Tuesday, April 24, 2012

2012 ICN Meeting Finishes - Links Available

Posted by D. Daniel Sokol

The ICN successfully concluded its eleventh annual conference last week in Rio de Janeiro, and appointed Mr. Eduardo Pérez Motta as the new Chair of the Steering Group. The conference press release http://www.internationalcompetitionnetwork.org/uploads/library/doc791.pdf and Mr. Pérez Motta's closing remarks, where he set out three areas he plans to emphasize during his tenure http://www.internationalcompetitionnetwork.org/uploads/library/doc790.pdf, are available here http://www.internationalcompetitionnetwork.org/news-and-events/newsroom.aspx.

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

A more general theory of commodity bundling

Posted by D. Daniel Sokol

Mark Armstrong (Oxford) have come up with A more general theory of commodity bundling.

ABSTRACT: This paper extends the standard model of bundling as a price discrimination device to allow products to be substitutes and for products to be supplied by separate sellers. Whether integrated or separate, firms have an incentive to introduce a bundling discount when demand for the bundle is elastic relative to demand for stand-alone products. Product substitutability typically gives an integrated firm a greater incentive to offer a bundle discount (relative to the model with additive preferences), while substitutability is often the sole reason why separate sellers wish to offer inter-firm discounts. When separate sellers coordinate on an inter-firm discount, they can use the discount to overturn product substitutability and relax competition.

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Should Google Search Be Regulated as a Public Utility?

Posted by D. Daniel Sokol

Mark A. Jamison, University of Florida - Warrington College of Business Administration, Public Utility Research Center asks Should Google Search Be Regulated as a Public Utility?

ABSTRACT: I examine the validity of the arguments for regulating Google search and find that they are insufficient and that regulation would likely be counterproductive. Google search does not fit the traditional frameworks for justifying regulatory control, namely, the public utility concept, common carrier concept, and essential facilities doctrine. For example, Google’s search is not monopolistic in nature, does not preclude rivals from competing against Google, does not rely upon grant of a franchise as does a utility, and does not take control of rivals’ content or service. Furthermore, the advocates for regulation fail to give adequate weight to the changes that constantly occur in the search business, the ways that rivals benefit from Google’s investments, the negative impacts of forcing Google to reveal its search algorithms, and regulation’s stifling effect on innovation.

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

The Credit Rating Agencies: How Did We Get Here? Where Should We Go?

Posted by D. Daniel Sokol

Lawrence White (NYU - Stern School of Business) asks The Credit Rating Agencies: How Did We Get Here? Where Should We Go?

ABSTRACT: The three major credit rating agencies-Moody's, Standard & Poor's ("S&P"), and Fitch-have attracted an increasing amount of media attention over the past five years. They were clearly central players in the housing bubble and collapse of the late 1990s through the mid 2000s and the financial debacle that followed, and they have more recently gained notoriety in downgrading the debt of various European countries-with S&P even downgrading the United States in August 2011.

So, who are these guys? What do they do? Why are they so important? Why did they err so badly with respect to mortgage bonds in the United States in the mid 2000s? In what direction should public policy go? And, since there are only three major rating agencies, is there a role for competition policy?

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Fines against Parent Companies in EU Antitrust Law: Setting Incentives for ‘Best Practice Compliance.'

Posted by D. Daniel Sokol

Karl Hofstetter (Schindler Holding AG and University of Zurich) and Melanie Ludescher (Schindler) have an interesting article on Fines against Parent Companies in EU Antitrust Law: Setting Incentives for ‘Best Practice Compliance.'

