Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, April 30, 2010

21st Annual Communications and Competition Law Conference

Posted by D. Daniel Sokol

A conference presented by the IBA Communications Law Committee and the IBA Antitrust Committee and supported by the IBA European Regional Forum.

The event will discuss key regulatory and antitrust developments that will affect the communications industry, primarily from an EU standpoint but also looking at other jurisdictions such as the US.

Topics include

The telecoms regulatory agenda; the interrelation between telecoms, media and anti-trust regulation; convergence as merger control in the communications industry.

Who should attend?
In-house and private practice lawyers, regulators, bankers and professionals involved in providing advice and guidance to the converging communications and technology industry.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Price Coordination in Two-Sided Markets: Competition in the TV Industry

Posted by D. Daniel Sokol

Hans Jarle Kind, Norwegian School of Economics & Business Administration (NHH), CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Norwegian School of Economics and Business Administration (NHH) - Department of Economics, Tore Nilssen, University of Oslo - Department of Economics, and Lars Sorgard, Norwegian School of Economics and Business Administration (NHH), describe Price Coordination in Two-Sided Markets: Competition in the TV Industry.

ABSTRACT: The TV industry is a two-sided market where both advertisers and viewers buy access to the programs offered by competing TV channels. Under the current market structure advertising prices are typically set by TV channels while viewer prices are set by distributors (e.g. cable operators). The latter implies that the distributors partly internalize the competition between the TV channels, since they take into account the fact that a lower viewer price at one channel will harm rival channels. We nonetheless find that a shift to a market structure where both advertising prices and viewer prices are set competitively by the TV channels might increase joint industry profits. The reason is that this market structure, in contrast to the one we observe today, directly addresses the two-sidedness of the market. We also show that this is to the benefit for the viewers.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Semi-Collusion on Investments in the Mobile Internet Market

Posted by D. Daniel Sokol

Torben Stühmeier, University of Duesseldorf, Düsseldorf Institute for Competition Economics has posted Semi-Collusion on Investments in the Mobile Internet Market.

ABSTRACT: This model analyzes mobile network operators' (MNOs) incentives to invest in their facilities in the era of the mobile internet, given a widespread use of third generation (3G) services. Usually, MNOs agree on reciprocal roaming to offer full service to their subscribers. Roaming induces investment spillovers, as due to roaming agreements also rival customers benefit from investment of a MNO. It will be analyzed how different regimes of access regulation affect MNOs' incentives to invest. Semi-collusion on investments should be allowed, if investment spillovers are sufficiently large. The model is able to provide a rational for a ''bill-and-keep'' access pricing regime, proposed by the European Commission, given that a regulator is both able to determine access prices and investments. Given that a social planer only regulates access prices, an access price of zero may lead to over-and underinvestments from a welfare perspective.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

DG Competition is looking for competition lawyers and economists

Posted by D. Daniel Sokol

See here.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

International Competition Network Adopts Recommended Practices to Improve Merger Analysis and Presents Report on Unilateral Conduct Issues

Posted by D. Daniel Sokol

The DOJ press release is here.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Summary of ICN Work Plan for 2010-11

Posted by D. Daniel Sokol

With the ICN meeting over, the world's antitrust enforcers can focus on next steps for the upcoming year.  Please see here for the 2010-11 work plan.

April 30, 2010 | Permalink | Comments (0) | TrackBack (0)

Against the Stand-Alone-Cost Test in U.S. Freight Rail Regulation

Posted by D. Daniel Sokol

Russ Pittman (DOJ) has posted a diatribe Against the Stand-Alone-Cost Test in U.S. Freight Rail Regulation.

ABSTRACT: The stand-alone-cost test has become an expensive, extensive, and time-consuming part of the regulatory practice of the U.S. Surface Transportation Board in the performance of its statutory duty to protect "captive shippers" from monopoly rail rates. Worse, a close examination of the history of its adoption and application suggests only a very tenuous connection with its claimed intellectual foundations, the classic works of Faulhaber (1975) and Baumol, Panzar, and Willig (1982). It is time to retire this tool and replace it with something simpler and more effective and transparent.

