Friday, April 24, 2009

The Law and Economics of Innovation: Online Markets vs. Traditional Markets

Posted by D. Daniel Sokol

The Law and Economics of Innovation: Online Markets vs. Traditional Markets
Thursday, May 7, 2009

8:00 am - 8:45 am Registration & Continental Breakfast
8:45 am - 9:00 am Introductions
9:00 am - 9:30 am Opening Keynote featuring
William E. Kovacic, Federal Trade Commissioner
9:30 am - 10:30 am

Panel I: Economic Forces at Work in Online and Traditional Markets

Moderator: Michael R. Baye
Presenters: Peter Klein – Does the New Economy Need a New Economics?
Thomas W. Hazlett – The Role of Exclusive Spectrum Rights in Wireless Network Innovations: Of Newtons, Blackberries, iPhones & G-Phones
Eric Goldman – The Economics of Reputational Information
10:30 am - 10:50 am Q&A
10:50 am - 11:00 am Break
11:00 am - 12:00 pm

Panel II: The Regulation of Online Commerce

Moderator: Joshua Wright
Presenters: Florencia Marotta-Wurgler – Does Anyone Read Fine Print? A Test of the Informed Minority Hypothesis
Howard Beales – Public Goods, Private Information, and Anonymous Transactions: Providing a Safe and Interesting Internet
Peter Swire – Privacy and Antitrust
12:00 pm - 12:20 pm Q&A
12:20 pm Break for lunch
12:30 pm - 1:30 pm Lunch featuring Keynote Speaker
Susan Athey, Professor of Economics, Harvard University
1:30 pm - 2:30 pm

Panel III: Online Exceptionalism?: Law and Economics in Cyberspace

Moderator: Geoffrey Manne
Presenters: Philip J. Weiser — Re-evaluating the Theory and Realities of Online Contracts
Randal C. Picker — The Mediated Book
F. Scott Kieff — Commerce in the Shadow of the Commons: Business Models in Cyberspace
2:30 pm - 2:50 pm Q&A
2:50 pm - 3:00 pm Break
3:00 pm - 4:00 pm

Industry/Regulator Roundtable

Moderator: Christopher Wolf, Partner and Co-Chair, Privacy and Data Security Practice Group, Hogan & Hartson
Participants: Susan DeSanti, Director of Policy Planning, Federal Trade Commission
Emmett O'Keefe, Director, Federal Public Policy,, Inc.
Mary Snapp, Corporate Vice President and Deputy General Counsel, Microsoft Corp.
4:00 pm - 4:20 pm Q&A
4:20 pm - 4:30 pm Closing remarks
4:30 pm - 5:30 pm Reception

April 24, 2009 | Permalink | Comments (0) | TrackBack (0)

Margin Squeeze in the United States and in Europe: Stand Alone Abuse or Refusal to Deal?

Posted by D. Daniel Sokol

Paolo Palmigiano (British Telecommunications) discusses Margin Squeeze in the United States and in Europe: Stand Alone Abuse or Refusal to Deal?

ABSTRACT: A striking contrast between the two [United States and Europe] becomes obvious in relation to the so-called abuse of “margin squeeze.” Recent court cases dealing with very similar situations, show the differences of approach. In the United States, the Supreme Court decision in linkLine in 2009 considers that there is no such thing as a stand alone abuse called “price squeeze” but rather the abuse can be either a refusal to deal at the wholesale level or predation at the retail level. In Europe the Court of First Instance (“CFI”), in its recent Deutsche Telekom case in April 2008, seems to confirm the Commission’s view that margin squeeze can well be considered a stand-alone antitrust offence. Another margin squeeze case, Telefonica is currently pending in front of the CFI and it might add further clarification.

These cases raise some very interesting questions, in particular on the nature of the abuse and on the correct approach to margin squeeze. My view, expressed in this short article, is that the differences have their origin in different policy objectives and, as such, they may both be appropriate if seen in their particular context.

