Monday, November 26, 2012

The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV

Posted by D. Daniel Sokol

Helmut M. Dietl (Department of Business Administration (IBW), University of Zurich), Markus Lang (Department of Business Administration (IBW), University of Zurich), Pannlang Lin (Department of Business Administration (IBW), University of Zurich) describe The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV.

ABSTRACT: This paper develops a theoretical model of asymmetric competition between a pay TV and a free TV broadcaster. Our model shows that the pay TV broadcaster has incentives to place advertising on its channel if the marginal return on advertising exceeds the viewers' disutility from advertising. In this case, however, the pay TV advertising level is always below the corresponding level on free TV. The pay TV advertising level can increase with a higher viewer disutility from advertising but the pay TV channel will never attract a larger viewership than the free TV channel. Furthermore, we show that introducing advertising on pay TV induces a decrease of the subscription fees on this channel and a decrease in the advertising level of the free TV channel. Moreover, pay TV viewer demand can increase if the pay TV broadcaster places advertising on its channel. If the viewer disutility of advertising is suffciently large, aggrega! te broadcaster profits increase through the introduction of advertising in pay TV, while aggregate consumer surplus always increases.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Two-Sided Platform Competition in the Online Daily Deals Promotion Market

Posted by D. Daniel Sokol

Byung-Cheol Kim (School of Economics, Georgia Institute of Technology), Jeongsik "Jay" Lee (Scheller College of Business, Georgia Institute of Business) and Hyunwoo Park (School of Industrial and System Engineering) explain Two-Sided Platform Competition in the Online Daily Deals Promotion Market.

ABSTRACT: We empirically investigate the platform competition in the online daily deals promotion market that is characterized by intense rivalry between two leading promotion sites, Groupon and LivingSocial, that broker between merchants and consumers. We find that deals offered through Groupon, the incumbent, sell more and generate higher revenues than those offered by LivingSocial, the entrant. We show that the greater network size in the consumer side entirely explains the incumbent's lead in the merchant side performance, indicating the existence of cross-side network effects at the aggregated market level. However, this performance advantage is dampened by the entrant's competitive chasing at local markets through offers of greater discounts and lower prices. Moreover, the incumbent advantage quickly attenuates as the merchants repeat promotions over time. These countering forces appear to prevent this market from achieving ! a tipping equilibrium. Our findings thus help explain why different market structures arise in two-sided markets with network externalities.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

6th Annual Private Antitrust Enforcement Conference : Tuesday, December 4, 2012

Posted by D. Daniel Sokol

Event Date:
Tuesday, December 4, 2012
Location:
National Press Club, Washington DC

On Tuesday, December 4, 2012, the American Antitrust Institute will host its 6th Annual Private Antitrust Enforcement Conference at the National Press Club in Washington D.C. Tuition for this program is $250 with a discounted rate of $50 for government employees, educators, public interest advocates, and students. This conference has been approved for 6.5 CLE credits by the Pennsylvania Continuing Legal Education Board.

REGISTER HERE.

The complete agenda and supporting materials are available for download below.

This event is presented with support from:

  • Adams Holcomb LLP
  • Advanced Analytics Consulting Group
  • Berger & Montague, P.C.
  • Berman DeValerio
  • Blecher & Collins
  • Bolognese & Associates, LLC
  • Cafferty Clobes Meriwether & Sprengel LLP
  • Cohen Milstein Sellers & Toll PLLC
  • Cuneo Gilbert & LaDuca
  • Dickstein Shapiro LLP
  • Econ One
  • Epiq Systems
  • Expedia
  • Fan Freedom Project
  • Faruqi & Faruqi, LLP
  • Gustafson Gluek PLLC
  • Kurtzman Carson Consultants LLC
  • Lieff Cabraser Heimann & Bernstein, LLP
  • MLEX Market Intelligence
  • NastLaw, LLC
  • OnPoint Analytics, Inc.
  • Robbins Geller Rudman & Dowd LLP
  • Robins Kaplan Miller & Ciresi LLP
  • Rust Consulting/Kinsella Media
  • Spector Roseman Kodroff & Willis

