Tuesday, April 26, 2016
Mahdiyeh Entezarkheir, Huron at Western University and Saeed Moshiri, University of Saskatchewan - Saint Thomas More College analyze Mergers and Innovation: Evidence from a Panel of U.S. Firms.
ABSTRACT: The impact of changes in market structure on innovation after mergers is a concern for anti-trust policies. However, studies on merger changes of innovation are limited. Combining four different data sets, we construct a unique panel data set of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003 and investigate merger impacts on innovation controlling for endogeneity and factors such as market share, size, industry, and time. Our proxy for innovation is based on the citation-weighted patent stocks, which includes information on not only the merged entities in the post-merger period similar to previous studies, but also both target and acquiring firms in the pre-merger period and the merging year. We find that mergers are positively and significantly correlated with firms' innovation, and firms with large market share experience a greater boost in innovation from mergers. Merger effects on innovation are larger in the long-run and heterogeneous across industries. Our findings are robust to alternative measures of innovation.
Joshua P. Davis, University of San Francisco - School of Law, Shannon Wheatman, Kinsella Media LLC, and Cristen Stephansky, Kinsella Media LLC have an interesting paper on Writing Better Jury Instructions: Antitrust as an Example. Worth reading!
ABSTRACT: Understanding the law is difficult. Getting juries to understand the law is more difficult. Yet we provide evidence that it can be done, even in complex areas such as antitrust. This Article tests whether jury instructions can be written in a way that maintains fidelity to the law - indeed, improves on fidelity to the law compared to standard jury instructions - while also permitting jurors to understand the relevant legal standards. But it goes further than that. It proposes making empirical testing an integral part of drafting model jury instructions. It also shows that such empirical testing is feasible by harnessing the power of the Internet. It undertakes those efforts by drafting and testing jury instructions in two challenging areas of antitrust law. The results of the empirical testing provide reason for optimism about the prospects of juries understanding the law, if those who draft jury instructions test whether they are comprehensible and modify draft jury instructions in light of empirical results.
Chen Zhou, University of South Carolina, Paulo Albuquerque, INSEAD, and Rajdeep Grewal, Pennsylvania State University - Department of Marketing analyze Competition and Firm Service Reliability Decisions: A Study of the Airline Industry.
ABSTRACT: To understand the impact of strategic competition on organizational service reliability decisions, this study investigates if firms in the airline industry consider competitors’ actions when making their service reliability decisions.
We apply two methods – a seemingly unrelated regression and a discrete game among airlines – to analyze data from the U.S. Bureau of Transportation Statistics on flight cancellations rates and duration of flight delays. We find that competitive effects lead firms to differentiate themselves on the levels (low vs. high) and dimensions (cancellation vs. delay) of service reliability.
In counterfactual analyses, we show that commitment by a firm to low cancellation rates leads to improved service reliability in the overall market. Internal programs to improve service reliability, such as on-time bonuses, can significantly improve service reliability, however, ignoring competitive interactions can lead to the over-estimation of the impact of these programs on service reliability by more than 10%.
Monday, April 25, 2016
Igor Sloev, National Research University Higher School of Economics (Moscow) and Maria Nastych, Saint-Petersburg State University explore Coordination within a Supply Chain with a Profit Sharing Contract.
ABSTRACT: We analyze an equilibrium choice of a product quality within a supply chain consisting of a manufacturer and a supplier. A quality of an intermediate good is private information of the supplier and determines the quality of a final product. The manufacturer holds all bargaining power and proposes a profit sharing contract to the supplier. We show that (i) such the contract may serve as the efficient mechanism of within-chain coordination in special cases and (ii) tougher market competition may lead to a higher profit of both supplier and manufacturer.
Emmanuel Petrakis, University of Crete - Department of Economics and Nikolas Tsakas, University of Cyprus - Department of Economics examine The Effect of Entry on R&D Networks.
