Antitrust & Competition Policy Blog

Recent Developments in the Enforcement of Article 82

Posted by D. Daniel Sokol

CONFERENCE ON THE RECENT DEVELOPMENTS IN THE ENFORCEMENT OF ART. 82
ROME, AGCM (ITALIAN ANTITRUST AUTHORITY),
MARCH 6, 2009

The aim of this conference is to address the recent developments on the enforcement of Article 82, with particular reference to the Guidance on the Commission’s Enforcement Priorities in applying Art.82. The conference will also focus on the assessment of efficiencies, on issues related to innovation and high-tech markets, and on regulated markets.

There is no registration fee.

PROGRAM
08:30-09:15 Registration
09:15-09:30: Welcome, Professor Federico Etro, Dr. Ioannis Kokkoris
09:30-10:00 AGCM President Antonio Catricalà Address
10:00-11:45: Debate on the reform of the approach to Art. 82 in EU and Italy
• Chair: Dr. Ioannis Kokkoris (Office of Fair Trading, City University, IMEDIPA)
• Luc Peepercorn (DG Competition, European Commission)
• Mario Siragusa (Cleary Gottlieb Steen Hamilton)
• Damien Geradin (University of Tilburg, Howrey)
• Ombretta Main (AGCM)
11:45-12:00: Coffee Break
12:00-13:30: The assessment of efficiencies under Article 82 (with a comparison with the US approach)
• Chair: Alberto Heimler (AGCM)
• Denis Waelbroeck (Free University, ULB)
• Jean-Francois Bellis (Van Bael and Bellis and University of Brussels)
• Bo Vesterdorf (Plesner)
• Ken Glazer (US Federal Trade Commission)
13:30-14:30: Lunch
14:30-16:00: The application of Article 82 and Article 3 of Law No. 287/1990 in innovative and high-tech markets and the potential conflicts between IPRs protection and competition policy
• Chair: Federico Etro (University of Milan, Bicocca)
• Vincenzo Denicolò (University of Bologna)
• Alberto Heimler (AGCM)
• Luc Peepercorn (DG Competition, European Commission)
• Christian Ahlborn (Linklaters)
16:00-16:15: Coffee Break
16:15-17:45: Application of Article 82 and Article 3 of Law No. 287/1990 in Regulated Industries
• Chair: Giandonato Caggiano (University of Rome III)
• Professor Bariatti (Chiomenti Studio Legale)
• Ioannis Lianos (University College, London, IMEDIPA) and Javier Tapia (University College, London)
• Philip Marsden (Office of Fair Trading, British Institute of International Comparative Law)
• Pierluigi Congedo (Roma III, Accomply)
17:45 Concluding Remarks, Professor Federico Etro, Dr. Ioannis Kokkoris

When Does a Self-Serving Antitrust Authority Act in Society's Best Interests?

Posted by D. Daniel Sokol

Joe Harrington (Johns Hopkins - Economics) asks When Does a Self-Serving Antitrust Authority Act in Society's Best Interests?

ABSTRACT: If an antitrust authority chooses policies to maximize the number of successfully prosecuted cartels, when do those policies also serve to minimize the number of cartels that form? When the detection and prosecution of cartels is inherently difficult, we find that an antitrust authority's policies minimize the number of cartels, as is socially desirable. But when the detection and prosecution of cartels is not difficult, an antitrust authority is not aggressive enough in that it prosecutes too few cartel cases.

World Competition Looking for Submissions

Posted by D. Daniel Sokol

World Competition Law and Economics Review is a highly regarded journal dedicated to competition and antitrust. It examines all aspects of competition policy, primarily  from a legal perspective, but also from an economic point of view. Membership of the Advisory and Editorial Boards includes highly regarded academics, practitioners, and members of the judiciary, as well as top ranking competition law officials.

In order to obtain more information about World Competition, please visit:

http://www.kluwerlawonline.com/productinfo.php?pubcode=WOCO&PHPSESSID=300dbfc3b8cdc6f393d01f9aa1161b3c 

World Competition is inviting authors to submit their manuscripts for publishing. The articles must include legal analysis of competition issues. Further requirements for the manuscripts are laid down in the attached Guide to Authors. Please note, that articles submitted to World Competition must undergo a peer review procedure by the Editorial Board in order to ensure the contributions published are of the highest quality.

