Wednesday, November 23, 2016

Diagnosing Foreclosure Due to Exclusive Dealing

John Asker, UCLA is Diagnosing Foreclosure Due to Exclusive Dealing.

ABSTRACT: Exclusive dealing arrangements, in which a distributor agrees to work exclusively with a single manufacturer, can be efficiency enhancing or can be an anticompetitive means to foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition in the Chicago beer market in 1994. A diagnostic test is provided to judge whether exclusive arrangements lead to foreclosure. To implement this test a model of consumer demand and firm behavior is estimated that incorporates industry details and allows for distribution through exclusive and shared channels. The test indicates that foreclosure effects are not present in this market.



November 23, 2016 | Permalink | Comments (0)

Foreclosing Competition Through High Access Charges and Price Discrimination

Angel L. Lopez, Autonomous University of Barcelona and Rey Patrick, Toulouse School of Economics; Centre for Economic Policy Research (CEPR) study Foreclosing Competition Through High Access Charges and Price Discrimination.

ABSTRACT: This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non‐linear tariffs and may charge different prices for on‐net and off‐net calls. When access charges are high, this allows the incumbent to foreclose the market in a profitable way if switching costs are sufficiently large. In the absence of termination‐based price discrimination, however, such foreclosure strategies are not profitable.

November 23, 2016 | Permalink | Comments (0)

Tuesday, November 22, 2016

Entry Models Applied to Churches: Could Protestants Use a Catholic Bishop to Solve Excess Entry?

Michael W. Walrath, University of St. Thomas asks Entry Models Applied to Churches: Could Protestants Use a Catholic Bishop to Solve Excess Entry?

ABSTRACT: This paper studies the entry behavior of churches of different religious denominations. In a given town, there tend to be fewer Catholic churches (with more members) than there are Protestant churches. Entry of Catholic churches can be considered centralized, since entry is controlled by a bishop; whereas, the entry of Protestant churches is rather decentralized. I estimate an entry game for Protestants, then conduct counterfactuals looking at how entry would change if it were centralized. I find that a large portion of the differences in entry between Catholic and Protestant churches is explained by this difference in entry regulation.



November 22, 2016 | Permalink | Comments (0)

Developments in International Enforcement Co-operation in the Competition Field

Antonio Capobianco (OECD) and Aranka Nagy (Hungarian Competition Authority) describe Developments in International Enforcement Co-operation in the Competition Field.

ABSTRACT: •International co-operation in competition law enforcement has made significant progresses in the last two decades, mainly through the development of bilateral relationships between competition authorities. •Although it is still important for competition authorities to explore the way to deepen their existing bilateral relationships, it is equally important to consider the limitations of bilateral co-operation in pursuing effective and efficient international co-operation in competition law enforcement. •To ensure that antitrust enforcement in cross-border cases continues to be effective, agencies should explore new forms of enhanced cooperation, including the possibility to recognise competition decisions of foreign agencies, introduce one-stop shop systems and lead agency models.

November 22, 2016 | Permalink | Comments (0)

AAI 2016 Airline Roundtable: The Changing Airline Competition Agenda - December 14, 2016

AAI 2016 Airline Roundtable: The Changing Airline Competition Agenda

DATE: DEC 14, 2016

On December 14, the American Antitrust Institute will host its second annual Airline Roundtable. Experts in antitrust and regulation from government, industry, advocacy, and academia will discuss major competition issues facing the airline industry and consumers of air travel. Recent antitrust and regulatory events in the airline industry make this an especially timely program, including developments involving Open Skies applications, requests for antitrust immunity, domestic mergers, and a renewed focus on distribution. This year's Roundtable will focus on challenges to competition, with the goal of focusing antitrust and regulatory aviation policies to promote rivalry, innovation, and consumer benefits. The day will include a "Year in Review," three panels, a keynote luncheon, and roundtable discussions.

Panel 1: Promoting Competition in U.S. Markets - Assessing Open Skies and Antitrust Immunity
This panel will take a look at challenges to opening domestic airline markets to competition. Panelists will explore the debate surrounding the interface between international aviation and domestic competition, with an eye toward how consolidation between the large U.S. carriers has changed the equation. Among other questions, the panel will assess the current climate around, and issues raised by, Open Skies applications by foreign carriers and the regulatory framework governing grants of antitrust immunity for the international airline alliances. Panelists will examine the effectiveness and balancing of antitrust and regulatory policies in facilitating competition and a consumer-facing aviation policy.