 

DownloadSize
DownloadSize
Agenda 553.52 KB
Speaker Bios 634.01 KB
9:25 a.m. Panel Materials – AAI Jury Instruction Project 926.75 KB
9:45 a.m. Panel Materials– Employment Antitrust Litigation 1.89 MB
11:00 a.m. Panel Materials – Current Status and Trends in Use of Truncated or "Quick Look" Analysis 1.73 MB
12:30 p.m. Luncheon Address Materials 177.59 KB
2:00 p.m. Panel Materials – Litigation in Regulated Industries 7.24 MB
3:30 p.m. Panel Materials – Class Action Developments 453.22 KB


November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK

Posted by D. Daniel Sokol

Laura Nurski (Center for Economic Studies, Faculty of Business and Economics, KU Leuven) explores Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK.

ABSTRACT: Consumers buy internet access from Internet Service Providers (ISPs) to reach online content providers. Under net neutrality, an ISP is not allowed to discriminate between content providers, even though it might have an incentive to do so. An ISP might want to sell a “fast lane” to content providers or use quality degradation to foreclose content providers that compete with the ISP's own content. Discarding net neutrality will have two effects on consumers: (i) consumers will reoptimize their choice of online content, at constant ISP choices; and (ii) consumers will reoptimize their choice of ISP. I empirically investigate whether an ISP has an incentive to break net neutrality, taking into account both channels of consumer response. I combine a novel data set on UK household content and ISP choices with data on ISP presence in local markets, as well as speeds and prices. Preliminary results indicate that a fast lane! increases consumers' surplus, industry revenues and advertising revenues. In contrast, foreclosure seems an unlikely scenario since it reduces the foreclosing ISP's revenues from selling broadband by more than it can recuperate through advertising on online content.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Hiring: Post Doctoral Research Fellow at UEA's CCP

Posted by D. Daniel Sokol

Faculty of Social Sciences
ESRC Centre for Competition Policy (CCP)
Post Doctoral Research Fellow
Ref: RA894
£30,122 to £35,938 per annum

The ESRC Centre for Competition Policy seeks a Post Doctoral Fellow with demonstrated research potential, who wishes to develop an academic career. The position would suit a candidate who has recently finished their PhD or a candidate looking to pursue a specific research project. The Centre is a focus of research into Competition and Regulation across a range of disciplines, and welcomes applications in the area of competition or regulation policy from candidates with a strong background in competition law, industrial economics, or Political Science. Candidates must have submitted their thesis for a doctoral degree prior to their appointment, or have been awarded a doctoral degree within the past four years and satisfy all other essential criteria in the person specification. This full-time post is available fixed term for 1 year with effect from 1 January 2013. Closing date 12 noon 30 November 2012

November 26, 2012 | Permalink | Comments (1) | TrackBack (0)

Network of Industrial Economists Winter Conference 14th December 2012

Posted by D. Daniel Sokol

The Centre for Competition Policy of the University of East Anglia reports:

On 14th December 2012 we are delighted to be hosting the Network of Industrial Economists (NIE) Winter Conference. The 1-day event will be looking at Competition Issues in the Health Sector.

Our venue is 10-11 Carlton House Terrace, London - a classically-styled terrace and home to The British Academy.

The draft programme appears below: if you would like to attend please use the booking form which can be accessed via the navigation to your left.

09:45-10:15

Registration, coffee/tea available

10:15-10:30

Welcome

10:30-12:30

Session 1Health Sector Competition Issues

Moderator: Bruce Lyons, University of East Anglia, School of Economics and Deputy Director of the ESRC Centre for Competition Policy.

