Monday, September 26, 2016
Christos Cabolis, IMD World Competitiveness Center; ALBA Graduate Business School; Yale SOM International Center for Finance, Constantine Manasakis, University of Crete - Department of Economics, Diego Moreno, Universidad Carlos III de Madrid - Department of Economics, and Emmanuel Petrakis, University of Crete - Department of Economics examine R&D Investments Fostering Horizontal Mergers.
ABSTRACT: We study a homogenous good triopoly in which firms first choose their cost-reducing R&D investments and consider alternative merger proposals, and then compete a la Cournot in the ensuing industry. We identify conditions under which both horizontal mergers and non-integration are sustained by Coalition-Proof Nash equilibria (CPNE). These conditions involve the effectiveness of the R&D technology, as well as the distribution of the bargaining power between the acquirer and the acquiree, which determine the allocation of the incremental profits generated by the merger. We show that whether firms follow duplicative or complementary research paths, sustaining a merger generally requires a sufficiently effective R&D technology that creates endogenous cost asymmetries and renders the merger profitable, and a moderate distribution of bargaining power that allows to spread the benefits of the merger. We examine the welfare effects of mergers and obtain clear policy guidelines.
Develop legal strategy in connection with competition review of mergers and acquisitions by European regulators including DG Comp
Represent company in connection with competition inquiries by regulators in the EU
Develop and implement long-term competition strategy in EMEA in conjunction with Policy team
Review and advise on pending and developing competition regulation.
Solicitor or barrister (qualified to practice law in a European member state)
Significant in-depth and related experience (6 + years) litigating complex commercial matters and representing companies in significant regulatory inquiries
Significant competition experience, including engagement with applicable regulatory bodies in Europe
Data protection experience a plus
First rate experience developing innovative and pragmatic approaches to complex legal challenges with a proven track record in providing concise and business-focused legal advice
Experience working with web 2.0, social networking, and other Internet and technology companies
Flexibility and eagerness to work on broad range of legal matters
Excellent interpersonal skills with an absolute commitment to professionalism and collegiality
Knowledge of, or fluency in, other European languages (German, French) a plus.
Valerie Smeets, Aarhus School of Business; Universite Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES), Kathryn Ierulli, University of Chicago, and Michael Gibbs, University of Chicago Booth School of Business; Institute for the Study of Labor (IZA) provide An Empirical Analysis of Post‐Merger Organizational Integration.
ABSTRACT: We study post‐merger organizational integration using linked employer–employee data. Integration is implemented by reassigning a small number of high‐skilled workers, especially in R&D and management. Workforce mixing is concentrated to establishments set up after merger, rather than to previously existing establishments. Worker turnover is high after merger, but new hiring yields stable total employment. Target employees have higher turnover and reassignment, particularly if the target firm is small relative to the acquiring firm. These findings might suggest that integration is costly, but can be achieved by focusing on key employees. Alternatively, the reassignment of a few key employees is sufficient for achieving integration.
Sunday, September 25, 2016
FTC Commissioner Maureen Ohlhausen asks U.S. – E.U. Convergence: Can We Bridge the Atlantic? at the 2016 Georgetown Global Antitrust Symposium Dinner.
FTC Commissioner Maureen Ohlhausen asks What Are We Talking About When We Talk About Antitrust? at the Concurrences Review Dinner, in New York on
Keynote Remarks of FTC Chairwoman Edith Ramirez - 10th Annual Global Antitrust Enforcement Symposium
Acting Assistant Attorney General Renata Hesse of the Antitrust Division Delivers Remarks at Fordham Competition Law Institute's 43rd Annual Conference on International Antitrust Law and Policy - Friday, September 23, 2016
Friday, September 23, 2016
Relationship of financial stability and risk with market structure and competition: evidence from Indian banking sector
Pankaj Sinha (University of Delhi) and Sakshi Sharma (University of Delhi) explore the Relationship of financial stability and risk with market structure and competition: evidence from Indian banking sector.
