Wednesday, July 31, 2013

Dynamic Screening with Limited Commitment

Posted by D. Daniel Sokol

Rahul Deb (University of Toronto) and Maher Said (Washington University) discuss Dynamic Screening with Limited Commitment.

ABSTRACT: We examine a model of dynamic screening and price discrimination in which the seller has limited commitment power. Two cohorts of anonymous, patient, and risk-neutral buyers arrive over two periods. Buyers in the first cohort arrive in period one, are privately informed about the distribution of their values, and then privately learn the value realizations in period two. Buyers in the second cohort are ``last-minute shoppers'' that already know their values upon their arrival in period two. The seller can fully commit to a long-term contract with buyers in the first cohort, but cannot commit to the future contractual terms that will be offered to second-cohort buyers. The expected second-cohort contract serves as an endogenous type-dependent outside option for first-cohort buyers, reducing the seller's ability to extract rents via sequential contracts. We derive the seller-optimal equilibrium and show that the seller mit! igates this effect by inducing some first-cohort buyers to strategically delay their time of contracting---the seller manipulates the timing of contracting in order to endogenously generate a commitment to maintaining high future prices. The seller's optimal contract pools low types, separates high types, and induces intermediate types to delay contracting.

July 31, 2013 | Permalink | Comments (0) | TrackBack (0)

Shrinking Goods

Posted by D. Daniel Sokol

Daniel Levy (Emory University, USA; Bar-Ilan University, Israel; RCEA, Italy) and Avichai Snir (Department of Banking and Finance, Netanya Academic College, Israel) discuss Shrinking Goods.

ABSTRACT: If producers have more information than consumers about goods’ attributes, then they may use non-price (rather than price) adjustment mechanisms and, consequently, the market may reach a new equilibrium even if prices don't change. We study a situation where producers adjust the quantity per package rather than the price in response to changes in market conditions. Although consumers should be indifferent between equivalent changes in goods' prices and quantities, empirical evidence suggests that consumers often respond differently to price changes and equivalent quantity changes. We offer a possible explanation for this puzzle by constructing and empirically testing a model in which consumers incur cognitive costs when processing goods’ price and quantity information.

July 31, 2013 | Permalink | Comments (0) | TrackBack (0)

Monopolistic Competition and Optimum Product Selection: Why and How Heterogeneity Matters

Posted by D. Daniel Sokol

Antonella Nocco (Salerno), Gianmarco I. P. Ottaviano (Bocconi) and Matteo Salto (European Commission) discuss Monopolistic Competition and Optimum Product Selection: Why and How Heterogeneity Matters.

ABSTRACT: After some decades of relative oblivion, the interest in the optimality properties of monopolistic competition has recently re-emerged due to the availability of an appropriate and parsimonious framework to deal with firm heterogeneity. Within this framework we show that non-separable utility, variable demand elasticity and endogenous firm heterogeneity cause the market equilibrium to err in many ways, concerning the number of products, the size and the choice of producers, the overall size of the monopolistically competitive sector. More crucially with respect to the existing literature, we also show that the extent of the errors depends on the degree of firm heterogeneity. In particular, the inefficiency of the market equilibrium seems to be largest when selection among heterogeneous firms is needed most, that is, when there are relatively many firms with low productivity and relatively few firms with high productivity.

July 31, 2013 | Permalink | Comments (0) | TrackBack (0)

Cournot is more competitive than Bertrand Upstream Monopoly with Two-part Tariffs

Posted by D. Daniel Sokol

Maria Alipranti (University of Crete) and Emmanuel Petrakis (Department of Economics, University of Crete, Greece) argue that Cournot is more competitive than Bertrand Upstream Monopoly with Two-part Tariffs.

ABSTRACT: The present paper compares the Cournot and Bertrand equilibrium outcomes and social welfare in vertically related markets with upstream monopolistic market structure, where the trade between the upstream monopolist and the downstream firms is conducted via two-part tariffs contracts. We show that the equilibrium quantities, the profits of the downstream firms, the consumers' surplus and the social welfare are always higher under Cournot final market competition than under Bertrand final market competition. On the contrary the equilibrium profits of the upstream monopolist under Bertrand market competition always exceed those obtained under Cournot market competition.

July 31, 2013 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 30, 2013

Strategic Patent Acquisitions

Posted by D. Daniel Sokol

Fiona Scott Morton, Yale School of Management and Carl Shapiro, University of California, Berkeley - Haas School of Business explain Strategic Patent Acquisitions.

