Antitrust & Competition Policy Blog

GCR Live 4th Annual Antitrust Law Leaders Forum - 6 February 2015 at 09:00 to 7 February 2015 at 18:00 in South Beach, Florida at the Ritz-Carlton

This year, the University of Florida is a proud co-sponsor of the of GCR Live 4th Annual Antitrust Law Leaders Forum, which will be held 6 February 2015 at 09:00 to 7 February 2015 at 18:00 in South Beach, Florida at the Ritz-Carlton.   

 

About the Event

Global Competition Review is pleased to present a major one and a half day international conference to be held in Miami in February 2015 in association with Charles River Associates and the University of Florida.

 

All delegates are invited to attend a cocktail reception hosted by Blake, Cassels & Graydon on Thursday, 5 February at the Dilido Beach Club at the Ritz-Carlton from 20.00 onwards, and the conference dinner kindly hosted by Charles River Associates on Friday, 6 February.

 

Delegates who wish to stay at the Ritz-Carlton, South Beach can book using a discounted rate. More information on how to book can be found on the confirmation email after registering for the conference.  

 

Registration

See here.

 

Agenda

 

Thursday, 5th February

8:00pm: Welcome Reception - Sponsored byBlake, Cassels & Graydon LLP

 

Friday, 6th February

7:30am – 8:30am:

Registration/ Light Breakfast

8:30am – 9:15am: (Plenary)

Chairpersons’ Opening Remarks

• Jason Gudofsky, Blake, Cassels & Graydon LLP (Toronto)
• Margaret Sanderson, Charles River Associates (Toronto)

Keynote Address

• William Baer, Assistant Attorney General, Antitrust Division, US Department of Justice (Washington)

9:15am – 10:30am: (Plenary)

Roundtable with Recent Agency Heads of Economics

Moderator:

• Margaret Sanderson, Charles River Associates (Toronto)

Speakers:

• Tim Brennan, Chief Economist, US Federal Communications Commission (Washington)
• Giulio Federico, Economist, DG Competition, European Commission (Brussels)
• Mike Walker, Chief Economic Advisor, Competition and Markets Authority (London)
• Nancy Rose, Deputy Assistant Attorney General for Economic Analysis, US Department of Justice (Washington)
• Francine Lafontaine, Director, Bureau of Economics, US Federal Trade Commission (Washington)

10:30am – 10:45am:

Coffee Break

10:45am – 12:30pm: (Concurrent sessions)

Merger: Evidence in Merger Reviews – Handling Customer Views

This panel will discuss the relative and potentially changing importance of customer feedback and economic evidence to agencies conducting merger reviews in light of the court's discounting of the views of customers in BazaarVoice.

• Is it still an effective use of agency time to solicit the views of large numbers of customers, and if so, why?
• What is the value and what are the limitations of commissioning a customer survey, and how should surveys be best used by merging parties?
• How should agencies interpret economic evidence that is at odds with feedback from customers and other market participants?
• Are theories of harm about the exercising of bargaining power - whether resulting in exclusion of upstream suppliers or horizontal competitors (e.g., water-bedding) - economically provable in the merger context?
• If customer opinion is not capable of being determinative of a merger's legality in some instances, does this diminish the probative value of customer opinion in other circumstances?

Moderator:

• Olivier Antoine, Crowell & Moring LLP (New York)

Speakers:

• Jordan Ellison, Slaughter and May (Brussels)
• Scott Sher, Wilson Sonsini Goodrich & Rosati (Washington)
• David Wales, Jones Day (Washington)
• Carl Shapiro, University of California at Berkeley (Berkeley)

or

Antitrust: Sharing Technology and Facilitating Competitor Success as a Remedy in Innovation Markets

This panel will discuss the obligation to share technology with competitors and facilitate the success of competitors as a remedy in certain innovation markets, and the effectiveness of such remedies in restoring competitive market dynamics.

• Is there good evidence of a causal relationship between a lack of sharing and the achievement of dominance or exclusion in certain industries? If not, why is sharing a potentially appropriate remedy?
• In what circumstances is sharing or facilitating a competitor likely to overcome tying and other exclusionary practices? In what circumstances is it likely to overcome entrenched business models that customers are accustomed to?
• What are the economic circumstances in which mandated sharing or facilitation is most likely to succeed? Is sharing an appropriate remedy in regulated industries (when other regulators are capable of ordering sharing)?
• Does the imposition of "net neutrality" regulations constitute a facilitation?
• Is "Big Data" an industry where sharing should be required, given the high barriers to entry (both for data accumulation and server capacity)?
• If sharing and facilitation is an effective and appropriate remedy, particularly in industries given to innovation, what does it mean if Aspen Ski is considered to be at the outer edge of monopolization/ abuse of dominance?