ABSTRACT: Academic debate over the ‘competition-fragility view’ and ‘competition-stability view’, in context of the risk shift and franchise value paradigms has lead to study the concept and relationship of competition and riskiness of banks in detail. In this respect, Martinez-Miera Repullo 2010 (MMR model) has even propagated the existence of a non-linear relationship between stability and competition. We test these hypotheses on a sample of Indian banks using measures for stability and riskiness of banks. The paper investigates the impact of bank competition and impact of bank concentration on stability, as well as on the riskiness of their loan portfolios .We find evidence for the presence of non-linear relationship between stability index and competition. It may be pointed out that in case of Indian banks, both concentration and competition work simultaneously to support the competition-fragility view. Both increased concentration and decreased competi! tion may lead to greater riskiness with greater instability. The study suggests that it is important to understand the tradeoff between competition and concentration, and their impact on riskiness of loan portfolios and stability of banks for formulating steps to foster competition within the industry.
Tadashi Sekiguchi and Katsutoshi Wakai examine Repeated Games with Recursive Utility:Cournot Duopoly under Gain/Loss Asymmetry.
ABSTRACT: We study the repeated Cournot duopoly with recursive utility where the players discount gains more than losses. First, as in the standard model of discounted utility, we confirm that the optimal punishment equilibrium has a stick-and-carrot structure. Next, we explore its exact form in relation to the role of the asymmetry in discounting. We find that the discount factor used to evaluate losses controls the deterrence of a given punishment, while the discount factor used to evaluate gains influences the enforceability of the penalty. An increase in one of the two discount factors increases the most collusive equilibrium profit unless full collusion is already sustainable. However, the key to collusion is the loss discount factor: regardless of the level of the gain discount factor, full cooperation can be achieved if the loss discount factor is sufficiently high.
Amitrajeet Batabyal, Rochester Institute of Technology and Hamid Beladi, University of Texas at San Antonio offer A game model of competition for market share between a new good producer and a remanufacturer.
ABSTRACT: We analyze the hitherto unstudied duopolistic interaction between a new good producer and a remanufacturer who compete for a dominant share of the market for a particular product. Each firm i spends d_i ≥ 0 on product development to sway consumers and this expenditure increases the likelihood that firm i captures a dominant market share. The revenue to each firm from obtaining a dominant market share is r>0. Our analysis of this interaction leads to five results. First, given the two product development expenditures (d_1,d_2), we specify the expected profit for each firm i. Second, we describe the function that characterizes each firm’s best response function. Third, we compute the unique Nash equilibrium. Fourth, we show what happens to this Nash equilibrium when the revenue r increases. Finally, we study what happens to the Nash equilibrium when the remanufacturer’s revenue from capturing a dominant market share is still r but the new good producer’s revenue is θ r, where θ >1.
Thursday, September 22, 2016
Jeroen Hinloopen (Utrecht University, The Netherlands); Grega Smrkolj (Newcastle University, United Kingdom) and Florian Wagener (University of Amsterdam, The Netherlands) investigate R&D Cooperatives and Market Collusion: A Global Dynamic Approach.
ABSTRACT: We present a continuous-time generalization of the seminal R&D model of d’Aspremont and Jacquemin (American Economic Review, 1988) to examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. We consider all trajectories that are candidates for an optimal solution as well as initial marginal cost levels that exceed the choke price. Firms that collude develop further a wider range of initial technologies, pursue innovations more quickly, and are less likely to abandon a technology. Product market collusion could thus yield higher total surplus.
Cyril Ritter, European Commission, Directorate-General for Competition ask How Far Can the Commission Go When Imposing Remedies for Antitrust Infringements?
ABSTRACT: Article 7 remedies for infringements of Articles 101 and 102 TFUE have a specific function (‘bringing the infringement effectively to an end’), which is distinct from interim measures, fines, and actions for damages. Alongside merger remedies and Article 9 commitments, Article 7 remedies can shape markets in very significant ways. In this paper, the author examines the purposes of Article 7 remedies, the types of remedies, and the procedures used to impose and enforce them.