ABSTRACT: We report data on patent litigation activity initiated by patent assertion entities and discuss the tactics used by these entities to monetize the patents they acquire. We develop a simple economic model to evaluate the effect of enhanced patent monetization on innovation and on consumers. We then study the economic effects of several different categories of patent acquisitions based on the type of seller, the type of buyer, and the patent portfolio involved.

July 30, 2013 | Permalink | Comments (0) | TrackBack (0)

The Role of Quality in Competition Analysis

Posted by D. Daniel Sokol

Jeremy K. West, OECD Competition Division and Anna R. Pisarkiewicz, Organization for Economic Co-Operation and Development (OECD) discuss The Role of Quality in Competition Analysis.

ABSTRACT: Nominally, competition policy is just as concerned with quality as it is with prices. But in practice, courts and competition authorities rarely analyze quality effects as rigorously as they analyze price effects. We begin this paper by examining some of the reasons why that is so. We then delve into some definitional questions associated with quality, including whether choice is an aspect of quality, and whether quality can be used to define markets. Then we turn to the question of how changes in the level of competition affect quality, examining that issue from the perspectives of both microeconomic theory and empirical studies. Finally, we look at how quality concerns have been analyzed by courts and competition authorities in a variety of competition law enforcement contexts.

July 30, 2013 | Permalink | Comments (0) | TrackBack (0)

Merger Externalities in Oligopolistic Markets

Posted by D. Daniel Sokol

Klaus Peter Gugler, Vienna University of Economics and Business Administration; European Corporate Governance Institute (ECGI) and Florian Szucs, DIW Berlin Merger Externalities in Oligopolistic Markets explore Merger Externalities in Oligopolistic Markets.

ABSTRACT: We quantify externalities on profitability and market shares of competing firms in oligopolistic markets through the transition from an n to an n-1 player oligopoly after a merger. Competitors are identified via the European Commission’s market investigations and our methodology allows us to distinguish the externality due to the change in market structure from the merger e ffect. We obtain results consistent with the predictions of standard oligopoly models: rivals expand their output and increase their profits, whereas merging firms are negatively aff ected. This indicates that on average the market power e ffects of large mergers outweigh the efficiencies.

July 30, 2013 | Permalink | Comments (0) | TrackBack (0)

Do Retroactive Rebates Imply Lower Prices for Consumers?

Posted by D. Daniel Sokol

Frank P. Maier-Rigaud, IESEG School of Management, Department of Economics and Quantitative Methods; Lille - Economics & Management (LEM) - Centre National de la Recherche Scientifique; Organisation for Economic Co-operation and Development (OECD) - Competition Division; European Commission, DG Competition; Laboratory for Experimental Economics, University of Bonn; Max Planck Institute for Research on Collective Goods and Ulrich Schwalbe, University of Hohenheim ask Do Retroactive Rebates Imply Lower Prices for Consumers?

ABSTRACT: Despite a host of recent cases on both sides of the Atlantic, the antitrust implications of retroactive rebates or loyalty discounts are among the most controversial topics in competition law. One of the key beliefs found in the literature is that such schemes lead to lower prices for consumers and that competition authorities therefore need to be particularly prudent in balancing these "obvious" pro-competitive effects against potential foreclosure concerns. Based on a simple model it is shown that retroactive rebates do not necessarily imply lower prices for consumers and that, on the contrary, even total welfare may decline as a result of the introduction of a rebate scheme. In addition to leading to higher prices, rebate schemes may hurt consumers by inducing them to buy a higher quantity than they otherwise would. The belief that rebates increase consumer welfare as they imply lower prices is shown to be based on the fundamentally flawed reliance on the non-rebated base price as appropriate counterfactual.

July 30, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, July 29, 2013

Antitrust Courts: Specialists Versus Generalists

Posted by D. Daniel Sokol

Douglas H. Ginsburg, George Mason University School of Law and Joshua D. Wright, George Mason University School of Law describe Antitrust Courts: Specialists Versus Generalists.

