Tuesday, September 25, 2012

Quality improvement to meet competitive fringe

Posted by D. Daniel Sokol

Noriaki Matsushima (Osaka University) and Ren-Jye Liu (Tunghai University) theorize on Quality improvement to meet competitive fringe.

ABSTRACT: We investigate what kind of competitive pressure induces existing firms to engage in more intensive innovation activities. We examine two types of competitive pressure: a price decrease in competitive fringe firms and a quality improvement therein. We use an oligopoly model with vertical differentiation to investigate this question. We show that a decrease in the exogenous price of competitive firms induces the two existent leading firms (one high-quality firm and one mid-quality firm) to engage in quality investments more if the ex ante quality level of the high quality product is large enough; otherwise, only the mid-quality firm engages more in quality investment. We also show that an increase in the exogenous quality level of competitive firms diminishes the incentive of the mid-quality firm to engage in quality investments.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Canadian Competition Tribunal Orders Divestiture in Waste Merger: Some Lessons Learned

Posted by D. Daniel Sokol

Richard Elliott (Davies Ward) discusses Canadian Competition Tribunal Orders Divestiture in Waste Merger: Some Lessons Learned.

ABSTRACT: The Canadian Competition Tribunal (the "Tribunal") has issued its first decision in a fully contested application under the merger provisions of the Competition Act (the "Act") in over a decade. On May 29, 2012, further to an application by the Commissioner of Competition (the "Commissioner") challenging the acquisition (the "Merger") by CCS Corporation ("CCS") of Complete Environmental Inc. ("Complete"), the owner of a landfill site in northeastern British Columbia known as Babkirk, the Tribunal ordered CCS to divest Complete.

The Commissioner's application raised a number of legal issues, including the threshold and analysis for establishing that a merger has prevented future competition, as opposed to lessening existing competition in the marketplace. Importantly, the case also demonstrates the Commissioner's willingness to challenge mergers that are not subject to notification under the Act and that have already been completed. Finally, the case also confirms the Commissioner's readiness to seek the dissolution of a merger as an alternative to divestiture (even though the Tribunal did not grant dissolution in this particular instance). Accordingly, the potential for a post-closing challenge by the Commissioner should be of significance to all parties to a transaction, including vendors, where the transaction may have anticompetitive effects.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Antitrust in Asia: Developments in India's Competition Regime

Posted by D. Daniel Sokol

Antitrust in Asia: Developments in India's Competition Regime

When

November 30 - December 01, 2012

Where

  • The Taj Mahal Hotel
  • Number One Mansingh Road
  • New Delhi 110 011
  • India
Primary Sponsors
Co-Sponsors

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition between Multiproduct Firms with Heterogeneous Costs

Posted by D. Daniel Sokol

Roberto Roson (Department of Economics, University Of Venice Ca Foscari) addresses Competition between Multiproduct Firms with Heterogeneous Costs.

ABSTRACT: This paper draws upon Feenstra and Ma (2007, 2008), to develop a model of asymmetric competition between multiproduct firms. The model is used to analyze how cost asymmetry affects the equilibrium, with determination of quantity/price as well as product scope per firm. By treating the number of firms as a continuous variable, the model is extended to account for the endogenous determination of the number of firms in a long-run, monopolistically competitive equilibrium, with free entry by heterogeneous firms.

September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, September 24, 2012

Google and anti-trust: The new debate over Internet search

Posted by D. Daniel Sokol

Google and anti-trust: The new debate over Internet search
Friday, October 05, 2012 | 12:30 p.m. – 2:00 p.m.
AEI, Twelfth Floor
1150 Seventeenth Street, NW
Washington, DC 20036 
    RSVP
Google and anti-trust: The new debate over Internet searchFriday, October 05, 2012 | 12:30 p.m. – 2:00 p.m.AEI, Twelfth Floor 1150 Seventeenth Street, NW Washington, DC 20036  About This Event

Since publishing “The Anti-Trust Paradox: A Policy at War With Itself” in 1978, Judge Robert Bork has been among the most influential analysts and critics of U.S. anti-trust law. Judge Bork and other “Chicago School” thinkers have profoundly shaped constitutional jurisprudence with respect to anti-trust for more than three decades.
 
