Saturday, February 28, 2015
Laarni Bulan, Zoya Marriott and Maria Salgado, Cornerstone Research are Interpreting Stock Reactions To Reverse-Payment Settlements.
Friday, February 27, 2015
Koichiro Ito, Stanford University and Mar Reguant, Stanford University - Knight Management Center theorize about Sequential Markets, Market Power and Arbitrage.
ABSTRACT: We develop a theoretical framework to characterize strategic behavior in sequential markets under imperfect competition and limited arbitrage. Our theory predicts that these two elements can generate a systematic price premium. We test the model predictions using micro-data from the Iberian electricity market. We show that the observed price differences and firm behavior are consistent with the model. Finally, we quantify the welfare effects of arbitrage using a structural model. In our setting, we show that full arbitrage is not necessarily welfare-enhancing in the presence of market power, reducing consumer costs but decreasing productive efficiency.
This past Saturday at the DC Courthouse at the Global Antitrust Moot, an invitational competition hosted by George Mason University on Feb. 21, the UF Law team of Bradley Crocker (3L), Areesha Muzaffar (3L) and Kevin Paule (2L) placed second overall. Kevin was awarded second-best individual oralist of the entire tournament. See here for details.
I am very proud of my students. They worked hard, became expert in complex areas of antitrust (multiproduct discounts and refusals to deal) and had excellent support from a number of practitioners who judged practice rounds. Most importantly, the students really got a first hand appreciation for a very interesting field of law.
Gregory J. Werden, U.S. Department of Justice - Antitrust Division offers Inconvenient Truths on Merger Retrospective Studies.
ABSTRACT: Inconvenient truths prevent merger retrospective studies from substantially altering our understanding of competitive effects from horizontal mergers. Merger retrospectives cannot definitively determine the effects of particular mergers, and if they could, merger retrospectives still could not provide evidence supporting merger assessments grounded in data on actual merger effects rather than in economic theory and legal presumptions. If merger retrospectives are to have some prospect of recalibrating merger enforcement, they must be transformed from econometric exercises into case studies examining the details of the relevant agency’s assessment, but inconvenient truths likely prevent much from being learned through even such studies.
Eckart Bueren, Max Planck Institute for Comparative and International Private Law has written on Transactional Resolutions in German Competition Law & Merger Control.
ABSTRACT: Are transactional resolutions of competition law and merger control proceedings such as settlement procedures, leniency, transactions, commitments, and amicable agreements compatible and consistent with due process and fundamental rights of the parties concerned? This question was one of the main topics of the 2014 Congress of the International League of Competition Law (LIDC) in Torino. This paper, the German national report, provides a thorough overview of transactional resolutions in German competition law and merger control proceedings, the main practical and legal issues as well as important recent developments. After an introduction into the German competition law enforcement landscape, the paper first covers the two transactional elements in administrative offence proceedings, the leniency policy and settlements, followed by a primer on (negotiated) agreements on the further course and outcome in criminal proceedings. After that, the paper deals with settlements in administrative proceedings, especially commitments. It then summarizes important developments concerning the tension between transactional resolutions and private enforcement of competition law in the current German legal framework. This includes in particular recent case law on access to leniency and settlements declarations, followed by a brief outlook on likely changes required by the European Damages Directive. The final part of the paper concerns commitments (remedies) in German merger control proceedings. Concerning all transactional mechanisms, the report explains their legal basis, content, practical application, compatibility with the rule of law, control and transparency as well as options to appeal and/or to rescind.
Thursday, February 26, 2015
Victor Aguirregabiria and Gustavo Vicentini explore Dynamic Spatial Competition Between Multi-Store Firms.
ABSTRACT: We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store retailers. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We develop an algorithm to approximate a Markov Perfect Equilibrium in our model, and propose a procedure for the estimation of the parameters of the model using panel data on number of stores, prices, and quantities at multiple geographic locations within a city. We also present numerical examples to illustrate the model and algorithm.
Raphael Auer and Philip Saura analyze Spatial Competition in Quality.
ABSTRACT: We develop a model of vertical innovation in which firms incur a market entry cost and position themselves in the quality space. Once established, firms compete monopolistically, selling to consumers with heterogeneous tastes for quality. We establish existence and uniqueness of the pricing game in such vertically differentiated markets with a potentially large number of active firms. Turning to firms' entry decisions, exogenously growing productivities induce firms to enter the market sequentially at the top end of the quality spectrum. We spell out the conditions under which the entry problem is replicated over time so that each new entrant improves incumbent qualities in fixed proportions. Sequential market entry overcomes the asymmetry of the location problem, which unavoidably arises in the quality spectrum because of its top and bottom ends. Our main technical contribution lies in handling this asymmetry, a feature absent in Salop (1979) and other circular representations of Hotelling (1929) and Lancaster (1966).
