants and counsel. The conduct challenged by the government involves the formation of loosely-structured organizations, ranging from Independent Practice Associations to Preferred Provider Organizations (PPO) to other kinds of loose “networks” that collectively bargain with employers or managed care organizations for provider contracts.

The puzzle explored in this essay is why the government’s deployment of extensive resources has not curtailed physician attempts to engage in collective bargaining and other attempts to restrain price competition. It first analyzes the hypothesis that overly cautious government enforcement policies created a mismatch between penalties and rewards that invited abuse. While finding merit in this explanation, the essay offers a more nuanced account. It suggests that a convergence of factors including doctrinal shortcomings, political pressures, and institutional constraints may have deterred the Agencies from seeking stronger remedies and emboldened parties who questioned the role of competition in health markets generally. A related claim of this essay is that the Agencies may have inadvertently precipitated some of this conduct by the regulatory efforts they have undertaken. Finally, the essay offers some lessons learned from the FTC’s recent North Texas Specialty Physicians case.

Download final_greaney_pdf.pdf

Competition Policy And Merger Analysis In Deregulated And Newly Competitive Industries

Posted by D. Daniel Sokol

A forthcoming edited book by Peter Carstensen (University of Wisconsin Law) and Susan Beth Farmer (Pennsylvania State Law) provides insights on Competition Policy And Merger Analysis In Deregulated And Newly Competitive Industries.

Contents:

1. Introduction and Overview
Peter C. Carstensen and Susan Beth Farmer

2. Mergers in the US Electric Power Industry      
Richard J. Pierce

3. Natural Gas Pipelines: Can Merger Enforcement Preserve the Gains from Restructuring?
Diana L. Moss

4. Telecommunications Mergers      
Jim Chen

5.  Merger Analysis in the Post-Staggers Railroad Industry 
Curtis M. Grimm

6. Airline Mergers – Second Best Results in a Change Environment   
Peter C. Carstensen

7. Hospital Mergers   
Thomas L. Greaney

8. Mergers and Competition Policy in the Banking Industry   
Bernard Shull

9. The European Experience with Merger and Deregulation    
Susan Beth Farmer

10. Reflections on Mergers and Competition in Formerly Regulated Industries
Peter C. Carstensen

Pass-Through in Retail and Wholesale

Posted by D. Daniel Sokol

Emi Nakamura of Columbia's Economics Department addresses Pass-Through in Retail and Wholesale in her latest working paper.

ABSTRACT: This paper studies how prices comove across products, firms and locations to gauge the relative importance of retailer versus manufacturer-level shocks in determining prices. I make use of a large panel data set on prices for a cross-section of retailers in the U.S. I analyze prices at the barcode or "Universal Product Code'' (UPC) level for individual stores. I find that only 16% of the variation in prices is common across stores selling an identical product. 65% of the price variation is common to stores within a particular retail chain (but not across retail chains), while 17% is completely idiosyncratic to the store and product. Product categories with frequent temporary "sales'' exhibit a disproportionate amount of completely idiosyncratic price variation. My results suggest that most of the observed price variation arises from retail-level rather than manufacturer-level demand and supply shocks. However, the behavior of prices is difficult to relate to observed variation in costs and demand at the retail level. This suggests that retail prices may vary largely as a consequence of dynamic pricing strategies on the part of retailers or manufacturers, rather than static demand and supply shocks.

The Great Global Vitamins Conspiracy: Sanctions and Deterrence

Posted by D. Daniel Sokol

John Connor, the empiricist who has done more than any other academic to explain international cartels tells a compelling story about The Great Global Vitamins Conspiracy: Sanctions and Deterrence.

ABSTRACT: When they were discovered in 1999, the 16 vitamins cartels were probably the largest, most harmful, and harshest sanctioned international cartels of the late 20th century. Still today, the vitamins cartels are cited by antitrust authorities as the outstanding example of an enforcement action likely to deter cartel formation; this episode is also often mentioned by other legal experts as an egregious example of cartels subject to supra-optimal penalties.