In a new paper entitled “What Does the Chicago School Teach about Internet Search and the Anti-Trust Treatment of Google?,” Bork and Gregory Sidak analyze and weigh the merits of the anti-trust concerns that have been raised concerning Google and the market for Internet search. Join AEI for a luncheon in which experts in the fields of anti-trust, law and economics and technology policy will discuss the market for Internet search, the evolving competitive landscape and the proper role of government regulation in this sphere.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
 Agenda
12:00 PM
Registration and Lunch

12:30 PM
Panelists:
Jeff Eisenach, AEI
Randal Picker, University of Chicago
George Priest, Yale University
Gregory Sidak, Criterion Economics
Moderator:
Nick Schulz, AEI

2:00 PM
Adjournment
 Event Contact Information
For more information, please contact Jennifer Carey at jennifer.carey@aei.org, 202.862.5948.
 Media Contact Information
For media inquiries, please contact Véronique Rodman at vrodman@aei.org, 202.862.4871   

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

Inventories and Endogenous Stackelberg Leadership in Two-period Cournot Oligopoly

Posted by D. Daniel Sokol

Sebastien Mitraille (Universite de Toulouse, Toulouse Business School) and Michel Moreaux (Toulouse School of Economics (IDEI and LERNA)) identify Inventories and Endogenous Stackelberg Leadership in Two-period Cournot Oligopoly.

ABSTRACT: Two-period Cournot competition between n identical firms producing at constant marginal cost and able to store before selling has pure strategy Nash-perfect equilibria, in which some firms store to exert endogenously a leadership over rivals. The number of firms storing balances market share gains, obtained by accumulating early the output, with losses in margin resulting from increased sales and higher operation costs. This number and the industry inventories are non monotonic in n. Concentration (HHI) and aggregate sales increase due to the strategic use of inventories.

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

Vertical integration, market floreclosure and quality investment

Posted by D. Daniel Sokol

Roberto Hernan Gonzalez (Chapman) and Praveen Kujal (Universidad Carlos III de Madrid) describe Vertical integration, market floreclosure and quality investment.

ABSTRACT: We study incentives to vertically integrate in an industry with vertically differentiated downstream firms. Vertical integration by one of the firms increases production costs for the rival. Increased production costs negatively affects quality investment both by the integrated firm and the unintegrated rival. Quality investment by both firms decreases under any (vertical integration) scenario. The decrease in quality invesment by both firms softens competition among downstream firms. By integrating first, a firm always produces the high quality good and earns higher profits. A fully integrated industry, with increased product differentiation, is observed in equilibrium. Due to increase in firm profits, social welfare under this structure is greater than under no integration.

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

Search, Essential Facilities, and the Antitrust Duty to Deal

Posted by D. Daniel Sokol

Marina Lao (Seton Hall) explores Search, Essential Facilities, and the Antitrust Duty to Deal.

ABSTRACT: The core of the gathering antitrust case against Google seems to be that it favors its own or its affiliates’ content over that of its competitors in ancillary markets in the unpaid search results. Seeking the competitive advantages inherent in integration, which is what preferential treatment of one’s own property is about, is usually not unlawful. This paper examines whether “essential facilities” and the duty-to-deal nonetheless provide a basis for prohibiting this practice, as some have suggested, and concludes that they do not.

On the threshold monopoly power issue, most assume, based on Google’s high percentage of general search queries, that Google has monopoly power. This paper analyzes why this assumption, though intuitively appealing, is incorrect. It also considers other problems with invoking either principle in the display of search results. For essential facilities, for example, important issues regarding which is the alleged essential facility, whether there is denial of access, and whether the facility is capable of being shared have been largely overlooked. For the duty-to-deal, it is difficult to see how the principle, rarely applicable, can be made to apply.