Panel 2: Slots, Gates, Airports, and Market Entry
This panel will examine entry as a major enforcement and policy tool for promoting competition in U.S. markets. The U.S. Department of Justice has expressed concern over both unilateral and coordinated conduct involving domestic airlines. Unilateral concerns have arisen particularly at congested airports where takeoff and landing slots are valuable. Past remedies in airline enforcement actions have focused on market entry through access to slots and gates. Panelists will consider whether these actions adequately promote competition and protect consumers. They will also consider the likely impact of regulatory initiatives involving slot allocation rules and proposals to privatize the air traffic control system on competition and consumers.

Panel 3: The State of Air Travel Distribution
We will focus on the importance of air travel distribution and ongoing developments that might affect competition within and across distribution channels. Panelists will unpack policies involving: access to airline fare and availability data; surcharges on itineraries purchased outside airline websites; a “standard” distribution model; and other initiatives that can potentially affect the playing field for the distribution of air travel. The discussion will tie in antitrust and regulatory tools for addressing competition and consumer issues surrounding distribution.

November 22, 2016 | Permalink | Comments (0)

Telefonica and Portugal Telecom v Commission: Assessment of a Non-Compete Clause Unrelated to the Actual Transaction

Jolling K. de Pree and Simone J.H. Evans analyze Telefonica and Portugal Telecom v Commission: Assessment of a Non-Compete Clause Unrelated to the Actual Transaction.

ABSTRACT: The General Court ruled that the European Commission rightfully qualified a non-compete clause as an object restriction in spite of the fact that the contract provided that the stipulation was valid only ‘to the extent permitted by law’.                   

November 22, 2016 | Permalink | Comments (0)

A stochastic production frontier estimator of the degree of oligopsony power in the U.S. cattle industry

Panagiotou, Dimitrios and Stavrakoudis, Athanassios offer A stochastic production frontier estimator of the degree of oligopsony power in the U.S. cattle industry.

ABSTRACT: The objective of this study is to estimate the degree of oligopsony power in the U.S. cattle industry with the use of the recently developed stochastic frontier estimator of market power. Unlike the seminal paper where estimation of the mark-up in an output market at firm level was the main objective, this work proposes a stochastic production frontier estimator in order to estimate the mark-down in an input market at aggregate level. Furthermore, with the help of the new estimator we derive and estimate the Lerner index of oligospony power for the U.S. cattle market. For the empirical part of the study we employed annual time series data from the U.S. cattle/beef industry for the time period 1970-2009. Our results suggest that beef packers exert market power when purchasing live cattle for slaughter.

November 22, 2016 | Permalink | Comments (0)

Monday, November 21, 2016

Banking Competition and Firm-Level Financial Constraints in Latin America

Roberto Álvarez and Mauricio Jara examine Banking Competition and Firm-Level Financial Constraints in Latin America.

ABSTRACT: Prior literature argues that, given the existence of information asymmetries and agency costs, higher competition may increase financial constraints by reducing banks’ incentives to build lending relationships. Using a sample of listed firms for six Latin American countries, we analyze the relation between banking competition and financial constraints. We find evidence in line with prior research that banking competition increases financial constraints. This result is robust and heterogeneous. We include other country-specific variables and check the robustness of our findings; the main results hold. Our results show that the effect of competition differs across firms and industries. Specifically, consistent with the information hypothesis, the negative impact of competition is higher for small quoted firms and for low assets tangibility industries. Also, as expected, we find evidence that firms are more affected by financial constraints during the last crisis. This negative effect is larger for firms in more competitive banking industries.

November 21, 2016 | Permalink | Comments (0)

Antitrust: Where Did It Come from and What Did It Mean?

Richard N. Langlois (University of Connecticut) asks Antitrust: Where Did It Come from and What Did It Mean?