Moreover, the competition for the Young Writer's Award is running throughout 2009, providing an opportunity for young authors to be published and rewarded for their contribution. The participation of candidates from new EU Member States and particularly from developing countries is encouraged. The prize is a free annual subscription of World Competition and a 1 000 Euro voucher for Kluwer's publications. Please see the attached notice for more details regarding the award.

Contributions   should be sent by post to José Rivas, Editor, at Bird & Bird, Avenue d'Auderghem 22-28 box 9, 1040 Brussels, Belgium or alternatively via e-mail to the Editor [email protected] or to the Editorial Board [email protected].

Bertrand's Price Competition in Markets with Fixed Costs

Posted by D. Daniel Sokol

Alejandro Saporitiy (University of Manchester - Economics) and German Coloma (Universidad del CEMA - Economics) analyze Bertrand's Price Competition in Markets with Fixed Costs.

ABSTRACT: We analyze Bertrand's price competition in a homogenous good market with a fixed cost
and an increasing marginal cost (i.e., with variable returns to scale). If the fixed cost is avoid-able, we show that the non-subadditivity of the cost function at the output corresponding to the oligopoly break-even price, denoted by D(pL(n)), is sufficient to guarantee that the market supports an equilibrium in pure strategies with two or more active firms supplying at least D(pL(n)). Conversely, the existence of a pure strategy equilibrium ensures that the cost function is not subadditive at every output greater than or equal to D(pL(n)). As a by-product, the latter implies that the average cost cannot be decreasing over the range of outputs mentioned before. In addition, we also prove that the existence of a price-taking equilibrium is sufficient, but not necessary, for Bertrand's price competition to possess an
equilibrium in pure strategies. This provides a simple existence result for the case where the fixed cost is fully unavoidable.

Toward a Better Competition Policy for the Media: The Challenge of Developing Antitrust Policies that Support the Media Sector's Unique Role in Our Democracy

Posted by D. Daniel Sokol

Maurice E. Stucke, University of Tennessee College of Law and Allen P. Grunes, Brownstein Hyatt Farber Schreck, LLP have a new paper on Toward a Better Competition Policy for the Media: The Challenge of Developing Antitrust Policies that Support the Media Sector's Unique Role in Our Democracy.

ABSTRACT: It is difficult to formulate meaningful competition policy when there is a fierce debate over the current competitiveness of the media industry. After addressing the importance of the marketplace of ideas in our democracy, our article examines the current state of the media industry, including the response of traditional media to audience declines, the growth of new media, the impact of media consolidation (including its impact on minority and women ownership), and the role of the Internet. In response to recent calls for liberalizing cross-ownership rules to protect traditional media, our article outlines why conventional antitrust policy is difficult to apply in media markets, and how the concerns underlying media mergers differ from other industries. Our article recommends that Congress should take the lead in formulating a national media policy. This new legislation should (1) promote, or at least not diminish, the media's contribution to the marketplace of ideas; (2) have antitrust merger policies complement FCC policy, which together should provide some of the necessary legal framework for a vibrant marketplace of ideas; and (3) understand from a 21st Century perspective, all of the values, including noneconomic values, such as localism and diversity, that are important to preserving a healthy marketplace of ideas.

Merger Retrospective Studies: A Review

Posted by D. Daniel Sokol

A team of economists from NERA, Graeme Hunter, Gregory K. Leonard, and G. Steven Olley have a great (and relatively short) piece on Merger Retrospective Studies: A Review.

ABSTRACT: The debate concerning whether the antitrust agencies under the Bush administration were lax with respect to merger review has led to a call to evaluate retrospectively the competitive effects of consummated mergers. Such information would help assess whether enforcement thresholds have been set too high or too low. In this article from Antitrust magazine, NERA Vice President Dr. Graeme Hunter, Senior Vice President Dr. Gregory K. Leonard, and Vice President Dr. G. Steven Olley review various merger retrospective studies that have appeared since 1990. These studies often employed the "differences-in-differences" econometric approach. While a majority of the studies found that prices increased post-merger, a significant minority found no price increase.