Moderator:

• Ilene Knable Gotts, Wachtell, Lipton, Rosen & Katz (New York)

Speakers:

• Sean Durkin, Charles River Associates (Chicago)
• Jenine Hulsmann, Clifford Chance LLP (London)
• Dina Kallay, Director, Intellectual Property and Competition, Ericsson, Inc. (Washington)
• James Keyte, Skadden, Arps, Slate, Meagher & Flom LLP (New York)
• Nikhil Shanbhag, Director, Competition, Google Inc. (California)

12:30pm – 1:45pm:

Lunch (Plenary)

Introduction: William Kolasky, Hughes Hubbard & Reed LLP (Washington)

Keynote Speaker: Joshua Wright, Commissioner, Federal Trade Commission (Washington)

2:00pm – 3:45pm: (Concurrent sessions)

Merger: Merger Review in Rapidly Evolving Industries

This panel will discuss how agencies should approach the task of merger review when industries go through rapid consolidation and successive transactions, including a discussion of how innovation competition and portfolio effects can be reliably assessed in such circumstances.

• Industry consolidation, especially in the technology sector, may be driven by product evolution or technology convergence. How should agencies address relevant product market definition in such cases?
• Is rapid industry consolidation an appropriate time to apply theories of competitive harm that are more difficult to apply from an evidentiary perspective, including portfolio effects and innovation effects?
• Where consolidation occurs rapidly (e.g., Samsung/SeaGate and Hitachi/Western Digital) how should agencies assess the likelihood of future coordinated effects? Will these circumstances bring about the first "tipping point" case?

Moderator:

• Susanne Zuehlke, Latham & Watkins LLP (Brussels)

Speakers:

• Deborah Feinstein, Director, Bureau of Competition, US Federal Trade Commission (Washington)
• Antonio Bavasso, Allen & Overy LLP (London)
• Ronan Harty, Davis Polk & Wardwell LLP (New York)
• Aviv Nevo, Northwestern University (Evanston)
• Scott Darling, Vice President, General Counsel, Trulia, Inc. (San Francisco)

or

Antitrust: Creating Transparency in Markets: Coordination and Information Exchange

This panel will discuss the recent antitrust scrutiny of coordination and information exchange practices used by market participants to create price discovery mechanisms and enhance price transparency as well as agency responses to information exchange and hub-and-spoke coordination.

• Industries that do not operate in open markets have little price transparency. How can this information gap be remedied in a pro-competitive manner? Is a lack of transparency necessarily a bad thing?
• In what cases can information exchanges be pro-competitive (e.g. Rx 360, Tristate Health Partners)? How can economic tools be used to make this determination?
• What steps have European regulators taken recently to reduce the risk of horizontal coordination and hub-and-spoke coordination in particular (e.g. Tesco, Post Danmark)? How have these efforts affected particular sectors, especially the food and textile sectors?
• What benefit do these antitrust cases have for consumers (e.g. Libor, Gold Investigation)? What are the economic benefits?
• How has the American approach to coordination and information exchange to enhance price transparency differed from the European approach?

Moderator:

• Katrin Gaßner, Freshfields Bruckhaus Deringer LLP (Düsseldorf)

Speakers:

• Matthew Reilly, Simpson Thacher & Bartlett LLP (Washington)
• Matthew Bennett, Charles River Associates (London)
• James Mutchnik, Kirkland & Ellis LLP (Chicago)
• Cecilio Madero Villarejo, Deputy Director-General for Antitrust, DG Competition, European Commission (Brussels)
• Kyriakos Fountoukakos, Herbert Smith Freehills LLP (Brussels)

3:45pm – 4:00pm:

Coffee Break

4:00pm – 5:30pm: (Concurrent sessions)

Merger: Clean Up in Aisle 3 – New Approaches to Merger Review in the Retail Sector

This panel will discuss competition and consolidation in the retail sector and how the rise of online sales platforms and other disruptive technologies have influenced the development of merger analysis.

