Antitrust & Competition Policy Blog

Finding a Baseline for Competition Law Enforcement During Crises: Case Study of the 'Irish Beef' Proceedings

Conor C. Talbot, European University Institute - Department of Law (LAW); Trinity College (Dublin) - Department of Economics; LK Shields Solicitors is Finding a Baseline for Competition Law Enforcement During Crises: Case Study of the 'Irish Beef' Proceedings.

ABSTRACT: The aim of this article is to draw on original research and an analysis of legal precedents to discuss the baseline treatment which operators and economic policy actors in a crisis-stricken sector must now expect from competition authorities in the European Union. This article focuses on so-called crisis cartels since they constitute some of the most significant interactions between competition authorities and commercial operators, so the level of certainty and predictability is important for regulators and practitioners alike. The argument is made that a timely public restatement of a comprehensive baseline approach to the application of competition law rules to so-called crisis cartels could well have led to a more optimal solution being found in the Irish beef sector.

Section II examines the developments that set the scene for the case study by describing the background to the measures proposed in the beef sector. Section III sets out the rules which the actors in the beef sector would appear to have deemed to be applicable to them. This particular area of the law had been characterised by a certain amount of flexibility being afforded to actors in previous economic crises encountered by various industries in the EU. However, as Section IV examines, this sense of flexibility gradually dissipated and the final pronouncements on the beef industry litigation and subsequent clarifications are such that a predictable baseline approach is now arguably in place. Sections V and VI provide a comment and some conclusions.

Imagining a Counterfactual Section 36: Rebalancing New Zealand's Competition Law Framework

Andrew I. Gavil, Howard University School of Law is Imagining a Counterfactual Section 36: Rebalancing New Zealand's Competition Law Framework.

ABSTRACT: Like the competition-related laws of most other nations, Section 36 of New Zealand's Commerce Act 1986 includes a prohibition of some unilateral acts by firms with substantial market power. Such prohibitions reflect the consensus view of many jurisdictions, courts and commentators that the anticompetitive potential of unilateral conduct largely depends on the market power of the firm undertaking it. In lieu of an inquiry into the actual or probable effects of challenged conduct, however, Section 36 has been interpreted to rely on a "counterfactual" test, seemingly unique in the world. Under that approach, courts have been directed to ask whether a firm lacking substantial market power would have engaged in the same conduct, and from the answer to that question to infer the likely effects of the conduct by the firm with market power. This article argues that the counterfactual test will frequently be an unreliable method for implementing the language and underlying purposes of s 36. In many common circumstances it will likely fail to proscribe conduct that may well be harmful to competition and consumers, and result in systematic under-deterrence. In other cases, it may fail to recognize and credit efficiencies that might be unique to the firm with market power, and hence over-deter procompetitive conduct. The article concludes by considering several options for reform.

A Solution for the Pay for Play Delemma of College Athletes: A Novel Compensation Structure Tehtered to Amateurism and Education

Roger M. Groves, Florida Coastal School of Law offers A Solution for the Pay for Play Delemma of College Athletes: A Novel Compensation Structure Tehtered to Amateurism and Education.

ABSTRACT: Over 80 percent of the total revenue received by the NCAA each year comes from television media rights agreements, which take advantage of the names, images and likeness of those who play the game as student-athletes. Yet there are NCAA rules that prohibit scholarship athletes from receiving as much as a dime from their own name – ever. Despite several challenges by plaintiff players, the most recent federal case, O’Bannon v. NCAA rejected those claims, and affirms the NCAA rule that values student-athlete NIL as worthless under antitrust law.

After dispelling the false narrative that NIL payments are pay-for-play transactions, this article provides a middle ground between disbursing nothing to student athletes and paying cash to those athletes for any purpose at any time. A careful analysis of O’Bannon reveals opportunities to craft this solution while conforming to the precise rule of law established in the case. The key evidentiary findings that were missing in that case can be remedied. A model rule is therefore proposed that cures what the court found fatal in O’Bannon. In essence, the model rule creates a tether – a link between NIL payments and amateurism through education-related expenses that was not part of the evidentiary record in O’Bannon.

This author’s model goes further to provide safeguards against NIL compensation abuse. The model includes a novel sports payment system borrowing from clawback and recapture provisions of securities law to return ill-gotten gains back to the universities. The model is designed to have practical application to the Power 5 Conferences in football and basketball.