April 24, 2009 | Permalink | Comments (1) | TrackBack (0)

Thursday, April 23, 2009

Persistence of Monopoly and Research Specialization

Posted by D. Daniel Sokol

Philipp Weinschenk (Max Planck Institute for Collective Goods) explains the Persistence of Monopoly and Research Specialization.

ABSTRACT: We examine the persistence of monopolies in markets with innovations when the outcome of research is uncertain. We show that for low success probabilities of research, the incumbent can seldom preempt the potential entrant. Then the efficiency effect outweighs the replacement effect. It is vice versa for high probabilities. Moreover, the incumbent specializes in “safe” research and the potential entrant in “risky” research. We also show that the probability of entry has an inverted U-shape in the success probability. Since even at the peak entry is rather unlikely, the persistence of the monopoly is high.

April 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Regulation of Liberal Professions and Competition Policy: Developments in the EU and China

Posted by D. Daniel Sokol

Niels J. Philipsen (Maastricht University) discusses the Regulation of Liberal Professions and Competition Policy: Developments in the EU and China in a forthcoming article.

ABSTRACT: The regulation of professional services has been high on the political agenda for years now in Europe. This paper points out the methods of working and the strategies used by the European Commission (Directorate General for Competition) and various national competition authorities to promote deregulation of the professions throughout the European Union. Central to this discussion are the so-called public interest and private interest approaches to regulation. On the one hand, the European Commission seems to have been influenced by developments in particular Member States (bottom-up effects), whereas on the other hand, there have been top-down effects in recent years, at least in some Member States. The European experience is used to study the recent developments in China, and in particular the regulation of lawyers. I find that the argument of information asymmetry may have more relevance in China than in Europe. In addition, the fact that liability rules may not yet be a good alternative for (or supplement to) quality regulation may also make a stronger case for regulation in China. However, economic theory and European practice have taught us that there is a general risk of disproportional regulation.

April 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Incomplete Regulation, Asymmetric Information and Collusion-Proofness

Posted by D. Daniel Sokol

Marco Meireles (Universidade do Porto - Economics) and Paula Sarmento (Universidade do Porto - Economics) address Incomplete Regulation, Asymmetric Information and Collusion-Proofness in a new paper.

ABSTRACT: In an incomplete regulation framework the Regulator cannot replicate all the possible outcomes by himself since he has no influence on some firms present in the market. When facing asymmetric information regarding the regulated firm’s costs, it may be better for the Regulator to allow the other competitors to extract a truthful report from her through side-payments in a collusion and therefore the “Collusion-Proofness Principle” may not hold. In fact, by introducing an exogenous number of unregulated competitors, Social Welfare differences seem to favour a Collusion-Allowing equilibrium. However, such result will strongly depend on the relative importance given by the Regulator to the Consumer Surplus.

April 23, 2009 | Permalink | Comments (0) | TrackBack (0)

What You Need to Know About Twombly

Posted by D. Daniel Sokol

 EvansLarge David Evans (University of Chicago, University College London, LECG) provides us with What You Need to Know About Twombly.

ABSTRACT: In Bell Atlantic v. Twombly the Supreme Court clarified what plaintiffs must plead for their complaints to pass muster. It retired the Conley rule that a court should not dismiss a complaint unless “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” The new rule is based on whether the complaint states a set of facts that, assuming their truth, makes it “plausible” that the plaintiff has a claim which would entitle her to relief. Although Twombly involved an antitrust conspiracy claim, most commentators agree that it modified general pleading standards for all cases. Lower courts have cited Twombly more than 10,000 times in a wide range of cases since it came down in May 2007. These cases involve a wide area of claims including the full gamut of antitrust cases. Defendants now routinely seek to dismiss complaints on the grounds that they do not state a plausible claim. This note explores what sorts of economic and statistical evidence help establish that a claim is plausible and what do not.