• In a world with Amazon, are mergers in the retail sector (outside of groceries) ever likely to be anti-competitive again?
• How are agencies approaching the effects of retail mergers on upstream suppliers? How can economics be used to further our understanding of these effects?
• How should merger analysis (both as presented by the parties and as performed by the agencies) reflect the rapid (and continuing) evolution of distribution structures?
• How do antitrust agencies approach the general problem of disruptive new entrant retailers when performing merger review?

Moderator:

• Rebecca Farrington, White & Case LLP (Washington)

Speakers:

• George Cary, Cleary Gottlieb Steen & Hamilton LLP (Washington)
• James Fishkin, Dechert LLP (Washington)
• Paul Collins, Stikeman Elliott LLP (Toronto)
• Peter Boberg, Charles River Associates (Boston)

or

Antitrust: "Sir, please step out of line" - Extraterritoriality and Extradition in the Antitrust Context

This panel will discuss the implications for clients of the US DOJ demonstrating its ability to extradite a foreign national for participation in a cartel and explore the limits of extraterritoriality in cartel enforcement today as well as the incentives of those subject to extradition.

• Is the risk of extradition to the United States more significant than previously?  Is this a general risk, or specific to the country in which individuals reside?
• What impacts the incentives of individuals who are potentially subject to extradition?
• Do antitrust laws properly capture the risk profiles of individuals who engage in such behavior?
• What is an appropriate threshold for "dual criminality" under antitrust law?
• In trans-national cartels, in which jurisdiction should individuals plead guilty, and where should they serve their sentences?
• How can corporate counsel best handle potential extradition proceedings against one of its employees? Should those employees be carved out of plea agreements? Should they be advised to retain separate counsel? Should they enter cooperation agreements?
• What are the limits on extraterritoriality in U.S. law and what are the implications for individuals and companies likely to arise out of Motorola v. AU Optronics Corp?

Moderator:

• Peter Niggemann, Freshfields Bruckhaus Deringer LLP (Düsseldorf)

Speakers:

• José Carlos da Matta Berardo, Barbosa, Müssnich & Aragão Advogados (São Paulo)
• Kenneth O’Rourke, O’Melveny & Myers LLP (Los Angeles)
• Kathryn Hellings, Hogan Lovells US LLP (Washington)
• Yusuke Nakano, Anderson Mori & Tomotsune (Tokyo)
• Matthew Boswell, Senior Deputy Commissioner of Competition, Criminal Matters, Competition Bureau (Ottawa)

7:30pm: Conference Dinner - Sponsored by Charles River Associates

Saturday, 7th February

8:15am - 8.45am:

Welcome Coffee

8:45am – 10:30am: (Plenary)

A Retrospective on the Term of Commissioner Joaquín Almunia, and a Look Ahead

GCR Miami 2015 will be one of the first opportunities to reflect on the outcomes and accomplishments of Joaquín Almunia's term as EU Commissioner of Competition, and to look ahead at the challenges facing the new Commission.

• What are the key accomplishments of the European Commission under Joaquín Almunia?
• In what areas has the European Commission under Joaquín Almunia failed to advance enforcement? What are the circumstances necessary for the next Commissioner to address these areas?
• How do these accomplishments and failures match against those of American agencies during the same time period? What are the lessons that other agencies can take from Joaquín Almunia’s term?
• What ought to be the priorities of the next Commissioner? How do these proposed priorities compare to trends in other jurisdictions?

Moderator:

• Paula Riedel, Linklaters LLP (London)

Speakers:

• Rachel Brandenburger, Senior Advisor to Hogan Lovells US LLP (New York)
• William Blumenthal, Sidley Austin LLP (Washington)
• Cristina Caffarra, Charles River Associates (London)
• Frédéric Jenny, Chairman, OECD Competition Law and Policy Committee (Cergy-Pontoise)

10:30am – 10:45am:

Coffee Break

10:45am – 12:15pm: (Concurrent sessions)

Merger: A Vertical Tide in Merger Review

This panel will discuss recent trends in vertical theories of harm in merger review.

• Are vertical concerns the new horizontal? 
• Are questions of vertical effects more important to the exercise of market power in certain industries?
• What strategies should merging parties consider in the context of a vertical merger?
• How does the analysis of vertical mergers differ across jurisdictions?