ABSTRACT: We study the effect of potential entry on the formation and stability of R&D networks considering farsighted firms. In particular, we seek to understand whether the incentives for forming R&D collaborations may be altered by the presence of a potential entrant, as well as which are the factors that affect these incentives. We find that an incumbent firm might be willing to sustain an otherwise undesirable collaboration in order to prevent the entry of a new competitor, as well as to refrain from establishing an otherwise desirable collaboration, expecting to form a more profitable collaboration with the entrant. We also find that entry may lead an inefficient incumbent firm to exit the market.
Resale Price Maintenance and Vertical Territorial Restrictions Theory and Practice in EU Competition Law and US Antitrust Law
Barbora Jedlickova, TC Beirne School of Law, The University of Queensland, Australia has written on Resale Price Maintenance and Vertical Territorial Restrictions Theory and Practice in EU Competition Law and US Antitrust Law.
BOOK ABSTRACT: Theoretical discussions among competition lawyers and economists on the approach to Resale Price Maintenance (RPM) and Vertical Territorial Restrictions (VTR) have often caused controversy. However, commentators agree that there is a lack of comprehensive study surrounding the topic. This book explores these two forms of anticompetitive conduct from legal, historical, economical, and theoretical points of view, focusing on the EU and US experiences.
Alberto F. Cavallo (MIT) asks Are Online and Offine Prices Similar? Evidence from Large Multi-Channel Retailers.
ABSTRACT: Online prices are increasingly being used for a variety of inflation measurement and research applications, yet little is know about their relation to prices collected offline, where most retail transactions take place. This paper presents the results of the first large-scale comparison of online and offline prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72% of the time for the products sold in both locations, with significant heterogeneity across countries, sectors, and retailers. The similarity is highest in electronics and clothing and lowest for drugstores and office-supply retailers. There is no evidence of prices varying with the location of the ip address or persistent browsing habits. Price changes are un-synchronized but have similar frequencies and average sizes. These results have implications for National Statistical Offices and researchers using online data, as well as those interested in the effect of the internet on retail prices in different countries and sectors.
Saturday, April 23, 2016
10th Anniversary Colloquium: Global Antitrust Enforcement 10 years and Beyond Friday 3 June 2016, 08:15 - 15:45
Friday 3 June 2016, 08:15 - 15:45
Bibliothèque Solvay, Brussels
The Jevons Institute 10th Anniversary Colloquium on Global Antitrust Enforcement has been organised and by
Antonio Bavasso, David Evans and Douglas Ginsburg
UCL Jevons Institute
Jacques Steenbergen, Belgian Competition Authority
Margrethe Vestager, European Commission
|09:30||Session I: Enforcers Roundtable
Johannes Laitenberger, European Commission
Renata Hesse, US DoJ
Terrell McSweeny, FTC
Alex Chisholm, UK CMA
Bruno Lassere, French Competition Authority
Ashok Chawla, formerly Competition Commission of India
|11:15||Session II: Chief Economists Roundtable
Massimo Motta, European Commission
Howard Shelanski, OIRA, The White House
Damien Neven, Graduate Institute Geneva – CRA
Handong Zhang, National Development & Reform Commission Antitrust Bureau, PRC
|14:00||Session III: Judges Roundtable
Christopher Vadja, Court of Justice of the European Union
Sir Peter Roth, UK Competition Appeals Tribunal
Jacqueline Riffault-Silk, French Cour de Cassation
Sir Nicholas Forwood QC, Brick Court Chambers
Sen Mario Monti, Italian Senate – Bocconi University
The conference venue:
Parc Léopold, Belliardstraat 137,
1040 Brussel, Belgium
Download directions to the venue from: http://bit.ly/1RUw6b3
About the Jevons Institute
The Jevons Institute for Competition Law and Economics at UCL (The Jevons Institute), set up in 2006, constitutes a policy forum and a meeting point between academia and practice with the aim to:
- stimulate debate concerning the application of competition law and industry regulation to the marketplace; and
- promote interaction among academic scholars in law and economics, policymakers and enforcement officials, the judiciary, practitioners and business leaders.
