Friday, December 30, 2016

US Merger Enforcement in the Information Technology Sector

Jeffrey A. Eisenach, American Enterprise Institute; NERA Economic Consulting examines US Merger Enforcement in the Information Technology Sector.

ABSTRACT: U.S. merger policy seeks to prevent transactions that would result in a substantial lessening of competition in a relevant product market. Competition is harmed when a transaction results in a significant increase in market power, defined as the ability of a firm, or group of firms, to set and maintain prices above (or reduce quality below) the competitive level, thereby harming consumer welfare; or, in an increase in the incentive and ability of a dominant firm to engage in anticompetitive activities, such as raising rivals’ costs. Under prevailing jurisprudence, transactions which significantly increase concentration in a relevant market above certain levels are presumed to increase market power and substantially lessen competition. However, merging parties seeking to win approval of transactions that significantly increase concentration may rebut the presumption of illegality by demonstrating through other evidence that the transaction will not actually harm competition, or that any harms are offset by increases in transaction-specific efficiencies.

The application of these concepts to transactions in information technology (IT) markets is complicated by the fact that such markets have distinct economic characteristics. Specifically, IT markets typically exhibit dynamism, modularity, and demand- and supply-side economies of scale and scope (Eisenach 2012, Eisenach and Gotts 2015a). Each of these characteristics introduces challenges and complexities into the assessment of the competitive effects of mergers.

December 30, 2016 | Permalink | Comments (0)

Thursday, December 29, 2016

Does Competition Policy Affect Acquisition Efficiency? Evidence from the Reform of European Merger Control

Gishan Dissanaike, University of Cambridge - Judge Business School, Wolfgang Drobetz, University of Hamburg, and Paul Peyman Momtaz, University of Hamburg ask Does Competition Policy Affect Acquisition Efficiency? Evidence from the Reform of European Merger Control.

ABSTRACT: We use the reform of the European Commission Merger Regulation as a natural experiment to examine the more general relationship between merger control and the profitability of corporate acquisitions. Our results suggest that acquisition efficiency is significantly lower in controlled deals, although the reform-induced improvement of legal certainty ameliorated this effect. The valuation effect is more pronounced in concentrated industries and in national cultures where firms tend to be more intolerant to uncertainty. These findings are consistent with the hypothesis that uncertainty about merger control decisions impedes M&A activity, which amplifies managerial entrenchment and enables managers to make agency-motivated acquisitions.


December 29, 2016 | Permalink | Comments (0)

Wednesday, December 28, 2016

CBA/ABA Consumer Protection Conference - February 2, 2017

On February 2nd, the Canadian Bar Association will be co-sponsoring a one-day Consumer Protection conference in Atlanta with the American Bar Association.  The conference will be held at the Atlanta Aquarium (with a welcome reception at the World of Coca-Cola on the evening of February 1st) and features discussions on various cutting-edge topics such as:  government enforcement priorities in advertising/marketing and other areas, compliance challenges, best practices when responding to government investigations, regulation and disruptive technologies, claim substantiation in new or evolving industries, privacy/data protection in a digital world, and international trends. 


December 28, 2016 | Permalink | Comments (0)

UK Competition Policy Post-Brexit: In the Public Interest?

Bruce Lyons, University of East Anglia, David Reader, University of East Anglia (UEA) - Centre for Competition Policy, and Andreas Stephan, University of East Anglia (UEA) - Centre for Competition Policy ask UK Competition Policy Post-Brexit: In the Public Interest?

ABSTRACT: This paper provides an analysis of the UK’s future Competition Policy, following its withdrawal from the EU. It is focused on whether the UK should make greater use of public interest tests in merger regulation, implement industrial policies aimed at protecting UK industries, or allow antitrust rules to diverge from those of the EU. We find that some of the new freedoms achieved by Brexit will be damaging to competitive markets. It may be necessary to legislate to limit these effects.


December 28, 2016 | Permalink | Comments (0)

Tuesday, December 27, 2016

Carrier Fisher 1956-2016

The Sokol family is in shock that Carrie Fisher has died. We are with my parents and all three generations of Sokols are distraught as we remember someone whom we never knew personally but meant so much to us through her writing and her iconic performance as Princess Leia of Star Wars.  Just last week we saw a younger version of her through the magic of CGI in Rogue One.


December 27, 2016 | Permalink | Comments (0)

Anticipated vs. Actual Synergy in Merger Partner Selection and Post-Merger Innovation

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 examine 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.

December 27, 2016 | Permalink | Comments (0)

Monday, December 26, 2016

Private Antitrust Enforcement: A New Era for Collective Redress?

Sofia Pais, Catholic University of Portugal (UCP) - Centro de Estudos e Investigação em Direito (CEID) asks Private Antitrust Enforcement: A New Era for Collective Redress?

ABSTRACT: It will be argued in this article that the EU Recommendation on common principles for collective redress might have limited impact on the field of competition law due to: several uncertainties regarding the legal standing in class actions; difficulties in their funding; and the risk of forum shopping with cross-border actions. Nevertheless, Belgium and Great Britain have recently introduced class actions into their national legal systems and addressed some of the difficulties which other Member States were experiencing already. It will also be suggested that the Portuguese model – the ‘Popular Action’ – and recent Portuguese practice may be considered an interesting example to follow in order to overcome some of the identified obstacles to private antitrust enforcement.