ABSTRACT: Antitrust fines imposed by the European Commission have reached record levels and have scratched or passed the EUR 1 billion mark in several cases. This expansion was, inter alia, made possible by the Commission’s practice to not only sanction responsible subsidiaries, but their parent companies as well. As a result, the fine cap, which Community law sets at 10% of the annual sales of responsible undertakings, has been ratcheted up significantly. This article maintains that the current practice of the European Commission, which fi nds at least arguable support in the case law of the Community courts, ignores the fundamental concept of limited liability for subsidiary corporations. It also lacks a sound basis in EU antitrust law. Perhaps most important, the fi ning practice of the Commission does not do justice to its pursued goal of effectively preventing antitrust violations by corporate managers and employees. Antitrust fines against corporations, be they subsidiaries or parent companies, should primarily be aimed at deterrence and therefore be based on fault. Absent any direct involvement in the antitrust violations of the top representatives of a corporation, fault on the part of the company should be defined as a deficiency in its compliance organization. ‘Best Practice Compliance’ should, therefore, take centre stage in an optimally designed antitrust fi ning policy. As a result, the amount of fi nes against companies, but also the question of whether a parent company bears co-responsibility for antitrust violations by its subsidiaries, should primarily hinge on whether and to what extent ‘Best Practice Compliance’ standards had been implemented.

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Tilburg June 15 2012 Innovation, Intellectual Property and Competition (IIPC) Conference

Posted by D. Daniel Sokol

The 2012 'Innovation, Intellectual Property and Competition (IIPC) Conference' is a Tilburg Law and Economics Centre (TILEC) event featuring the authors who received an IIPC grant from TILEC in 2011 to support their research and produce a paper. The selected papers deal with the economics of patents, copyright and competition. This year's conference is complemented by two morning sessions where leading European and American legal scholars will discuss issues related to patent law, competition and innovation.

Program

8.30-9.00 Registration and Coffee

9.00 Welcome address and opening remarks

Session I: Innovation and Intellectual Property Rights Chair: Geertrui Van Overwalle (Tilburg University and KU Leuven)

9.15 The US Patent Reform and Its Impact on Innovation Speaker: Michael Meurer (Boston University)

9.45 The European Unitary Patent Protection: Progresses and Challenges Speaker: Hanns Ullrich (College of Europe - Bruges)

10.15 Discussion Session II: Innovation and Competition Chair: Pierre Larouche (Tilburg University, Tilec)

11.15 The Reform of the Technology Transfer Block Exemption Regulation in the EU Speaker: Luc Peeperkorn (DG Competition, European Commission)

11.45 The 1995 Guidelines on Intellectual Property Licensing: The past, the present and the future Speaker: Bill Kovacic (George Washington University)

12.15 Discussion

12:45 Lunch Session III: Presentation of the papers awarded the IIPC Grant 2011 Chair: Eric van Damme (Tilburg University, Tilec)

14.00 Patent Trolls and Innovation Catherine Tucker (MIT)

14.40 Discussant: Michael Meurer (Boston University)

14.50 Open Discussion

15.10 Optimal Pricing and Quality of Academic Journals and the Ambiguous Welfare Effects of Forced Open Access: A Two-Sided Model Frank Müller-Langer (Max Plank Institute-Munich) and Richard Watt (University of Canterbury)

15.50 Discussant: Damien Geradin (Tilburg University, Tilec)

16.00 Open Discussion

16.20 Coffee Break

16.40 The Impact of Joint Patents on Incentive to Licence: Evidence from the US and Europe Andrea Fosfuri (Universidad Carlos III Madrid), Christian Helmers (Universidad Carlos III Madrid), Catherine Roux (University of St. Gallen)

17.20 Discussant: Esther van Zimmeren (KU Leuven)

17.30 Open Discussion

17:50 Conclusions

18.00 Drinks Participation to the conference is free of charge but registration is mandatory. Registration to this event is open until 1 June 2012. Please note that seats for the conference are limited. To receive an invitation for the conference, please register here. Tilec has a long-standing commitment to advanced research in the areas of innovation, intellectual property and competition. For more information about Tilec activities, research projects and publications please visit our website Should you have further queries, please contact Tilec event coordinator, Ms. Maartje van Genk, at the following email address tilec@uvt.nl

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

EU Competition Law and the Information and Communication Technology Network Industries

Posted by D. Daniel Sokol

Andrej Fatur has a new book on EU Competition Law and the Information and Communication Technology Network Industries.