This paper summarizes the structural conditions and price effects of the global vitamins conspiracy and analyzes the deterrence power of world-wide monetary penalties paid by the corporate members of these cartels.1 The paper concludes that only in North America did monetary antitrust penalties exceed the monopoly profits of the vitamins cartel, principally because of huge private settlements. Penalties in the EU were a small percentage of European overcharges, and penalties in the rest of the world were negligible. On a global basis, deterrence was sup-optimal for three major reasons: low penalties outside North America, delays in the collection of fines and private settlements (i.e., the absence of court-awarded prejudgement interest), and the low probability of discovery of hidden cartels.

Bargaining in the Shadow of the European Microsoft Decision: The Microsoft-Samba Protocol License

Posted by D. Daniel Sokol

My colleague William H. Page (University of Florida) and University of Florida law school student Seldon J. Childers have collaborated on Bargaining in the Shadow of the European Microsoft Decision: The Microsoft-Samba Protocol License.

ABSTRACT: In 2004, the European Commission held that Microsoft had abused its dominant position under Article 82 of the European Treaty by, among other actions, refusing Sun Microsystems' request for information Sun needed to interoperate with Windows workgroup server products. The EC ordered Microsoft to disclose complete and accurate specifications for the protocols used by Windows work group servers in order to provide file, print, and group and user administration services to Windows work group networks. In September 2007, the European Court of First Instance affirmed the EC's liability ruling and its remedial order. Last December, with the active encouragement of the EC, Microsoft reached a licensing agreement for the covered protocols with Samba, an open-source development project that produces server software that emulates the behavior of Microsoft's server operating systems. The Microsoft-Samba license agreement is by far the most important tangible outcome of the European Microsoft case. The EC's other remedial order in the case, which required Microsoft to create a version of Windows without Windows Media Player, was an embarrassing failure. The Samba agreement, however, is both significant and perilous for global antitrust policy. It provides critical protocols and documentation to Microsoft's most important rival in the server market, a rival, moreover, whose development methods are focused on the analysis of those very protocols. Samba is thus more likely to put the disclosures to effective competitive use than any other licensee. It is also possible that Microsoft will derive technical and competitive benefits from the interaction with the Samba team. The long-run peril is that the disclosures will go beyond the specifications that the CFI contemplated, and will allow Samba to clone Microsoft's proprietary algorithms. That result, although reducing prices in the short run, would inhibit dynamic competition by undermining the incentives of leading firms to innovate. 

Kudos to Spencer Waller

Posted by Shubha Ghosh

I just came back from Chicago where I attended Professor Spencer Waller's eighth antitrust colloquium.  The conference was stimulating and the discussion lively, with a wide range of viewpoints, both academic and practitioner being represented.   The day began with a presentation by Professor Maurice Stucke of The University of Tennessee Law School on the implications of Trinko and the hierarchy of enforcement by the antitrust agencies with cartels at the top, section 2 claims at the bottom, and mergers in the middle.  Professor Stucke challenged this hierarchy, raising questions about the normative view of competition that underlies antitrust law and the harmful consequences that can arise from monopolization.   Donald Baker's paper on the divergence between antitrust enforcement in the US and the EU continued the lively discussion in the late morning, particularly with Mr. Baker's arguments that the divergence had its roots in institutional and procedural differences on either side of the Atlantic.  Commentators pointed out divergence within the EU itself, particularly between the UK and the Continent.  The afternoon was rounded off with Professor Tim Greaney (of St Louis Univeristy Law School) presenting on antitrust after managed care and Professor Robert Lande (of The University of Baltimore Law School) presenting empirical work on the benefits of private antitrust enforcement.   Professor Greaney's talk underscored the difficulties of applying traditional antitrust analysis to the imperfect markets for the allocation and provision of health care services.  Professor Lande reported that the sizable awards in private antitrust litigation (both in terms of final judgments and settlements) provided an important deterrence function.

