Thursday, February 23, 2012

OFT Head John Fingleton to Step Down

Posted by D. Daniel Sokol

OFT Chief Executive John Fingleton has announced that he will step down after seven years. I have had an opporunity to interact with John around the world. He is smart, engaging and has had a temendous influence internationally. I have the greatest respect for him. From the OFT press release:

The OFT today announced that its Chief Executive, John Fingleton, is to step down later in 2012, after seven years in the role.

He said: 'I am proud of the OFT's achievements over the past seven years. During that time we have tackled major issues of concern to the public, helping to ensure that consumers are treated fairly and that firms are competing vigorously and transparently for their custom. In very many UK sectors, consumers are increasingly served by competitive, efficient businesses that comply with consumer and competition law. 'As the Government moves closer to a decision on the future structure of the regime, this is a good time for someone new to take the helm at the OFT and steer the competition and consumer regime into the future. I have not yet decided on my next career move.'

February 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Endogenous Lysine Strategy Profile and Cartel Duration: An Instrumental Variables Approach

Posted by D. Daniel Sokol

Jun Zhou (University of Bonn, University of Tilburg) explores Endogenous Lysine Strategy Profile and Cartel Duration: An Instrumental Variables Approach.

ABSTRACT: Colluding firms often exchange private information and make transfers within the cartels based on the information. Estimating the impact of such collusive practices — known as the “lysine strategy profile(LSP)” — on cartel duration is difficult because of endogeneity and omitted variable bias. I use firms ’linguistic differences as an instrumental variable for the LSP in 135 cartels discovered by the European Commission since 1980. The incidence of the LSP is not significantly related to cartel duration. After correction for selectivity in the decision to use the LSP, statistical tests are consistent with a theoretic prediction that the LSP increases cartel duration.

February 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Antitrust Law Scholar Tom Sullivan Named President of the University of Vermont

Posted by D. Daniel Sokol

I am happy to announce that Tom Sullivan (among other accolades, co-author with my friend and colleague at UF Jeff Harrison on the book Understanding Antitrust and its Economic Implications) has been announced as the next President of the University of Vermont. See the press release here.

February 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Entrepreneurial Commercialization Choices and the Interaction between IPR and Competition Policy

Posted by D. Daniel Sokol

Joshua S. Gans (Rotman School of Management - University of Toronto) and Lars Persson, (Research Institute of Industrial Economics (IFN)) have a very interesting paper on Entrepreneurial Commercialization Choices and the Interaction between IPR and Competition Policy.

ABSTRACT: This paper examines the interaction between intellectual property protection and competition policy on the choice of entrepreneurs with respect to commercialization as well as the rate of innovation. We find that stronger intellectual property protection makes it more likely that entrepreneurs will commercialize by cooperating with incumbents rather than competing with them. Consequently, we demonstrate that competition policy has a clearer role in promoting a higher rate of innovation in that event. Hence, we identify one reason why the strength of the two policies may be complements from the perspective of increasing the rate of entrepreneurial innovation.

February 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 22, 2012

Enforcer's Consideration of Compliance Programs in Europe: Are 2011 Initiatives Raising Their Profile or Reducing It to the Lowest Common Denominator?

Posted by D. Daniel Sokol

Nathalie Jalabert-Doury & Gillian Sproul (Mayer Brown) have written on Enforcer's Consideration of Compliance Programs in Europe: Are 2011 Initiatives Raising Their Profile or Reducing It to the Lowest Common Denominator?

In Europe, compliance programs have been implemented by companies for many years. However, few competition authorities had clarified how they viewed these compliance initiatives, nor the impact of having (or not having) compliance programs on enforcement decisions. It took a long time for the European Commission to address the issue in any of its reports or notices. Then, in 2011, three competition authorities produced new guidance documents, outlining their support for compliance programs: the U.K. Office of Fair Trading ("OFT), the French Competition Authority ("FCA"), and the European Commission itself. Are these documents good news for businesses? The documents do show that competition authorities will now at least recognize compliance programs in Europe. However, behind the supportive tone, and the provision of more detailed guidance, the new guidelines in the United Kingdom and France only go as far as maintaining existing compliance reductions with reinforced conditions. Furthermore, the main emphasis of the European Commission's guidance appears to be on its commitment not to consider compliance programs as an aggravating circumstance.