Our approach in this area of law and policy is based on a strong interaction between legal principles and analysis, and applied economic theory and empirics.
The Jevons Institute has been named after William Stanley Jevons, one of the foremost economists of the 19th Century and professor of political economy at UCL.
The Jevons Institute was founded by Visiting Professor Antonio Bavasso and Visiting Professor David S. Evans and operates within the Faculty of Laws at University College London.
It is directed by three Executive Directors: visiting professors Antonio Bavasso and David S. Evans and Ioannis Lianos, chair of global competition law and policy at UCL Laws.
Thursday 26 May 2016, 10:00 - 17:30
A one-day CPD course introducing Chinese Competition Law
organised by UCL’s Centre for Law, Economics & Society
Accreditation: 6 CPD hours
- Thomas Cheng, Associate Professor, The University of Hong Kong
- David Stallibrass, Fingleton Associates
About this course
This six-hour short course will give students an introduction to the Chinese Anti-monopoly Law.
The course will cover all the basic aspects of substantive competition law, including restrictive agreements, abuse of dominance, merger review, IP-competition interface, and an area of competition law unique to China known as abuse of administrative monopoly.
Students will be introduced to the leading cases with reference to both private litigation in the courts and administrative enforcement by state agencies.
The course will seek to highlight the similarities and difference between the Chinese Anti-Monopoly Law and competition law in other jurisdictions, such as the EU and the US. In addition, it will set the Chinese law within the broader context of Chinese political and economic development.
The course will include a discussion of the unique context in which competition law is enforced in China and a critical evaluation of the cause and effect of divergence between Chinese and international competition law norms.
What you will learn
- Students will become familiar with the political economy and institutional environment that contextualises competition law enforcement in China.
- Students will understand the basic aspects of all areas of substantive competition law, including restrictive agreements, abuse of dominance, merger review, IP-competition interface, and an area of competition law unique to China known as abuse of administrative monopoly.
- Students will be introduced to leading cases with reference to both private litigation in the courts and administrative enforcement by state agencies.
- Students will acquire a greater appreciation of the development of competition law in China in the context of the global debate about and movement toward convergence.
None, though a good understanding of UK, EU, or US competition law is highly desirable.
A pack with english translations of core legislation, guidance, and decisions will be provided. Students will be expected to have made themselves familiar with it.
About the teachers
Thomas Cheng is an associate professor at the Faculty of Law of the University of Hong Kong. He received a Bachelor of Arts degree from Yale College, and a Juris Doctor degree from Harvard Law School, and a Bachelor of Civil Law degree in European and Comparative Law from the University of Oxford. His research focuses on competition law and policy issues, especially comparative competition law and competition law in developing countries.
Thomas is a member of the Hong Kong Competition Commission, Administrative Appeals Board, the Energy Advisory Committee, and the Committee on Slots Complaints. He has assisted the Hong Kong government in drafting the city’s first comprehensive competition law. He is also a member of the executive board of the Academic Society for Competition Law (ASCOLA) and is a member of the advisory board of the American Antitrust Institute.
David Stallibrass is a director at Fingleton Associates, a strategic regulatory advice boutique. He was the first economist to testify before both a regional high-court and the Supreme Peoples Court of China in an antitrust dispute in the high profile dispute between Tencent and Qihoo 360.
Previously he worked in a number of roles at the UK Office of Fair Trading such as Director responsible for consumer protection and competition enforcement in the health and professional services industries; Assistant Director responsible for the OFT’s investigation into bank charges; Senior Economic Advisor on a wide range of investigations and mergers; and Head of Strategy.
David has degrees from Oxford University and the London School of Economics, is a senior research fellow at Koguan Law School in Shanghai, and has published a number of articles on antitrust and regulation. Currently David is a director at Fingleton Associates, a strategic regulatory advice boutique.