Moderator:

• Navin Joneja, Blake, Cassels & Graydon LLP (Toronto)

Speakers:

• Ian John, Kirkland & Ellis LLP (New York)
• Joshua Soven, Gibson, Dunn & Crutcher LLP (Washington)
• Ulrich Denzel, Gleiss Lutz (Stuttgart)
• Steven Salop, Georgetown University (Washington)
• Sophie Moonen, Deputy Head of Unit, European Commission (Brussels)

or

Antitrust: From Compliance to Crisis

The panel will discuss the qualities that make up effective antitrust and anti-corruption compliance programs and their growing importance, and consider how those policies help (or hinder) in a crisis situation.

• What are the key substantive and procedural aspects of an effective compliance program?
• How can economics help clients in determining their damage exposure and be used effectively in settlement discussions with the agency or private parties?
• In what circumstances is compliance risk estimable for reserve purposes?
• In what circumstances can compliance programs aggravate corporate liability? How can such circumstances be prevented?
• How can compliance programs can help/ hinder after an investigation has been commenced? What economics tools can be used to gauge the scale of damages?

Moderator:

• Daniel Sokol, Levin College of Law, University of Florida (Gainesville)

Speakers:

• Alfredo O’Farrell, Marval O'Farrell Mairal (Buenos Aires)
• Fiona Schaeffer, Milbank, Tweed, Hadley & McCloy LLP (New York)
• Helen Bardell, Director, Competition Team, Barclays Bank (London)
• Claire Debney, Vice President & General Counsel, Group Legal Affairs & Compliance, Reckitt Benckiser Group plc (Slough)

12:15pm – 1:00pm: Chairpersons' Concluding Remarks and Lunch

• Jason Gudofsky, Blake, Cassels & Graydon LLP (Toronto)
• Margaret Sanderson, Charles River Associates (Toronto)

The Characterization of a Procurement Process as a 'Call or Request for Bids or Tenders' under Section 47 of the Competition Act

Pierre-Christian Collins Hoffman, McMillan LLP and Guy Pinsonnault, McMillan LLP explore The Characterization of a Procurement Process as a 'Call or Request for Bids or Tenders' under Section 47 of the Competition Act.

ABSTRACT: Courts have recently recognized that the law of tenders can provide useful indications as to what a "call or request for bids or tenders" should consist in for the purpose of section 47 of the Competition Act. In two preliminary inquiry judgments rendered in Quebec (Al Nashar/Industries Garanties) and Ontario (Dowdall) involving bid-rigging charges, courts have made reference to the contract A/contract B scheme of the law of tenders. They also had to assess the weight of "privilege clauses" (i.e. no obligation upon the owner to accept the lowest bid or any tender submitted) and post-selection negotiations in the characterization of a procurement process as an RFP. This paper aims to review these two decisions, along with other case law rendered under section 47 and the law of tendering, in an attempt to propose basic general criteria and a nonexhaustive set of indicia to determine whether a procurement process is contemplated under section 47 of the Competition Act. In particular, the authors assess the weight of the contract A/contract B paradigm, privilege clauses and negotiations in the characterization of a tendering process as a "call or request for bids or tenders."

Multilateralism of Competition Policy: An Unassailable Pedestal for a World of Free Trade

Saloni Khanderia-Yadav, National Law University, Delhi describes Multilateralism of Competition Policy: An Unassailable Pedestal for a World of Free Trade.

ABSTRACT:The article delves to gain an insight into the relationship between trade and competition policy. With the failure of various attempts been made by various Ministerial Declarations in Singapore, Seattle, Doha and Cancun, and Organizations like the UNCTAD and OECD; a need is now felt to negotiate a multilateral agreement on an international competition policy. Considering the effects of anti-competitive measures crossing the borders, the article analyses the benefits of multilateralism as an unassailable pedestrian to an international competition policy. Though various Agreements such as the TRIPS, GATS, TRIMS and the Agreements on Safeguards; and provisions across the GATT-WTO, namely: Articles II: 4, III, X, XI, XVII, XX(d), XXIII(1)(b) and (c); have acknowledged the effect of anti-trust policies on trade across the border, it does not suffice; and the utility of multilateralism under the auspices of the WTO is now being felt. The aim of both the WTO and competition policy being to provide market access to all sans barriers, marked the birth of the Working Group on the Interaction between Trade and Competition Policy (WGTCP) established in the Singapore Ministerial Declaration in 1996, made its first attempt under the auspices of the WTO. It is recognized that globalization cannot merely be achieved by checking the governmental measures in the form of tariff and non tariff barriers; anti-competitive behavior by various private enterprises is what now constitutes a hurdle to liberalization to trade. Primarily, anti-competitive behavior in the form of horizontal and vertical restraints, abuse of dominant position/monopolization and mergers for the thrust of targeted actions must be banned. Hence, multilateralism will incorporate the best practices of the WTO such as the National Treatment, Most Favored Nation Treatment and the Transparency provisions may form the base of the negotiations. A truly international forum of dispute settlement is also predicted to be more trusted as a dispute resolver. It will make clear the practices that are considered anti-competitive and the market players that are subject to jurisdiction apart from exemptions, if any.