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

The Unnoticed Difference between Antitrust and Competition Policy

Posted by D. Daniel Sokol

Petra Lunackova (Institute of Economic Studies, Charles University, Prague) describes The Unnoticed Difference between Antitrust and Competition Policy.

ABSTRACT: This paper presents a model which focuses on differences between the competition policy of the EU and antitrust of the U.S. It introduces three versions – Neutral, American, and European. Two-stage game model takes the authority’s perspective and describes options and behavior of antitrust officials when a firm engages in non-price vertical agreement (possibly restraint). Optimal behavior is expressed as expected income of the authority (EIA) which is a function of probability of wrong decision(s) in the course of action. It takes into account specific preferences, different types of errors, fear of those errors, and harm they might cause. Comparison shows some unnoticed features and results slightly in favor of the EU.

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

On the Price Effects of Horizontal Mergers: A Theoretical Interpretation

Posted by D. Daniel Sokol

Emilie Dargaud (Universite de la Reunion) and Carlo Reggiani (University of Manchester) provide comments On the Price Effects of Horizontal Mergers: A Theoretical Interpretation.

ABSTRACT: Horizontal mergers are usually under the scrutiny of antitrust au- thorities due to their potential undesirable e¤ects on prices and con- sumer surplus. Ex-post evidence, however, suggests that not always these e¤ects take place and even relevant mergers may end up hav- ing negligible price e¤ects. The analysis of mergers in the context of non-localized spatial competition offers a further explanation of that evidence: in this framework both positive and zero price e¤ects are possible outcomes of the merger activity.

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition Policy in Global Markets Efficiencies and remedies in lean times 22 June 2012

Posted by D. Daniel Sokol

Competition Policy in Global Markets Efficiencies and remedies in lean times 22 June 2012
Chatam House

This annual competition policy conference will focus on the challenges faced by regulators and industry world-wide as a result of the global downturn and budget cuts. Issues to be discussed include: Should there be a move from case-by-case or complaints-driven enforcement to sector-specific, ex officio cases? Should enforcement reflect a business’s economic difficulties? Competition issues relating to new technologies and the extractive industries. Speaker highlights: Joaquín Almunia (Commissioner for Economic & Monetary Affairs, European Commission), William E Kovacic (Global Competition Professor of Law and Policy, George Washington University), J Thomas Rosch (Commissioner, US Federal Trade Commission) Information and registration: www.chathamhouse.org/competition2012

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Price Competition or Tacit Collusion

Posted by D. Daniel Sokol

Makoto Yano (Institute of Economic Research, Kyoto University) and Takashi Komatsubara (Institute of Economic Research, Kyoto University) ask Price Competition or Tacit Collusion.

ABSTRACT: Every now and then, we observe a fierce price war in a real world market, through which competing firms end up with a Bertrand-like price competition equilibrium. Despite this, very little has been known in the existing literature as to why a price competition market is formed. We address this question in the context of a choice between engaging in price competition and holding a price leader. Focusing on a duopoly market, we demonstrate that if supply is tight relative to demand, and if the cost differential between firms is reasonably large, a price competition market is formed non-cooperatively.

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Pricing in Retail Payment Systems: A Public Policy Perspective on Pricing of Payment Cards

Posted by D. Daniel Sokol

Wilko Bolt (De Nederlandsche Bank) and Sujit Chakravorti (De Nederlandsche Bank) address Pricing in Retail Payment Systems: A Public Policy Perspective on Pricing of Payment Cards.

ABSTRACT: The provision of retail payment services is complex with many participants engaging in a series of interrelated bilateral transactions and subject to large economies of scale and scope along with strong adoption, usage and network externalities. This makes sound public policy difficult. We focus on three types of market interventions for various countries. We argue that intervention into payment markets should concentrate on the removal of entry barriers in payment markets and providing greater incentives to adopt efficient payment instruments without stifling private sector investment in more efficient payment technologies over the long term. While the theoretical literature on the economics of payment cards is growing, the empirical literature is yet too limited to provide much guidance to public authorities. Eventually, the outcomes from different types of market interventions will provide a useful “natural experime! nt” to refute or validate the various theories of the economics of payments.