Friday 6 May 2016, 13:00 - 14:00
UCL Haldane Room, Wilkins Building, off UCL Main Quad, Gower Street, London WC1E 6BT
Speaker: Professor Spencer Weber Waller, Loyola University of Chicago
Commentator: Anna Morfey, Partner, Hausfeld & Co LLP
Chair: Professor Ioannis Lianos, UCL Laws
Organised by the Centre for Law, Economics & Society
About the talk:
Antitrust class actions have narrowed significantly in the United States in recent years but still remain robust compared to aggregate litigation in the rest of the world. While the Supreme Court continues to narrow the doorway to class actions, the rest of the world is increasingly interested in creating new mechanisms for aggregate litigation to better support effective private damage litigation in competition cases, and in particular the large number of small claims cases that led to the class action boom in the United States in the first place. The challenge for the rest of the world will be to fashion new remedies consistent with the history, culture, substantive law, and procedural rules of their legal traditions rather than either adopt or reject the system that has evolved in the United States.
The lecture will provide an overview of the increasingly stringent requirements for antitrust class actions in the United States and a representative survey of the nascent movement toward collective actions abroad where competition cases have been at the forefront of the debate. The lecture will cover the standards for class certification under Rule 23 and recent Supreme Court cases tightening those standards. It will then analyse a separate line of Supreme Court cases which effectively eliminates class actions altogether when parties have entered into a contract requiring arbitration rather than litigation and further requires individual rather than collective arbitration proceedings.
We will continue with a survey of recent developments in the opposite direction outside the United States. This section examines ongoing changes in the EU, UK, other EU Member States, Mexico, and Canada to empower consumers and business with small claims in competition cases by creating collection action mechanisms of different types. We will also briefly discuss the decision of the EU to simply prohibit the type of forced arbitration clauses that the U.S. Supreme actively encourages. We will analyse the critical aspect of whether foreign class actions will thrive or whither on the vine – the need for an opt-out mechanism rather than the opt-in mechanism favoured in most jurisdictions outside the U.S. It is ironic that the rest of the world is struggling to figure out how best to empower plaintiffs to bring appropriate class action type proceedings while the U.S. Supreme Court remains principally concerned with how to restrain or eliminate the very same type of action.
About the speaker:
Spencer Weber Waller is professor at the School of Law of Loyola University of Chicago. He served as a staff law clerk for the U.S. Court of Appeals for the Seventh Circuit. He also worked for the U.S. Department of Justice, first as a trial attorney in the Foreign Commerce Section of the Antitrust Division and later as a special attorney in the Chicago Strike Force of the Criminal Division. He then practiced at the Chicago firm of Freeborn & Peters. He was a full-time faculty member at Brooklyn Law School for ten years until joining Loyola in 2000. Professor Waller also serves as the Faculty Director of the Institute for Consumer Antitrust Studies.
Wednesday 8 June 2016, 08:30 - 19:00
Bibliothèque Solvay, Brussels
A special conference honouring the scholarship of Eleanor M. Fox (NYU)
About the conference:
This symposium on Competition Law at the Intersection of Equity and Efficiency, co-organized by theGlobal Competition Law Center at the College of Europe and the UCL Centre for Law, Economics and Society aims to discuss Eleanor Fox’s contribution to the field of competition policy. Leading competition law scholars from around the world will comment on Eleanor Fox’s scholarship, reflecting on her legacy, while engaging with the broader debate of the relation between “efficiency” and “equity” in competition law.
The symposium aims to provide critical insights into the work of one of the world’s most prominent competition law scholar of the past four decades by providing leading global competition law experts, Eleanor’s colleagues and friends, the opportunity to engage with the psyche of competition law and the balance, for some, or Faustian Pact for others, it has reached between “efficiency” and “equity”.