April 30, 2010 | Permalink | Comments (3) | TrackBack (0)

Thursday, April 29, 2010

2nd Circuit Cipro Reverse Payments Decision is Out

Posted by D. Daniel Sokol

The Second Circuit upheld the Cipro settlement today, but recommended that plaintiffs file for en banc review.  Mike Carrier (Rutgers Camden - Law) offers his thoughts here.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

The D.C. Circuit’s Error in Rambus and a More Justifiable Framework for Causation and Standard-Setting

Posted by D. Daniel Sokol

Mike Carrier (Rutgers-Camden Law) has posted The D.C. Circuit’s Error in Rambus and a More Justifiable Framework for Causation and Standard-Setting.

ABSTRACT: In the most important ruling ever on causation and standard-setting, In re Rambus, the D.C. Circuit made it unnecessarily difficult to demonstrate causation. It erected roadblock after roadblock in front of legitimate cases alleging monopolization in the standard-setting context.

The primary hurdle took the form of a dichotomy. The court reasoned that Rambus’s nondisclosure of its patents was responsible for the standard-setting organization (SSO) either (1) adopting its technology or (2) failing to obtain reasonable-and-nondiscriminatory (RAND) royalties. But its reasoning on each prong of the dichotomy cut off legitimate claims.

The first prong, of adoption, received a strict “but for” causation standard that is essentially impossible for a plaintiff to show. The FTC was punished for not “eliminating the possibility” that the SSO might have included Rambus’s technology even if it had been disclosed. But the difficulties of proving a sole cause and predicting a counterfactual setting are extremely difficult. The challenges are even higher in the standard-setting context, in which there are numerous potential technologies, including many that are unpatented and less expensive.

The second prong, addressing RAND royalties, also suffered from an excessive reliance on the case of NYNEX Corp. v. Discon, Inc., which presented a far different factual scenario than Rambus. The D.C. Circuit imbued one line in the case, on monopoly pricing, with far more weight than was warranted. In addition, unlike Rambus, the case dealt with the conduct of a party that already had monopoly power.

Antitrust law has no developed standard of causation upon which the D.C. Circuit could have relied. This Article begins the process of constructing such a framework by turning to the law with the most developed causation framework, tort law. Two conceptions of causation, factual and legal cause, offer instructive elements.

The factual cause inquiry asks if the defendant’s conduct played any role in the anticompetitive effect. It makes clear that each of multiple causes could be a factual cause. It then determines whether the conduct reasonably contributed to the effect. In the Rambus case, the company’s nondisclosure appeared to reasonably contribute to its monopoly power.

The legal cause inquiry determines if the conduct was the type targeted by the antitrust laws and if it substantially contributed to the defendant’s monopoly power. The FTC would have been able to show legal cause in this case. Nor would Rambus have been able to rebut these showings since it failed to offer evidence that its technology was so superior that (even if it had disclosed) the SSO would have adopted it, let alone adopted it without a RAND guarantee.

In short, borrowing a framework from tort law for antitrust causation promises to improve upon the D.C. Circuit’s requirement of showing that the conduct was the sole cause of the anticompetitive effect. It does so by forging a strong, but not impossible, connection between the challenged conduct and the anticompetitive effect.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Preserving a Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement

Posted by D. Daniel Sokol

Jon Baker (American University - Law) has posted the very interesting Preserving a Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement.  This is an article worth downloading.