Excessive Pharmaceutical Prices and Competition Law: Doctrinal Development to Protect Public Health

Fred Abbott, FSU describes Excessive Pharmaceutical Prices and Competition Law: Doctrinal Development to Protect Public Health.

ABSTRACT: Public health budgets and individual patients around the world struggle with high prices for pharmaceutical products. Difficulties are not limited to low income countries. Prices for newly introduced therapies to treat hepatitis C, cancer, joint disease and other medical conditions have entered the stratosphere. In the United States, state pharmaceutical acquisition budgets are at the breaking point -- or have passed it -- and treatment is effectively rationed.

Competition/antitrust law has rarely been used to address “excessive pricing” of pharmaceutical products. This is a worldwide phenomenon. In the United States, the federal courts have refused to apply excessive pricing as an antitrust doctrine, either with respect to pharmaceutical products or more generally. Courts in some other countries have been more receptive to considering the doctrine, but application in specific cases has been sporadic, including with respect to pharmaceuticals.

This remains a paradox of sorts. Competition law experts acknowledge that one of the principal objectives of competition policy is to protect consumers against the charging of excessive prices. The currently preferred alternative is to address the “structural problems” that allow the charging of excessive prices. That is, “fixing the market” so that the underlying defect by which excessive prices are enabled is remedied.

There is a fundamental problem with the “fixing the market” approach when addressing products protected by legislatively authorized market exclusivity mechanisms such as patents and regulatory marketing exclusivity. That is, mechanical aspects of the market are not broken in the conventional antitrust sense. Rather, the market has been designed without adequate control mechanisms or “limiters” that act to constrain exploitive behavior. Political institutions, such as legislatures, that might step in are constrained by political economy (e.g., lobbying), and do not respond as they should.

Competition law and policy should develop robust doctrine to address excessive pricing in markets lacking adequate control mechanisms. This article will focus specifically on the pharmaceutical sector because of its unique structure and social importance. This focus is not intended to exclude the possibility that development of excessive pricing doctrine would be useful in other contexts.

This article is divided into two parts. The first addresses competition policy and why it is appropriate to develop the doctrine of excessive pricing to address distortions in the pharmaceutical sector. The second addresses the technical aspect of how courts or administrative authorities may determine when prices are excessive, and potential remedies.

The policy prescription of this article is twofold: first, the United States should incorporate excessive pricing doctrine in its antitrust arsenal, and; second, other countries should maintain the status quo with respect to multilateral competition rules that allow them flexibility to develop and refine doctrine, including excessive pricing doctrine, that is best suited to their circumstances and interests.

Finding a Baseline for Competition Law Enforcement During Crises: Case Study of the 'Irish Beef' Proceedings

Conor C. Talbot, European University Institute - Department of Law (LAW); Trinity College (Dublin) - Department of Economics; LK Shields Solicitors is Finding a Baseline for Competition Law Enforcement During Crises: Case Study of the 'Irish Beef' Proceedings.

ABSTRACT: The aim of this article is to draw on original research and an analysis of legal precedents to discuss the baseline treatment which operators and economic policy actors in a crisis-stricken sector must now expect from competition authorities in the European Union. This article focuses on so-called crisis cartels since they constitute some of the most significant interactions between competition authorities and commercial operators, so the level of certainty and predictability is important for regulators and practitioners alike. The argument is made that a timely public restatement of a comprehensive baseline approach to the application of competition law rules to so-called crisis cartels could well have led to a more optimal solution being found in the Irish beef sector.

Section II examines the developments that set the scene for the case study by describing the background to the measures proposed in the beef sector. Section III sets out the rules which the actors in the beef sector would appear to have deemed to be applicable to them. This particular area of the law had been characterised by a certain amount of flexibility being afforded to actors in previous economic crises encountered by various industries in the EU. However, as Section IV examines, this sense of flexibility gradually dissipated and the final pronouncements on the beef industry litigation and subsequent clarifications are such that a predictable baseline approach is now arguably in place. Sections V and VI provide a comment and some conclusions.