ABSTRACT: In the last several decades, scores of new competition laws have been adopted and National Competition Authorities ("NCAs") established around the world. No matter what the arrangement for initial review of the NCA decision or review of a trial court in a private action, there is always an upper level reviewing court of general jurisdiction, whether mandatory or discretionary. These tribunals vary significantly on a number of dimensions, including the degree of specialization as measured by the percentage of the court’s cases arising under the antitrust laws and the degree to which judges of a court have skills or training specific to antitrust. The proliferation of tribunals reviewing NCA decisions invites inquiry as to whether one degree or another of specialization provides more satisfactory results, however measured. In the absence of data sufficient to identify a relationship between specialization and performance, we evaluate the case for specialist versus generalist tribunals by reference to criteria that have been widely accepted in the legal and political science literature evaluating actual or proposed specialized courts, and applying those criteria — efficiency, expertise, and uniformly — to the particular context of antitrust cases. We make no recommendation for or against the use of specialist courts for antitrust cases where they do not already exist. Our point is the more modest one that the objections commonly raised against specialist tribunals, at least as applied to antitrust cases, are not daunting, much less insurmountable. Whether all antitrust cases — or perhaps only cases seeking review of a decision of an NCA — should be singled out for resolution by a specialist court depends, therefore, entirely upon the claim that the economic evidence in such cases would be better understood and analyzed by judges who deal repeatedly with cases of the same ilk.

July 29, 2013 | Permalink | Comments (0) | TrackBack (0)

Anticompetitive Patent Settlements and the Supreme Court's Actavis Decision

Posted by D. Daniel Sokol

Herb Hovenkamp (Iowa) discusses Anticompetitive Patent Settlements and the Supreme Court's Actavis Decision.

ABSTRACT: In FTC v. Actavis the Supreme Court held that settlement of a patent infringement suit in which the patentee of a branded pharmaceutical drug pays a generic infringer to stay out of the market could be illegal under the antitrust laws. Justice Breyer's majority opinion was surprisingly broad, in two critical senses. First, he spoke with a generality that reached far beyond the pharmaceutical generic drug disputes that have provoked numerous pay-for-delay settlements.

Second was the aggressive approach that the Court chose. The obvious alternatives were the rule that prevailed in most Circuits, that any settlement is immune from antitrust attack if it is facially "within the scope of the patent." Under this approach the court may not second guess the settlement by inquiring into the validity of the patent; the settlement itself shields this query from the court. A second alternative concludes that a very large settlement payment is a sign that something is wrong with the patent, inviting the court to look more closely at the underlying patent to determine whether the settlement is really a good faith attempt to manage litigation and business risk. A third approach is that a large settlement exclusion payment disproportionate to litigation risk can be unlawful under antitrust's rule of reason, without inquiry into whether the patent is actually invalid, and even if the settlement agreement does not go "beyond the scope" of the patent's nominal coverage. Finally, the court might apply a "quick look," or truncated, antitrust analysis in which the plaintiff can enjoy presumptions about market power or anticompetitive effect. The Supreme Court chose the third, or rule of reason, option, but it made clear that the plaintiff need not make a long form rule of reason showing and suggested important shortcuts. Payments whose size correlates with risk are essential to entrepreneurial decision making, but entrepreneurial risk is usually private in the sense that the firm risks the resources of its own shareholders. In the pharmaceutical pay-for-delay setting, however, what is being placed at risk is both the investment of the pioneer and the welfare of consumers, interests that pull in opposite directions. Consumers represent an important externality. They are not participants in this dispute, but they stand to lose the benefits of competition that would otherwise have occurred. While the Court did not discuss private consumer challenges, its substantial revision of the law applies equally to private actions and it is reasonable to expect that several will emerge. Purchasers seeking antitrust overcharge damages from an anticompetitive pay-for-delay settlement should be able to proceed without proving patent invalidity, although they would be subject to the same rule-of-reason constraints that the Court created for the FTC. Finally, the breadth of the Activis opinion makes it relevant for many situations outside of the Hatch-Waxman context. For example, the Court's dicta severely limited its 1926 GE decision permitting price fixing among a patent and its licensees, and implicitly overruled decisions such as Bement, which permitted product price fixing among the members of a patent pool. A central question was whether the Patent Act, either explicitly or by reasonable implication, authorized the challenged conduct. If the answer is no, ordinary antitrust analysis can proceed.

July 29, 2013 | Permalink | Comments (0) | TrackBack (0)

FTC v Actavis, Inc: When is the Rule of Reason Not the Rule of Reason?

Posted by D. Daniel Sokol

Thomas F. Cotter, University of Minnesota Law School asks FTC v Actavis, Inc: When is the Rule of Reason Not the Rule of Reason?