3rd Lear Conference on the Economics of Competition Law - Rome

Posted by D. Daniel Sokol

3rd Lear Conference on the Economics of Competition Law - Rome, June 25-26, 2009

WHAT MAKES COMPETITION POLICY WORK? Complesso Monumentale di San Michele a Ripa Grande Sala dello Stenditoio Via di San Michele 22, Rome                                                         

DAY 1 - Thursday, June 25th    

8:30 - 9:00 -   Registration    
9:00 - 9:30  -   Welcome address: Antonio CATRICALA' - Italian Competition Authority                                                       
William E. KOVACIC - Federal Trade Commission    
1. A study on the effectiveness of competition policy    
Chair: Fabienne ILZKOVITZ - DG EcFin, European Commission    
9:30 The Lear study, Paolo BUCCIROSSI    
Discussants:             
10:00 Robert CRANDALL – Brooking Institute             
10:20 Jonathan BAKER – American University    
10:40  – 11:00 Coffee break    
2. Institutions and procedures    
Chair: TBA    
11:00 – Title: TBA, Albert A. FOER - American Antitrust Institute    
11:30 – Title: TBA, Damien GERADIN - TILEC, Tilburg University and Howrey LLP    
11.30 – 13.30  FIRST PANEL:
Philip LOWE – DG Competition, European Commission             
Gregory J. WERDEN – Antitrust Division, U.S. DoJ             
Valentine KORAH – University College of London    
13:30 – 14:30 Lunch    
3. Substantive rules and standard of proofs    
Chair: TBA    
14:30 – Title: TBA, Daniel CRANE - Cardozo School of Law    
15:00 – Title: TBA, Margaret BLOOM - King's College, London          
15:30 – 16:00 Coffee break          
16.00 – 18.00  SECOND PANEL:                   
Eleanor FOX – New York University                   
Daniel L. RUBINFELD – University of California, Berkeley                   
Ginevra BRUZZONE – Assonime          
18:00 – 19:30 Welcome Cocktail          
20:30 –  Dinner on invitation    

DAY 2 - Friday, June 26th          
4. Sanctions, leniency and settlements          
Chair: Giancarlo SPAGNOLO - University of Rome "Tor Vergata"          
9:30 – Title: TBA, John CONNOR - Purdue University          
10:00 – Title: TBA, TBA          
10.30  – 11:00 Coffee break          
11:00  – 13:00   THIRD PANEL:                    
Damien NEVEN – DG Competition, European Commission                    
Amelia FLETCHER – UK Office of Fair Trading                    
Michael WISE – OCSE          
13:30 – 14:30
Lunch          
5. Public and private enforcement          
Chair: TBA          
14:30 – Title: TBA, Frédéric JENNY - French Supreme Court          
15:00 – Title: TBA, Robert H. LANDE - University of Baltimore          
15.30 – 16.00  Coffee break          
16:00 – 18:00  FOURTH PANEL:                      
Wouter P.J. WILS – European Commission Legal Service                      
Andrea RENDA* – CEPS           * to be confirmed

Antitrust In the New U.S. Administration: A Transatlantic View

Posted by D. Daniel Sokol

Ioannis Lianos (UCL - Law) and Abel Mateus (New University of Lisbon - Economics) provide us with Antitrust In the New U.S. Administration: A Transatlantic View.

ABSTRACT: The election of the new democratic administration in the United States in November 2008 was overwhelmingly greeted in Europe as an opportunity to reinforce transatlantic cooperation and convergence in competition law and policy. This study evaluates the plausibility of greater convergence between EC competition law and U.S. antitrust law in a number of areas: single-firm conduct, vertical contractual restraints, mergers, and state action (state subsidies).

The Federal Trade Commission at 100: Into Our 2nd Century - The Continuing Pursuit of Better Practices

Posted by D. Daniel Sokol

The FTC has released its report The Federal Trade Commission at 100: Into Our 2nd Century - The Continuing Pursuit of Better Practices.

Barnett to Rejoin Covington

Posted by D. Daniel Sokol

Former Assistant Attorney General for Antitrust Tom Barnett will rejoin Covington, according to news reports.