ABSTRACT: This paper is a draft chapter from an ongoing book project I am calling The Corporation and the Twentieth Century. In The Visible Hand, Alfred Chandler explained the rise of the large vertically integrated corporation in the United States mostly in terms of forces of technology and economic geography. Institutions, including government policy, played a quite minor role. In my own attempt to explain the decline of the vertically integrated form in the late twentieth century, I stayed true to Chandler’s largely institution-free approach. This book will be an exercise in bringing institutions back in. It will argue that institutions, notably various forms of non-market controls imposed by the federal government, are a critical piece of the explanation of the rise and decline of the multi-unit enterprise in the U. S. Indeed, non-market controls, including those imposed in response to the dramatic events of the century, account in significant measure for the dominance of the Chandlerian corporation in the middle of the twentieth century. One important form of non-market control – though by no means the only form – has been antitrust policy. This chapter traces the history of antitrust and argues that, far from being a coherent attempt to address an actual economic problem of monopoly, the Sherman Antitrust Act emerged from the distributional political economy of the nineteenth century. More importantly, the chapter argues that the form in which antitrust emerged would prove significant for the corporation, as the Sherman Act and its successors outlawed virtually all types of inter-firm coordinating mechanisms, thus effectively evacuating the space between anonymous market transactions and full integration.

November 21, 2016 | Permalink | Comments (0)

Partial cross ownership and collusion

Samuel de Haas (University of Giessen) and Johannes Paha (University of Giessen) find Partial cross ownership and collusion.

ABSTRACT: This article finds that non-controlling minority shareholdings among competitors lower the sustainability of collusion. This is the case under an even greater variety of situations than was indicated by earlier literature. The collusion destabilizing effect of minority shareholdings is mainly caused by their unilateral effects, and it is particularly prevalent in the presence of an effective antitrust authority.

November 21, 2016 | Permalink | Comments (0)

License or entry in oligopoly

Hattori, Masahiko and Tanaka, Yasuhito discuss License or entry in oligopoly.

ABSTRACT: We consider an incentive of a choice of options for an outside innovating firm to license its new cost reducing technology to incumbent firms, or to enter into the market with or without license in an oligopoly with three firms. We will show that under linear demand and cost functions the results depend on the size of the market. When the market size is large, license to two incumbent firms without entry strategy is the optimum strategy for the innovating firm. However, when the market size is not large, license to one incumbent firm with or without entry strategy may be optimum.

November 21, 2016 | Permalink | Comments (0)

Saturday, November 19, 2016

Competition - Future Leaders

Competition - Future Leaders - The Latest Legal News, Research and Legal Profiles - Who's Who Legal

Competition - Future Leaders

Who’s Who Legal and Global Competition Review are currently seeking to identify the future competition stars worldwide. The results will be published in a new publication entitled WWL: Competition – Future Leaders 2017.


All practitioners aged 45 and under on 31 December 2017 will be eligible for inclusion. We will be including three sections: two for lawyers, split by partners and non-partners; and one for economists. Nominees will be considered for inclusion according to their category.

We would be grateful if you were able to assist with our enquiries by recommending any practitioners you have worked with, either within your firm or elsewhere. If you or any of your peers fit this criteria, please let us know by emailing

All recommended names will be put forward for a provisional list which will be sent out for further comments from peers and clients.

We would be grateful if you could provide any names by Wednesday 23rd November.


November 19, 2016 | Permalink | Comments (0)

Friday, November 18, 2016

Equilibrium Type of Competition with Horizontal Product Innovation

A. Negriu (University of Amsterdam) examines Equilibrium Type of Competition with Horizontal Product Innovation.

ABSTRACT: Singh and Vives (1984) consider a game where duopolists first commit to a strategic variable, quantity or price, and then compete in selling horizontally differentiated products. Here product substitutability is endogenized by allowing firms to undertake R&D investments to increase differentiation. This has important consequences for the determination of the equilibrium type of competition. Whereas in the original model Cournot competition always ensued in equilibrium, horizontal product innovation allows all types of market competition to be an equilibrium, depending on model parameters. As market size increases, the game of choosing the strategic variable changes structure. For small market size it is a dominance solvable game with Cournot competition as unique outcome. For higher market size, the firms face a Prisoner's Dilemma where Bertrand competition would be Pareto optimal, but Cournot competition is the non-cooperative Nash Equilibrium. As market size further increases, the game of choosing market variables becomes a Hawk-Dove game where, in pure strategy equilibrium, one firm sets quantity and the other sets price. When market size increases even further, setting prices will be the strictly dominant strategy and Bertrand competition is the unique equilibrium outcome for a relatively small parameter-range. Finally, for suffciently high market size all equilibria corresponding to differentiated duopoly abruptly dissappear and the market separates into two monopolies.