9th IMEDIPA Conference

9TH IMEDIPA CONFERENCE ON COMPETITION LAW AND POLICY

IMEDIPA

Friday, April 15, 2016 at 9:00 AM - Saturday, April 16, 2016 at 1:30 PM (EEST)

Athens, Greece

 

Event Details

9th IMEDIPA Conference on Competition Law and Policy

Organized under the auspices of the Hellenic Competition Commission

 

Day 1: Friday, April 15th, 2016

 Registration starts at 8.45 am

 

9:15 – 9:30 Introduction

Dimitrios Kyritsakis (Chairman, HCC)

Ioannis Lianos (UCL; HSE; IMEDIPA)

 

9:30 – 11:15 Session 1: Recent developments in Competition Law

Chair: Georgios Triantafillakis (Democritus University of Thrace)

Panellists

Anastasios Antoniou (A.A. Antoniou & Associates (EY Law)

Dimitris Avgitidis (Democritus University of Thrace)

Emmanuel Dryllerakis (Dryllerakis & Associates Law Firm)

Assimakis Komninos (White & Case LLP; UCL)

Gregory Pelecanos (Ballas, Pelecanos & Associates LPC)

 

11:15 – 11:45 Break

 

11:45 – 13:30 Session 2: Structural Reforms in the Economy and the role of Competition Law

Chair: Dimitris Tzouganatos (University of Athens)

Panellists

Anastasia Dritsa (Kyriakides Georgopoulos Law Firm)

Ioannis Kokkoris (QMUL; IGLEF; IMEDIPA)

Federica Maiorano (OECD)

Nikos Vettas (IOBE; Athens University of Economics and Business)

 

13:30 – 14:15 Buffet Lunch

 

14:15– 16:40 Session 3: The “more economic approach” in EU competition law: success or failure?

Chair: Ioannis Lianos (UCL; HSE; IMEDIPA)

 

Part I: Rebates as a case study: a positive law perspective on the effects-based approach in Article 102 TFEU and national equivalent provisions

Panellists

Victoria Mertikopoulou (Hellenic Competition Commission)

Lia Vitzilaiou (Lambadarios Law Firm)

 

Part II: Discussion: The rise (and demise?) of the effects-based approach: Article 102 TFEU and beyond

Panellists

Damien Gerard (Cleary Gottlieb; GCLC, College of Europe)

Pablo Ibanez Colomo (London School of Economics)

Yannis Katsoulacos (Athens University of Economics and Business)

Giorgio Monti (European University Institute)

Renato Nazzini (King’s College London)

 

16:40 – 17:00 Break

 

17:00 – 18:45 Session 4: Roundtable of Competition Authorities: Competition law in an online world and the European Digital Single Market

Chair: Ioannis Lianos (UCL, HSE, IMEDIPA)

Panellists

Šarūnas Keserauskas (Lithuanian Competition Council)

Bruno Lasserre (French Competition Authority)

Lefkothea Nteka (Hellenic Competition Commission)

Jacques Steenbergen (Belgian Competition Authority)

Theodor Thanner (Austrian Competition Authority)

 

Day 2: Saturday, April 16th, 2016

 

10:00 – 11:30 Session 5: The interaction of competition law and regulation in the utilities sector with a specific focus on energy

Chair: Ioannis Kokkoris (QMUL, IGLEF, IMEDIPA)

Panellists

Vassilis Karagiannis (KLC Law firm)

Nikos Keramidas (Mytilineos Group)

Sotiris Manolkidis (Regulatory Authority for Energy)

Deni Mantzari (University of Reading)

Mihalis Thomadakis (Energy consultant)

 

11:30 – 12:00 Break

 

12:00 – 13:30 Session 6 Actions for damages and the moving equilibrium of European competition law enforcement

Chair: Assimakis Komninos (White & Case LLP; UCL)

Panellists

Maria Ioannidou (Queen Mary University)

Filip Kubik, (European Commission)

Dimitris Loukas (Hellenic Competition Commission)

Alexandra Mikroulea (University of Athens)

Iannis Symplis (Council of State)

 

13:30 Conclusions

Ioannis Kokkoris (QMUL; IGLEF; IMEDIPA)

Antitrust Cases and the Commitment Decision in the Energy Sector

Valentina Dimulescu, Central European University (CEU) - Department of Political Science; University of Bonn explores Antitrust Cases and the Commitment Decision in the Energy Sector.

ABSTRACT: The present article deals with a specific rule set out in Council Regulation (EC) 1/2003, frequently used by both the European Commission (EC) and undertakings in handling antitrust cases, especially in the gas market after the 2007 sector inquiry. More precisely, it refers to Article 9 – Commitments in antitrust cases. It discusses the current state of affairs, examines the reasons that lead to the introduction of the commitment decision, as well as its main advantages and disadvantages. The GDF and E.ON case studies it introduces illustrate a particular type of breach (long-term transportation infrastructure capacity booking) whereby market entrance and competition can be hampered to the advantage of incumbent firms.