Damien Gerard and Ioannis Lianos
09:15 Keynote Address
09:45 Panel I: Making Markets Work for People: Inequality, Poverty, Discrimination, Development, and Barriers
Chair: Harry First
Panel: Mor Bakhoum, Michal Gal, David Lewis, Ioannis Lianos
11:15 Coffee Break
11:30 Panel II: Global Governance: the Role and Design of Antitrust Enforcement
Chair: Frederic Jenny
–Extraterritoriality And Designs For A Global Antitrust Enforcement System
Participants: Dennis Davis, Philip Marsden, Spencer Weber Waller
– At the Intersection of Trade and Competition Law
Participants: Allan Fels, Damien Neven
14:00 Keynote Address
14:30 Panel III: The Ideology of Antitrust: Through the Looking Glass
Chair: Giuliano Amato
Participants: Donald Baker, Josef Drexl, Albert Foer, Maurice Stucke
16:00 Panel IV: Comparative Competition Law: Fostering Understanding
Chair: Heike Schweitzer
Participants: Ariel Ezrachi, Simon Roberts, Daniel Sokol
17:15 Coffee Break
17:30 Panel V: The Texture of Antitrust: Institutions, Norms and Economics
Chair: Ian Forrester
Participants: Dan Crane, Giorgio Monti, Dan Rubinfeld, Edward Iacobucci
18:45 Closing Speech: Eleanor Fox
Friday, April 22, 2016
Join us in Toronto on May 19 as we tackle these issues and more. With the help of leading experts, including the heads of all four competition agencies in North America, the CBA Competition Law Spring Conference will explore the international dimensions of a wide range of civil compliance issues, including:
- The Competition Tribunal's forthcoming abuse of dominance decision in the re-determination of the Toronto Real Estate Board case
- Latest trends and tips in securing international merger clearance, including both competition/antitrust and CFIUS/national security reviews
- Accounting for innovation in competitive impact analysis
Plus! We are delighted to announce a discussion-style Enforcers Panel with the following distinguished speakers:
- John Pecman, Commissioner of Competition, Canadian Competition Bureau
- Edith Ramirez, Chairwoman, U.S. Federal Trade Commission
- William J. Baer, Assistant Attorney General for the Antitrust Division, U.S. Department of Justice
- Alejandra Palacios Prieto, Chair, Mexican Federal Economic Competition Commission
On-line registration is now open. To register online (credit card required), click on the REGISTER NOW button located on the right-hand side of your screen. If you wish to pay by cheque, please contact Lauren Fortier (firstname.lastname@example.org)
Please note, your registration will not be processed until payment has been received.
$440 + taxes ($497.20): CBA Members
$305 + taxes ($344.65): Young Lawyers (less than 5 years)
$230 + taxes ($259.90): Students
$540 + taxes ($610.20): Non-Members
There will be a 20% administrative charge for any cancellation received in writing prior to April 19, 2016. No refund will be given after April 19, 2016. There will be no refunds for "no-show" registrants.
Meeting Venue & Accommodation
Toronto Board of Trade
1 First Canadian Place
77 Adelaide Street West
Toronto, ON M5X 1C1
While there is no room block for this conference, the Sheraton Toronto Centre is located steps away from the Toronto Board of Trade. As CBA members you may be entitled to a discount as they are part of the Starwood hotel chain. Mention that you are a member and receive their preferred rate (subject to availability). Phone: (416) 361-1000 / 1-800-325-3535, or visit the Sheraton on the web: http://www.sheratontoronto.com/ for more details.
Help Without Borders: How the Google Android Case Threatens to Derail the Limited Scope of the Obligation to Assist Competitors
Konstantinos Stylianou, University of Leeds - School of Law has a new paper on Help Without Borders: How the Google Android Case Threatens to Derail the Limited Scope of the Obligation to Assist Competitors.