Telecommunications Mergers under the EC Competition Law and US Antitrust Law: Substantive Assessment and Procedural Cooperation

Posted by D. Daniel Sokol

Alexandr Svetlicinii, European University Institute - Department of Law discusses Telecommunications Mergers under the EC Competition Law and US Antitrust Law: Substantive Assessment and Procedural Cooperation.

ABSTRACT:While the telecommunications industry is subject to both general competition and industry-specific regulations and control, the correlation between the two might sometimes appear problematic. The area of merger control is a lucrative field for examination of these often overlapping regulatory regimes. This paper is an attempt to review and summarise the existing practice of the assessment of transnational mergers by antitrust authorities in the EU and US. Focused on the analysis of the several key telecom mergers jointly investigated by the European and American antitrust authorities, the paper compares regulatory approaches on both sides of the Atlantic and evaluates the impact of the specific features of the telecom industry on merger assessment. Cooperation between the enforcement authorities of the EU and US is discussed in order to evaluate the existing procedural cooperation arrangements as well as the convergence of the substantive laws of the EU and US.

The InBev and Anheuser-Busch Merger in China: A View from Economists

Posted by D. Daniel Sokol

Xinzhu Zhang, Chinese Academy of Social Sciences - Research Center for Regulation and Competition, Vanessa Yanhua Zhang, LECG, and Howard H. Chang, LECG provide The InBev and Anheuser-Busch Merger in China: A View from Economists.

ABSTRACT: On November 18, 2008, China's Ministry of Commerce ("MOFCOM"), the Chinese merger control authority, approved InBev's takeover of Anheuser-Busch, with certain restrictions. The InBev Decision is the only published decision that MOFCOM has made to date following the implementation of China's Anti-Monopoly Law ("AML") in August 2008. As such, it has attracted the interest of international antitrust scholars and practitioners.

In this paper, we provide some background on the merger approval process in China and the InBev acquisition, and then discuss the implications of MOFCOM's decision and its other statements on merger policy for the future of merger control in China.

New Chief Executive at the UK Competition Commission

Posted by D. Daniel Sokol

David Saunders has been appointed the new Chief Executive of the UK Competition Commission.

The Intersection of Antitrust Law and Intellectual Property Rights Under the New Obama Administration

Posted by D. Daniel Sokol

Christopher R. Leslie (Chicago-Kent College of Law) discusses The Intersection of Antitrust Law and Intellectual Property Rights Under the New Obama Administration.

ABSTRACT: Political predictions are fraught with peril. Correctly foretelling what policies a new president will pursue—and whether his efforts will prove successful—is particularly difficult for matters that were not discussed extensively in stump speeches or the presidential debates. The intersection of antitrust law and intellectual property ("IP") is a niche that did not command national attention during the lead-up to the election. But evidence exists about President Obama’s general views on antitrust law and on patent reform. From this, we have a basis for intuiting his likely approach to several issues at the intersection of these two areas of law.

Over the previous several years, the balance between antitrust law and intellectual property rights has shifted in favor of the latter. While not addressing this balance specifically, the Obama campaign promised to pursue different approaches in each of these individual areas of law. With respect to intellectual property, the Obama campaign noted the importance of protecting intellectual property, while emphasizing the “need to update and reform our copyright and patent systems to promote civic discourse, innovation and investment while ensuring that intellectual property owners are fairly treated.”

Candidate Obama also advocated patent reform designed “to improve patent quality.” While short on particulars, the rhetoric suggests a greater wariness of patents issued by the U.S. Patent and Trademark Office ("PTO"), which could translate into more government scrutiny and perhaps challenges to patents.

Whole Foods Receives Another Setback from DC Circuit

Posted by D. Daniel Sokol

Whole Foods has proven unsuccessful in its bid to delay the FTC's upcoming trial according to BNA.

Vertical Contracts between Airports and Airlines: is there a Trade-off between Welfare and Competitiveness?

Posted by D. Daniel Sokol

Cristina Barbot (CETE, Faculdade de Economia, Universidade do Porto) has a paper on Vertical Contracts between Airports and Airlines: is there a Trade-off between Welfare and Competitiveness?