 

 

Why Online Retail Sales are Much Larger than US Census Data Report

David S. Evans, Global Economics Group; University of Chicago Law School; University College London, Scott R. Murray, Market Platform Dynamics, and Richard Schmalensee, Massachusetts Institute of Technology (MIT) - Sloan School of Management discuss Why Online Retail Sales are Much Larger than US Census Data Report.

ABSTRACT: US Census data are widely used to show the level and growth rate of online retail sales. However, based on a detailed review of the data reported by Census, Census’s technical documentation for collecting those data, the survey instrument used by the Census to collect the data, and e-mail correspondence with a senior Census official, it appears likely that those data significantly understate online retail sales for two reasons. First, it appears that the online sales of large retailers are not included in the three-digit NAICS code figures reported by the Census Bureau. Second, it appears that the Census Bureau does not count the substantial online retail sales of firms not classified as retailers. It is possible to derive conservative estimates of the amount of online sales not included by the Census Bureau under the assumption that the Census Bureau follows its published methodology. Conservative estimates based on available data indicate that online retail sales were $83 billion higher in 2013 than those reported by the Census Bureau; that is, actual online retail sales were 32 percent higher than those reported by the Census. The percentage undercount is similar for earlier years, so that Census-reported growth rates seem roughly correct. The undercount it is likely to persist as a consequence of the methods used by Census to collect and report online retail sales data. It is not possible to present these estimates as definitive, however, because the Census Bureau has made inconsistent statements concerning its methodology for estimating online retail sales, which Census has declined to help us reconcile, and because it is not possible for the Census Bureau to share details on the inclusion of data for large retailers with online sales.

 

 

Net Neutrality: A Fast Lane to Understanding the Trade-offs

Shane Greenstein, Harvard Business School, Martin Peitz, University of Mannheim, and Tommaso Valletti, Imperial College provide an overview of Net Neutrality: A Fast Lane to Understanding the Trade-offs.

ABSTRACT: The “net neutrality” principle has triggered a heated debate and advocates have proposed policy interventions. In this paper, we provide perspective by framing issues in terms of the positive economic factors at work. We stress the incentives of market participants, and highlight the economic conflicts behind the arguments put forward by the different parties. We also identify several key open questions. 

Measuring Market Power and the Efficiency of Alberta's Restructured Electricity Market: An Energy-Only Market Design

David P Brown, University of Alberta - Department of Economics and Derek E.H. Olmstead, Alberta Market Surveillance; Carleton University are Measuring Market Power and the Efficiency of Alberta's Restructured Electricity Market: An Energy-Only Market Design.

ABSTRACT: We measure the degree of market power execution and inefficiencies in Alberta's restructured electricity market. Using hourly wholesale market data from 2008 to 2014, we find that firms exercise substantial market power in the highest demand hours with limited excess production capacity. The degree of market power execution in all other hours is low. Market inefficiencies are larger in the high demand hours and elevate production costs by 14%-19% above the competitive benchmark. This reflects 2.35% of the average market price across all hours. A recent regulatory policy clarifies that certain types of unilateral market power execution is permitted in Alberta. We find evidence that suggests that strategic behavior changed after this announcement. Market power execution increased. We illustrate that the observed earnings are often sufficient to promote investment in natural gas based technologies. However, the rents from market power execution can exceed the estimated capacity costs for certain generation technologies. We demonstrate that the energy market profits in the presence of no market power execution are generally insufficient to promote investment in new generation capacity. This stresses the importance of considering both short-run and long-run performance measures.

Toward a Theory of Monopolistic Competition

Mathieu Parenti, Catholic University of Louvain (UCL), Philip Ushchev, National Research University Higher School of Economics (Moscow), and Jacques-François Thisse, Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); Centre for Economic Policy Research (CEPR) bring us Toward a Theory of Monopolistic Competition.