Hugh Gravelle, University of York, Centre for Health Economics, "Competition, prices, and quality: Australian GPs"

Gautam Gowrisankaran, University Arizona, Department Economics, "Mergers when prices are negotiated: Evidence from the hospital industry"

12:30-13:30

Lunch

13:30-14:45

Session 2: New Researcher Presentations

Moderator: Franco Mariuzzo, University of East Anglia, School of Economics & ESRC Centre for Competition Policy

Charlotte Davies, University of East Anglia, Medical School "Market structure in medical devices: An example of the hip prostheses market"

Sotiris Vandoros, London School of Economics Health, "tbc"

Kathleen Nosal, University of Mannheim, Department of Economics, "Estimating switching costs for Medicare advantage plans"

14:45-15:00

Break, coffee/tea available

15:00-17:00

Session 3: Pharmaceutical Sector Competition Issues

Moderator: Morten Hviid, University of East Anglia, Norwich Law School and Director of ESRC Centre for Competition Policy

Pierre Dubois, Toulouse School of Economics & CEPR, "The effects of price regulation on pharmaceutical industry margins: A structural estimation for anti-ulcer drugs"

Farasat Bokhari, University of East Anglia, School of Economics & ESRC Centre for Competition Policy, "Specifications in demand systems for drugs: logits v. aids"

 

17:00-17:30

Closing Remarks:

TBC

 

 

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

For a Rigorous 'Effects-Based' Analysis of Vertical Restraints Adopted by Dominant Firms: An Analysis of the EU and Brazilian Competition Law

Posted by D. Daniel Sokol

Damien Geradin (Covington, U Tilburg) explains For a Rigorous 'Effects-Based' Analysis of Vertical Restraints Adopted by Dominant Firms: An Analysis of the EU and Brazilian Competition Law. ABSTRACT: This study concerns the way agreements between a dominant supplier and its customers that restrict the ability of those customers to buy from the dominant firm’s rivals, including exclusive dealing, conditional rebates and tying and bundling (hereafter, “vertical restraints”) have been assessed by the EU and Brazilian competition authorities and courts.

For several decades, vertical restraints have been a subject of debate among lawyers and economists, and views as to how such restraints should be assessed have fluctuated. In recent years, however, a consensus has emerged that per se rules of illegality (or of legality) should not be applied to vertical restraints. Instead, such restraints should be assessed pursuant to an effects-based analysis balancing their pro- and anti-competitive effects. The difficulty, however, is to devise legal tests that allow this balancing to take place in a coherent and rigorous manner.

Following an analysis of the economics of vertical restraints, this paper shows that the European Commission, which has the power to enforce EU competition rules, has recently opted for an effects-based approach to vertical restraints, and has developed a Guidance Paper that offers a legal and economic methodology describing how it intends to analyse such restraints. This paper shows, however, that the EU courts are still reluctant to follow such a methodology preferring instead to continue to apply formalistic rules.

The situation is different in Brazil where, at least since the enactment of Law 8.884 in 1994, there has been a consensus that vertical restraints had to be analysed under an effects-based approach. However, such an approach has been pursued through balancing tests relying on qualitative criteria and intuitive reasoning, rather than and a rigorous and structured assessment, including quantitative elements, hence leading to inconsistency and uncertainty. The Brazilian competition law system would thus benefit from the adoption of guidelines, which as in the case of the EU Guidance Paper, provides a clear legal and economic methodology as to how an effects-based approach should be implemented.

This paper also analyses the extent to which the legal and institutional framework in place in the EU and in Brazil is well suited to the implementation of a rigorous effects-based approach relying on economic analysis. There is no doubt that the mature EU system possesses the legal and institutional framework to apply such a rigorous approach, the problem being however that the EU courts, which are composed of generalist judges, are still reluctant to pursue it. The European Commission, which is a sophisticated institution, can however pursue an economic based approach.

Although the Brazilian competition law system is not yet fully mature, it has gone a long way, and the entry into force of the new Brazilian Competition Act 12.529/2011 and the setting up of the New CADE will further contribute to its development. The paper argues that the Brazilian system would greatly benefit from the adoption of guidelines, which, like the European Commission Guidance Paper, would offer a clear legal and economic methodology to implement an effects-based approach to vertical restraints.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, November 25, 2012

Joint State and Federal Enforcement of the Antitrust Laws: More Historic than Conflicting

Posted by D. Daniel Sokol

James A. Donahue, III (Pennsylvania Office of Attorney General) addresses Joint State and Federal Enforcement of the Antitrust Laws: More Historic than Conflicting.