ABSTRACT: Competition policies have long been based on a scholarly tradition focused on static models and static analysis of industrial organisation. However, recent developments in industrial organisation literature have led to significant advances, moving beyond traditional static models and a preoccupation with price competition, to consider the organisation of industries in a dynamic context. This is especially important in the field of information and communication technology (ICT) network industries where competition centres on network effects, innovation and intellectual property rights, and where the key driver of consumer benefit is technological progress. Consequently, when an antitrust intervention is contemplated, a number of considerations that arise out of the specific nature of the ICT sector have to be taken into account to ensure improved consumer welfare. This book considers the adequacy of existing EU competition policy in the area of the ICT industries in the light of the findings of modern economic theory. Particular attention is given to the implications of these dynamic markets for the competitive assessment and treatment of the most common competitive harms in this area, such as non-price predatory practices, tying and bundling, co-operative standard setting, platform joint ventures and co-operative R&D.

April 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, April 23, 2012

Antirust Professors on the Move and Visiting for 2012-13

Posted by D. Daniel Sokol

I am looking to compile a list of antitrust faculty who have accepted entry level or lateral offers and will be moving this summer to a new institution. Also let me know if there are any profs doing a visit next year.

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

Remarks as Prepared for Delivery By Acting Assistant Attorney General for the Antitrust Division Sharis A. Pozen at the Brookings Institution

Posted by D. Daniel Sokol

Remarks as Prepared for Delivery By Acting Assistant Attorney General for the Antitrust Division Sharis A. Pozen at the Brookings Institution are now up.

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

Competition Policy in Infrastructure Specific Sectors in the Estonian Case: Entwining of Natural Monopoly and Universal Service

Posted by D. Daniel Sokol

Diana Eerma, University of Tartu - Faculty of Economics and Business Administration and Juri Sepp, University of Tartu have written on Competition Policy in Infrastructure Specific Sectors in the Estonian Case: Entwining of Natural Monopoly and Universal Service.

ABSTRACT: There is a growing consensus that the successful development of infrastructure specific sectors depends a lot on the adaption of appropriate public policies and the effective implementation of these policies. The way how regulation is implemented plays an important role in infrastructure development and use. In the article the means of regulating economic policy in Estonia are systematized and evaluated looking at practices regarding both natural monopoly and universal service.

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

The Oligopoly Problem in EU Competition Law

Posted by D. Daniel Sokol Nicolas Petit (Liege) discusses The Oligopoly Problem in EU Competition Law. ABSTRACT: This paper offers a complete overview of the oligopoly problem in competition law and economics, with a specific focus on European Union (EU) law. A related purpose of the paper is to challenge the dominant view that merger control is the ultimate preventive remedy against tacit collusion. On close analysis, the merger-only enforcement paradigm against tacit collusion generates a systemic risk of type II errors. Part of this enforcement gap may, however, be alleviated through a more muscular enforcement of the rules on coordinated conduct (i.e. Article 101 TFEU) and on unilateral conduct (i.e. Article 102 TFEU). In this later respect, the paper formulates a possible theory of harm that would entitle agencies and courts to apply Article 102 TFEU to specific types of conduct by oligopolists.

The concept of abuse of collective dominance may in particular be applied to the artificial tactics which oligopolists adopt to protect an observed collusive equilibrium from the natural, disruptive effect caused by an external shock (entry, natural disaster, change in tax rate, etc.). In this sense, the paper is different from other scholarly proposals that recommend applying rules on unilateral conduct to excessive oligopoly prices and/or facilitating practices.

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

Price Discrimination and Fairness Concerns

Posted by D. Daniel Sokol

Florian Englmaier, University of Wurzburg - Institute of Economics and Social Sciences, Linda Gratz, Max Planck Institute for Intellectual Property and Competition Law, Ludwig Maximilians University of Munich - Munich Graduate School of Economics (MGSE) and Markus Reisinger, WHU - Otto Beisheim Graduate School of Management have written on Price Discrimination and Fairness Concerns.

ABSTRACT: We analyze the profitability of third degree price discrimination under consideration of consumers' fairness concerns within an experiment and explain the results within a theoretical framework. We find that with an increase in the price differential negative reciprocal reactions by disadvantaged consumers become stronger compared to positive reciprocal reactions by advantaged consumers. Consequently, the profit maximizing price differential lies below the one predicted to be optimal by standard theory. Further, profitability increases when consumers who are regarded as poorer are charged lower prices compared to when the wealth of the different consumer groups is unknown.