April 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 22, 2009

DOJ Antitrust Senior Leadership Announced

Posted by D. Daniel Sokol

The news is now official - DOJ has named its top leadership antitrust team. The team includes:

Sharis Arnold Pozen, Chief of Staff and Counsel--Before she came to the Department in February 2009, Pozen was a partner at Hogan & Hartson's Antitrust, Competition, and Consumer Protection Group where she worked from1995 to February 2009, on a variety of antitrust matters in the technology and healthcare industries, and served as Practice Group Director for the Washington, D.C. office. She has counseled clients on a wide range of antitrust and consumer protection matters as well as issues pertaining to mergers and acquisitions, joint ventures, and trade association matters. Prior to joining Hogan & Hartson, Pozen worked for five years at the Federal Trade Commission (FTC) as an Attorney Advisor to then Commissioners Varney and Yao, as Assistant to the Director of the Bureau of Competition, and as staff attorney. Pozen received her B.A. from Connecticut College in 1986 and her J.D. from Washington University in 1989.

Molly S. Boast, Deputy Assistant Attorney General for Civil Matters--Boast, who is expected to arrive at the Department in May, is a seasoned antitrust veteran with extensive antitrust and management experience. Since 2001, she has been a partner at the New York law firm of Debevoise & Plimpton LLP where she leads the antitrust practice group. From July 1999 to June 2001, Boast was Senior Deputy Director and Director of the FTC's Bureau of Competition. During that time, she had management responsibility for merger and civil nonmerger Commission litigation and investigations, and has experience in competition issues in the energy and pharmaceuticals industries. Boast also served as the FTC's representative to the European Community/FTC/Department of Justice Mergers Working Group. From 1987 to 1999, she worked at the New York law firm of LeBoeuf, Lamb, Greene & MacRae where she was head of the litigation department and a member of the firms' Steering Committee. She has served in various positions within the American Bar Association's Sections of Antitrust and Litigation. Boast received her B.A. in 1970 from the College of William and Mary, her M.S. in 1971 from the Columbia University School of Journalism, and her J.D. in 1979 from the Columbia University School of Law.

William Cavanaugh Jr., Deputy Assistant Attorney General for Civil Matters--Cavanaugh, who is expected to arrive at the Department in May, is a highly experienced and lauded antitrust litigator. Since 1985, Cavanaugh has been with the New York law firm of Patterson, Belknap Webb & Tyler LLP where he has served as the firm's Co-Chair, Chair of the Litigation Department and a Litigation Partner since 1991. He has extensive trial and litigation experience in complex antitrust, patent and commercial matters. From 1981 to 1985, Cavanaugh was a Litigation Associate handling complex product liability, insurance coverage and general commercial matters at the New York law firm of Rivkin Radler LLP. He is a Fellow of the American College of Trial Lawyers, was named as one of the Best Lawyers in America for Antitrust Law and Commercial Litigation, and was named as one of New York's "Super Lawyers" for Antitrust Litigation. He received his B.S. in 1977, from St. John's University and his J.D. in 1980 from St. John's University School of Law.

Carl Shapiro, Deputy Assistant Attorney General for Economic Analysis--Shapiro, who arrived at the Department in March, is a leading scholar in economics and brings to the Department a wealth of experience on issues, including patents, intellectual property and licensing, network economics, and unilateral effects in mergers. Shapiro is taking a leave of absence from the University of California at Berkeley, where he is Transamerica Professor of Business Strategy in the Haas School of Business and a Professor of Economics. He has been at the Haas School of Business since 1990. Shapiro was previously the Antitrust Division's Economics Deputy from August 1995 to June 1996, where he provided economic analysis on a variety of antitrust cases, including Microsoft, NASDAQ and several mergers. Shapiro had been a Senior Consultant with CRA International, an economic consulting company. He was vice-chair of the American Bar Association Antitrust Section's Economics Committee from 1995-1998. Shapiro taught at the Woodrow Wilson School and the Department of Economics at Princeton University for 10 years. He has published one book, "Information Rules: A Strategic Guide to the Network Economy," and numerous articles in the areas of industrial organization, competition policy, patents, network economics and the economics of innovation and competitive strategy. Shapiro received his Ph.D. in Economics from the Massachusetts Institute of Technology (MIT) in 1981. He also earned B.S. degrees in mathematics and economics from MIT as well as an M.A. in mathematics from UC Berkeley.