February 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 21, 2012

Consumer credit and payment cards

Posted by D. Daniel Sokol

Wilko Bolt, Elizabeth Foote and Heiko Schmiedel (all De Nederlandsche Bank) explore Consumer credit and payment cards.

ABSTRACT: We consider debit and credit card networks. ABSTRACT: Our contribution is to introduce the role of consumer credit into these payment networks, and to assess the way this affects competition and equilibrium fees. We analyze a situation in which overdrafts are associated with current accounts and debit cards, and larger credit lines with ‘grace’ periods are associated with credit cards. If we just introduce credit cards, we find their merchant fees depend not only on the networks’ cost of funds and the probability of default, but also on the interest rates of overdrafts. Whilst debit card merchant fees do not depend on funding costs or default risk in a debit-card only world, this changes when they start to compete with credit cards. First, debit merchant acceptance increases with the default probability, even though merchant fees increase. Second, an increase in funding costs causes a surprising increase in debit merchant fe! es. Effectively, the bank offering the debit card benefits from consumers maintaining a positive current account balance, when they use their credit instead of their debit card. As a result, this complementarity may lead to relatively high debit card merchant fees as the bank discourages debit card acceptance at the margin.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

A battle between branded and me too brands (unbranded) products

Posted by D. Daniel Sokol

Muhammad Imtiaz Subhani, Iqra University, Syed Akif Hasan, Iqra University and Amber Osman, Iqra University describe A battle between branded and me too brands (unbranded) products.

ABSTRACT: Consumers have numerous options to select and buy various kinds of products. A retail outlet offers branded and me too (unbranded) items to the customers to buy from. The consumption pattern of both forms of products has which sort of variations, requires an accurate estimation and findings. For the outlined stated manifesto, personal survey technique was employed for grabbing the first hand data. Co- integration was used to understand and judge the co-variation between branded and me too (unbranded) products. Exclusive insights were revealed between the two different classes of product that an increase in consumer’s income level urges consumers to increase their consumption of branded products. Similarly, consumers opt to purchase branded product as there is a strong perception that branded items have good quality. While, it is also found that if there is an increase in the prices of branded and unbranded products than none of the products clearly win the battle and they have the same pattern for being consumed which is the co-movement of their consumption patterns.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

ABA Section of Antitrust Law International Scholar in Residence Program - Announcement

Posted by D. Daniel Sokol

International Scholar in Residence Program - Announcement

The Section of Antitrust Law is pleased to announce the creation of its International Scholar in Residence ("SAL SIR") Program. For the academic years 2012-13 and 2013-14, the program will provide funding of up to $10,000.00 USD for each of one (1) or two (2) scholars to visit the United States to pursue their competition policy-related research.

Applications are invited from junior faculty members (those who have been engaged in full-time teaching for five years or less) as well as current or recent Ph.D. students who have a demonstrated interest in the study of competition policy. SAL SIR would be expected to visit the United States for a period between six (6) weeks and (3) months, likely during the Spring semester. During their time in the U.S., SAL SIR will conduct research, meet and interact with members of the U.S. antitrust community, and hopefully attend and possibly participate in one or more of the SAL's principal meetings, such as the annual Spring Meeting, which is held in Washington, D.C. Although arrangements can be tailored to the particular needs of each scholar's research proposal, it is expected that SAL SIR will be resident in Washington for at least some of their time in the U.S., so they can have access to federal agency personnel as well as a range of academics, lawyers, and consulting firms. SAL SIR can also propose short visits to state enforcement agencies or U.S. academic institutions outside of Washington, D.C., provided the visit will advance their research.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Using Competition Policy to Promote "Shared Growth" in Korea

Posted by D. Daniel Sokol

Seonghoon Jeon (Sogang University - Economics) has an interesting article on Using Competition Policy to Promote "Shared Growth" in Korea.