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

Saturday, April 21, 2012

Conference announcement: 19th St.Gallen International Competition Law Forum ICF (June 7th and 8th)

Posted by D. Daniel Sokol 

Conference announcement: 19th St.Gallen International Competition Law Forum ICF (June 7th and 8th)

The Institute of European and International Business Law from the University of St.Gallen,  Switzerland is pleased to invite you to the 19th St.Gallen International Competition Law Forum ICF  on June 7th and 8th 2012. Once again, leading experts in national, European and international  competition law will come together to discuss and share their ideas on the latest trends and  developments in the field and their practical implications.

The St.Gallen International Competition Law Forum ICF prides itself on being one of the most  established events of its kind in Europe. It attracts influential policy shapers, this year, for example,  Joaquín Almunia (European Commissioner for Competition), Andreas Mundt (President of the  German Competition Authority) or William Kovacic (Former Commissioner of the U.S. Federal Trade  Commission ) as well as internationally renowned academic experts and leading business  practitioners.

You will find all information on the conference in the programme flyer  (http://www.eur.unisg.ch/org/eur/sgifk.nsf/SysWebRessources/Flyer+ICF+19/$FILE/19thICFFlyer.pdf)  and under www.sg‐icf.ch. As places are limited, we encourage early registration!  

If you have further questions, please do not hesitate to contact the Institute of European and  International Business Law (europarecht@unisg.ch).   We very much look forward to seeing you this summer in St.Gallen!

April 21, 2012 | Permalink | Comments (1) | TrackBack (0)

Friday, April 20, 2012

Trade, Competition, and the Pricing of Commodities

Posted by D. Daniel Sokol

Simon J. Evenett (University of St. Gallen) and Frederic Jenny (Essec Business School) have edited Trade, Competition, and the Pricing of Commodities.

1 Introduction
Simon J Evenett and Frederic Jenny

2 Commodity Prices, Government Policies and Competition
Steve McCorriston

3 Price Formation and Price Trends in Exhaustible Resource Markets
Marian Radetzki

4 Price Effects of International Cartels in Markets for Primary Products
John M Connor

5 Global Welfare Consequences of Cartelisation in Primary Commodities: Cases of Natural Rubber and Banana
Pradeep S Mehta, Aradhna Aggarwal and Natasha Nayak

6 Export Cartels in Primary Products: The Potash Case in Perspective
Frederic Jenny

7 Reducing Distortions in International Commodity Markets: An Agenda for Multilateral Cooperation Bernard Hoekman and Will Martin

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

How does bank competition affect systemic stability?

Posted by D. Daniel Sokol

Deniz Anginer Asli Demirguc-Kunt and Min Zhu (all World Bank) ask How does bank competition affect systemic stability?

ABSTRACT: Using bank level measures of competition and co-dependence, the authors show a robust positive relationship between bank competition and systemic stability. Whereas much of the extant literature has focused on the relationship between competition and the absolute level of risk of individual banks, they examine the correlation in the risk taking behavior of banks, hence systemic risk. They find that greater competition encourages banks to take on more diversified risks, making the banking system less fragile to shocks. Examining the impact of the institutional and regulatory environment on systemic stability shows that banking systems are more fragile in countries with weak supervision and private monitoring, with generous deposit insurance and greater government ownership of banks, and public policies that restrict competition. Furthermore, lack of competition has a greater adverse effect on systemic stability in countries with low levels of foreign ownership, weak investor protections, generous safety nets, and where the authorities provide limited guidance for bank asset diversification.

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

The institutional framework for doing sports business: Principles of EU competition policy in sports markets

Posted by D. Daniel Sokol

Oliver Budzinski (University of Southern Denmark) describes The institutional framework for doing sports business: Principles of EU competition policy in sports markets.