Abstract: The Google Android investigation concerns the conditions under which Google makes certain of its applications (“Google Apps”, e.g. Play, Maps etc.) and the Android operating system available to manufacturers of mobile devices and mobile operating systems (OEMs). Some of those terms and conditions place restrictions around Android and Google Apps raising complaints among market players and competition authorities. One should not be too quick to dismiss these concerns; Google possesses a prominent position in the market and its practices, no matter how innocuous when performed by smaller firms, can have far-reaching reverberations when performed by Google. But at the same time, appreciating Google's prominent position also means not neglecting Google’s coopetitive relationship with its partners/competitors on account of the development and distribution of Android and Google Apps, and Google’s own interests as another competitor in the market. To ask that Google raise all restrictions as desired by its competitors would upset this balance, and competition law has traditionally been wary of prescribing market interactions as long as the competitive process remains intact. This article indeed suggests that, properly conceived, Google's restrictions not only serve its right to compete on the merits, which always serves as a backstop to what can be recognised as an offense or how far a remedy can do, but they do so in the context of Google already assisting competitors succeed in the market.
To understand and evaluate the central point here the article proceeds in two steps. First, it establishes what type of competition law offenses Google might be engaging in. The language of the European Commission and the ensuing legal literature suggest tying/bundling arrangements among Google Apps, and between Google Apps and Android, and also a requirement that OEMs that want to adopt Google Apps do not develop forked versions of Android. A different approach is suggested here, according to which the conditions that govern the availability of Google Apps should be treated as a potential refusal to supply (with Google Apps serving as the “golden nugget” to which OEMs want access), the bundling of Google Apps together should be treated as a what can be described as coopetitive bundling, due to the multi-layered relationship Google maintains with rival application developers, and for the same reason the exclusive dealing arrangement as coopetitive exclusive dealing arrangement.
Once the proper legal bases are found, one can then look for their limits. In that direction, it is argued that mandating access to Google Apps and unbundling the applications suite would amount to the creation of a positive obligation for Google to assist competitors beyond what the (already limited) refusal to supply doctrine envisages, and beyond the residual freedom to compete on the merits the tying doctrine allows, especially when the tying arrangement is characterised by the novel element of generating benefits for competitors as, arguably, in the case at hand.
This note does not deny the possibility of Google's wrongdoing. Nor does it deny that Google’s conduct is inconveniencing competitors. It does insist however on proper legal tests, which set boundaries that respect the fundamental principle of competition law that firms are there to compete, not to help each other beyond what they wish for themselves.
AAI TO HOST INVITATIONAL SYMPOSIUM ON THE NON-PRICE EFFECTS OF MERGERS
Experts from law, economics, and the business schools will convene on June 15 for the AAI’s 2016 Invitational Symposium, Non-price Effects And Mergers: A Multidisciplinary Perspective. The symposium will examine the increasing importance of and emphasis on non-price dimensions of competition in merger analysis. This includes the effects of a merger on competition involving product quality, variety, service, and innovation.
The symposium will feature two panels and a capstone roundtable discussion. The first panel will feature multidisciplinary perspectives from the economics, law, and the business schools. This panel will take up issues relating to strategic management and marketing decisions, integration decisions, R&D strategy, and product positioning as they pertain to variety, quality (including privacy concerns), service offerings, and innovation. The second panel will gather experts from the enforcement community experienced in a variety of merger cases involving non-price effects. They will debate the substantive and evidentiary issues involving non-price effects in merger analysis, with the goal of sketching a landscape against which non-price effects can gain traction in enforcement decision-making and inform competition policy more generally.
The symposium should be of special interest to those interested in mergers and their effects for competition and consumers, including scholars, consultants, and practitioners from antitrust, economics, and business.
This event is by invitation. If you are interested in attending, please contact email@example.com.
The event will coincide with, and serve to motivate in multidisciplinary ways, AAI’s 17th Annual Conference Living with Market Concentration? New Perspectives on Merger Policy to be held the following day on June 16, 2016.