ABSTRACT: "Shared Growth," a principle that both large and small companies should grow together, is among the top priorities on the political agenda of all Korean parties. There are many policy instruments to promote shared or mutual growth of large companies and small-medium enterprises ("SMEs"), but the Korea Fair Trade Commission ("KFTC") has played a pivotal role.

In this column, I would like to address the issue of using competition policies to promote shared growth in Korea, with an emphasis on innovation. Even though the recent drive of shared growth by KFTC covers issues larger than innovation, a main focus is to encourage cooperation in research and development ("R&D") between large companies and small-medium enterprises.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives

Posted by D. Daniel Sokol

Marcella Scrimitore, University of Salento discusses Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives.

ABSTRACT: We examine both quantity and price competition between a number of profit-maximizing firms and a state-controlled enterprise (SCE). The objective function of the latter is strategically defined by a welfare-maximizing government which weighs the SCE’s profits relative to consumer surplus and private profits. Different motives drive the government‘s optimal behavior in the two competitive settings and lead all firms in oligopoly to gain higher profits in Cournot than in Bertrand. The profit ordering is reverted, and social welfare is enhanced, with respect to the purely-mixed market examined by Ghosh and Mitra (2010). In duopoly, aggregate profits are equivalent in Cournot and Bertrand.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Competitive Effects of Exchanges or Sales of Airport Landing Slots

Posted by D. Daniel Sokol

James D. Reitzes, The Brattle Group Brendan McVeigh, The Brattle Group, Nicholas Powers, The Brattle Group and Samuel Moy, The Brattle Group explore Competitive Effects of Exchanges or Sales of Airport Landing Slots.

ABSTRACT: We investigate the competitive effects of exchanges or sales of airport landing slots. In our model, airlines with potentially asymmetric slot allocations must decide upon which routes to use their landing slots. When all airlines serve the same routes in a slot-constrained Cournot Nash equilibrium, small changes in slot allocations among airlines do not affect the overall allocation of slots across routes or air fares. In a symmetric equilibrium where slot holding airlines have the same number of slots, we find that an increase in the number of slot-holding airlines leads to higher social welfare and consumer surplus, although the number of served routes may decline. Under asymmetric slot allocations, larger slot holders serve "thin" demand routes that are not served by smaller slot holders. In this situation, transfers of slots from larger to smaller slot holders increase social welfare and consumer surplus, even though fewer routes may be served. More generally, our results suggest that increases in slot concentration are harmful to consumers and social welfare, although consumers on relatively thin routes may gain air transportation service as a result.

February 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, February 20, 2012

Convergence and Its Discontents: A Reconsideration of the Merits of Convergence of Global Competition Law

Posted by D. Daniel Sokol

Thomas Cheng (Hong Kong University - Law) has posted Convergence and Its Discontents: A Reconsideration of the Merits of Convergence of Global Competition Law.

ABSTRACT: This Article examines the recent phenomenon of the convergence of competition law regimes across the globe. The increasing harmonization of competition law, at both the procedural and substantive levels, has been widely discussed and applauded in recent years. This Article casts doubt on the conventional wisdom that convergence necessarily constitutes a positive development in global competition law. After analyzing the causes of the phenomenon, this Article argues that there should be limits to the pursuit of convergence. First, the costs of convergence should not be overlooked. The most important of such costs is the loss of national regulatory prerogative. Second, the multitude of goals that are pursued by different jurisdictions in their competition laws poses serious obstacles to convergence. Finally, the need to incorporate economic development considerations and cultural variations in market behavior further cautions against wholesale harmonization of competition laws.