Congratulations to Professor Waller and the staff and fellows of the Institute.  All are encouraged to be on the look out for next year's conference and to submit papers and attend.

Economics Of Antitrust Law

Posted by D. Daniel Sokol

An excellent edited book of two volumes will hit book stands in June 2008, titled Economics Of Antitrust Law, which is edited by Benjamin Klein (UCLA) and Andres V. Lerner (LECG).

Contents:

Volume I

Acknowledgements

Introduction The Role of Economics in the Development of Antitrust Law Benjamin Klein and Andres V. Lerner

PART I MARKET POWER   
1. Harold Demsetz (1973), ‘Industry Structure, Market Rivalry, and Public Policy’
2. William M. Landes and Richard A. Posner (1981), ‘Market Power in Antitrust Cases’
3. Franklin M. Fisher and John J. McGowan (1983), ‘On the Misuse of Accounting Rates of Return to Infer Monopoly Profits’
4. Thomas G. Krattenmaker, Robert H. Lande and Steven C. Salop (1987), ‘Monopoly Power and Market Power in Antitrust Law’
5. Jonathan B. Baker and Timothy F. Bresnahan (1992), ‘Empirical Methods of Identifying and Measuring Market Power’
6. Benjamin Klein (1993), ‘Market Power in Antitrust: Economic Analysis after Kodak’

PART II HORIZONTAL ARRANGEMENTS   
A Oligopoly and Collusion
7. George J. Stigler (1964), ‘A Theory of Oligopoly’
8. Donald F. Turner (1962), ‘The Definition of Agreement under the Sherman Act: Conscious Parallelism and Refusals to Deal’
9. Richard A. Posner (1969), ‘Oligopoly and the Antitrust Laws: A Suggested Approach’
10. Franklin M. Fisher (1989), ‘Games Economists Play: A Noncooperative View’
11. Jonathan B. Baker (1993), ‘Two Sherman Act Section 1 Dilemmas: Parallel Pricing, the Oligopoly Problem, and Contemporary Economic Theory’

B Horizontal Mergers and Joint Ventures
12. Oliver E. Williamson (1968), ‘Economies as an Antitrust Defense: The Welfare Tradeoffs’
13. Janusz Ordover and Robert D. Willig (1983), ‘The 1982 Department of Justice Merger Guidelines: An Economic Assessment’
14. Joseph Farrell and Carl Shapiro (1990), ‘Horizontal Mergers: An Equilibrium Analysis’
15. Jonathan B. Baker (2002), ‘Mavericks, Mergers, and Exclusion: Proving Coordinated Competitive Effects Under the Antitrust Laws’
16. Thomas M. Jorde and David J. Teece (1990), ‘Innovation and Cooperation: Implications for Competition and Antitrust’
17. Carl Shapiro and Robert D. Willig (1990), ‘On the Antitrust Treatment of Production Joint Ventures’

Name Index

Volume II

Acknowledgements

Introduction The Role of Economics in the Development of Antitrust Law Benjamin Klein and Andres V. Lerner

PART I VERTICAL ARRANGEMENTS
1. Aaron Director and Edward H. Levi (1956), ‘Law and the Future: Trade Regulation’
2. Frank H. Easterbrook (1984), ‘The Limits of Antitrust’

A Tying and Bundling
3. Ward S. Bowman, Jr. (1957), ‘Tying Arrangements and the Leverage Problem’
4. George J. Stigler (1963), ‘United States v. Loew’s Inc.: A Note of Block-Booking’
5. William James Adams and Janet L. Yellen (1976), ‘Commodity Bundling and the Burden of Monopoly’
6. Benjamin Klein and Lester F. Saft (1985), ‘The Law and Economics of Franchise Tying Contracts’
7. Michael D. Whinston (1990), ‘Tying, Foreclosure, and Exclusion’
8. Dennis W. Carlton and Michael Waldman (2002), ‘The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries’
9. Barry Nalebuff (2004), ‘Bundling as an Entry Barrier’