I am writing to you in my new role as the President of ASCOLA. ASCOLA is in international organization of competition law scholars (see http://www.ascola.org/). It was founded 11 years ago by Prof. Josef Drexl, and since then has increased its membership to approximately 350 members worldwide. While many members are European, many others come from all other parts of the world, whose main interest and occupation is the research of competition law issues. Unfortunately U.S. participation is still limited, but I hope to change this in my time as President. Some AAI members (including Bert and John Kwoka) have already joined, and I hope they will second me that it is well worth their time.
What does ASCOLA have to offer? It offers a unique opportunity to meet established competition law scholars from around the world. In one conference, you can meet many interesting scholars that you might not have come across otherwise, which might offer different points of view on shared topics. It also offers an environment in which competition law issues are discussed at a high level among scholars and researchers. This is mainly done though its yearly conference (this year in Stockholm, Sweden on June 15-17, 2017, with a focus on digital markets), and several more local events. Hopefully in the near future digital discussion groups will also be created.
How to join? ASCOLA membership is based on academic achievements in the fields of competition law and regulation. To join one can download an application form and send it along with the CV to me. The application is then approved by the board.
I invite the competition law scholars among you to join! If you have any questions please do not hesitate to contact me,
-- Prof. Michal S. Gal, S.J.D Director of the Forum for Law and Markets
Faculty of Law, University of Haifa
President, International Academic Society of Competition Law Scholars (ASCOLA) Mount Carmel, Haifa 31905, Israel Tel: 972-4-825-3865 Fax: 972-4-824-0681 http://weblaw.haifa.ac.il/en/faculty/gal/pages/home.aspx SSRN page: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=163287
Vithala R. Rao, Johnson Graduate School of Management, Cornell University, Yu Yu AIG Science, and Nita Umashankar, J. Mack Robinson College of Business, Georgia State University have a paper in the current issue of Marketing Science on Anticipated vs. Actual Synergy in Merger Partner Selection and Post-Merger Innovation.
ABSTRACT: Past research has primarily focused on what happens after a merger. This research attempts to determine whether anticipated benefits from the merger actually accrue. We characterize the effects of observed variables on whether pairs of firms merge, vis-à-vis roommate matching, and then link these factors to post-merger innovation (i.e., number of patents). We jointly estimate the two models using Markov Chain Monte Carlo methods with a unique panel data set of 1,979 mergers between 4,444 firms across industries and countries from 1992 to 2008. We find that similarity in national culture and technical knowledge has a positive effect on partner selection and post-merger innovation. Anticipated synergy from subindustry similarity, however, is not realized in post-merger innovation. Furthermore, some key synergy sources are unanticipated when selecting a merger partner. For example, financial synergy from higher total assets and complementarity in total assets and debt leverage as well as knowledge synergy from breadth and depth of knowledge positively influence innovation but not partner selection. Furthermore, factors that dilute synergy (e.g., higher debt levels) are unanticipated, and firms merge with firms that detract from their innovation potential. Overall, the results reveal some incongruity between anticipated and realized synergy.
Sara Biancini, University of Cergy-Pontoise - THEMA and David Ettinger, CNRS, National Center for Scientific Research, France - CERAS Vertical investigate Integration and Downstream Collusion.
ABSTRACT: We investigate the effect of a vertical merger on downstream firms’ ability to collude in a repeated game framework. We show that a vertical merger has two main effects. On the one hand, it increases the total collusive profits, increasing the stakes of collusion. On the other hand, it creates an asymmetry between the integrated firm and the unintegrated competitors. The integrated firm, accessing the input at marginal cost, faces higher profits in the deviation phase and in the non cooperative equilibrium, which potentially harms collusion. As we show, the optimal collusive profit-sharing agreement takes care of the increased incentive to deviate of the integrated firm, while optimal punishment erases the difficulty related to the asymmetries in the non cooperative state. As a result, vertical integration generally favors collusion.
Wednesday, September 21, 2016
David Gerber, Chicago Kent conceptualizes Competition Law and Global Supply Chains.