February 20, 2012 | Permalink | Comments (0) | TrackBack (0)

CALL FOR PAPERS: THIRD WORKSHOP FOR JUNIOR RESEARCHERS ON THE LAW AND ECONOMICS OF INTELLECTUAL PROPERTY AND COMPETITION LAW June 18 to June 20, 2012

Posted by D. Daniel Sokol

International Max Planck Research School for Competition and Innovation & the Professorship for Intellectual Property, ETH Zurich CALL FOR PAPERS From June 18 to June 20, 2012, the International Max Planck Research School for Competition and Innovation (www.imprs-ci.ip.mpg.de) and the Professorship for Intellectual Property at ETH Zurich (www.ip.ethz.ch) will jointly organize their

THIRD WORKSHOP FOR JUNIOR RESEARCHERS ON THE LAW AND ECONOMICS OF INTELLECTUAL PROPERTY AND COMPETITION LAW

The workshop will enable a small number of junior researchers from law and from economics to engage in an intensive, rigorous discussion of their own scholarly work. Several senior professors from law and from economics departments in Europe and the United States will provide feedback on the research projects. Keynote speakers & commentators include faculty of both hosting institutions as well as Professors Harry First (New York University), Mark Schankerman (London School of Economics) and Geertrui Van Overwalle (Universities of Leuven & Tilburg). The workshop will be held at Castle Ringberg (http://www.schloss-ringberg.mpg.de/home), which is located in a lovely region one hour south of Munich, Germany. The organizers will fund travel and hotel expenses for all invited workshop participants. Excellent junior researchers (doctoral students, postdocs, research fellows and assistant professors) from law and from economics are invited to submit their application online at www.easychair.org/conferences/?conf=ipcompetition2012.

After registering a user account, please fill out the "New submission" form. You must attach an extended abstract or a draft paper ("Upload Paper", draft paper is preferred, PDF or Word) as well as a curriculum vitae with a list of two references ("Attachment", reference letters are not required at submission time). Papers may not be published by the conference date; papers already accepted for publication must be in a stage where substantial feedback is still helpful. The submission deadline is March 31, 2012. Notifications of acceptance will be sent out by April 16, 2012. Papers are due for circulation among workshop participants and commentators on June 1, 2012. For junior researchers from economics, research projects should relate to industrial organization, competition, innovation and/or intellectual property and may include formal models as well as empirical or experimental approaches. For junior scholars from law, research projects should relate to intellectual property and/or competition law and must use law and economics as a research methodology. In order to achieve a good international mix of workshop participants, submissions from researchers from outside Europe are particularly encouraged. The International Max Planck Research School for Competition and Innovation is a joint initiative by the Max Planck Institute for Intellectual Property and Competition Law as well as the Department of Economics, the Munich School of Management, and the Faculty of Law of the Ludwig Maximilians University of Munich. Any questions concerning the workshop should be directed to Prof. Stefan Bechtold, sbechtold@ethz.ch.

February 20, 2012 | Permalink | Comments (1) | TrackBack (0)

One Network’s Effect: The Rise and Future of the ICN

Posted by D. Daniel Sokol

Maria Coppola Tineo, FTC describes One Network’s Effect: The Rise and Future of the ICN.

ABSTRACT: In the first decade of its existence the International Competition Network (ICN) has advanced to frontrunner position among international organizations that address competition policy. As the ICN looks to its next decade, and governmental belt-tightening forces most competition agencies to rethink resource allocation, a key question is whether the ICN’s success is attributable to the Network’s relevance and competence, or timing and luck? The ICN has reached the top by furthering international cooperation and coordination, influencing domestic policies, and building capacity of its members. Many of its very achievements, however, also pose the greatest risks for a free fall.

February 20, 2012 | Permalink | Comments (0) | TrackBack (0)

A Comparative Look on Foreign State Compulsion as a Defence in Antitrust Litigation

Posted by D. Daniel Sokol

Marek Martyniszyn, University College Dublin- School of Law has posted A Comparative Look on Foreign State Compulsion as a Defence in Antitrust Litigation.

ABSTRACT: This paper presents and investigates the foreign state compulsion as a defence in transnational antitrust cases. It takes a comparative approach by looking at the doctrine and its developments in the United States and in the European Union. To illustrate the relevance of the defence and the difficulties of its applicability, this paper analyses the new antitrust case law emerging in the US involving Chinese export cartels. It is argued that at present the standard required to prove compulsion is too high to serve its function.

February 20, 2012 | Permalink | Comments (0) | TrackBack (0)