ABSTRACT: The antitrust rules governing exclusionary conduct by dominant firms are among the most controversial in U.S. competition policy. During the first decade of the twenty-first century, they were debated in three arenas, involving legal policy, economic policy, and politics. In each arena, the dispute mainly arose as criticism of traditional standards by advocates of less intervention. Viewed through a political economy lens, the controversy can be understood as a potential challenge to an informal political bargain reached during the 1940s by which competition was adopted as national economic policy in preference to regulation or laissez-faire. From this perspective, and applying insights from the economic literature on the stability of cartels, the non-interventionist criticism is best viewed as a bid for reform of the competition policy bargain, similar in spirit to the reforms undertaken during the 1980s in response to Chicago school criticisms. It could also be interpreted as part of a broader attack on the post-New Deal regulatory state. However understood, the non-interventionist effort to raise the bar for plaintiffs seeking to demonstrate monopolization by exclusionary conduct faces hurdles that limit its prospects for success.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Proving Common Impact in Antitrust Class Actions: Current Legal and Economic Thinking

Posted by D. Daniel Sokol

Proving Common Impact in Antitrust Class Actions: Current Legal and Economic Thinking
May 12, 2010
8:00 AM - 9:30 AM (CST)
Gleacher Center, 450 North Cityfront Plaza Drive, Chicago, Illinois

Description:
With issues raised by the Hydrogen Peroxide Litigation far from settled and the recent affirmation of class in Wal-Mart en banc, economic guidance in addressing proof of common impact is essential. Our panelists will review the legal landscape defined by these landmark cases and offer a systematic way of approaching common methods of proof, including:

  • The legal challenges of class certification in light of the recent affirmation of class in Dukes v.Wal-Mart and In re Hydrogen Peroxide Antitrust Litigation, with an update on the 9th and 3rd circuits
  • Assessment of merits and whether economic damages can be assessed at the class level
  • A systematic approach to testing whether regression analysis offers a common method of proof to assist the courts in assessing class certification


Panelists:
Edward A. Snyder, Ph.D., Dean and George Shultz Professor of Economics, University of Chicago Booth School of Business
John W. Treece
, Esq., Partner, Sidley Austin LLP
Pierre Y. Cremieux, Ph.D., Managing Principal, Analysis Group
Andrew Wong, Ph.D., Managing Principal, Analysis Group (moderator)

REGISTER: http://www.analysisgroup.com/common_impact_seminar.aspx

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Advocate General Opinion in Akzo Nobel Case - This is a Significant Setback for In-house Lawyers

Posted by D. Daniel Sokol

The opinion is here.  The WSJ covers it here.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Harmonizing Essential Facilities

Posted by D. Daniel Sokol

Spencer Weber Waller, Loyola University Chicago School of Law and William Tasch, Loyola University Chicago School of Law - Student explain the process of Harmonizing Essential Facilities.

ABSTRACT: The United States and the rest of the world have taken markedly different views of the essential facilities doctrine in recent years. Although the essential facility doctrine has many defenders in the United States, it has been criticized by the Supreme Court in dicta, in the report of the Antitrust Modernization Commission, and the more recent monopoly report of the Bush administration Justice Department.

The situation is quite different everywhere else. In Europe, the essential facilities doctrine, also called unilateral refusals to deal, has been applied over the past thirty years by the European Commission, the Court of First Instance, the European Court of Justice, and increasingly courts of the twenty-seven Member States. In addition, the European Commission’s recently-issued draft guidelines on the abuse of dominance endorse the doctrine and sensibly describe its application and limitations.

The situation is similar in countries outside of the European Union. Most jurisdictions, both common law and civil law, apply some form of the essential facility doctrine to unjustifiable denials of access to infrastructure and other forms of facilities that are impossible to duplicate, but nonetheless essential for competition.

Of course, just because everyone does something does not make it right. However, there is a growing international consensus that it is sometimes appropriate to require a regime of nondiscriminatory access to infrastructure and related facilities. The extent to which the international community is applying some version of the essential facilities doctrine in a thoughtful and consistent manner suggests that the United States is an outlier and should rethink its position. A revitalized essential facilities doctrine more in line with the international consensus would be beneficial domestically as well as internationally.