ABSTRACT: The concept of a statute to temper or eradicate the market power of trusts and cartels of businesses that agreed not to compete against one another first arose in state legislatures, notably Missouri and Kansas, prior to the passage of the Sherman Act in 1890. These statutes codified and expanded common law prohibitions on monopolies and restraints of trade that had their foundation in the common law of England.

The Sherman Act and the Clayton Act, passed in 1912, vested, in the federal government, the authority the states had exercised to break up trusts and monopolies. With the passage of these laws state enforcement waned until the passage of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

That act provided funding for states to start, or restart, an antitrust enforcement unit. The event prompting such funding was the rejection of several classes where consumers were the ultimate victims of an antitrust violation, but the court refused to certify a class. The Hart-Scott-Rodino Act addressed that problem through two prongs, one funding state antitrust enforcement and another allowing Attorneys General to bring damages actions as parens patriae on behalf of natural person consumers for violations of the Sherman and Clayton Acts.

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

Saturday, November 24, 2012

State and Federal Antitrust Enforcement: Complementary or Just Confusing?

Posted by D. Daniel Sokol

Elinor Hoffmann (New York Office of the Attorney General) asks State and Federal Antitrust Enforcement: Complementary or Just Confusing?

ABSTRACT: Our federalist system and our belief in the social, political, and economic benefits of competition have spawned a multiplicity of antitrust enforcers. On the federal side, the Federal Trade Commission ("FTC") and the Department of Justice's Antitrust Division ("DOJ") have overlapping jurisdiction with regard to civil antitrust enforcement, and the DOJ has sole jurisdiction to prosecute criminal violations of federal antitrust law. In almost every state, the state Attorney General plays a leading role in antitrust enforcement and, in many states, the Attorney General has both civil and criminal authority. On the local level, District Attorneys may prosecute criminal violations of state antitrust law. Beyond government enforcement, any "person"-individual, firm, or public entity-may sue to enjoin or recover treble damages caused by anticompetitive behavior, and private attorneys often represent classes of consumers who have suffered damage and who likely would not sue as individuals. These "private attorneys general" contribute to the legislative goal of maximizing enforcement of the antitrust laws.

From one point of view, our system looks inefficient and messy. Foreign enforcement officials sometimes quizzically wrinkle their brows, asking "how does this work?" (read, "how is this workable?"). But, history has taught us that this multi-faceted approach works quite well in the context of our competition driven system. Like most good outcomes, however, there are bumps in the road to success. This article focuses on just one type of collaboration-that between state Attorneys General ("state AGs") and the federal enforcement agencies. While the state Attorneys General and the federal enforcement agencies have cooperated across many sectors, and in many contexts, this article will illustrate the state/federal interface by focusing on two specific contexts: (1) collaborative civil investigations, particularly mergers; and (2) state civil investigations that are separate from, but parallel to, federal criminal investigations.

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

Friday, November 23, 2012

16th International Conference on Competition from 20-22 March 2013 in Berlin - Save the Date!

Posted by D. Daniel Sokol

16th International Conference on Competition from 20-22 March 2013 in Berlin - Save the Date!