ABSTRACT: The U.S. Supreme Court’s recent decision in FTC v. Actavis, Inc. brings some resolution to the decade-long dispute over the level of antitrust scrutiny that is appropriate for evaluating the legality of "reverse-payment" or "pay-for-delay" agreements settling pharmaceutical patent infringement litigation between brand-name and generic drug companies. Writing for a 5-3 majority in Actavis, Justice Breyer rejected both the scope-of-the-patent test and the presumptive illegality approach, and held instead that courts should review reverse-payment settlements under the rule of reason. Or say the opinion states. In reality, the Court appears to have all but in name adopted the presumptive illegality approach it purported to reject. One might speculate about the political or prudential considerations that went into the majority’s characterization of what it was actually doing, but as I read the opinion reverse-payment settlements of the type at issue in Actavis are now subject to a de facto regime of presumptive illegality. In my view, this is a welcome result.

July 29, 2013 | Permalink | Comments (0) | TrackBack (0)

Consumer Choice in Retail Banking: Are Prices Really Relevant?

Posted by D. Daniel Sokol

Ornella Ricci, University of Roma Tre, Department of Business Studies and Massimo Caratelli, University of Roma Tre - Department of Business Studies ask Consumer Choice in Retail Banking: Are Prices Really Relevant?

ABSTRACT: This paper presents an analysis of the role of pricing conditions with respect to other consumer choice criteria in retail banking. Our sample includes 7,146 respondents to the 2010 Bank of Italy Survey on Household Income and Wealth. Using both a univariate analysis and a logit model, results show that interest rates and services charges have increased in importance, especially in the last years. However, they are still not taken into account as a unique driver of choice, but are generally considered together with other extrinsic attributes of the offering. Finally, customers with a higher level of financial literacy are more likely to rely on technical features such as pricing conditions.

July 29, 2013 | Permalink | Comments (0) | TrackBack (0)

Sunday, July 28, 2013

The Transformation of Vertical Restraints: Per Se Illegality, the Rule of Reason and Per Se Legality

Posted by D. Daniel Sokol

D. Daniel Sokol (University of Florida) has posted The Transformation of Vertical Restraints: Per Se Illegality, the Rule of Reason and Per Se Legality.

ABSTRACT: This essay tracks Robert Bork’s influence on the development of vertical restraints in three areas of antitrust law - maximum resale price maintenance (“RPM”), vertical territorial restrictions, and Robinson Patman. In practice, across these areas, the shift in legal rules has not been one of per se illegality to the rule of reason but a more dramatic shift from per se illegality to one of presumptive legality under the rule of reason to close to per se legality.

July 28, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, July 26, 2013

Exclusive Contracts and Market Dominance

Posted by D. Daniel Sokol

Giacomo Calzolari, University of Bologna and Vincenzo Denicolo, University of Bologna analyze Exclusive Contracts and Market Dominance.

ABSTRACT: We develop a theory of exclusive dealing that rehabilitates pre-Chicago-school analyses. Our theory rests on two realistic assumptions: that firms are imperfectly informed about demand, and that a dominant firm has a competitive advantage over its rivals. Under those assumptions, exclusive contracts tend to be pro-competitive when the dominant firm's competitive advantage is small, but are anti-competitive when it is more pronounced. In this latter case, the dominant firm uses exclusivity clauses as a means to increase its market share and profit, without necessarily driving its rivals out of the market, or impeding their entry. We discuss the implications of these results for competition policy.

July 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Asia Competition Association 2013 Annual Conference, September 6, 2013, Seoul, Korea

Posted by D. Daniel Sokol

Asia Competition Association
2013 Annual Conference


  September 6, 2013
Schubert Hall, 31st Floor, Hotel President





09:00 – 09:30


09:30 – 09:45

Opening Remarks

• Hoil YOON, Chairman, Asia Competition
Association; Chairman,
Yoon & Yang LLC

• Shiying XU,
Vice-Chairman, Asia Competition Association; Professor, East China University of
Political Science and Law

• Kimitoshi YABUKI, Vice-Chairman, Asia
Competition Association;
Yabuki Law Offices

09:45 – 10:05

Keynote Speech

Keynote Speech
Dae-lae NOH, Chairman, Korea Fair
Trade Commission

Major recent developments and
prospects of competition policies
and enforcement in Korea

10:10 – 12:10

Session 1:

Recent developments and prospects of
competition policies and
enforcement in East Asia