In this essay, we look briefly at the law of the essential facilities doctrine in the United States and abroad in order to analyze which jurisdictions have applied these rules in a sensible and economically efficient manner, and which have used the doctrine in a more ad hoc and arbitrary fashion. Part One analyzes the situation in the United States. Part Two examines the law of essential facilities and unilateral refusals to deal in the European Union and its member states. Part Three looks at the rest of the world and the variety of approaches followed in diverse common and civil law jurisdictions that have examined this question. Part Four looks at the prospects for harmonization of these divergent approaches through the International Competition Network and the more constructive role that the United States must play if these efforts are to be successful. Part Five offers substantive suggestions to better harmonize U.S. law and practice with the developing consensus that antitrust law has an important role to play when dominant firms deny access to essential facilities in economically and socially harmful ways.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

US Antitrust Law under an Obama Administration: One year on

Posted by D. Daniel Sokol

The UCL Centre for Law and Economics is pleased to present a seminar:

US Antitrust Law under an Obama Administration: One year on


Speakers: 
Professor Eleanor Fox, 
New York University School of Law  
Professor Andrew Gavil, Howard University School of Law (TBC)
Professor Maurice Stucke, University of Tennessee College of Law
Professor Spencer Weber Waller, Institute of Consumer Antitrust Studies, Loyola University Chicago School of Law  

Chair: 
Dr Ioannis Lianos, UCL Faculty of Laws 


Tuesday 1 June 2010, 4 - 6 pm
at UCL Faculty of Laws 

Accredited with 2 CPD hour by the SRA and BSB.

Fees:
Standard fee = £25
Free of charge for academics, the judiciary and students. 

For more information on the speakers and to book your place please click on the link below or go to: 
http://antitrust-obama.eventbrite.com/


You are invited to the following event:
US Antitrust Law under an Obama Administration: One year on

Date:
Tuesday, June 01, 2010 from 4:00 PM - 6:00 PM (GMT)

Location:
UCL Faculty of Laws
Bentham House
Endsleigh Gardens
WC1H 0EG London
United Kingdom
 
  Can you attend this event?  Respond Here  
 
For more information click here

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Payment Cards Pricing Patterns: The Role of Antitrust and Regulatory Authorities

Posted by D. Daniel Sokol

Alberto Heimler, Government of the Italian Republic (Italy) - Advanced School of Public Administration explores Payment Cards Pricing Patterns: The Role of Antitrust and Regulatory Authorities.

ABSTRACT:

Antitrust enforcers and regulators are increasingly worried that interchange fees in four-party systems, more than being an instrument for addressing usage externality, had become a collusionary device, setting a floor under which the charges could not go. Competition is not working effectively in card payment systems. The reason is that with the non discrimination rule in place, the cost of payment services is transferred by merchants to all buyers, not just to cardholders. As a result, cardholders (that do not pay for the cost of their choice) tend to use the payment instrument that offers the highest private benefits to them (the one with the better reward system), often the most costly. In turn, issuers tend to offer to consumers the cards that provide the highest interchange fee. This paper shows that eliminating the interchange fee and allowing for both issuers and acquirers to charge cardholders and merchants respectively may lead to the internalization of usage externalities and to markets for payment services to operate more effectively. Furthermore the elimination of the no-discrimination rule may also discipline three party systems, as the Australian example shows.

April 29, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 28, 2010

Review of Michael Carrier's 'Innovation in the 21st Century'

Posted by D. Daniel Sokol

Geoff Manne, International Center for Law & Economics (ICLE), Lecturer in Law, Lewis & Clark Law School provides a Review of Michael Carrier's 'Innovation in the 21st Century'.

ABSTRACT: This essay reviews Michael Carrier's recent book, Innovation in the 21st Century. While the book is well-written and full of accessible content, it nevertheless fails in its ambitious effort to defend the concept of an antitrust-relevant "innovation market." The essay notes that there is considerable uncertainty about the relationship between regulation and innovation, and suggests that Carrier is insufficiently sensitive to the limitations of his analysis.

April 28, 2010 | Permalink | Comments (0) | TrackBack (0)

Anticompetitive Effect

Posted by D. Daniel Sokol

Hon. Richard D. Cudahy, U.S. Court of Appeals for the 7th Circuit and Alan Devlin, his clerk, ponder Anticompetitive Effect.