November 18, 2016 | Permalink | Comments (0)

Stackelberg Competition among Intermediaries in a Differentiated Duopoly with Product Innovation

Jochen Manegold (Paderborn University) theorizes Stackelberg Competition among Intermediaries in a Differentiated Duopoly with Product Innovation.

ABSTRACT: On an intermediate goods market we consider vertical and horizontal product differentiation and analyze the impact of simultaneous competition for resources and the demand of customers on the market outcome. Asymmetries between intermediaries may arise due to distinct product qualities as well as by reasons of different production technologies. The intermediaries compete on the output market by choosing production quantities sequentially and for the supplies of a monopolistic input supplier on the input market. It turns out that there exist differences in product quality and productivities such that an intermediary being the Stackelberg leader has no incentive to procure inputs, whereas in the role of the Stackelberg follower will participate in the market. Moreover, we find that given an intermediary is more competitive, his equilibrium output quantity is higher when being the leader than when being the follower. Interestingly, if the intermediary is less competitive and goods are complements, there may exist asymmetries such that an intermediary being in the position of the Stackelberg follower offers higher output quantities in equilibrium than when being in the position of the Stackelberg leader.

November 18, 2016 | Permalink | Comments (0)

Competition and Big Data, 8 December 2016

Public Seminar - Competition and Big Data Tickets, Thu, 8 Dec 2016 at 18:00

Public Seminar

Centre of European Law

The Dickson Poon School of Law

Competition and Big Data

Commissioner Terrell McSweeny, Federal Trade Commission, Professor D Daniel Sokol, University of Florida and Martin McElwee, Freshfields Bruckhaus Deringer will be 'in conversation' on this very important and current issue.

In the Chair Professor Alison Jones, King's College London


18.00 8 December 2016


Edmond J Safra Lecture Theatre

King's College London





The lecture will be followed by a drinks reception

CPD accredited by the the Bar Standards Board

Centre of European Law

King’s College London

Strand, London, WC2R 2LS

Tel 020 7848 2387 Email: Web

November 18, 2016 | Permalink | Comments (1)

An Equilibrium Selection Theory of Monopolization

Eckert, Andrew (University of Alberta, Department of Economics); Klumpp, Tilman (University of Alberta, Department of Economics); and Su, Xuejuan (University of Alberta, Department of Economics) offer An Equilibrium Selection Theory of Monopolization.

ABSTRACT: We develop a duopoly model in which firms compete for the market (e.g., investing in process innovation or product development) as well as in the market (e.g., setting quantities or prices). Competition for the market generates multiple equilibria that differ in the firms' investment levels, relative size, and profitability. We show that monopolization that affects competition in the market can act as an equilibrium selection device in competition for the market. In particular, it eliminates equilibria that are undesirable for the monopolizing rm, while not generating new equilibria. This result complicates the task of determining whether a firm's dominance in a given market is the result of fair competition or unlawful monopolization. We discuss a number of implications for antitrust policy and litigation, and illustrate these by means of two well-known antitrust cases.

November 18, 2016 | Permalink | Comments (0)

Thursday, November 17, 2016

Punishing Cartel Behaviour: Means to Encourage Compliance with the Hong Kong Competition Ordinance

Sandra Marco Colino, The Chinese University of Hong Kong (CUHK) examines Punishing Cartel Behaviour: Means to Encourage Compliance with the Hong Kong Competition Ordinance.

ABSTRACT: This paper examines the way that cartel behaviour may be sanctioned under the new Hong Kong Competition Ordinance, and assesses whether such punishment is suitable to efficiently deter this kind of anti-competitive activity. The legislation, adopted in 2012, has introduced an array of sanctions which are traditionally used in competition regimes around the world to fight practices considered to be particularly pernicious. When a company is found to have breached the CO, remedies and pecuniary penalties may be imposed on the corporation. In addition, individual sanctions are also contemplated, and directors may be disqualified in certain cases. Interestingly, harsher sanctions may be imposed on individuals who breach the procedural rules, including fines and even imprisonment.