The International Conference on
Competition, hosted by the Bundeskartellamt, is one of
the most renowned international events dealing with competition law issues. At
this conference, the heads of competition authorities, antitrust lawyers,
academics, politicians, prominent representatives of international companies and
other high-ranking participants discuss current, internationally relevant issues
of competition policy and competition law.
The Bundeskartellamt is proud to
announce that it will host its
16th International
Conference on Competition
in
Berlin
on 20 - 22 March
2013.
Keynote
speeches
will be given by Dr Philipp Rösler, German Federal
Minister of Economics and Technology,
Joaquín
Almunia
, Commissioner for Competition and Vice-President of the European
Commission,
and Karl-Ludwig Kley, Chairman of the
Executive Board of Merck KGaA
.
The keynote speeches will be
followed by
four panel discussions.
In addition to the keynote
speakers,
conference participants will include Prof Dr Carl
Baudenbacher
(EFTA Court), Prof Dr Joachim Bornkamm
(Federal
Court of Justice),
Dr Fabien Curto Millet (Google, London), Albert Foer
(American Antitrust Institute, USA), Chris Fonteijn (Netherlands Competition
Authority
),
Agnete
Gersing
(Competition Authority Denmark), Daniel Goffart (Focus Magazin Verlag),
Scott
Hammond

(Department of Justice, USA),
Prof Dr Thomas Hoeren
(Law
Faculty at Münster University),
Prof Dr Michael Hüther
(Institut der deutschen Wirtschaft), Ulrich Kelber (Member of the German
Parliament),
Dr Thomas Kremer (Legal Affairs and Compliance,
Deutsche
Telekom AG),
Prof Dr Kai-Uwe Kühn (DG Competition of the European Commission),
Bruno
Lasserre

(
Autorité de
la concurrence, France
), Jon Leibowitz (Federal Trade Commission, USA),
Prof Dr
Koen Lenaerts
(Court of Justice of the European Union), Deborah P Majoras
(Procter
& Gamble),
Clive Maxwell (Office of Fair Trading, UK),
Dr Frank
Montag
(Competition Lawyers’ Association), Eduardo Pérez Motta
(Federal
Competition Commission, Mexico, Chair
of the ICN Steering Group), and
Thomas Vinje (Clifford Chance,
Brussels).
The first panel
discussion
will deal with the political content of
antitrust.
The second panel
discussion
will take a close look at the challenges
posed by different systems with different legal rights in a global
environment.
The third panel
discussion
will discuss the right balance when applying
a more economic approach in merger assessment.
The fourth panel
discussion
will deal with competition and the digital
economy.
---------------------------------
The event will start with a
welcome reception on the evening of Wednesday, 20 March. The conference will
begin in the morning of Thursday, 21 March and will end in the early afternoon
of Friday, 22 March.
The working languages of the
conference will be German and English (simultaneous translation services will be
provided).
For
more information about the conference, please visit our website
www.ikk2013.de which
will go online soon.

November 23, 2012 | Permalink | Comments (1) | TrackBack (0)

Excess Liquidity against Predation

Posted by D. Daniel Sokol

Dai Zusai (Department of Economics, Temple University) describes Excess Liquidity against Predation.

ABSTRACT: We consider precautionary liquidity holding as counter-strategy for the entrant to protect himself from predation. Threat of predation, even if avoided in equilibrium, affects the financial contract to raise precautionary liquidity and the equilibrium outcome in the product market competition. When the incumbent's strategy is unverifiable, the entrant with small start-up capital cannot raise large enough precautionary liquidity; consequently, he shrinks his business so as to avoid predation. Predation evolves in the model only as perturbation from equilibrium strategy. We provide the revelation principle for a sequential equilibrium to select a sensible outcome by imposing robustness to such perturbation.

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

State-Federal Relations

Posted by D. Daniel Sokol

Kathleen Foote (California DOJ, Attorney General’s Office) discusses State-Federal Relations.