Philip J. Weiser, Deputy Assistant Attorney General for International, Policy and Appellate Matters--Weiser, who is expected to arrive at the Department in July, is an Antitrust Division veteran, and is currently a Professor and Associate Dean for Research at the University of Colorado, where he has taught since January 1999, in the School of Law and in the Interdisciplinary Telecommunications Program. During his tenure at the Department, Weiser will be on a leave of absence from the University of Colorado. Weiser has also served as a visiting Professor at the New York University School of Law (2008) and the University of Pennsylvania School of Law (2006). From August 2001 to June 2002, he was a Law and Public Affairs Program Fellow at Princeton University, one of only six law Professors selected as a scholar-in-residence. Weiser is the Founder and Executive Director of Silicon Flatirons Center for Law, Technology, and Entrepreneurship, which focuses on spurring interdisciplinary engagement, facilitating community outreach, and supporting interest in the intersection of technology, policy and business. From September 1996 to August 1998, Weiser was a Senior Counsel to Joel Klein, Assistant Attorney General of the Department's Antitrust Division, where he advised Klein on antitrust policy in the telecommunications industry as well as participated in civil investigations. He served this fall as the lead agency reviewer of the FTC for the Presidential Transition Team, serves as the co-Chair of the Colorado Innovation Council, was a Special Master for the Colorado Public Utilities Commission, and was a Special Counsel to Cablevision Systems Corporation. Weiser clerked for Justices Byron R. White (Ret.) and Ruth Bader Ginsburg at the U.S. Supreme Court from September 1995 to August 1996. He also clerked for Judge David M. Ebel, Tenth Circuit Court of Appeals, from September 1994 to August 1995. He has published two books and numerous articles on and has regularly taught in the areas of competition policy and technology law. Weiser graduated with high honors from Swarthmore College in 1990 and with high honors from the New York University School of Law in 1994.

Gene Kimmelman, Chief Counsel for Competition Policy and Intergovernmental Relations--Kimmelman, who arrived at the Department in April, was most recently Vice President for Federal and International Affairs at Consumers Union (CU). During his tenure at CU, from 1995 to 2009, he directed CU's federal and international policy programs. Kimmelman has extensive knowledge of deregulation, market structure and consumer protection issues. He is a recognized expert in a wide variety of areas, including telecommunications, Internet/media policy, product liability and antitrust law. He has represented consumers during the break up of AT&T, consideration of the Telecommunications Act of 1996, major media and telecommunications mergers, and at numerous congressional hearings. Prior to his employment at CU, from 1993 to 1995, Kimmelman served as Chief Counsel and Staff Director for the Antitrust Subcommittee of the U.S. Senate Judiciary Committee. Previous to that, from 1984 to 1993, he was Legislative Director for the Consumer Federation of America (CFA) where he directed their legislative and regulatory programs. In 1981, he began his career as a staff attorney for Public Citizen's Congress Watch. Kimmelman received his B.A. from Brown University in 1977 and his J.D. from the University of Virginia in 1981. He studied in Denmark as a Fulbright Fellow at Copenhagen University's graduate program on the public sector.

April 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Extraterritoriality, Antitrust, and the Pragmatist Style

Posted by D. Daniel Sokol

Justin Desautels-Stein (Colorado - Law) has posted Extraterritoriality, Antitrust, and the Pragmatist Style.