ABSTRACT: Despite receiving thorough analytic treatment from the judiciary and academy, and notwithstanding its sophisticated doctrine, antitrust law remains dogged by a profound incongruity. For precisely what the law condemns remains elusive. Certainly, there is widespread agreement that the antitrust laws exist to promote some measure of efficiency. While this baseline serves as an adequate foundation for judging the legality of many business practices, it proves insufficient for some others. This Article seeks to inject much-needed specificity into the concept of “anticompetitive.” In doing so, it addresses the question of whether the Sherman Act is properly concerned with aggregate or consumer welfare. It explores the extent to which anticompetitive effect refers to more than an absence of competition. It considers how the law should treat conduct that results in prices increases, but not demonstrable output restrictions. It explains how intertemporal effects complicate analysis and explores the implications of the paradoxical fact that “anticompetitive” conditions may be the sine qua non of long-run welfare. By highlighting the amorphous nature of antitrust’s most fundamental concept, and explaining how it can be clarified, the Article seeks to alleviate a significant shortcoming in the law.

April 28, 2010 | Permalink | Comments (0) | TrackBack (0)

Predation Under Perfect Information

Posted by D. Daniel Sokol

Cédric Argenton, Tilburg Law and Economics Center has posted Predation Under Perfect Information.

ABSTRACT: In an oligopoly configuration characterized by high barriers to (re-)entry, a finite horizon, perfect information about demand and costs and the presence of three identical firms, we show that two of them (the predators) can choose to charge an initial price that is so low that the third (the prey) decides to exit immediately, after which the predators can enjoy higher profits, even if they do not raise their price. Predatory prices are thus observed on the equilibrium path and the predators end up earning more than in the best Bertrand (or even, collusive) equilibrium with three firms.

April 28, 2010 | Permalink | Comments (0) | TrackBack (0)

UCL Centre for Law and Economics conference, 21 & 22 May 2010, Nicosia, Cyprus

Posted by D. Daniel Sokol

The UCL Centre for Law and Economics would like to cordially invite you to a conference on competition law on 21 and 22 May 2002 in Cyprus.

Conference proceedings on 21 May 2010 will be on consumer protection and on 22 May 2010 on information exchange agreements. For more information on the conference and a programme, please visit the Eventbrite page at http://ucl-cyprus-conference.eventbrite.com/.

Tickets will be available for £95 and the event will be registered for CPD.

You are invited to the following event:
UCL Centre for Law and Economics conference, 21 & 22 May 2010, Nicosia, Cyprus

Date:
Friday, May 21, 2010 at 5:00 PM
- to -
Saturday, May 22, 2010 at 6:00 PM (GMT+0200)


Location:
Administration Centre, National Bank of Greece
Auditorium 15
Arch. Makarios III Avenue
Nicosia
Cyprus
 
  Can you attend this event?  Respond Here  

April 28, 2010 | Permalink | Comments (0) | TrackBack (0)

Global Cartels, Leniency Programs and International Antitrust Cooperation

Posted by D. Daniel Sokol

Jay Pil Choi, Michigan State University - Department of Economics and Heiko A. Gerlach, University of Auckland - Department of Economics explore Global Cartels, Leniency Programs and International Antitrust Cooperation.

ABSTRACT: In this paper we analyze cartel formation and self-reporting incentives when firms operate in several geographical markets and face antitrust enforcement in different jurisdictions. We are concerned with the effectiveness of leniency programs and the benefits of international antitrust cooperation between agencies. When international antitrust prosecution is uncoordinated, multi-market contact allows firms to reduce the amount of self-reporting in equilibrium and sustain cartels more effectively. We then discuss the effects of information sharing among antitrust authorities as a function of how much and which type of information is exchanged. We show that extensive information sharing might have an adverse effect on self-reporting by cartel members.


 

April 28, 2010 | Permalink | Comments (0) | TrackBack (0)