Antitrust's leading figure, Herb Hovenkamp has a new paper on the implications on North Carolina Dental. Given that the decision just came out yesterday, this is fast even for the prolific Hovenkamp.
Hak Choi,Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research has written on The Birth of Monopoly, Alias Domestic Extreme Protectionism.
ABSTRACT: This paper rejects the traditional monopoly model and works out a completely new one. It also offers a more concrete measure of the loss due to monopoly. Most economists regard monopoly and protectionism is the same, but this paper proves that they are not. Monopoly is the extreme form of protectionism; it is the elimination of both foreign and domestic competitors. This paper also introduces a new concept: domestic protectionism, and shows that it is more harmful than foreign protectionism.
Darren S. Tucker, Morgan Lewis & Bockius LLP and Gregory F. Wells, Morgan, Lewis & Bockius, L.L.P. describe Emerging Competition Issues Involving Follow-On Biologics.
Abstract: In 2010, President Obama signed into law the Biologics Price Competition and Innovation Act, which created an abbreviated approval pathway for competing versions of previously-approved biologics. Passage of this legislation and the impending introduction of follow-on biologics, or biosimilars, into the marketplace raise the question of whether biologic product manufacturers will have to contend with the same antitrust scrutiny of their intellectual property litigation settlement agreements, life cycle management, and marketing practices that pharmaceutical drug firms have faced. In this article, we examine four ways in which pharmaceutical firms have allegedly delayed product entry in violation of the antitrust laws — reverse-payment settlements, REMS-based distribution restrictions, false Orange Book listings, and product hopping — and examine whether this conduct is likely to occur in the context of biologics and how the antitrust analysis of this conduct may differ for biologics.
Wednesday, February 25, 2015
Koki Arai (JFTC) explores Merger assessment in Japan: the declining importance of market shares.
ABSTRACT: Around the globe, most authorities assess mergers on the basis, primarily, of the market shares held by parties. That approach has been set aside in two important cases adopted in the last years by the Japanese Fair Trade Commission (JFTC). The new attitude adopted by the JFTC mirrors a growing importance of economic analysis in the cases examined in Japan, as in other parts of the world.
North Carolina Dental decision is out: Supreme Court rules 6-3 that there was insufficient regulatory oversight
New Limits to the Concept of Selectivity: The Birth of ‘General Exception’ to the Prohibition of State Aid in EU Competition Law
Phedon Nicolaides, College of Europe, Bruges, and Professor at the University of Maastricht discusses New Limits to the Concept of Selectivity: The Birth of ‘General Exception’ to the Prohibition of State Aid in EU Competition Law.
ABSTRACT: For a tax measure to constitute state aid, it must be shown that it is an exception from a reference system. The latest case law indicates that this is a necessary but not sufficient condition as, in addition, it must be demonstrated that the exception is limited to certain undertakings. Tax measures applied by sub-national authorities to a limited geographic area are not selective if they cover all undertakings within the jurisdiction of those authorities.
Bill Baer (DOJ) has provided Workshop on Examining Health Care Competition Opening Remarks
Briefing on Big Data, Privacy, and Antitrust Wednesday, March 18, 2015 8:30 – 11:45 am George Mason University School of Law
Wednesday, March 18, 2015 from 8:30 – 11:45 am
George Mason University School of Law
Increasingly, there is a call for competition authorities to take account of firms’ collection and use of consumer data—practices that have been the sole province of consumer protection—when reviewing mergers or conducting antitrust investigations. For example, although the Facebook-WhatsApp, Google-Nest, and Oracle-Datalogix mergers raised no traditional antitrust concerns, some argued for a new competition analysis that would take into account the abilities of the combined entities to collect and utilize consumer data. Indeed, a consortium of public interest groups recently asked the FTC to take a closer look at “increasing concentration” in the “big data digital marketplace.” Further, several commentators urged the FTC to examine privacy-related issues during its investigation into Google’s search practices. At the same time, it’s not at all clear that antitrust can or should accommodate these new non-competition concerns. Critics of conflating antitrust and privacy analysis contend that the use of big data enhances competition by improving service and facilitating entry. What’s more, antitrust analysis traditionally has focused on markets for goods and services that are sold to consumers, not on internally-used resources like data. Would consumers be better served with the continued divorcement of privacy and competition concerns? Or should modern antitrust be more accommodating to privacy concerns in the era of big data? Join the LEC for a morning of lively discussion on this topic. FTC Commissioner Maureen Ohlhausen will set the stage by discussing her linked Antitrust Law Journal article "Competition, Consumer Protection and The Right [Approach] To Privacy.” A panel discussion on big data and antitrust, which includes some of the leading thinkers on the subject, will follow.
Ioannis Lianos, University College London - Faculty of Laws Frederic Jenny, ESSEC Business School Florian Wagner-von Papp, University College London Faculty of Laws Evgenia Motchenkova, VU University Amsterdam - Department of Economics; TILEC, and Eric David, Vaughan Avocats describe Judicial Scrutiny of Financial Penalties in Competition Law: A Comparative Perspective.