ABSTRACT: Global supply chains (or value chains or production networks) produce most of the manufactured products used by most people in most developed countries most of the time. They often represent a highly efficient and valuable set of economic arrangements, but they also carry a potential for harm that is often beyond the reach of current legal remedies. GSCs can shield those that produce faulty or hazardous products or artificially raise prices from legal responsibility for the harms they cause to markets, consumers and to the environment. This article focuses on one of those potential harms -- those caused by anti-competitive conduct, but many of the issues also arise in relation to environmental, financial and other types of harm. The article also looks at the impact of such arrangements on emerging markets and suggests ways in which the interests of low income source countries can be better aligned with high income destination countries.
Max Huffman (IU Indianapolis) describes Scalia as A Reluctant Standard-Bearer for Chicago-School Antitrust.
ABSTRACT: Justice Scalia was part of the intellectual ferment that gave rise to the deregulatory mindset in the 1970s and 1980s. He was involved in the intellectual conversations around ideas including textualist interpretive philosophy (statutes), originalist interpretation (constitutions), and free-market economic thought. Justice Scalia adopted the originalist philosophy from Judge Bork and advanced it from the pulpit of the Supreme Court. For the most part, he did not take the same leadership role in advancing the Chicago School tradition in antitrust. It would be impossible, however, in light of his long tenure on the Court and his engagement with the core intellectual philosophies that underlie much of modern antitrust, for him not to have had an impact on the body of law. And in Kodak (dissenting), Empagran (concurring), and Trinko (for the majority), he did.
The Blocking Injunction: A Comparative and Critical Review of the EU, Singaporean and Australian Regimes
Alpana Roy, Western Sydney University and Althaf Marsoof, King’s College London, Dickson Poon School of Law, Students describe The Blocking Injunction: A Comparative and Critical Review of the EU, Singaporean and Australian Regimes.
ABSTRACT: This article critically, and comparatively, evaluates the legal basis and key shortcomings of the blocking injunction, which has gained popularity in the EU, Singapore and lately Australia, as an alternative to the extrajudicial “notice and takedown” approach to enforcing intellectual property rights. The article concludes that there are problems not only with the remedy itself, but also in the manner in which the blocking injunction is implemented. The fact that multiple proceedings have to be filed in order to obtain a global level of enforcement and the possibility of blocking measures being circumvented are problems with the remedy itself. In the EU context, at least, not only does the implementation of the blocking injunction fall short of due process requirements, but also the legal basis for the remedy in the context of enforcing trade mark rights is questionable.
Does Competition from Private Surgical Centres Improve Public Hospitals' Performance? Evidence from the English National Health Service
Zack Cooper; Stephen Gibbons and Matthew Skellern add Does Competition from Private Surgical Centres Improve Public Hospitals' Performance? Evidence from the English National Health Service.
ABSTRACT: This paper examines the impact of competition from government-facilitated entry of private, specialty surgical centres on the efficiency and case mix of incumbent public hospitals within the English NHS. We exploit the fact that the government chose the location of these surgical centres (Independent Sector Treatment Centres or ISTCs) based on nearby public hospitals' waiting times - not length of stay or clinical quality - to construct treatment and control groups that are comparable with respect to key outcome variables of interest. Using a difference-in-difference estimation strategy, we find that ISTC entry led to greater efficiency - measured by pre-surgery length of stay for hip and knee replacements - at nearby public hospitals. However, these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker, and who stayed in hospital longer after surgery.
Tuesday, September 20, 2016
Sofa Bauducco, Central Bank of Chile and Alexandre Janiak, University of Chile provide thoughts On the welfare cost of bank concentration.
ABSTRACT: We build a model of bank concentration. Banks and entrepreneurs meet in a credit market characterized by search frictions and negotiate repayment rates à la Nash. Banks are large in the sense that they allocate credit to more than one entrepreneur through branches and there is bank heterogeneity in terms of their cost structure. Banks have incentives to overlend, generating a scale inefficiency and overconcentration of banks. We find that this friction also generates too much concentration on the goods market, lowering aggregate output and welfare. We calibrate the model with data on the distribution of branches across banks in the US and available estimates on X-efficiency in the banking sector to assess the quantitative importance of this effect. We find that aggregate output would increase by 2.4% had the scale inefficiency been absent, while loan rates would decrease by 1.2%.