B Resale Price Maintenance and Exclusive Territories
10. Lester G. Telser (1960), ‘Why Should Manufacturers Want Fair Trade?’
11. Benjamin Klein and Kevin M. Murphy (1988), ‘Vertical Restraints as Contract Enforcement Mechanisms’
12. Pauline M. Ippolito (1991), ‘Resale Price Maintenance: Empirical Evidence From Litigation’

C Exclusive Dealing
13. Howard P. Marvel (1982), ‘Exclusive Dealing’
14. Philippe Aghion and Patrick Bolton (1987), ‘Contracts as a Barrier to Entry’
15. Eric Rasmusen, J. Mark Ramseyer and John S. Wiley, Jr. (1991), ‘Naked Exclusion’
16. Benjamin Klein and Andres Lerner (2007), ‘The Expanded Economics of Free-Riding: How Exclusive Dealing Prevents Free-Riding and Creates Undivided Loyalty’

PART II UNILATERAL EXCLUSIONARY BEHAVIOR
A Predatory Pricing
17. John S. McGee (1958), ‘Predatory Price Cutting: The Standard Oil (N.J.) Case’
18. Phillip Areeda and Donald F. Turner (1975), ‘Predatory Pricing and Related Practices under Section 2 of the Sherman Act’
19. Janusz A. Ordover and Robert D. Willig (1981), ‘An Economic Definition of Predation: Pricing and Product Innovation’

B Raising Rivals’ Costs
20. Thomas G. Krattenmaker and Steven C. Salop (1986), ‘Anticompetitive Exclusion: Raising Rivals’ Costs to Achieve Power Over Price’
21. Elizabeth Granitz and Benjamin Klein (1996), ‘Monopolization by “Raising Rivals’ Costs”: The Standard Oil Case’

Competition and Market Concentration

Posted by D. Daniel Sokol

Nazmi Sari of the University of Saskatchewan - Department of Economics writes on Competition and Market Concentration with a health care bent.

ABSTRACT:  Hospital markets have become highly concentrated due to increasing numbers of mergers and acquisitions. These consolidations in hospital markets may have anticompetitive or procompetitive effects due to increasing market power, economies of scale and scope and quality consequences. In this chapter, market competition and concentration and their antitrust implications in hospital markets are examined. After a brief summary of recent changes in hospital markets, the chapter focuses on the relevant economics literature on price, cost and quality consequences of market concentration, and their implications and connections with the merger guidelines and antitrust policies.

Revised British Merger Guidlines

Posted by D. Daniel Sokol

The UK Competition Commission and Office of Fair Traiding are working on revised joint merger guidelines.  The press release is here.

Appropriate Antitrust Policy Towards Single-Firm Conduct

Posted by D. Daniel Sokol

A must read paper is Appropriate Antitrust Policy Towards Single-Firm Conduct by Dennis W. Carlton (University of Chicago Graduate School of Business) and Ken Heyer (DOJ).

ABSTRACT: In this article we distinguish between two types of single-firm conduct. The first, which we call "extraction," is conduct engaged in by the firm to capture surplus from what the firm has itself created independent of the conduct's effect on rivals. The second, which we call "extension," is single firm conduct that increases the firm's profit by weakening or eliminating the competitive constraints provided by products of rivals. We propose as a fundamental antitrust policy towards single-firm conduct the following: Conduct merely to extract surplus the firm has created independent of the conduct's effect on rivals should be permitted. Conversely, conduct that extends the firm's market power by impairing the competitive constraints imposed by rivals presents a legitimate cause for concern.