ABSTRACT: Antitrust enforcers in the offices of state attorneys general frequently find ourselves between a rock and a hard place when it comes to public perceptions of our work. State antitrust enforcement tends to be subject to criticism as misguided-or worse-whenever it diverges publicly from enforcement by the federal agencies. Yet when it doesn't diverge it is often labeled "redundant" in the pejorative sense of that term. The reality is a good bit different from the perception in either case. Much of the perception is a legacy of the historic 2001 split between the U.S. Department of Justice Antitrust Division ("DOJ") and state government prosecutors over appropriate remedies in the Microsoft case, which arose after an exemplary partnership throughout the liability phase of the case. The rupture led to two contemporaneous and highly visible tracks through the same courtroom in early 2002: a Tunney Act review of whether the DOJ settlement (joined by nine states) was in the public interest, and a six-week merits trial in which nine other states sought to prove that far stiffer remedies should be required. Judge Kollar-Kotelly's ultimate rulings rejected most of the state-requested remedies but added some terms to the DOJ settlement, thus largely conforming the state and federal results. The subsequent years of joint enforcement of the affirmative mandates of the Microsoft decree under active court supervision marked a return to smooth sailing between the state and federal agencies and close cooperation in executing their shared enforcement responsibilities.

The wave of criticism following the initial split, however, by then had taken on a life of its own. It was promptly formalized in the initial agenda of the Antitrust Modernization Commission, which reviewed and debated at length the history of dual state-federal enforcement and considered, but ultimately rejected, various proposals for partial preemption of state authority. Its conclusion, reached in 2007, was that no changes to the institutional structure were warranted. The AMC did note, as others have, that further efforts by state and federal enforcers to harmonize their work would be salutary.

While Microsoft is an undeniable and extreme exception to their usual consistency, it is not the only time that state and federal agencies have differed in recent years. Typically, the differences can be viewed as healthy ones that foster the overall goal of preserving competition, and rarely manifest themselves as public disagreements over major policy issues. No generalizations are possible, however, without distinguishing between merger reviews and non-merger situations.

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

Does Input Purchase Cooperation Foster Downstream Collusion?

Posted by D. Daniel Sokol

Aldo Gonzalez (University of Chile) and Loreto Ayala (University of Chile) ask Does Input Purchase Cooperation Foster Downstream Collusion?

ABSTRACT: We set up a model where two retailers compete downstream and buy their inputs from a single producer. Retailers may collude downstream, when fixing the retail price and cooperate upstream by jointly negotiating the wholesale price with the producer. We find that purchase cooperation renders downstream collusion more likely. First it expands the range of differentiation where downstream collusion is a profitable strategy. Second it makes more stable the agreement downstream since the punishment becomes harsher due to the increase in the wholesale price coming from the breakdown of common upstream negotiation. The results are robust to a scenario of upstream price rigidity where the wholesale price cannot be immediately renegotiated after a deviation downstream has occurred.

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

Thursday, November 22, 2012

Obama and Congress Must Protect Family Farmers

Posted by D. Daniel Sokol

David Balto's Thanksgiving message is that Obama and Congress Must Protect Family Farmers.

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

The State of State-Federal Cooperation at the Antitrust Division: A View from the Front Row

Posted by D. Daniel Sokol

Mark Tobey (DOJ) discusses The State of State-Federal Cooperation at the Antitrust Division: A View from the Front Row.

ABSTRACT: Under the leadership of former Assistant Attorney General ("AAG") Christine Varney and Acting Assistant Attorneys General Sharis Pozen and Joseph Wayland, the U.S. Department of Justice Antitrust Division has renewed and expanded federal-state partnerships that are essential to many of the division's accomplishments. As AAG Varney stated in an early speech to the state Attorney General ("AG") antitrust community, the division is prepared to work "hand-in-glove with our partners in State Attorney General Offices." For my part, having worked more than 20 years as a state antitrust enforcer at the Texas Attorney General's Office before coming to Washington, I know first-hand that effective federal-state coordination, like we have, does not happen accidently. In truth, it cannot occur without open communication, constant nurturing, and a large measure of mutual good will.

Of course, the focus on the importance of cooperation is not new for the Antitrust Division. Earlier this year, when the former AAG for Antitrust James Rill received the Department of Justice's ("DOJ's") John Sherman Award for lifetime accomplishment in antitrust, much of the praise was for Rill's contribution to the development of international cooperation mechanisms in antitrust law and publication of the first joint Department of Justice/Federal Trade Commission ("DOJ/FTC") horizontal merger guidelines. In his acceptance speech, Rill took pains to emphasize another important accomplishment: His work in the late 1980s and early 1990s developing protocols and mechanisms to promote federal-state cooperation in mergers, such as the National Association of Attorneys General ("NAAG") Voluntary Pre-Merger Disclosure Compact ("NAAG Merger Compact") and the Executive Working Group on Antitrust ("EWG-A").