Ohseung KWON, Professor, Seoul National University Law School,


• Akinori UESUGI, Consultant, Freshfields Bruckhaus

• Xiaoye WANG, Professor of Law, Hunan University and Chinese

Academy of Social Sciences

• Joong-weon JEONG,
Commissioner, Korea Fair Trade Commission

• Ming SHANG, Director
General, MOFCOM (Invited)

• Qing LI, Deputy Director General, NDRC

• Ye LIU, Deputy Director General, SAIC (Invited)

Toshiyuki NAMBU, Deputy Secretary-General for International
Affairs, Japan
Fair Trade Commission

12:10 – 13:30


13:30 – 15:00

Session 2
Trends in

Economic evidence for proving cartels;
leniency; and regulation of
international cartels


Chul-kyu KANG, President, Woosuk University, Korea

• Kimitoshi YABUKI,
Attorney, Yabuki Law Offices

• Yanbo JIANG, Dean, Law
School of Jiangxi University of Finance
and Economics

• Jae Young
KIM, Attorney, Yoon & Yang LLC

• Gary SPRATLING, Attorney, Gibson
Dunn & Crutcher LLP

• Toshiaki TADA, Attorney, Hibiya Sogo Law

15:00 – 15:10

Coffee Break

15:10 – 16:20

Session 3
Recent Developments
Merger Regulation
from an Economic

Regulation of international mergers
using economic analysis

• Kei AMEMIYA, Attorney, Morrison

• Jianmin DAI, Attorney, Dacheng Law

• Keita ITO, Chief Investigator, Merger and
Acquisition Division of the
Japan Fair Trade Commission

• Yangsoo JIN,
Advisor, Kim & Chang

• Zhong LIN, Attorney, Shanghai Ying Ming Law
[A person from Japan]
[A possible speaker from an international

16:20 – 16:40

Coffee Break

16:40 – 18:30

Session 4
Abuse of Dominance
a Global Context

Global trends in competition regulation
of standard essential
patents, rebates, and so on


Ji-sang CHANG, Professor, Kyungpook National University, Korea

• Shiying
XU, Vice-Chairman, Asia Competition Association; Professor, East China
University of Political Science and Law

• Gee-Hong
KIM, Attorney, Jipyong Jisung

• Makoto KURITA, Professor, Chiba

• Greg S. SLATER, Director of Trade and Competition Policy,
Intel Corporation

• Jian WANG, Professor, Law School of Zhejiang Polytech

• Seong Un YUN, Attorney, Bae, Kim & Lee LLC
possible speaker from an international company]

18:30 – 18:45

Closing Remarks

• Xiaoye WANG, Professor of Law, Hunan
University and Chinese
Academy of Social Sciences

• Kiljun PARK,
Professor, Yonsei University

• Toshifumi HIENUKI, Hokkai-Gakuen

18:30 ~


Keynote Speech
Justice Inbok LEE, Supreme Court of

The role of the courts in development of
antitrust law in Korea
- Judicial review of KFTC decisions and recent
developments in
antitrust damages litigation in Korea [Tentative


Schubert Hall, 31st Floor, Hotel President, 16, Euljiro, Jung-Gu,
Seoul Korea 100-191

July 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Should Competition Policy in Banking be Amended During Crises? Lessons from the EU

Posted by D. Daniel Sokol

Iftekhar Hasan Fordham University; Bank of Finland and Matej Marinc University of Ljubljana - Faculty of Economics; University of Amsterdam ask Should Competition Policy in Banking be Amended During Crises? Lessons from the EU.

ABSTRACT: This article investigates the nexus of competition and stability in European banking. It analyzes the European legal framework for competition policy in banking and several cases that pertain to anti-cartel policy, merger policy, and state-aid control. It discusses whether and how competition policy should be amended in order to preserve the stability of the banking system during crises. The article argues for increased cooperation between prudential regulators and competition authorities, as well as an enhanced framework for bank regulation, supervision, and resolution that could mitigate the need to change competition policy in crisis times.​

July 26, 2013 | Permalink | Comments (0) | TrackBack (0)


Posted by D. Daniel Sokol

Farasat A.S. Bokhari, School of Economics and Centre for Competition Policy, University of East Anglia asks WHAT IS THE PRICE OF PAY-TO-DELAY DEALS?