This paper also questions a fundamental assumption embedded in the discourse -- that favoring one’s own property in search results, being good for a search engine, must be anticompetitive. Antitrust law is consumer-centric, and practices that benefit search users, while also benefiting the search engine, would not be anticompetitive even if they incidentally hurt some competing providers.

The paper ends with a discussion of some policy issues and concludes that they generally cut in favor of allowing search engines to incorporate new features and redesign their product, even if that might unfortunately adversely impact some competitors in ancillary markets.

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

The Constitutionality of Administrative Monetary Penalties Under the Competition Act: Is Rowan a Full Answer?

Posted by D. Daniel Sokol

John A. Campion & Antonio Di Domenico (Fasken Martineau) ask The Constitutionality of Administrative Monetary Penalties Under the Competition Act: Is Rowan a Full Answer?

ABSTRACT: Administrative Monetary Penalties ("AMPs") are monetary penalties where payment is ordered by a decision maker acting under a statutory power. AMPs are popular among regulators, including the Commissioner of Competition, because they fill the gap between true administrative remedies and criminal sanctions. They allow regulators to collect considerable sums without having to prove their cases on the "beyond a reasonable doubt" criminal standard. However, some AMPs are so large that they arguably amount to penal sanctions, triggering constitutional protections under the Canadian Charter of Freedoms.

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

Regulatory Asymmetry? The Competition Between Telecommunication Operators and Other ICT Players

Posted by D. Daniel Sokol

Laurent De Muyter (Jones Day) asks Regulatory Asymmetry? The Competition Between Telecommunication Operators and Other ICT Players.

ABSTRACT: Under EU law, telecommunication operators must open their main resources (networks) to service providers including other ICT providers under far reaching and sometimes conceptually inconsistent conditions. But they have limited access to the resources operated by the latter (content, data, handset, software). This distorts competition, hampers network related investments, and makes high bids less plausible in future spectrum auctions.

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

Saturday, September 22, 2012

Deterring EU Competition Law Infringements: Are We Using the Right Sanctions? Brussels December 3, 2012

Posted by D. Daniel Sokol

Sanctions are a critical component of any legal regime and competition law should be no exception. Competition law regimes across the world have typically relied on a diverse set of sanctions to deter companies from engaging in anti-competitive behaviour. The EU competition law regime has so far focused on corporate fines, which have risen significantly over the last 20 years. This evolution seems to be in great part due to the Commission’s desire to increase deterrence. However, in recent years, some voices have questioned whether increasing the level of corporate fines is indeed the most appropriate means for increasing deterrence. A number of other criticisms have also been addressed to the European sanctioning regime, ranging from its allegedly high level of uncertainty, its compatibility with international instruments protecting due process, its blindness to corporate compliance programs, or the absence of individual sanctions targeting the individuals who are actually instrumental in the violation of competition law. Are those criticisms founded? Are there major issues with the EU competition law regime? Does it need reform if it wants to achieve its stated goal of higher deterrence?

To take stock of what is known about this question, the Tilburg Law and Economics Center (TILEC) at Tilburg University and the Liège Competition and Innovation Institute (LCII) at the University of Liège organize a whole-day conference in Brussels on 3 December 2012.* Speakers include prominent academics, enforcers, and practitioners. The conference aims at bringing detailed analysis and up-to-date knowledge to at a large audience of practitioners, academics, public officials, and competition policy observers.

 Organizers welcome support from Schindler Holding AG and the Association of Corporate Counsels.