ABSTRACT: We propose a general model of monopolistic competition which encompasses existing models while being flexible enough to take into account new demand and competition features. Even though preferences need not be additive and/or homothetic, the market outcome is still driven by the sole variable elasticity of substitution. We impose elementary conditions on this function to guarantee empirically relevant properties of a free-entry equilibrium. Comparative statics with respect to market size and productivity shock are characterized through necessary and sufficient conditions. Furthermore, we show that the attention to the constant elasticity of substitution (CES) based on its normative implications was misguided: constant mark-ups, additivity and homotheticity are neither necessary nor sufficient for the market to deliver the optimum outcome. Our approach can cope with heterogeneous firms once it is recognized that the elasticity of substitution is firm-specific. Finally, we show how our set-up can be extended to cope with multiple sectors.

Systemic Efficiencies in Competition Law: Evidence from the ICT Industry

Konstantinos Stylianou, University of Leeds - School of Law offers Systemic Efficiencies in Competition Law: Evidence from the ICT Industry.

ABSTRACT: This article introduces the concept of systemic efficiencies, traces its theoretical underpinnings in economics, management and technology, and applies it to recent high profile cases. Systemic efficiencies occur in large complex systems through the interaction of multiple distributed components, a process which is commonly coordinated by an entity that can exercise pervasive control over the components and their interactions. This type of extensive control can manifest itself as potentially anticompetitive practices, like tying, refusal to deal and full line forcing, causing the reaction of competition authorities. However, at the same time, systemic efficiencies can have significant benefits that cannot be generated by smaller scale, simpler, more isolated efficiencies, and are therefore of great interest to society, and of high redeeming value as antitrust defence to the introducing entities. To demonstrate how systemic efficiencies and their benefits materialize in practice this article also discusses two series of cases: the recent IBM mainframes cases in the US and the US, and the ongoing Google Android cases in the US and the EU. Both cases belong in the ICT industry, which is frequently said to consist of paradigmatic examples of large complex systems that can give rise to systemic efficiencies.

 

 

ADDING DIMENSION TO MERGER ANALYSIS

Mark A. Jamison (University of Florida) and Janice A. Hauge (University of North Texas) are ADDING DIMENSION TO MERGER ANALYSIS.

ABSTRACT:  Traditional merger analysis in the U.S. focuses on a single dimension: namely, the combination of two or more firms that supply substitutable products. Thus, merger analysis misses the fact that there are various types of mergers—for example, hostile takeovers, friendly acquisitions, and mergers of equals—and that the differences among these types affect outcomes. Similarly absent is explicit consideration of merger-created synergies for future markets. We illustrate the effects of painting all mergers with the same brush on the propensity for firms to form beneficial mergers and we suggest means of changing merger analysis to reflect diversity in the natures of mergers and their future markets.

MODELING THE DURATION OF MERGER REVIEWS IN NEW ZEALAND

Qing Gong Yang and Michael Pickford are MODELING THE DURATION OF MERGER REVIEWS IN NEW ZEALAND.

ABSTRACT:  The limited evidence on the speed of processing merger reviews by competition agencies shows that the time taken varies widely between cases. In this article, we explore which factors influence the duration of merger reviews by applying multivariate duration analysis to a dataset of 130 merger decisions made by the New Zealand Commerce Commission between 2001 and 2010. Our results suggest that a range of factors influence duration, including (1) the nature of the decision, and especially whether the application is declined, (2) the size of the application, (3) the potential impact on competition, measured by market concentration and barrier to entry height, (4) the complexity of the economic analysis, and (5) the Commission's merger workload. We use a competing-risks model that reflects the three alternative decisions available to the Commission (clear at stage 1, clear at stage 2, and decline). We find that the influence of some of these factors varies greatly between decision types and that declined decisions take much longer on average, probably because declines can lead to an appeal to the High Court by disappointed applicants.

Patent Licensing and Entry Deterrence: The Role of Low Royalties

Anne Duchene, Drexel University - Department of Economics & International Business, Debapriya Sen, Ryerson University, Faculty of Arts - Department of Economics, and Konstantinos Serfes, Drexel University - School of Economics examine Patent Licensing and Entry Deterrence: The Role of Low Royalties.

ABSTRACT: We study how an incumbent patent holder can use licensing strategically to reduce the threat of further entry, through a low royalty. This licensing strategy deters entry by making the terms of future licensing agreements less favourable to potential entrants. Strategic licensing induces a trade‐off between a more concentrated market and a lower price. When this strategy is profitable for the patent holder, it is welfare enhancing if and only if the entry cost is high, or the efficiency edge of the technology is significant. Our analysis yields new policy implications (e.g. royalty floor) with respect to strategic licensing.