Rill's emphasis was not misplaced and has been carried forward most recently by former AAG Varney and her successors Acting AAGs Sharis Pozen and Joseph Wayland. Today, effective federal-state cooperation is a given fact-of-life in the antitrust universe, integrally, and permanently woven into the fabric of antitrust enforcement.

The record of cooperation in antitrust between the states and the DOJ over the past three years illustrates the prescience of AAG Varney's words. It also demonstrates the importance and continuing vitality of the federal-state partnership. Many of the Antitrust Division's hardest won accomplishments during this time have been forged with the help of the states.

Having served for the past three years as Special Counsel for State Relations and Agriculture at the Antitrust Division, I am honored to offer my perspectives on the state of state-federal relations from my current position in the division. My view is that the record of the past three years is testament to, and the result of, a strong commitment from both the state AGs and the division to make the partnership work as well as it can for the benefit of competition and the American consumer.

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

Being Thankful on Thanksgiving

Posted by D. Daniel Sokol

As people in the United States celebrate with friends and family, there are a number of things that I am thankful for both personally and with regard to antitrust.

Personal

  1. Family
  2. Health
  3. Friends
  4. Rule of Law
  5. Democratic and peaceful elections
  6. Religious freedom
  7. Hello Kitty (my girls really love Hello Kitty) 

Antitrust

  1. DOJ Antitrust's international cartel efforts. I may have some problems on the margins with the leniency program (I think that certain tweaks can make it more effective) but leniency has fundamentally transformed detection of cartels. The world is better off because of Scott Hammond and his team in the Antitrust Criminal Enforcement group and similar cartel units around the world. I would add that the introduction of leniency has been the most important antitrust policy globally of the past 25 years.
  2. Merger guidelines. Do people remember a world without merger guidelines? The most lasting antitrust improvement of the past 50 years globally has been the introduction of merger guidelines to provide greater certainty and better decision-making about merger control.
  3. Dedicated antitrust/competition enforcers.  Wherever I go around the world, I am always impressed with the great dedication that enforcers have to promote competition.  They toil through long hours and intellectually difficult issues to try to make the world better and do so at a fraction of the pay of their private sector counterparts.  When we think of government heroes, we tend to think of people such as police or firefighters.  Antitrust enforcers also play an important role in protecting us and deserve our great respect and gratitude.

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

Monopolistic Location Choice in Two-Sided Industries

Posted by D. Daniel Sokol

Enrico Bohme, Christopher Muller (both Johann Wolfgang Goethe-University) discuss Monopolistic Location Choice in Two-Sided Industries.

ABSTRACT: We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the onesided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate.

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

Wednesday, November 21, 2012

Introducing the Turkish Competition Bulletin

Posted by D. Daniel Sokol

The newest Turkish delight is the wonderful new blog Turkish Competition Bulletin. The bloggers wrote me:

We, a number of competition specialists working for Turkish Competition Authority, decided to initiate this blog in order to inform the community about latest developments in Turkish competition law and to share our personal comments on them. We generally do not only try to appraise the new and important authority decisions but also intend to give some background information about cases and equivalent/relevant ones in US and EU. The main aspect of the blog is that it's the only English blog on Turkish competition law.

I encourage everyone to check it out.

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

Non-Mutual Offensive Collateral Estoppel in Private Antitrust Litigation: Lessons from the Microsoft Cases

Posted by D. Daniel Sokol

Michael E. Jacobs (DePaul Law) has posted Non-Mutual Offensive Collateral Estoppel in Private Antitrust Litigation: Lessons from the Microsoft Cases.