 

Scientific committee

 

Cédric Argenton (TILEC)

Damien Geradin (TILEC)

Nicolas Petit (LCII)

 

 

PROGRAMME

 

 

8:00 - 9:00 Registration and coffee

 

9:00 - 9:15 Sanctioning Competition Law Infringements: An Overview of the EU Approach

Speaker: Damien Geradin, Partner, Covington & Burling; Professor of
Competition Law and Economics, Tilburg University

 

9:15 - 9:45 Importance and Challenges of Antitrust Compliance for Large
Corporations

Speaker: Christoph Klahold, Chief Compliance Officer, Head of Corporate
Center Compliance, ThyssenKrupp AG

9:45 - 10:15 Optimal Deterrence of Competition Law Infringements

Speaker: Joseph E. Harrington, Professor of Economics, Wharton School,
University of Pennsylvania

 

10:15 - 10:30 Coffee break

 

First Panel: Designing Appropriate Sanctions and Incentive Mechanisms

 Moderator: Jacques Steenbergen, Director General, Belgian
Competition Authority

 

10:30 - 10:50 Are Administrative Fines the Best Way to Deter Infringements?

Speaker: Douglas H. Ginsburg, Senior Judge, DC Court of Appeals; Professor of
Law, New York University School of Law

 

10:50 - 11:10 Should Individual Sanctions Be Part of Deterrence Efforts?

 Speaker: Andreas Stephan, Lecturer in Law, University of East Anglia

 

11:10 - 11:30 Contrasting the EU and US Sanctioning Approaches

 Speaker: Thomas O. Barnett, Partner, Covington & Burling; former Assistant
Attorney General, Antitrust Division, US Department of Justice

 

11:30 - 11:50 Ways in Which the System of Sanction in EU Competition Enforcement Can Be
Changed

 Speaker: Luis Ortiz-Blanco, Partner, Garrigues; Professor, Complutense
University Madrid

 

11:50 - 12:40 Panel Discussion / Q&As

 

12:40 - 13:30 Lunch

 

Second Panel: Fines, parental liability and challenges for compliance

 Moderator: Anne Riley, Associate General Counsel, Shell

 

13:30 - 13:50 Optimal Deterrence of Collusion in the Presence of Agency Problems within
Firms

Speaker: Cédric Argenton, Professor of Economics, Tilburg University;
Director, Tilburg Law and Economics Center (TILEC)

 

13:50 - 14:10 Should Parent Companies be Held Liable for the Conduct of their Subsidiaries
when They have not Participated in the Infringement?

 Speaker: Stefan Thomas, Professor of Law, Tubingen University

 

14:10 - 14:30 Compliance Programmes, Codes of Conduct and Social Responsibility Charters –
A Good Idea?

 Speaker: Anny Tubbs, General Counsel, Competition, Unilever

 

14:30 - 15:20 Panel Discussion / Q&As

 

15:20 - 15:35 Coffee break

 

 

Third panel: Addressing the Relationships between EU and National Enforcement
and Public and Private Enforcement, and the Due Process Aspects
Moderator: Marc van der Woude, General Court of the EU

 

15:35 - 15:55 What is the Interplay between EU and National Enforcement and the
Impact on Sanctions?

 Speaker: Christophe Lemaire, Partner, Ashurst

 

15:55 - 16:15 What is the Interplay between Public and Private Enforcement (Actions for
Damages) and the Impact on Sanctions?

Speaker: Eddy de Smijter, Deputy Head of Unit, DG Competition, European
Commission

 

16:15 - 16:35 The Commission’s Fining Policy and the European Convention on Human Rights:
Menarini and its Implications

 Speaker: Eric Morgan de Rivery, Partner, Jones Day

 

16:35 - 17:15 Panel Discussion / Q&As

 


17:15 - 18:00 Conclusions

 

 Final Observations from an Industry Perspective

Speaker: Stefan Gehring, Head of Law and Patents, Chief Compliance Officer,
Bayer MaterialScience AG

 

 Final Observations from a Political Perspective

 Speaker: Andreas Schwab, Member of the European Parliament

 

 Final Observations from an Academic Perspective

Speaker: Nicolas Petit, Professor, University of Liège; Director, GCLC, College
of Europe

 

 

USEFUL INFORMATION

 

Venue

 

Hotel SAS, Brussels

Rue d'Idalie, 35

1050 Brussels

 

Near Brussels-Luxemburg Station

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

Friday, September 21, 2012

Antitrust Policy in the Information Age: Protecting Innovation and Competition

Posted by D. Daniel Sokol

Joe Wayland (DOJ) gave a speech today at Fordham on Antitrust Policy in the Information Age: Protecting Innovation and Competition.