ABSTRACT: When a branded drug manufacturer makes a payment to a potential entrant to delay generic entry, it raises anticompetitive concerns. In this article, I highlight one such deal in a subsegment of drugs used to treat attention deficit hyperactivity disorder (ADHD)—mixed amphetamine salts (MAS)—and compute market equilibrium prices under three counterfactuals. In the first case, equilibrium prices are computed as if all MAS drugs were produced by a single profit-maximizing firm, while in the latter two counterfactuals, I compute equilibrium prices as if either an immediate-release generic or an extended-release branded drug were not available in the market. The simulations show that the average percentage increase in drug prices is 4 to 4.5 times larger in the latter two cases (when one of the drugs is not available in the market) compared with a simple joint profit maximization of the same products. In this respect, the challenges by the Federal Trade Commission (FTC) to the so called “pay-to-delay” deals and the recent legislations introduced into the Congress to ban such deals are justified.

July 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 25, 2013

New Perspectives on Misuse of Market Power: How Should the Effects-Based Approach Complement the Existing Normative Solution?

Posted by D. Daniel Sokol

Erdem Buyuksagis, University of Fribourg offers New Perspectives on Misuse of Market Power: How Should the Effects-Based Approach Complement the Existing Normative Solution?

ABSTRACT: This article delivers an analysis of the EU Commission’s new competition policy regime, with specific consideration given to abuse of dominant position cases. Given that the new regime based on the effects-based approach makes provision for a shift from the protection of competition towards the protection of consumers, the article forecasts its eventual implementation into European national laws (e.g. Swiss law) as well as its eventual outcome on consumer welfare. It concludes by highlighting the need for the new regime to be complemented by structural and procedural mechanisms in order to contribute to a more efficient competition law enforcement.

July 25, 2013 | Permalink | Comments (0) | TrackBack (0)

The Economic Consequences and Constitutionality of Administrative Monetary Penalties for Abuse of Dominance

Posted by D. Daniel Sokol

Grant Bishop, University of Toronto - Faculty of Law discusses The Economic Consequences and Constitutionality of Administrative Monetary Penalties for Abuse of Dominance.

ABSTRACT: The 2009 amendments to the Competition Act introduced administrative monetary penalties ("AMPs") for a finding of abuse of dominant position of up to $10 million for the first order, and a $15 million for each subsequent order. The quantum of such an AMP is to be determined according to a list of "aggravating or mitigating factors,” including gross revenue and profits affected by the practice, the party's financial position, the history of compliance with the Act and "any other relevant factor."

The author argues that this provision is both inefficient and potentially unconstitutional (following from the Supreme Court of Canada's holding in Wigglesworth), because, 1) the Act does not explicitly constrain the AMP quantum to a level that internalizes the economic impacts of the anti-competitive conduct; and, 2) some of the aggravating factors lack a coherent connection to the economic impact of anti-competitive conduct.

The author concludes that the Commissioner should clarify the circumstances under which AMPs for abuse of dominance will be sought. AMPs should be calibrated to market impacts based on evidence of estimated deadweight loss and economic profits, in order to ensure that AMPs remain purely deterrent and do not reach a denunciatory magnitude.

July 25, 2013 | Permalink | Comments (0) | TrackBack (0)

Balancing 'Incentive to Innovate' and 'Protection of Competition': An African Perspective on IPRS and Competition Law

Posted by D. Daniel Sokol

Mor Bakhoum, Max Planck Institute for Intellectual Property and Competition Law is Balancing 'Incentive to Innovate' and 'Protection of Competition': An African Perspective on IPRS and Competition Law.

ABSTRACT: This paper discusses the interface(s) between IP and Competition Law from a Sub-Saharan Africa perspective. It analyzes the essential facility doctrine raised in the Glaxo Smith Kline case which was settled by the South African Competition Commission against the backdrop of the EU line of case law. This contribution “reopens” the settled case and provides some insights on the legal challenges (and economic implications) that the case would have raised if it had followed the Magill approach with the new product rule for which there is a consumer demand.

The EU line of case law seems to emphasize more the need to promote innovation as evidenced by the “innovation surplus” requirement. However, for countries that are importers of technology where local innovation is limited or nonexistent, the “innovation surplus requirement” would be difficult to meet. Access to existing technology or to patented products would therefore be limited.

From a consumer-interest perspective of a developing or technology-importing country, access to technology, in some cases, is more relevant than innovation in the first place.

In addition to the discussion pertaining to “innovation” and “access”, the paper takes a transversal approach and shed light on the treatment of IP related issues in selected Sub-Saharan African countries competition laws. Suggestions as to how to foster competition law enforcement in IP related restrictions of competition are put forward in the concluding remarks.

July 25, 2013 | Permalink | Comments (0) | TrackBack (0)