ABSTRACT: For nearly 100 years, antitrust policy in the United States has reflected the important role of private enforcement by allowing private litigants to benefit from successful government enforcement actions. With the enactment of section 5(a) of the Clayton Act in 1914, prior judgments obtained by the government were given prima facie effect in follow-on litigation by private parties. Following the U.S. Supreme Court’s 1976 decision in Parklane Hosiery Co. v. Shore, non-mutual offensive collateral estoppel has since supplanted section 5(a) as the tool of choice in many private antitrust lawsuits. That doctrine, however, has been described as “detailed, difficult, and potentially dangerous,” and the cautious approach that some courts have adopted in the antitrust context is in tension with the policy preference expressed in the Clayton Act that favors giving private plaintiffs the full benefits of prior government judgments.

The Microsoft antitrust litigation presents one of the most interesting and challenging examples of that tension, and thus provides important lessons for future cases. This article seeks to provide a framework, based on lessons learned in Microsoft, for the application of non-mutual offensive collateral estoppel in antitrust cases that gives effect to the policy considerations underlying section 5(a) of the Clayton Act, while remaining mindful of the concerns identified by the U.S. Supreme Court in Parklane Hosiery. It argues that a broader application of the doctrine is warranted in the antitrust context and that, in order to give private plaintiffs the full benefit of prior government enforcement actions, all issues decided in the earlier proceeding that were “necessary” to each analytical step undertaken by the court in deciding, under the applicable substantive standard, that the antitrust laws had been violated should be given preclusive effect.

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

Rethinking RAND: SDO-Based Approaches to Patent Licensing Commitments

Posted by D. Daniel Sokol

Jorge L. Contreras, American University - Washington College of Law is Rethinking RAND: SDO-Based Approaches to Patent Licensing Commitments.

ABSTRACT: So-called “reasonable and nondiscriminatory” (RAND) licensing commitments have been utilized by standards-development organizations (SDOs) for years in an attempt to alleviate the risk of patent hold-up in standard-setting. These commitments, however, have proven to be vague and offer few assurances to product vendors or patent holders. A recent surge of international litigation concerning RAND commitments has brought this issue to the attention of regulators, industry and the public, and many agree that a better approach is needed. In this paper, I identify seven “first principles” that underlie the licensing and enforcement of standards-essential patents (SEP)s. These can be summarized as follows: (1) certainty is preferable to uncertainty concerning the cost of implementing a technical standard, (2) there is a meaningful upper limit on reasonable royalty rates, (3) information regarding RAND terms should be available before adoption of a standard, (4) individual RAND commitments must be constrained by the aggregate royalty burden on a standard, (5) non-SEPs need not be bundled with SEPs, (6) SEPs should not be used to block implementation of a standard unless the recovery of monetary compensation is impossible, and (7) RAND commitments should travel with the relevant patent.

Based on these first principles, I propose an SDO-driven approach to addressing the uncertainty of RAND commitments that is based on certain beneficial attributes of patent pools. I call this a “pseudo-pool” approach, as it draws on pooling strategies, but is adapted for use in the more flexible and prolific world of SDO standard-setting. The pseudo-pool approach includes the following elements: (a) SDO participants must declare SEPs in good faith, (b) SDO working groups that include patent holders and potential vendors establish aggregate royalty rates for each standard, (c) patent holders continue to grant licenses on RAND terms, subject to the aggregate royalty agreement, (d) each patent holder is entitled to a share of the aggregate royalty based on a proportionality measure, (e) there is a defined penalty for over-declaration of SEPs, (f) each patent holder is permitted to license its SEPs independently of the pseudo-pooling arrangement, (g) parties must waive their right to seek injunctive relief for infringement of SEPs unless monetary damages have proven impossible to collect, and (h) commitments made with respect to SEPs must bind all future transferees of such SEPs. This proposal requires the adoption of joint ex ante negotiation of royalty rates near the outset of a standardization project, conduct that has been viewed with favor by several regulatory agencies and acknowledged as offering various procompetitive benefits.

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