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

Non‐Discrimination Clauses in the Retail Energy Sector

Posted by D. Daniel Sokol

Morten Hviid, and Catherine Waddams Price University of East Anglia - Centre for Competition Policy (CCP) discuss Non‐Discrimination Clauses in the Retail Energy Sector.

ABSTRACT: The British energy regulator has recently reviewed a non‐discrimination licence condition imposed to ensure that energy retailers charge the same mark‐up in different regions. Loyalty by many to incumbent firms necessitated heavy discounting by entrants to attract customers, which had led to regional price discrimination. Matching characteristics of the energy market to models of discrimination, we identify the necessary conditions for the licence condition to have a positive effect for consumers, and particularly ‘vulnerable’ consumers. The licence condition is likely to have reduced competition in the mainstream energy markets, which seems confirmed by the regulator's subsequent review of the retail market.

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

The Design of Competition Law Institutions and the Global Convergence of Process Norms: The GAL Competition Project

Posted by D. Daniel Sokol

Eleanor M. Fox, New York University School of Law and Michael J. Trebilcock, University of Toronto - Faculty of Law describe The Design of Competition Law Institutions and the Global Convergence of Process Norms: The GAL Competition Project.

ABSTRACT: This paper is an account of the institutions of antitrust enforcement and adjudication in nine jurisdictions, across six continents, and the four principal international bodies involved with issues of antitrust. It synthesizes nine studies that illuminate the inner workings of each of systems in the sample studied and it exposes their norms, all in the quest to determine whether there are global norms of procedure and process. The paper reveals that there are indeed common norms across very different institutional arrangements, most of which are currently embedded in the systems and some of which are aspirational.

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

Sharpe on The Concept of Abuse in EU Competition Law

Posted by Tom Sharpe

This is an important an important and brave book.  Its genesis is a doctoral thesis awarded by
the University of East Anglia, yet another major contribution from the ESRC

Centre for Competition Policy located at UEA. It has all the strengths and none of the weaknesses of a book derived from such research.
Dr. Akman has read widely in several languages and a particular strength of the
book is its willingness to place “competition law” in its theoretical and
historical content and fully 100 pages derive from  archival research into the genesis of Article 102 and the latest economics. 
She is not afraid to grapple with some of the
complexities, and inconsistencies, of welfare
economics and goes well beyond
the usual (it must be said, superficial) treatment
found in many other
texts.  A further strength lies in her very careful analysis of the key cases involving abuse.
There is a lot of loose thinking in relation to “abuse” of dominant position: Article
102 does not express the requirement of “prevent, restriction or distort
competition”;  it does not stipulate either the objectives or the standard of harm of the provision itself.   And the mere
possession of a dominant position is not off itself  prohibited.
But there must be harm to something or something for Article 102 to be applicable.
Her thesis is that “abuse” should be understood as a component of the

prevention or distortion of competition, following Protocol 27.  Of course, it can mean harm to competition, harm to competitors, harm to consumers or a combination of these, and

more.  And, as Dr. Akman points out, Article 102 does not contain any comparable provision to Article 101(3), where the importance of consumers obtaining “a fair share of the benefits” of
an
agreement which does prevent, restrict or distort competition
is
emphasized. 
Dr. Akman analyses the various issues which arise from the vagueness of Article
102: does it relate to “consumer welfare; what is the standard which should be