ABSTRACT: In the last decades of the 20th century, David Kennedy and Martti Koskenniemi made the case that the modern structure of international legal argument was characterized by “pragmatism.” Taking this idea as its baseline, this Article’s central argument is that legal pragmatism embodies a dominant style of contemporary legal reasoning, and that as Kennedy and Koskenniemi might have suggested, it is on display in some of the canonical antitrust decisions having an international dimension. The Article also seeks to show that pragmatism’s ostensible triumph is best understood as a contest of three distinctly legal pragmatisms: “eclectic pragmatism,” as evidenced in the work of Thomas Grey and Daniel Farber, “economic pragmatism,” as espoused by Richard Posner, and “experimental pragmatism,” represented in the work of Charles Sabel, William Simon, and Michael Dorf. While these three styles are hardly determinative, they do suggest meaningfully different orientations, as illustrated in an analysis of F. Hoffman LaRoche Ltd. v. Empagran, the U.S. Supreme Court’s most recent extraterritorial antitrust decision. The irony, once one sees the three pragmatisms in action, is that they all fail to offer anything resembling the promise of a truly pragmatist moment of legal decision.

April 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Monopoly Building: Why the Justice Department Must Block the Ticketmaster/LiveNation Deal

Posted by D. Daniel Sokol

David Balto (Center for American Progress) has posted Monopoly Building: Why the Justice Department Must Block the Ticketmaster/LiveNation Deal.

ABSTRACT: By combining, Ticketmaster and Live Nation will create an entertainment giant that:

  • Sells most of the concert tickets in this country through its contracts with venues
  • Manages a significant number of the marquee performers in the world or controls their tours
  • Owns most of the amphitheatres in the US and owns more 'club' venues, as well as controlling (through owning/leasing) a large amount of other clubs and theatres
  • Owns two of the major resellers of tickets
  • Owns various sources of competitively sensitive data

Ticketmaster claims that this deal is pro-competitive for everyone: artists, venues and consumers. It claims by putting everything under one roof—artists, concert promotion, venues, and ticketing—everyone will do better. Certainly one can conceive how that might be true. But at the Senate hearings when asked about the alleged efficiencies, Ticketmaster could present claims of only $40 million in savings, a truly paltry amount for a merger combining two companies with billions in revenues. What, then, is the real incentive for the merger? Moreover, why should we assume any of those costs savings would benefit consumers? It is rivalry that leads to the incentive to cut costs and become more efficient. It is rivalry that forces competitors to pass on cost savings by reducing prices.

April 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Predatory Bundling and the Exclusionary Standard

Posted by D. Daniel Sokol

Shahar Dilbary (Alabama Law) addresses Predatory Bundling and the Exclusionary Standard.

ABSTRACT: Recent decisions - all relying on a stylized example first provided by the Ortho court - hold that a multi-product seller that uses a bundled discount in a way that excludes an equally or more efficient competitor engages in predatory bundling. According to these decisions, a bundle can be considered predatory even when the price of the bundle exceeds its cost. The article offers evidence demonstrating that the Ortho's stylized example and its monopoly leveraging theory are erroneous. The article further shows that even when a bundle's price excludes more efficient competitors and even when a component in the bundle is priced below cost, and thus sold at a loss, it may still have welfare enhancing effects. The result is that bundles that fail the discount allocation test and even bundles that fail the Brooke Group test may still be desirable. The article provides a number of examples from the airline and telecommunication industries to illustrate that both exclusionary and below cost bundles can be not only welfare enhancing, but also very common.

April 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 21, 2009

International Antitrust Enforcement and Multi-Market Contact

Posted by D. Daniel Sokol

Jay Pil Choi, Michigan State University - Department of Economics and Heiko A. Gerlach, University of Auckland - Department of Economics focus their latest work on International Antitrust Enforcement and Multi-Market Contact.