The chapter consists of three main parts. It begins with an analysis of the goals that penalties in competition law ought to pursue by drawing on the traditional justifications of punishment, and focusing expressly on reparation, retribution and deterrence. Subsequently, an overview of the most important forms of punishing cartels is provided, with an assessment of their pros and cons. This is followed by a study of the specific penalties that are imposed in Hong Kong (both in the former sector-specific competition rules and in the new cross-sector CO), and their suitability to achieve the goals described in the first section. Finally, conclusions are drawn.

November 17, 2016 | Permalink | Comments (0)

The Transplantability of the EU's Competition Law Framework into the ASEAN Region

Josef Drexl, Max Planck Institute for Innovation and Competition; Ludwig Maximilian University of Munich discuss The Transplantability of the EU's Competition Law Framework into the ASEAN Region.

ABSTRACT: The European Union is the home of the most experienced supranational competition law system of the world. Hence, other regional integration systems often look at the EU as a role model for designing their regional competition policies. However, this does not necessarily argue in favor of a ‘copy-and-paste’ adoption of the European framework. To learn from the EU implies taking into account both the European experience and the socio-economic and political circumstances of the relevant region for the purpose of designing a tailor-made regional competition policy. Accordingly, European experience demonstrates that certain decisions need to be made, such as on the scope of application of the regional competition law, its relationship with the national competition law systems, its institutional design and its enforcement mechanisms. ASEAN has chosen to implement a regional competition policy framework as part of its project to create an ASEAN single market and an ASEAN Economic Community. However, ASEAN’s approach to competition law is limited to convergence. Its biggest achievement consists in the adoption of competition legislation in the ASEAN countries. This article discusses whether and to what extent ASEAN should now go a step further and ‘transplant’ the EU competition law framework. The answer depends on a number of considerations such as the goals of creating a supranational competition law, the degree and potential of economic integration of the national economies, the level of economic development of these economies, the development of a competition culture in these countries, the comparative advantages of centralised and decentralised enforcement and the willingness of ASEAN countries to surrender sovereignty in the field of competition law.

November 17, 2016 | Permalink | Comments (0)

The Procedural Aspects of the Application of Competition Law, Editor's Preface

Csongor Istvan Nagy, University of Szeged, Faculty of Law; Budapest University of Technology and Economics describes The Procedural Aspects of the Application of Competition Law, Editor's Preface.

ABSTRACT: Although substantive competition law has been largely “Europeanized”, procedural law comes, for the most part, under the autonomy of the Member States and, for a long time, thinking on the procedural aspects of competition law’s application had not been in the focus of the European scholarship. Nonetheless, recently, “procedure” became one of the most topical issues of European competition law and came to the fore of the scholarly discourse. This edited volume addresses the above subject’s pan-European framework and its Central European perspectives with the purpose of channelling the region’s experiences into the European discourse. The book’s first part (Section 1) examines the general issues of the procedural aspects of competition law’s application, while Sections 2 and 3 analyse the administrative competition procedure (and judicial review) and the legal consequences of breaching competition rules in the Czech Republic, Hungary, Poland, Romania and Slovakia.

November 17, 2016 | Permalink | Comments (0)

Cross-Ownership, R&D Spillovers, and Antitrust Policy

Angel Luis Lopez, University of Navarra - School of Economics; IESE Business School and Xavier Vives, University of Navarra - IESE Business School; Universitat Pompeu Fabra (UPF); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research) examine Cross-Ownership, R&D Spillovers, and Antitrust Policy.

ABSTRACT: This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with minority shareholdings. We find that, with high market concentration and sufficiently convex demand, there is no scope for cross-ownership to improve welfare regardless of spillover levels. Otherwise, there is scope for cross-ownership provided that spillovers are sufficiently large. The socially optimal degree of cross-ownership increases with the number of firms, with the elasticity of demand and of the innovation function, and with the extent of spillover effects. In terms of consumer surplus standard, the scope for cross-ownership is greatly reduced even under low market concentration.

November 17, 2016 | Permalink | Comments (0)