Russian Competition Law in Light of the Principles of Ex Post and Ex Ante

Konstantin Totyev, National Research University Higher School of Economics explores Russian Competition Law in Light of the Principles of Ex Post and Ex Ante.

ABSTRACT: This article is devoted to the legitimation and application of the standards of ex post and ex ante by courts and the executive authorities in the sphere of competition regulation. The postulates of ex post and ex ante are considered as legal principles. The principle of ex post is intended solely for judicial and administrative application; it has a deontological framework; it assumes that the legality of the activity of economic entities is assessed only on the basis of positive legal criteria in terms of the subjective rights violated; it is limited to a particular case. The traditional approach to the principle of ex post limits the scope of its application on the subjects and excessively expands its objects. The postulate of ex ante has a utilitarian basis which assumes the assessment of the application of relevant rules in the future. One of the main aims of the article is to refute the common view of lawyers and economists that a legislator applies principle of ex ante not being bound by principle of ex post, while it is the other way around for the courts and the executive authorities. The principle of ex ante may be applied not only in the process of the creation of new rules but also at the application stage for existing rules on economic competition. This is justified because the arguments of the courts and the executive authorities about a refusal to take into account the consequences of a decision in a particular case are not convincing.

Price Squeezes with Positive Margins in EU Competition Law: Economic and Legal Anatomy of a Zombie

Nicolas Petit, University of Liege - School of Law offers Price Squeezes with Positive Margins in EU Competition Law: Economic and Legal Anatomy of a Zombie.

ABSTRACT: In European Union ("EU") competition law, the supply policy of a dominant input provider can be deemed unlawful, if his wholesale and retail price-mix forces rival input purchasers to compete at a loss on the downstream market. This is known as an abusive "margin squeeze". Whilst this stands to reason, the TeliaSonera case-law adds that there can also be an "exclusionary" abuse when rivals’ margins are "positive", by virtue, for instance of "reduced profitability". In other words, there is an infringement of Article 102 TFEU even if rivals maintain the ability to competitively sell their products at prices above costs. We call this the positive margin squeeze theory. After a quick overview of TeliaSonera and of its context (I), this paper shows that the positive margin squeeze theory is flawed on economic grounds (II). To this end, it resorts to a simple numerical example. Further, this paper explains that the positive margin squeeze theory is wrong on legal grounds, and that it has since been overruled by a subsequent judgment of the Court of Justice of the EU ("CJEU") (III). Finally, we conclude that the positive margin squeeze theory can be disregarded in positive competition law.

Innovation and Competition in the Retail Banking Industry: An Industrial Organization Perspective

Carlotta Mariotto, Ecole Nationale Superieure des Mines de Paris and Marianne Verdier, Universite Paris 2 Pantheon Assas analyze Innovation and Competition in the Retail Banking Industry: An Industrial Organization Perspective.

ABSTRACT: Over the recent years, the development of mobile banking and Internet banking has had a considerable impact on competition in the retail banking industry. In some countries, the regulatory framework has been adapted to allow non-banks to operate in retail payments and compete with banks for deposits. Several Internet Service Providers or large retailers have started to offer innovative financial products to their customers. In this paper, we analyse how the industrial organization literature can be used to study recent innovations in retail banking and discuss some perspectives for future research.

Optimal Cartel Prices in Two-Sided Markets

Federico Boffa, Universita degli Studi di Macerata and Lapo Filistrucchi, Tilburg University, Department of Economics, CentER & TILEC; University of Florence, Dipartimento di Scienze Economiche discuss Optimal Cartel Prices in Two-Sided Markets.