We subscribe strongly to the view that an essential element of appropriate antitrust policy is to allow a firm to capture as much of the surplus that, by its own investment, innovation, industry or foresight, the firm has itself brought into existence. We believe that alternative approaches to single-firm conduct, including in particular ones aiming to enhance static efficiency at the possible cost of dynamic efficiency and ones seeking to maximize overall welfare through more targeted intervention on a case-by-case basis (not to mention the use of competition policy to protect competitors rather than consumers) threaten seriously to impede economic growth and welfare over time.

A policy that goes further, and which permits all unilateral conduct regardless of competitive effects (perhaps on grounds that "even more profit will generate even more innovation") is considered below and rejected as overly lenient, inconsistent with widely accepted presumptions in favor of inter-firm competition, and unwise, at least under the current state of economic knowledge. But we note that this conclusion is one based on our current economic knowledge and should remain a topic of ongoing research. It requires an empirical assessment of the gains from motivating more competition ex ante versus the subsequent loss of competition ex post. 

Vertical Restraints in Competition Law Conference

Posted by D. Daniel Sokol

University College London and Collège européen de Paris - Université Paris-II Panthéon Assas co-host Vertical Restraints in Competition Law.

The conference will be held on Friday May 23, 2008.

PROGRAMME

8h30 Registration
9h00 Introduction: Professor Louis Vogel President, University of Paris II
Sandy Shandro Dean, Faculty of Laws, UCL

9h20 First Roundtable: The vertical/horizontal dichotomy and the boundaries of Article 81 EC
Chair: President Daniel Tricot Honorary president of the commercial, financial and economic chamber of the Cour de Cassation
Speakers: Professor Catherine Prieto University of Paul Cezanne Aix-Marseille, CERIC
Dr. Ioannis Lianos Faculty of Laws, University College London, Centre for Law & Governance in Europe
Commentators: Chantal Momège Ashurst, Paris
Luc Gyselen Arnold & Porter, Brussels

11h00 Coffee/Tea Break

11h30 Second Roundtable: Vertical restraints, parallel imports and the objective of market integration
Chair: Professor Robert Kovar University of Strasbourg
Speakers: Professor Patrick Rey IDEI, University of Toulouse
Thierry Dahan French Competition Council
Commentators: Dr. José Luis Buendia Garrigues, Brussels
Dr. Assimakis Komninos White & Case, Brussels

13h00 Lunch

14h00 Third Roundtable: The law and economics of resale price maintenance: a comparative perspective
Chair: Dr. Philippe Nasse Vice-chairman, French Competition Council
Speakers: Professor Eleanor Fox New York University School of Law
Luc Peeperkorn DG Competition, European Commission
Professor Anne Perrot Vice-chairman, French Competition Council
Commentator: Dr. Jérôme Philippe Freshfields, Bruckhaus, Derringer, Paris

15h30 Coffee/Tea Break

16h00 Fourth Roundtable: Anticompetitive foreclosure and the coherence of competition policy towards vertical restraints
Chair: Frederic Jenny, President of the OECD Competition Committee, French Supreme Court
Speakers: Dr. Kay Parplies DG Competition, European Commission
Luc Gyselen Arnold & Porter, Brussels
Commentators: Dr. David Sevy LECG, Paris
Prof. John Kallaugher Faculty of Laws, University College London; Latham & Watkins LLP, London
Dr. Jérôme Philippe Freshfields, Bruckhaus, Derringer, Paris

18h00 Conclusion Prof. Laurence Idot University of Paris II, Concurrences

18h30 Conference End

IPR on Information and Market Power: Comparing the European and American Protections of Databases

Posted by D. Daniel Sokol

Estelle Derclaye  of the University of Nottingham School of Law has a new working paper on IPR on Information and Market Power: Comparing the European and American Protections of Databases.