ABSTRACT: We proceed to a comparative analysis of the judicial scrutiny of financial penalties for competition law infringements in the following jurisdictions: European Union, United States, Germany, United Kingdom, France and Chile.
An Optimal and Just Financial Penalties System for Infringements of Competition Law: A Comparative Analysis
Ioannis Lianos, University College London - Faculty of Laws Frederic Jenny, ESSEC Business School Florian Wagner-von Papp, University College London Faculty of Laws Evgenia Motchenkova, VU University Amsterdam - Department of Economics; TILEC, and Eric David, Vaughan Avocats offer An Optimal and Just Financial Penalties System for Infringements of Competition Law: A Comparative Analysis.
ABSTRACT: The report examines optimal financial penalties from an economic and a comparative perspective. While emphasis is put on deterrence, we also examine some limits to the optimal enforcement theory employed by economists to design effective sanctions, in particular the principle of proportionality and the need for the penalty to be related to the harm caused and the wrong committed, the legal system integrating corrective justice concerns. The report delves into the tension between over-enforcement and under-enforcement and that between a more effects-based approach for setting financial penalties (sanctions) that would rely on economic methodologies and a case-by-case analysis to provide an accurate estimate of the harm caused by the anticompetitive conduct and a more "forms-based" approach that would rely on the use of proxies of percentages of the volume of commerce or the affected sales. The latter reduce the administrative costs of the authorities in designing appropriate sanctions but are less accurate than effects-based approaches. The report examines intermediary approaches put forward by the literature and their possible application to various competition law infringements (e.g. cartels, abuse of a dominant position). The final part of the report proceeds to a detailed comparative analysis of the financial penalties (sanctions) regimes for infringements of competition Law in the European Union, United States, Germany, United Kingdom, France and Chile, taking an empirical and a doctrinal perspective. Specific recommendations for the reform of the financial penalties system in Chile are also provided.
Tuesday, February 24, 2015
Ioannis Lianos, UCL examines The Principle of Effectiveness, Competition Law Remedies and the Limits of Adjudication.
ABSTRACT: The principle of effectiveness is closely related to the development of the emerging EU law on remedies. Its instrumental use has enabled the EU courts to restrict the principle of national procedural autonomy, when this was convenient in order to ensure the accomplishment of the aims set by EU competition law enforcement, and to establish EU-granted remedies, the most notable one being the right to claim competition law damages. The principle of effectiveness may also influence the design of injunctive relief by the European Commission, which should be adequate to ensure not only that the results of the violation of competition law are reversed, but also that there is no risk that the aims of competition law will be jeopardized in the future (general deterrence, specific deterrence and prophylactic/preventive aims). Left unbound, the principle of effectiveness may offer the opportunity to competition authorities to expand their remedial discretion and to re-design market processes and outcomes in accordance with the dominant interpretation of their statutory objectives. The point made in this paper is that, whatever one thinks of the appropriateness of an expansive view of remedial discretion, which is not, in our view, supported by the restrictive interpretation of the principle of effectiveness in EU law, remedial discretion is naturally limited by the specific function exercised by the remedial process chosen or, more contentiously, imposed by the nature of the dispute. Drawing on Fuller’s account of the existence of various forms of social ordering, each of them emerging in specific circumstances/context and having its own principles and limitations, the paper offers some reflections on the possible limits that the essence of each ideal type of social ordering sets to the expansive interpretative potential of the principle of remedial effectiveness. The polycentric nature of competition law disputes calls for flexibility in the choice of the adequate form of social ordering aiming to achieve the objectives set by the legislator. This breaks with the classic view of the adjudication model and hints to the prevalence, in a significant number of cases with a pronounced polycentric element, of what has been called the “structural adjudication” model, still distinct from the model of regulatory governance. The paper explores the nature of commitment decisions as an illustration of the difficulties of classification, without a proper consideration of the functions and respective limits of each form of social ordering. It does this by examining some recent cases, such as the ongoing Google saga at the European Commission or the Skyscanner judgment of the UK Competition Appeal Tribunal (CAT).
Ioannis Lianos, UCL has written on Brands, Product Differentiation and EU Competition Law.
ABSTRACT: The paper explores how EU competition law has integrated so far the concept of brands in different areas of enforcement. Although EU competition law has engaged in multiple instances with branding and product differentiation, brands do not yet constitute an operational concept in EU competition law. This is due to an important uncertainty as to the normative choices that need to be made with regard to the relation between brands and the formation of consumer preferences. The concerns raised by retailer power and the development of private labels also indicate that the existing economic theory on product differentiation may not also provide a complete picture on the effects of brands on the competitive process and ultimately on consumers. Competition law will also need to tackle the issues raised by the development of ‘social branding’ and the dialogic interaction between brand owners and consumers in the constitution of their brand identity.