ABSTRACT: This paper analyzes international antitrust enforcement when multinational firms operate in several markets with antitrust authorities in each market. We are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by demand relationships. The interdependence of collusion sustainability across markets leads to potential externalities in antitrust enforcement across jurisdictions. As a result, cartel prosecution can have a domino effect with the desistance of one cartel triggering the internal break-up of the cartel in the adjacent market. We further find that the equilibrium in antitrust authorities' enforcement decisions may exhibit non-linearity due to a free-rider problem as the global economy is more integrated. We also analyze the equilibrium antitrust enforcement and compare it with the globally optimal antitrust enforcement policy.

April 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Television Duopoly in Small Markets

Posted by D. Daniel Sokol

Matthew Spitzer (Southern California - Law) addresses Television Duopoly in Small Markets.

ABSTRACT: This article will show that, in general, allowing merger in small television markets is good for diversity in local news and public affairs. Consequently, the FCC should adopt a presumption in favor of the legality of television mergers in small markets. Intervenors and staff should be able to rebut the presumption in favor of a particular merger by showing that the specific facts of the market containing the proposed merger cause the other public interest goals – competition or localism – to require a different result.

April 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Models, Mathematics and Critical Loss

Posted by D. Daniel Sokol

Malcolm Coate (FTC) and Joe Simons (Paul Weiss) have a nice, short and accessible piece for antitrust practitioners on Models, Mathematics and Critical Loss.

ABSTRACT: Critical Loss is an empirical implementation of the hypothetical monopolist test for market definition contained in the Department of Justice and Federal Trade Commission Horizontal Merger Guidelines. As usually applied, the test accepts the proposed market as relevant for antitrust analysis whenever the predicted Actual Loss from a small, but significant and non-transitory price increase is less than the computed break-even Critical Loss. While the traditional analysis does not posit a link between the predicted Actual Loss and the break-even Critical Loss, some theoretical economists claim the two concepts are mathematically related. They believe that the Critical Loss test will almost never generate broad market definitions in high margin markets. We suggest that the critics overstate their case, as they have only identified a special case modeling structure that has rarely, if ever, been used in practice and if used, would have very limited applicability. Standard Critical Loss analysis, carefully applied, still represents the best tool for market definition.

April 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Private Enforcement of EU and National Competition Law

Posted by D. Daniel Sokol

Ignacio Sancho Gargallo (Universitat Pompeu Fabra - Law) addresses Private Enforcement of EU and National Competition Law.

ABSTRACT: Domestic ordinary courts within the EU Member States are empowered to hear cases concerning damages actions arisen from the infringement of articles 81 and 82 ECT. This article analyzes the evolution of the rules governing this topic and emphasizes civil actions in Competition law, judicial powers, procedural rules and the impact of the EU law and institutions, as well as their cooperation with the national ones.

April 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, April 20, 2009

Is the U.S. Supreme Court Giving a New Shape to Antitrust Law?

Posted by D. Daniel Sokol

Fmarcos Francisco Marcos of Instituto de Empresa Business School (and a judge of the Tribunal de Defensa de la Competencia de la Comunidad de Madrid) asks Is the U.S. Supreme Court Giving a New Shape to Antitrust Law?

ABSTRACT: This brief note reviews the judgments on antitrust law delivered by the U.S. Supreme Court in the last two years and provides a concise reference to the issues examined in each of them. It also gives a general overview of the effects that they may have in the stare decisis doctrine and in antitrust law practice.

April 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Loyalty/Requirement Rebates and the AMC: What is the Appropriate Liability Standard?

Posted by D. Daniel Sokol

Nicholas Economides of the Stern School of Business - NYU asks, Loyalty/Requirement Rebates and the AMC: What is the Appropriate Liability Standard?

ABSTRACT: I discuss and assess the various standards for establishing liability for loyalty discounts offered under a requirement contract. I find that the standard proposed by the Antitrust Modernization Commission is likely to result in many cases of violation that are not caught. The safe harbor defined by the AMC would permit activity that is in fact anticompetitive. I propose instead a structured rule of reason test that relies on consumers' surplus comparisons under the loyalty /requirement practice and the but-for world. The proposed standard does not have a safe harbor based on a price/cost comparison because such comparisons do not generally correspond to consumers' surplus comparisons.