ABSTRACT:  When the database sui generis right (database right) was enacted in 1996, many voices rose to criticise it vehemently. According to some, it would create an unprecedented intellectual property right on information, the latter being traditionally otherwise free, that would lead to monopolies on raw information and give considerable market power to database producers. The recent report issued by the European Commission 10 years later on the status of the database industry in Europe and the United States apparently confirms this thesis as the American database sector is thriving without a similar intellectual property right whilst the European database sector is receding. This would suggest that the situation in the U.S. is ideal, that is, it adequately protects database producers whilst safeguarding consumers' interests. This paper seeks to discover whether these assertions and the Commission report's conclusions actually reflect the reality. If they do, the database right should be abolished and neither the U.S. nor any country should adopt a similar right.

To determine whether the database right and alternative American protections actually grant market power to database producers, market power must first be defined (Section 1). Then the situation in Europe can be examined. The database right is scrutinised first (Section 2.1). Thereafter, additional protections that can be used to reinforce the protection of the database right are examined (Section 2.2). A conclusion as to the strength of the right, alone and in combination with other protections, can then be drawn. The situation in the U.S. is then contrasted. As there is still no database right or equivalent intellectual property right there, the main other types of protection which can be used to protect databases are reviewed. This includes misappropriation, contracts and technological measures (Section 3.1). Additional protections are then reviewed (Section 3.2.). The section concludes with whether or not the protections, alone and in combination, grant market power to database producers. The paper's conclusion draws lessons from this analysis as to what should be the adequate legal protection of databases and suggests remedies to the current over- and under-protection of databases in Europe and the U.S.   

Call For Papers - Deterrance in Competition Policy

Posted by D. Daniel Sokol

Call For Papers

Wissenschaftszentrum Berlin (WZB)
Reichpietschufer 50
D-10785 Berlin
Germany
Room A300             

Contact:             Jo Seldeslachts
Conference email: [email protected]

The WZB will stage its 15th conference on Markets and Politics on October 17-18, 2008, in Berlin. This will be held in conjunction with the 2nd conference of the Research Network on Innovation and Competition Policy (RNIC). During this conference, we intend to provide a forum for international researchers, practitioners and network members to present and discuss work concerning deterrence effects in competition policy. The objective is to organize a small-scale event that promotes interaction and discussion. Participation will mainly be by invitation.

Deterrence is a crucial aspect of competition policy, traditionally in the area of cartels and price fixing, but also in the area of merger policy. Although its main elements – detection and punishment – are well-known, an evaluation of the deterrence impact remains problematic. The major problem is its measurability, as it is difficult to assess how laws, court decisions and authority actions influence anti-competitive behavior by firms. This conference intends to enhance our understanding of deterrence in the area of competition policy, by discussing new methodological approaches for measurement. Furthermore, we also aim to consider both empirically and theoretically how new developments in competition policy may influence deterrence (e.g. the introduction of private litigation). Finally, deterrence, by changing firms’ behavior, then also has an impact on resulting market structures and economic growth; these themes will be dealt with as well. Some of the issues we are interested in include:

• The development of new empirical approaches
• Do mistakes from authorities or uncertain environments influence deterrence?
• Does over deterrence exist The deterrence impact of plea bargaining on cartels
• The deterrence impact of bargaining over remedies on mergers
• Policing actual merger cases versus deterring future mergers Does private litigation increase cartel deterrence?
• Ex ante versus ex post deterrence
• The importance of precedents and court decisions in deterrence
• The deterrence impact on merger behavior and ultimately market structure and growth

The Protection of the Right to Private Life, Home and Correspondence v the Efficient Enforcement of Competition Law: Is a New EC Competition Court the Way Forward?

Posted by D. Daniel Sokol

Michele Messina, University of London - Department of Mathematics, University of Rome- La Sapienza, University of Messina - Institute of Legal Sciences offers an intriguing proposal to change the institutional design of EC competition law in her article The Protection of the Right to Private Life, Home and Correspondence v the Efficient Enforcement of Competition Law: Is a New EC Competition Court the Way Forward?