applied; what relevance does a read across from Article 101(3) have to the

proper construction of Article 102; if there are efficiencies derived from

conduct, must they be demonstrably to the benefit of consumers.  She is notably critical of the European Courts in finding conduct abusive merely on the basis of alleged
anti-competitive object, given that dominance is not prohibited: an undertaking  can only abuse its position if it uses its power abusively.
Dr. Akman’s general conclusions are that after 50 years of enforcement the
application of Article 102 is still controversial and that it is unclear what
makes a practice abusive and what distinguishes abusive from normal commercial practice.  This has resulted in significant legal
uncertainty.
Her policy conclusion is that the three necessary and sufficient conditions for abuse are that there should be exploitation, exclusion and a lack of increase in efficiency. Exploitation is required by Article 102 itself; exclusion means distortion of competition, and lack of any increase
in efficiency excludes
conduct which is no more than normal commercial practice, which should not be proscribed.  She acknowledges, though, that we have a good deal further to go before the Courts catch up with this.
But this is a powerfully argued analysis.

 

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

Freeman on The Concept of Abuse in EU Competition Law

Posted by Peter Freeman

It is good to see a serious attempt to pull together the
efforts made by competition authorities in the EU to define and apply the law
on abuse of dominant position.  Not only
is this one of the most important issues in competition law, it is also one of
the hardest.

The first Secretary of the UK Monopolies and Restrictive
Practices Commission in 1948 was Dame Alix Meynell.  Before the Commission was set up she had
visited Washington to learn about the US system.  When she came back she advised against
adopting the US approach to “Antitrust”: “They make everyone run a race then
cut off the head of the winner.”

Ms Akman’s book tackles the fundamental questions – how
much market power are you allowed to have? 
And what can you not do with it when you have it?  There is more on the second question than the
first, but the two go hand in hand as there can be no abuse unless there is market
power.

The book describes the long journey to the current “effects-based”
approach.  In many ways the old law (as
in United Brands, Continental Can and Commercial Solvents)
was familiar and easy.  Dominance was
assessed essentially by share of the market, abuse was a matter of items on a
list.  Defining “the market” could
usually be solved by a common sense approach to reasonable substitution.

Familiar and easy it may have been, but it could also risk
being incoherent, with the more substantive definition of dominance developed
by the courts – ability to behave independently of competitors, customers and
suppliers – being particularly curious when examined more closely. After all,
competitors are surely meant to behave independently of each other?  A shift to a more economically literate
approach surely had to come. 

On the face of it, the modern “effects-based” approach
offers an attractive solution.  Indeed
the basic lesson, of examining what happens on the market and whether consumers
are actually harmed, rather than whether a particular form of behavior is
taking place, is sound.  But the book
explores the difficulties in a helpful and illuminating way.  For example, an effects- based test of
dominance requires an element of circularity – its existence is proved only by showing
whether it is possible to abuse it.  Then
there is the problem of assessing the effects of an abusive practice.  Then author rightly points out the issues of administrability
and legitimacy raised by the need to assess the specific facts of each case
before coming to a finding.  Can it be right,
the book asks, to operate a law against the abuse of dominant position when
(apart from vague intuitions about scale and market share) illegality cannot
definitely be pronounced without a detailed analysis of costs and prices and relative
levels of efficiency, not only of the supposed abuser but, in case of
exclusionary conduct, of the excluded would-be competitor?  Viewed in this way, this “as-efficient
competitor” test is merely an artefact, dependent on the data used for its
calculation. 

The author criticizes the over-emphasis of enforcers on
exclusion and their neglect of exploitation – which is in many ways much nearer
to the adverse effect on consumers that the policy claims to want to
lessen.  But even as applied to exclusionary
conduct, the problem remains that the complexities do not lend themselves
easily to simple prohibitions, yet the consequences of breach of the law are
very severe.  Equally intractable are the
problems of information asymmetry (itself an impenetrable term) and how the
authorities are to obtain the cost information needed to make their
judgments.  Finally there is the paradox of
predatory pricing – the remedy actually denies the consumers the benefit of cheap
prices in the short term, something which needs to be explained carefully to
them at the very least.

The author offers a brave formulation of a new approach
that addresses these problems.  But
concentrating more on exploitative abuse and harm to consumers comes up against
some, at least, of the same difficulties, and setting out clear, administrable per se rules for abuse of dominance
remains a difficult task. 