 

 

Antitrust Law Journal Rankings

Pepperdine Law Professor Rob Anderson has expanded his annual Google Law Review Rankings to include specialty, secondary, and law-related peer-reviewed journals.  The Antitrust Law Journal comes in at #61.  Below are the ten most cited articles in the Antitrust Law Journal over the past five years:

THE 2010 HORIZONTAL MERGER GUIDELINES: FROM HEDGEHOG TO FOX IN FORTY YEARS C Shapiro Antitrust Law Journal, 49-107	93	2010
COMPETITION POLICY AND THE APPLICATION OF SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT WE Kovacic, M Winerman Antitrust Law Journal, 929-950	57	2010
AN ECONOMIC APPROACH TO PRICE FIXING L Kaplow Antitrust Law Journal, 343-449	49	2011
EARNING EXCLUSIVITY: GENERIC DRUG INCENTIVES AND THE HATCH-WAXMAN ACT CS Hemphill, MA Lemley Antitrust Law Journal, 947-989	46	2011
CARTELS, CORPORATE COMPLIANCE, AND WHAT PRACTITIONERS REALLY THINK ABOUT ENFORCEMENT DD Sokol Antitrust Law Journal 78 (1), 201	42	2012
EXCLUSION AS A CORE COMPETITION CONCERN JB Baker Antitrust Law Journal 78 (3), 527	37	2013
DEAL OR NO DEAL? LICENSING NEGOTIATIONS IN STANDARD-SETTING ORGANIZATIONS RJ Gilbert Antitrust Law Journal, 855-888	28	2011
THE RULE OF REASON AND THE GOALS OF ANTITRUST: AN ECONOMIC APPROACH RD Blair, DD Sokol Antitrust Law Journal 78 (2), 471	28	2012
THE CASE FOR ANTITRUST LAW TO POLICE THE PATENT HOLDUP PROBLEM IN STANDARD SETTING GS Cary, MW Nelson, SJ Kaiser, AR Sistla Antitrust Law Journal, 913-945	27	2011
FIXING FRAND: A PSEUDO-POOL APPROACH TO STANDARDS-BASED PATENT LICENSING JL Contreras Antitrust Law Journal 79 (1), 47	26	2013

 

Loyalty discounts, exclusive dealing and bundling: rule of reason, quasi-per-se, price-cost test, or something in between?

Assaf Eilat, Israeli Antitrust Authority, David Gilo, Buchmann Faculty of Law, Tel Aviv University and Guy Sagi, Netanya Academic College ask Loyalty discounts, exclusive dealing and bundling: rule of reason, quasi-per-se, price-cost test, or something in between?

ABSTRACT: The article reviews loyalty rebates, target rebates, exclusive dealing, and bundling, and argues that these are analogous practices that deserve similar competitive analyses and rules. In particular, in the case of all of these practices, at least some marginal units are typically sold below cost. The article shows that the analyses and rules that should apply to all of these practices ought not to depend on their labels, but rather on the monopoly power of the supplier engaged in the practice; whether, in the particular case, exclusion is costless or almost costless; the size of the sanction that the buyer suffers from being disloyal to the monopolist, and whether the sanction makes it impossible for the monopolist’s as efficient rivals to compete for the buyer; the degree of market foreclosure, including its effective duration; the presence or absence of any efficiency justifications, and whether the discount is expected to be passed on to consumers. The analysis further highlights how exclusion may well be costless, or almost costless and can be achieved when the monopolist has non-price means of coercing buyers to be loyal. Further, intermediate cases are explored, in which exclusion, though not entirely costless, is nevertheless cheaper to the monopolist than ordinary predatory pricing.

Mixed Competition and Patent Licensing

Ray‐Yun Chang, Chinese Culture University, Yan‐Shu Lin, National Dong Hwa University, and Jin‐Li Hu, National Chiao-Tung University - Institute of Business and Management examine Mixed Competition and Patent Licensing.

ABSTRACT: This paper studies the patent licensing decision of an insider patentee when two firms engage in a mixed (Cournot–Bertrand or Bertrand–Cournot) competition where one firm adopts the quantity strategy while the other uses the price strategy and vice versa. If either the fixed fee or royalty is applied, then the licensor prefers the fixed fee when the licensor takes the quantity strategy, while the licensee uses the price strategy (Cournot–Bertrand). If the two‐part tariff is applied, then the two‐part tariff is more likely to be adopted by the licensor under Cournot–Bertrand than under Bertrand–Cournot competition.