ABSTRACT: We study optimal cartel prices in a two-sided market. We present a simple model showing that prices above the two-sided monopoly price may prevail on one side of a two-sided market as a means to enhance the sustainability of the cartel. We prove that in such a case a higher benefit from the network effect may compensate customers on that side of the market for the higher prices they are charged. We then provide both sufficient and necessary conditions for these results to hold in more complex models of two-sided markets. Our analysis extends to cartels in two-sided markets a result previously known for cartels selling complementary products, despite the fact that products in a two-sided market are not complements for customers, since customers typically buy only one of the two products (e.g. in the case of newspapers, advertisers buy advertising slots while readers buy content) and products on each side are substitutes (e.g. newspapers publishers compete for readers and for advertisers).

CPI Antitrust Chronicle: Global Pharm Update—Product Hopping & Pay-for-Delay

CPI Antitrust Chronicle: Global Pharm Update—Product Hopping & Pay-for-Delay

NOV-14(2)

Autumn 2014, Volume 11 Number 2

 

In the antitrust debate arena, health care topics are the gifts that just keep on giving—always something new to discuss, analyze, or understand. This issue focuses primarily on two segments, product hopping and pay-for-delay. The first paper describes and analyzes, while the next two papers contrast regulatory approaches. Then we present case studies of two countries presenting novel twists in the field—Canada, which has introduced criminal charges to pay-for-delay cases—and India, which has targeted the distribution chain, rather the manufacturers, for its antitrust focus.

Pharm Update

Michael Carrier, Nov 24, 2014

Pharmaceutical Antitrust Complexity

With layer piled upon layer, and defenses based on patents, innovation, and settlement that cannot easily be dismissed, brands are using complexity to their advantage. Michael Carrier (Rutgers Law School)

 

Ingrid Vandenborre, Julia York, Michael Frese, Nov 24, 2014

“Product Hopping” on Both Sides of the Pond: A Survey of U.S. and EU Case Law

The approaches in the United States and the European Union with respect to “product hops” appear to be similar in that direct, affirmative steps that prevent generic competition could give rise to antitrust scrutiny. Ingrid Vandenborre, Julia K. York, & Michael J. Frese (Skadden, Arps)

Seth Silber, Jonathan Lutinski, Ryan Maddock, Nov 25, 2014

“Good Luck” Post-Actavis: Current State of Play on “Pay-for-Delay” Settlements

This article examines the current quagmire in the courts, the FTC’s recent activities, and finally explores growing interest outside the United States in getting into the “pay-for-delay” fray. Seth Silber, Jonathan Lutinski, & Ryan Maddock (Wilson Sonsini)

Alan Gunderson, Nov 24, 2014

Competition Issues in the Canadian Pharmaceutical Industry

One approach to help determine whether a Settlement has created an SPLC is to consider whether the value transfer to the generic is in excess of what the patentee could have been expected to pay in the event it had lost the litigation. Alan Gunderson (Canadian Competition Bureau)

Kalyani Singh, Nov 24, 2014

The Rising Tide: Competition Law Enforcement in the Indian Pharmaceutical Sector

Notably, in India, it is the distribution chain that has been in the limelight for anticompetitive practices. Kalyani Singh (Luthra and Luthra Law Offices)

Modeling the E ects of Mergers in Procurement

Nathan Miller, Georgetown has a new paper on Modeling the Effects of Mergers in Procurement.

ABSTRACT: In procurement settings, mergers among suppliers reduce buyers' choice sets and can harm buyers by eliminating their preferred supplier or reducing their negotiating leverage. I develop a stochastic economic model that predicts the eects of mergers based on information that commonly is available to antitrust authorities. I derive general expressions for the ex ante expected changes in price, buyer utility, and supplier profit. Each becomes tractable under certain distributional assumptions. The model predicts that average prices will increase by more than 40% due to the recently litigated acquisition of Power Reviews by Bazaarvoice, in the absence of an effective remedy.

Comprehensive Economic and Legal Analysis of Tying Arrangements

Guy Sagi, Netanya Academic College offers Comprehensive Economic and Legal Analysis of Tying Arrangements.

ABSTRACT: The law of tying arrangements as it stands does not correspond with modern economic analysis. Therefore, and because tying arrangements are so widely common, the law is expected to change and extensive academic writing is currently attempting to guide its way. Part II will present a comprehensive economic analysis that demonstrates that tying arrangements, despite their anticompetitive potential, also hold exceedingly significant pro-competitive efficiency potential. Part II will then review and critique the current law relating to tying arrangements. In Part III, I will present the potential legal rules for analyzing tying arrangements and the two leading approaches in academic writing regarding their appropriate implementation—the approach of the Chicago Harvard Schools and the approach of Professor Einer Elhauge. In Part IV, I will discuss various tying scenarios and present my position regarding their appropriate legal analyses. In concurrence with the Chicago- Harvard Schools’ approach, I support the implementation of the legal per se rule for tying arrangements that do not foreclose the tied product’s market. However, for tying arrangements that do foreclose the tied product’s market, I will propose, based on economic theory and empirical evidence, the implementation of a rule of reason analysis that does not raise a presumption against the tying arrangement. Lastly, Part V will conclude the discussion.