ABSTRACT: Airports and airlines have been increasingly establishing vertical contracts, which have a wide variety of forms. These contracts have important implications for policy issues, namely for regulation and price discrimination legislation. In this paper we develop a model to analyse the effects of three types of vertical contracts, in what regards welfare, pro-competitiveness and the scope for regulation. We find that two types of contracts are anti-competitive, and that in all of them consumers are better-off, though in one of them within conditions regarding operational efficiency. We also conclude that regulation may (or may not) improve welfare depending on the type of contract and that price capping has different effects according to the facility the price of which is capped. Moreover, we find that these agreement’s effects exhibit a trade-off between pro-competitiveness and welfare and between price discrimin! ation and welfare.

On the Paternity of a Market Delineation Approach

Posted by D. Daniel Sokol

F.M. Scherer of Harvard - Kennedy School of Government provides an interesting historical retrospective On the Paternity of a Market Delineation Approach.

ABSTRACT: This paper by Harvard University’s F. M. Scherer traces the historical antecedants of the 1982 Merger Guidelines SSNIP (small but significant and non-transitory increase in price) approach to market definition. Surveying the prior literature, it recognizes that the person believed to have proposed the approach was Morris Adelman. The author claims a second-mover slot for his testimony in a 1972 brewing merger case, the IBM case, and the Marathon-Mobil case of 1981, along with a 1980 restatement of market definition principles in his industrial organization textbook. Intermediate contributions are also surveyed.

General Standards for Exclusionary Conduct

Posted by D. Daniel Sokol

Karen L. Grimm of the FTC is the author of General Standards for Exclusionary Conduct.

ABSTRACT: This paper first examines the development of section 2 conduct standards in the courts, focusing primarily on Supreme Court precedent. It then describes and analyzes the leading tests that commentators have proposed or endorsed for evaluating conduct under section 2, namely: (1) the Microsoft rule-of-reason framework, which examines both anticompetitive effects and procompetitive justifications within a structured, burden-shifting framework, and a variant, the disproportionality test, under which conduct that creates or maintains monopoly power is condemned only if it produces harms disproportionate to the resulting benefits; (2) the noeconomic-sense and profit-sacrifice tests, which focus on whether the challenged conduct made economic sense for the monopolist but for its potential exclusionary effect; (3) the equallyefficient-competitor test, which focuses on whether the challenged conduct would exclude an equally efficient rival; and (4) the impairing-rivals’-efficiencies test, which focuses on whether the suspect conduct solely created efficiencies for the monopolist or whether it also impaired the efficiencies of rivals.

The paper concludes that, while the proposed unitary tests are all useful for certain purposes, none can be used as a single bright-line rule for all of the many types of conduct subject to scrutiny under section 2, and that the Microsoft rule-of-reason framework should be utilized as the basic approach for analyzing the legality of single-firm conduct under section 2 of the Sherman Act.

A Perfect Storm Why approving the Highmark/IBC merger will damage the Pennsylvania economy and set it on the wrong direction for health care reform

Posted by D. Daniel Sokol

David Balto (Center for American Progress) has posted his successful white paper that played an important role in the PA Insurance Commission blocking a merger between Highmark/IBC merger which would have consolidated the two largest Blue Cross plans in Pennsylvania.  See A Perfect Storm Why approving the Highmark/IBC merger will damage the Pennsylvania economy and set it on the wrong direction for health care reform.

Prices and Market Structure: An Empirical Analysis of the Supermarket Industry in Chile

Posted by D. Daniel Sokol

Loreto Lira (Economics Department, Universidad de los Andes- Chile), Magdalena Ugarte (Economics Department, Universidad de los Andes- Chile), and Rodrigo Vergara (Economics Department, Pontificia Universidad Católica de Chile) provide analysis on Prices and Market Structure: An Empirical Analysis of the Supermarket Industry in Chile.

ABSTRACT: This paper investigates empirically the relationship between market structure and consumer prices in the supermarket industry in Chile. A panel of monthly data from 16 cities in the period January 1998–September 2006 was used. It was found that the more concentrated the industry is in a city, the higher the prices, while the participation of major national chains in cities tends to lower prices. Moreover, the dominant local chain was found to behave differently depending on whether or not one of the national chains was present in the city. Finally, we find that prices rise when a national chain acquires another chain and both were previously in a city (inmerge) while if only one of the two was present (outmerge), prices fall.