John R. Allison, University of Texas - McCombs School of Business, Mark A. Lemley, Stanford Law School, and David L. Schwartz, Northwestern Law School ask How Often Do Non-Practicing Entities Win Patent Suits?
ABSTRACT: Much of the policy debate over the patent system has focused on the perceived problems with non-practicing entities (NPEs), also called patent trolls. Drawing on a comprehensive data set we built of every patent lawsuit filed in 2008 and 2009 that resulted in a ruling on the merits, we find that the situation is rather more complicated than simply operating companies vs. NPEs. While operating companies fare better in litigation than NPEs overall, breaking NPEs into different categories reveals more complexity. Patent Assertion Entities (PAEs) in particular win very few cases. Further, once we remove certain pharmaceutical cases from the mix, no patent plaintiff fares very well. That is particularly true of software, computer, and electronics patents.
Market Competition and Corporate Innovation Relationship: An Explanation from Mergers and Acquisitions
Chong Chen, City University of Hong Kong (CityUHK) examines Market Competition and Corporate Innovation Relationship: An Explanation from Mergers and Acquisitions.
ABSTRACT: We revisit the relationship between market competition and innovation, which was first discussed in Schumpeter (1943). Using patents, citations and R&D as measures for innovation, and more recent measure for market competition, we document an increasing relationship between competition and innovation. Importantly, we provide evidence that firm’s takeover activities could help explain the linear relationships. Our empirical results indicate that generally there’s a declination of newly patents rollout in the post-merger period across firms. But the magnitude of declination in patenting activity varies with firms of different market concentrations: firms located in more concentrated market experience steeper drop while the decline is moderate among firms in less concentrated markets. We argue that firms of high market power are adept at expanding their patent portfolios through acquisitions and they decelerate their patenting activities after major takeovers.
Anca Chirita, Durham Law School describes The Judicial Review of the European Union Industrial Cartels.
ABSTRACT: The aim of this article is to explore recent appeals concerning illegal cartels under Article 101 TFEU by revealing the relevant principles underpinning both the substantive and the procedural review of price-fixing agreements, namely, the industrial organization criteria and the legal use of evidentiary presumptions respectively. Arguments advancing a perceived ‘criminalisation’ of the EU fines on cartels coupled with the success rate of appeals on the basis of an erroneous calculation of the level of fines, as well as the overall length of cartel proceedings, raise other pertinent issues regarding the need for institutional reform, in particular, a specialised EU Competition Tribunal. The present contribution seeks to highlight several hurdles in appeals as reflected by the interpretation of the EU Charter of Fundamental Rights, in particular, the right to good administration of justice before an independent and impartial tribunal, the right to a fair presentation of evidence through the sending of a Statement of Objections (SO), the right to have access to the file, the right to a reasoned decision and within a reasonable time, and the proportionality of the administrative fine. Therefore, such rights of defence as are enjoyed by corporations and mirrored by the human rights catalogue enshrined in the EU Charter make them even more contestable before the EU Courts.
Thursday, April 21, 2016
Sumit Agarwal, National University of Singapore, Changcheng Song, National University of Singapore, and Vincent W. Yao, Georgia State University - J. Mack Robinson College of Business explore Banking Competition and Shrouded Attributes: Evidence from the US Mortgage Market.
ABSTRACT: Increased competition has a causal effect on banks’ pricing strategies to compete for consumers and profits. We test this conjecture using an exogenous shock due to the interstate banking restriction that has been sequentially lifted across states since 1994. We find strong evidence that increased competition leads banks to reduce initial rates offered on the adjustable-rate mortgages (ARMs) to attract borrowers but increase interest rates after the rate reset and thereby exploit consumer inattention in the pricing terms. Different banks design pricing strategies that are optimal to their own profit structures. Consistent with theoretical predictions, we find that banks shroud more with naïve borrowers or less financially sophisticated borrowers, who are more subject to behavioral bias. Subsequently, banks earn more profits from lower default risk and delayed prepayments.