Although this is not what the book suggests, this examination
of the difficulties inherent in applying current abuse of dominance laws makes
this reviewer, at least, look with relief to the market investigation regime in
the UK.  Here, with the same basic intention
of controlling the misuse of market power, a much more flexible legal test is
applied, without the sharp delineation required for the concepts of “dominance”
and “abuse” and without the drastic legal consequences of an adverse finding in
terms of fines and damages.  In this
regime a case by case approach is possible with the Competition Commission or
its successor body doing what competition authorities are (or should be) best
at, finding out how a market works and what is not working well and taking
steps to make it work better.

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

Book Review symposium on The concept of abuse in EU competition law

Posted by D. Daniel Sokol

We are luck to have two reviews of the excellent The concept of abuse in EU competition law by Pinar Akman (East Anglia). Reviewing the book for us are Peter Freemann (Cleary) and Tom Sharpe, QC.

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

Exchange of Information and Evidence between Competition Authorities and Entrepreneurs’ Rights

Posted by D. Daniel Sokol

Mateusz Blachucki, Polish Academy of Sciences - Institute of Legal Studies and Sonia Jozwiak, Silesian University of Economics discuss Exchange of Information and Evidence between Competition Authorities and Entrepreneurs' Rights.

ABSTRACT: This article concentrates on the exchange of information and evidence between competition authorities. The issue is analyzed from the perspective of both antitrust and merger cases. The level, scope and intensity of cooperation between competition authorities differs in respect to these two kinds of cases and, to an extent, the applicable legal framework varies as well. Our analysis is based on EU law, national legislation, and relevant case law, with attention also given to other sources of law such as bilateral and multilateral agreements, best practices, recommendations etc. In addition the problem of exchange of information is examined through the prism of the Polish Competition Act. Regulation 1/2003 and the ECN, created upon its provisions, provide detailed rules applicable for the exchange of evidence and information between competition authorities in antitrust cases at the European level. With respect to mergers, the provisions of Regulation 139/2004 do not have the same high degree of influence, hence considerable attention is given to soft law acts, such as recommendations of OECD and ICN, or best practices and informal agreements adopted by national competition authorities.

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

Thursday, September 20, 2012

Entry Bias and Product Substitutability

Posted by D. Daniel Sokol

Lin Liu, University of Southern California - Marshall School of Business and Xinghe Henry Wang, University of Missouri at Columbia - Department of Economics explain Entry Bias and Product Substitutability.

ABSTRACT: The literature has established two kinds of entry bias in imperfectly competitive markets. First, free entry may lead to excessive entry relative to the socially optimal level. Second, free entry may lead to the wrong technology (type of firm) in the market compared to the socially optimal technology. This paper finds a product selection bias, a third kind of entry bias. We show that, in a Cournot market with asymmetric firms and imperfectly substituting goods, free entry may lead to fewer types of goods, more types of goods, or even a different type of good, compared to the social optimum.

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

Quality Improvement to Meet Competitive Fringe

Posted by D. Daniel Sokol

Noriaki Matsushima, Osaka University - Institute of Social and Economic Research and Ren-Jye Liu, Industrial Engineering and Enterprise Information, Tunghai University explore Quality Improvement to Meet Competitive Fringe.

ABSTRACT: We investigate what kind of competitive pressure induces existing firms to engage in more intensive innovation activities. We examine two types of competitive pressure: a price decrease in competitive fringe firms and a quality improvement therein. We use an oligopoly model with vertical differentiation to investigate this question. We show that a decrease in the exogenous price of competitive firms induces the two existent leading firms (one high-quality firm and one mid-quality firm) to engage in quality investments more if the ex ante quality level of the high quality product is large enough; otherwise, only the mid-quality firm engages more in quality investment. We also show that an increase in the exogenous quality level of competitive firms diminishes the incentive of the mid-quality firm to engage in quality investments.

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