April 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Are Price Squeezes Anticompetitive?

Posted by D. Daniel Sokol

Aaron Panner (Kellogg, Huber) asks Are Price Squeezes Anticompetitive?

ABSTRACT: Assume that Defendant is a monopolist at the upstream level; that it produces a product at the downstream level; and that it also sells the upstream input to downstream competitors. Under certain circumstances, Defendant can, by reducing its downstream prices or by increasing its upstream prices, eliminate downstream competitors’ margins and “squeeze” the downstream competitor out of the downstream market. That much is uncontroversial. Much more controversial is whether such conduct should be subject to scrutiny under the antitrust laws.

April 20, 2009 | Permalink | Comments (0) | TrackBack (0)

Sunday, April 19, 2009

Evolution and Change in Antitrust Law Networks, Access, and 'Essential Facilities': From Terminal Railroad to Microsoft

Posted by D. Daniel Sokol

Marina Lao of Seton Hall law School has posted the interesting Evolution and Change in Antitrust Law Networks, Access, and 'Essential Facilities': From Terminal Railroad to Microsoft.

ABSTRACT: Microsoft's well-publicized antitrust troubles in the US and EU have focused attention on interoperability and access issues that often arise in networks industries - when dominant firms controlling critical technical information refuse to license that information to competitors in complementary markets. This deprives consumers of the benefits of "network effects" and forecloses competition in the complements, but the difficult issue is whether there is a principled basis for antitrust intervention. This Article suggests that there is - the essential facilities doctrine, which has had a long, if somewhat controversial, history.

The doctrine has often been described as lacking theoretical grounding and consistent rationale. This characterization, however, is undeserved. The Article shows that, contrary to general perception, key American essential facilities cases are rooted in sound, though unarticulated, principles. Courts have tended to invoke the doctrine only where a facility had natural monopoly characteristics or strong network effects, and compulsory access would create or facilitate competition in a necessity. In other words, application of the doctrine has generally been limited to situations where denial of access would be socially wasteful, impede competition, and adversely impact public interest.

These limiting principles are, not only economically defensible, but eminently sensible, and can be applied equally well to cases involving access issues in modern-day networks, to help identify when the doctrine could properly be invoked. This method would be more effective than treating refusals to supply interoperability information almost as a separate category of conduct, as the European Commission's recent Discussion Paper seems to recommend, since incompatibility does not cause similar consumer or economic effects in all markets. To illustrate, this Article draws on the familiar stories of Microsoft's antitrust problems in Europe and Apple's iPod/iTunes controversy.

This Article also critiques two other common objections to the doctrine: 1) that compulsory access would not improve consumer welfare because the "harm" it seeks to remedy - monopoly leveraging - supposedly has no economic significance; and 2) that application of the doctrine would deter innovation and undermine the policy objectives of intellectual property law.

April 19, 2009 | Permalink | Comments (0) | TrackBack (0)

Saturday, April 18, 2009

International Antitrust in a World Without a Center - Conference Registration is Now Open

Posted by D. Daniel Sokol

Back to the front

On June 18, the American Antitrust Institute will host its 10th annual conference at the National Press Club in Washington, DC. This year's conference is titled "International Antitrust in a World Without a Center" and will focus on international challenges facing the antitrust community.

The AAI is honored to host Mario Monti, former European commissioner for competition and now president of the Universita Commerciale Luigi Bocconi in Milan, and John Fingleton, the chief executive officer of the U.K. Office of Fair Trading, as speakers on the June 18 program.

Registration is available here.


Welcome and Introduction – The Ballroom

Albert A. Foer, President, American Antitrust Institute



Keynote Address: Antitrust in International Economic Context

Mario Monti, President of the Universita Commerciale Luigi Bocconi, Milan; former European Commissioner for Competition


The Evolution of Comparative Antitrust as a Discipline

Moderator: Howard A. Shelanski, Director, Berkeley Center for Law & Technology

John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom

Stephen Martin, Professor of Economics, the Krannert School of Management, Purdue University




Breakout Sessions


Asia—A Progress Report

Moderator: Russell Pittman, Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice. 