ABSTRACT: The scope of the present paper is to analyse one possible alternative reason for the desirability, if at all, of an EU Judicial Panel on Competition Law matters, concerning in particular a higher degree of compliance with the European Convention on Human Rights (ECHR) and the jurisprudence of the European Court of Human Rights (ECtHR), while possibly guaranteeing a more efficient EC competition law enforcement system against "hard-core" infringements, such as cartels. Particular attention is focussed on whether the power of inspection, ex Article 20(4) of Regulation 1/2003, is compatible with Article 8 ECHR. The broad power of investigation of the Commission may not allegedly meet the third criterion provided in Article 8(2) ECHR, according to which the interference has to be "necessary in a democratic society". Considering that this criterion has been interpreted by the ECtHR as referring to the existence of adequate and effective safeguards against the abuse of this power, it might not be enough for the Commission to rely on an ex post judicial review of a decision ex Article 20(4) Reg. 1/2003 by the Community Courts, as it is not pre-emptive and has not suspensory effects. Undoubtedly, in an era where the leading idea is constituted by the decentralisation of the application of EC Competition Policy by National Competition Authorities and national courts, the peculiarity of this paper is that its main purpose is to assess whether a centralised system of ex ante control from a Community Court of the Commission‘s decisions regarding the carry out of inspections in business and private premises may be somehow advisable. Far from criticising the present investigative powers of the Commission, whose respect for fundamental rights seems to fairly comply with the ECHR requirements, it cannot be denied that such reform might render the Commission‘s investigations more in line with the Convention and, in particular, with Article 8(2) thereof. Furthermore, and somehow most importantly, it might also be desirable in order to deal more effectively with hard-core cartels, in particular multi-party cartels, which might need simultaneous inspections in different places, thus requiring as many judicial warrants as the jurisdictions involved. To conclude, it is suggested that such an ex ante centralised system of control, somehow beneficial to the enforcement of EC competition law, should be implemented by the CFI, with some internal organisational reforms, rather than by a new EC judicial panel on competition law matters.

Call For Papers - FTC Microeconomics Conference

Posted by D. Daniel Sokol

The Federal Trade Commission's Bureau of Economics will host a two day conference to bring together scholars working in industrial organization, information economics, game theory, quantitative marketing, consumer behavior, and other areas related to the FTC’s antitrust and consumer policy missions.

Examples of potentially relevant topics include online advertising, information disclosure, horizontal and vertical mergers, bundling, loyalty and other discounts, dynamic oligopoly, intellectual property, and behavioral and experimental economics.

Interested participants should send an abstract or completed paper to mailto:[email protected] by July 7, 2008. We also welcome suggestions for panel discussions.

The scientific committee for the conference is:

• Susan Athey (Harvard)
• Patrick Bajari (Minnesota)
• John List (Chicago)
• Carl Shapiro (Berkeley)
• Scott Stern (Northwestern-Kellogg)

Organizers: Chris Adams (FTC), Dan O'Brien (FTC)

The conference will be held at the Federal Trade Commission New Jersey Avenue Conference Center, 601 New Jersey Avenue NW, Washington, DC 20001.

Auctions, Exclusive Contracts and Competition for the Market

Posted by D. Daniel Sokol

Alexandra Merrett, Australian Competition & Consumer Commission and University of Melbourne, and Rhonda L. Smith, University of Melbourne - Department of Economics, have a new paper out titled Auctions, Exclusive Contracts and Competition for the Market.

ABSTRACT: In this article, we consider the distinction between competition in the market and competition for the market, with a view to identifying the conditions necessary to ensure that competition for the market does not (depending on the jurisdiction) create or increase dominance or substantially lessen competition. After providing a brief summary of some key cases as a framework for discussion, we examine the necessary pre-requisites if competition for the market is to avoid adverse competition effects: natural monopoly and limited contestability. Consideration then turns to the necessary factors for ensuring an auction process is an effective means of managing competition for the market. Finally, we analyse whether it is possible to structure remedies (in the form of commitments or undertakings) such that a proposed transaction, purportedly justified on the grounds of competition for the market, does not in fact create or increase dominance or substantially lessen competition.