Renata Hesse on Recent Developments in US antitrust law - London 9 December 2014

Recent Developments in US Antitrust Law

 

by Renata Hesse, Deputy Assistant Attorney General US Department of Justice

on 

 Tuesday 9 December 2014

Registration at 12:45pm, Lecture from 1.05 - 2pm
at the UCL Faculty of Laws 

 

About the speaker: Renata B. Hesse is Deputy Assistant Attorney General for Criminal and Civil Operations at the U.S. Department of Justice’s Antitrust Division. From November 16, 2012, until the confirmation of Assistant Attorney General Bill Baer, Ms. Hesse served as Acting Assistant Attorney General for the Antitrust Division. She rejoined the Antitrust Division in March of 2012, having previously served in several different capacities at the Division between 1997 and 2006. Immediately prior to returning to the Division, Ms. Hesse served as Senior Counsel to the Chairman for Transactions at the Federal Communications Commission, where she oversaw the Commission’s investigation of AT&T’s proposed acquisition of T-Mobile. Before that, Ms. Hesse was a partner in the Washington, DC office of Wilson Sonsini Goodrich & Rosati. Ms. Hesse has been recognized in Chambers USA: America’s Leading Business Lawyers (2007- 2011), The International Who’s Who of Competition Lawyers & Economists (2009-2011), and received the Attorney General’s Distinguished Service Award in 2005.

Politics should not be part of Google investigation

Ed Black, Computer & Communications Industry Association has a reply in the Financial Times that Politics should not be part of Google investigation.

Bundling and Tying

Nick Economides, NYU describes Bundling and Tying.

ABSTRACT: We discuss strategic ways that sellers can use tying and bundling with requirement conditions to extract consumer surplus. We analyze different types of tying and bundling creating (i) intra-product price discrimination; (ii) intra-consumer price discrimination; and (iii) inter-product price discrimination, and assess the antitrust liability that these practices may entail. We also discuss the impact on consumers and competition, as well as potential antitrust liability of bundling “incontestable” and “contestable” demand for the same good.

THE HIDDEN COSTS OF FREE GOODS: IMPLICATIONS FOR ANTITRUST ENFORCEMENT

Michal Gal, University of Haifa and Daniel Rubinfeld, University of California, Berkeley have a new paper on THE HIDDEN COSTS OF FREE GOODS: IMPLICATIONS FOR ANTITRUST ENFORCEMENT.

ABSTRACT: Today a growing number of goods and services are provided in the marketplace free of charge; indeed, free or the appearance of free, have become part of our ecosystem. More often than not, free goods and services provide real benefits to consumers and are clearly pro-competitive. Yet free goods may also create significant costs. We show that despite the fact that the consumer does not pay a direct price, there are indirect prices that reflect the opportunity cost associated with the consumption of free goods. These indirect costs can be overt or covert, in the same market in which the product is distributed or in related markets, monetary or non-monetary, and short-term or long-term. Most of the economic literature on free goods has focused on two-sided markets in which the free good is provided in exchange for attention or information. We analyze the welfare effects of additional cases that are becoming commonplace in our economy. Our analysis indicates that even goods that are offered for philanthropic motivations might sometimes harm competition and welfare. The article also stresses the need to evaluate the pricing strategies of firms that offer free goods in light of new research pointing to the "irrational" behavioral response of consumers when faced by a free option.

This welfare analysis serves as a basis for the exploration of the antitrust implications of the provision of free goods, which has been relatively neglected. Indeed, as this paper shows, free goods raise significant issues for antitrust enforcement, which run the gamut from market definition to market power and to the evaluation of the competitive effects of mergers and more generally to strategic business behavior. We use examples from diverse jurisdictions and markets to exemplify our arguments and, in particular, focus on three case studies: free search services, free internet browsers and free newspapers.

Substitution between fixed-line and mobile access: the role of complementarities

Lukasz Grzybowski, Telecom ParisTech & Frank Verboven, University of Leuven discuss Substitution between fixed-line and mobile access: the role of complementarities.