Wu Hanhong, School of Economics, Renmin University of China, Bejing

Hiromitsu Miyakawa, Attorney at Law, Jones Day. Japan


The International Meltdown and Antitrust

Moderator: Thomas Greaney, Professor of Law and Director, Center for Health Law Studies at Saint Louis University School of Law

Lawrence E. Mitchell, Theodore Rinehart Professor of Business Law, George Washington University

Paul Nihoul, Professor of Law, the University of Louvain, Belgium

Arthur Wilmarth, Professor of Law, George Washington University


Private Enforcement: Adding to the Complexity?

Moderator: Michal Gal, Professor of Law, University of Haifa Law School, Israel

Michael Hausfeld, Partner, Hausfeld LLP

Franz Jürgen Säcker, Director, Institute for German and European Business, Competition and Regulation Law, Free University Berlin

Karl Meessen, Co-editor, Wirtschaft uind Wettbewerb (monthly journal of German and European Competition law)


Bridging the Trade-Competition Gap

Moderator: Douglas E. Rosenthal, Partner, Washington Office of Constantine|Cannon

Shanker A. Singham, Partner, Squire Sanders & Dempsey LLP

Daniel Sokol, Assistant Professor, Levin College of Law, University of Florida




Luncheon– The Ballroom   

Presentation of the Fifth Annual Jerry S. Cohen Award


Presentation of the AAI Antitrust Achievement Award to Eleanor M. Fox

Ilene Gotts, Partner, Wachtell, Lipton, Rosen & Katz

John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom


Breakout Sessions


International Cartels

Moderator: Gary R. Spratling, Partner, Gibson, Dunn & Crutcher

John M. Connor, Professor of Industrial Economics, Purdue University

Ewoud Sakkers, DG- Comp., Head of Cartels Unit

Charles Wright, Partner, Siskinds, LLP


Can Section 5 and Article 82 Converge?

Presentation of Paper:
Ryan Marth, Attorney,
Robins, Kaplan, Miller & Ciresi L.L.P.

Thomas Miller, Partner, Robins, Kaplan, Miller & Ciresi L.L.P


Comments by:

William Kovacic, Commissioner, Federal Trade Commission

Rudolph J.R. Peritz, Professor and Director, IProgress Project, New York Law School


Centralizing Merger Controls

Moderator: Ilene Gotts, Partner, Wachtell, Lipton, Rosen & Katz

Ronald A. Stern, Vice President and Senior Competition Counsel, General Electric Company

Yoshizumi Tojo, Faculty of Law and Politics, Rikkyo University, Japan


Coordination Between ICN, OECD, UNCTAD, WTO, etc.: Do We Need a Summit?

Moderator: Daniel Sokol, Assistant Professor, Levin College of Law, University of Florida

Shyam Khemani, Economist, Micra

Sheridan Scott, Partner, Bennet Jones LLP, Canada

Randy Tritell, Director, Office of International Affairs, Federal Trade Commission



Antitrust in a World without a Center – Roundtable Discussion

Moderator: Eleanor Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law

John Fingleton, Chief Executive, Office of Fair Trading, United Kingdom

William Kovacic, Commissioner, Federal Trade Commission

Mario Monti, President of the Universita Commerciale Luigi Bocconi, Milan; former European Commissioner for Competition

Sheridan Scott, Partner, Bennet Jones LLP, Canada


Closing Remarks

April 18, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, April 17, 2009

Competition, the Crisis and the Road to Recovery

Posted by D. Daniel Sokol

Neelie Kroes, European Commissioner for Competition Policy, recently gave a speech on Competition, the Crisis and the Road to Recovery.

April 17, 2009 | Permalink | Comments (0) | TrackBack (0)