ABSTRACT: The competition rules and policy framework of the European Union represents an important institutional restriction for doing sports business. Driven by the courts, the 2007 overhaul of the approach and methodology has increased the scope of competition policy towards sports associations and clubs. Nowadays, virtually all activities of sports associations that govern and organize a sports discipline with business elements are subject to antitrust rules. This includes genuine sporting rules that are essential for a league, championship or tournament to come into existence. Of course, 'real' business or commercial activities like ticket selling, marketing of broadcasting rights, etc. also have to comply with competition rules. Regulatory activities of sports associations comply with European competition rules if they pursuit a legitimate objective, its restrictive effects are inherent to that objective and proportionate to ! it. This new approach offers important orientation for the strategy choice of sports associations, clubs and related enterprises. Since this assessment is done following a case-by-case approach, however, neither a blacklist of anticompetitive nor a whitelist of procompetitive sporting rules can be derived. Instead, conclusions can be drawn only from the existing case decisions - but, unfortunately, this leaves many aspects open. With respect to business activities, the focus of European competition policy is on centralized marketing arrangements bundling media rights. These constitute cartels and are viewed to be anticompetitive in nature. However, they may be exempted from the cartel prohibition on efficiency and consumer benefits considerations. Here, a detailed list of conditions exists that centralized marketing arrangements must comply with in order to be legal. Although this policy seems to be well-developed at first sight, a closer look at the decision practice reveals several open problems. Other areas of the buying and selling behavi or of sports associations and related enterprises are considerably less well-developed and do not provide much orientation for business.

April 20, 2012 | Permalink | Comments (2) | TrackBack (0)

Thursday, April 19, 2012

Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues

Posted by D. Daniel Sokol

Wladimir Andreff (CES - Centre d'economie de la Sorbonne - Universite Paris I - Pantheon Sorbonne) offers thoughts on Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues.

ABSTRACT: The paper presents the differences between the design of a closed and an open team sports league. Then it compares the theoretical models of a closed league with profit maximizing clubs and an open league with win maximizing clubs. Both models are now outdated by a Nash equilibrium model which is briefly sketeched. In the case of open leagues, a disequilibrium model seems more appropriate and a first attempt at elaborating it are exhibited.

April 19, 2012 | Permalink | Comments (0) | TrackBack (0)

Commitments in Antitrust

Posted by D. Daniel Sokol

Philippe Chone (ENSAE and CREST), Said Souam (Universite Paris Ouest Nanterre La Defense (EconomiX) and CREST) and Arnold Vialfont (Universite Paris-Est) have written on Commitments in Antitrust.

ABSTRACT: Competition agencies have the power to close an antitrust case in return for the commitment to end the alleged infringement. We examine how such a procedure affects deterrence and consumer welfare. We first show that it lowers the deterrent effect of competition policy. However, under asymmetric information, commitments may enhance consumer surplus with shortened proceedings and avoidance of trial type-II errors. The variation of consumer harm w.r.t. the firm's gain from the practice determines the optimal usage frequency of this negotiation tool. Finally, we show that trial and commitments may be complements as the latter is not always an answer to a lack of efficiency of the agency.

April 19, 2012 | Permalink | Comments (0) | TrackBack (0)

The Arm's Length Principle and Tacit Collusion

Posted by D. Daniel Sokol

Chongwoo Choe Department of Economics, Monash University and Noriaki Matsushimay Institute of Social and Economic Research, Osaka University have written on The Arm's Length Principle and Tacit Collusion.

ABSTRACT: The arm's length principle states that the transfer price between two associated enterprises should be the price that would be paid for similar goods in similar circumstances by unrelated parties dealing at arm's length with each other. This paper examines the effect of the arm's length principle on dynamic competition in imperfectly competitive markets. It is shown that the arm's length principle renders tacit collusion more stable. This is true whether firms have exclusive dealings with unrelated parties or compete for the demand from unrelated parties.

April 19, 2012 | Permalink | Comments (0) | TrackBack (0)

Antitrust and Patent Wars Question

Posted by D. Daniel Sokol At an antitrust conference earlier this week a friend asked why the antitrust concerns regarding standard essential patents seem to be focused on mobile telecom. Any thoughts?

April 19, 2012 | Permalink | Comments (0) | TrackBack (0)