Private Enforcement of EU Competition Law: A Comparison with, and Lessons from, the US

Alison Jones, King's College London – The Dickson Poon School of Law examines Private Enforcement of EU Competition Law: A Comparison with, and Lessons from, the US.

ABSTRACT: This paper focuses on private enforcement and, in particular, on the questions of whether private enforcement of the rules by those specifically harmed by a competition law violation should be encouraged in the EU (and, if so, how) and how it should interact with public enforcement. It examines the core features of the EU reform package designed to encourage greater volumes of private enforcement of the EU competition rules, particularly the Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union. Its principal objective is not, however, to scrutinize these provisions in detail. Rather, its purpose is to reflect on the questions of why, especially when compared with the position in the US, it has proved so difficult for a culture of antitrust litigation to develop in the EU, why the Commission believed that EU measures were necessary to kindle it and to consider, against that backdrop, whether the EU package is likely to achieve its stated goals.

Section 2 commences by exploring how private enforcement has developed in the US, examining not only the factors that have facilitated and encouraged it, but the extremes widely-believed to have bedeviled and undermined it, and the steps which have consequently been taken to limit and curtail private actions there. Section 3 then examines the EU system and seeks to unpick the different factors that have operated over time as barriers to private litigation in the EU Member States and to identify those that still exist. Having set out the factors that have encouraged and hindered litigation in the US and the EU respectively and examined some of the pros and cons of each system, it is possible to reflect more fully on the questions of whether private litigation should be further encouraged in the EU, what measures might be desirable or required to overcome the obstacles which exist to it, what measures should be avoided, whether the current package is likely to succeed, what pitfalls might be anticipated and/or what further developments and clarifications are likely to be required in the future.

Section 4 concludes that the package of reforms is not likely to lead to over-enforcement or to the encouragement of unmeritorious antitrust actions in the EU. What may be more of an issue, however, is whether it has done enough to boost and facilitate private damages actions and to create the level playing field across the EU sought by the Commission. Not only does the Directive not institute a completely harmonised framework, leaving a number of potential obstacles to national actions and areas of legal ambiguity outstanding, but a number of the Directive’s provisions are liable to introduce considerable complexities into national proceedings. Further, scope for some significant divergences between national rules remain; such differences are likely to continue to affect where litigants choose to commence their actions and to result in forum-shopping.

Review Paper Two: The Links between Competition Policy, Regulatory Policy and Trade and Industrial Policies

Fatsani Banda, Genna Robb and Simon Roberts, Centre for Competition, Regulation & Economic Development (CCRED) offer Review Paper Two: The Links between Competition Policy, Regulatory Policy and Trade and Industrial Policies.

ABSTRACT: This paper builds on an earlier working paper no. 04/15 on barriers to entry and inclusive growth by assessing the linkages between competition policy as a micro-economic tool and other national policy objectives. In so far as the mandates of regulators and various government departments charged with facilitating economic development seek to transform the economy into one that is more inclusive, the objectives of competition policy and other policies are complementary. For example, the work of economic regulators should be in parallel with competition policy through promoting access and restricting the ability of incumbent firms to exercise market power to the detriment of rivals and ultimately consumers. However, in practice South African policymakers and regulators faced with difficult choices have placed limited emphasis on regulating for competition and greater emphasis on encouraging investment and balancing the narrow interests of established incumbents.

This paper reviews the performance of the competition authorities in the past 15 years and draw links to other economic policies. It discusses the key challenges faced by the competition authorities and other government agencies in regulating for competition and transforming the structure of markets. It also explores the impact of industrial and trade policy on competition and barriers to entry. Successful industrial policy should support entry, dynamism and innovation rather than simply subsidizing jobs. However, if the state neglects to facilitate the creation of new entrants, capabilities and industries in its developmental framework, there may be limited competition in the long-term, as is the case in many industries in South Africa. The paper finds that whilst recent policy documents highlight the importance of competition and competition policy in achieving the aims of industrial policy, in practice the importance of rivalry and entry by new players does not seem to have been a major consideration in the implementation of policy programs.

The findings of this paper and its companion paper provide motivation for a more detailed program of study into the nature and impact of barriers to entry in different sectors of the economy, focusing in particular on the role of entrenched incumbent firms and government actors in maintaining or increasing barriers to entry.