ABSTRACT: We study substitution from fixed-line to mobile voice access, and the role of various complementarities that may influence this process. We use rich survey data on 160,363 households from 27 EU countries during 2005-2012. We estimate a discrete choice model where households may choose one or both technologies, possibly in combination with internet access. We obtain the following main findings. First, there is significant fixed-to mobile substitution, especially in recent years: without mobile telephony, fixed-line penetration would have been 14% higher in 2012. But there is substantial heterogeneity across households and EU regions, with a stronger substitution in Central and Eastern European countries. Second, the decline in fixed telephony has been slowed down because of a significant complementarity between fixed-line and mobile connections offered by the fixed-line incumbent operator. This gives the incumbent a possibility to maintain to some extent its position in the fixed-line market, and to leverage it into the mobile market. Third, the decline in fixed telephony has been slowed down because of the complementarity with broadband internet: the introduction of DSL avoided an additional decline in fixed-line penetration of almost 9% in 2012. The emergence of fixed broadband has thus been the main source through which incumbents maintain their strong position in the fixed-line network.

How do Consumers Respond to Gasoline

David P. Byrne (Melbourne), Gordon Leslie (Stanford) and Roger Ware (Queens) ask How do Consumers Respond to Gasoline.

ABSTRACT: This paper empirically studies how consumers respond to retail gasoline price cycles. Our analysis uses new station-level price data from local markets in Ontario, Canada, and a unique market-level measure of consumer responsiveness based on web traffic from gasoline price reporting websites. We first document how stations use coordinated pricing strategies that give rise to large daily changes in price levels and dispersion in cycling gasoline markets. We then show consumer responsiveness exhibits cycles that move with these price fluctuations. Through a series of tests we further show that forward-looking stockpiling behavior by consumers plays a central role in generating these patterns.

Using Remedies In Russian Merger Control

Anastasiya Redkina (National Research University Higher School of Economics) is Using Remedies In Russian Merger Control.

ABSTRACT: This article is motivated by a growing interest in the problem of merger control quality assessment. Remedies are one of the instruments of merger control and have a significant influence on the results of it. This paper aims to build and empirically evaluate a discrete choice model of merger remedies implementation in Russian merger control. The database consists of 443 merger cases accepted by the Russian antimonopoly agency between 2008 and 2011. We analyse the agency’s decisions to find which characteristics of merging firms and markets lead the Federal Antimonopoly Service to decide whether to allow conditional acceptance. We find that variables related to high market power lead more frequently to a remedy outcome. Such industries as the energy sector, communications and insurance positively affect the probability of a structural remedy. We do not find significant effects of “non-structural” variables, such as! the world leader and the nationality of the firm-buyer

Taxation and the Sustainability of Collusion: Ad Valorem versus Specific Taxes

Helmuts Azacis (Cardiff Business School) and David R. Collie (Cardiff Business School) have a paper on Taxation and the Sustainability of Collusion: Ad Valorem versus Specific Taxes.

ABSTRACT: Assuming constant marginal cost, it is shown that a switch from specific to ad valorem taxation has no effect on the critical discount factor required to sustain collusion. This result is shown to hold for Cournot oligopoly as well as for Bertrand oligopoly when collusion is sustained with Nash-reversion strategies or optimal-punishment strategies. In a Cournot duopoly model with linear demand and quadratic costs, it is shown that the critical discount factor is lower with an ad valorem tax than with a specific tax. However, in contrast to Colombo and Labrecciosa (2013), it is shown that revenue is always higher with an ad valorem tax than with a specific tax.

Collusion in regulated pluralistic markets

Giovanni Crea, Marisa Miraldo, Roberta Longo, and Andrew Street analyze Collusion in regulated pluralistic markets.

Signalling quality with posted prices

Peyman Khezr (School of Economics, The University of Queensland) and Abhijit Sengupta (School of Economics, University of Sydney) are Signalling quality with posted prices.

ABSTRACT: We study a game in which the seller of an indivisible object wants to sell her object to a finite number of potential buyers with a posted price. The environment is such that the seller has some private information about the quality of the object that cannot be communicated with buyers at zero cost. We focus on the separating equilibrium of this game in which the seller signals her actual type via the posted price. The conditions of the existence and the uniqueness of this equilibrium are studied. In an example, we calculate the seller’s expected payoff at this equilibrium and further discuss some comparative statistics.