December 26, 2016 | Permalink | Comments (0)

Saturday, December 24, 2016

Most downloaded antitrust law tenure track faculty of 2016 (based on December 2015-November 2016 downloads)

Who are people reading downloading in 2016?  Among tenure track antitrust faculty the list is below. To qualify you need to be a tenure track faculty member in law somewhere in the world and have written at least one antitrust work in the last two years.  This means that in some cases there are people who make the list who write primarily in areas outside of antitrust.  Similarly, there are some people who are adjuncts who do not make the list who otherwise would (most notably, adjunct professor David Evans of U. Chicago and UCL, who is the 9th most downloaded law person in all of SSRN's law database).


Name School Overall Rank Antitrust Rank Downloads in 2016
Mark Lemley Stanford 4 1 16,436
Damien Geradin    Tilburg 12 2 9,722
Herb Hovenkamp   Iowa 36 3 6,105
Tim Wu Columbia 43 4 5,836
Josh Wright George Mason 48 5 5,655
Nicolas Petit Liege 72 6 4,921
Michael Carrier Rutgers 86 7 4,519
Daniel Sokol Florida 88 8 4,465
Christopher Yoo Penn            94 9 4,290
Maurice Stucke Tennessee 112 10 3,851
Jorge Contreras     Utah 115 11 3,831
Pablo Ibáñez Colomo LSE 117 12 3,744
Einer Elhauge Harvard     137 13 3,500
Doug Ginsburg George Mason     151 14 3,241
David Hyman Georgetown 209 15 2,634
Bruce Kobayashi George Mason 258     16 2,364
Alison Jones Kings College 297 17 2,177
Ioannis Lianos UCL 317 18 2,050
Anca Chirita Durham 325 19 2,033
Kathryn Spier Harvard 329 20 2,012



December 24, 2016 | Permalink | Comments (0)

The Sokol girls choose the best Chanukkah video of the year - 2016 edition

The Maccabeats - Hasmonean - A Hamilton Hanukkah



December 24, 2016 | Permalink | Comments (0)

Friday, December 23, 2016

Harmonising Private Enforcement of Competition Law in Central and Eastern Europe: The Effectiveness of Legal Transplants Through Consumer Collective Actions

Kati Cseres, University of Amsterdam - Amsterdam Centre for European Law and Governance and Amsterdam Center for Law & Economics is Harmonising Private Enforcement of Competition Law in Central and Eastern Europe: The Effectiveness of Legal Transplants Through Consumer Collective Actions.

ABSTRACT: The aim of this paper is to critically analyze the manner of harmonizing private enforcement in the EU. The paper examines the legal rules and, more importantly, the actual enforcement practice of collective consumer actions in EU Member States situated in Central and Eastern Europe (CEE). Collective actions are the key method of getting compensation for consumers who have suffered harm as a result of an anti-competitive practice. Consumer compensation has always been the core justification for the European Commission’s policy of encouraging private enforcement of competition law. In those cases where collective redress is not available to consumers, or consumers cannot apply existing rules or are unwilling to do so, then both their right to an effective remedy and the public policy goal of private enforcement remain futile. Analyzing collective compensatory actions in CEE countries (CEECs) places the harmonization process in a broader governance framework, created during their EU accession, characterized by top-down law-making and strong EU conditionality. Analyzing collective consumer actions through this ‘Europeanization’ process, and the phenomenon of vertical legal transplants, raises major questions about the effectiveness of legal transplants vis-à-vis homegrown domestic law-making processes. It also poses the question how such legal rules may depend and interact with market, constitutional and institutional reforms.


December 23, 2016 | Permalink | Comments (0)

Patents and Competition Law in India: CCI's Reductionist Approach in Evaluating Competitive Harm

Yogesh Pai, National Law University Delhi, Centre for Innovation, IP and Competition (CIIPC) and Nitesh Daryanani, Centre for Innovation, Intellectual Property and Competition analyze Patents and Competition Law in India: CCI's Reductionist Approach in Evaluating Competitive Harm.

ABSTRACT:  The objective of this paper is to examine the CCI’s reasoning and approach in patent – related cases, in light of (i) the legislative framework governing competition and patent law in India, (ii) the economic theories that govern the intersection between antitrust and patent law, and (iii) the manner in which competition agencies in comparative jurisdictions have dealt with similar agreements and conduct by a patent holder.

Part 1 of this paper deals with an analysis of the distinction between sections 3 and 4 of the Competition Act 2002, in light of the CCI’s tendency to conflate issues pertaining to abuse of dominance and evaluation of anti-competitive agreement involving patents. Part 2 deals with constraints on pricing imposed in several CCI rulings. Part 3 deals with nonprice licensing restrictions as constituting abuse of dominance. Part 4 deals with cases involving a refusal to deal where products are protected by IP rights or proprietary technologies. Part 5 deals with the practice of price discrimination in unified systems markets dominated by intellectual property.

December 23, 2016 | Permalink | Comments (0)

Thursday, December 22, 2016

The Ripple Effects of Online Marketplace Bans

Ariel Ezrachi, University of Oxford - Faculty of Law observes The Ripple Effects of Online Marketplace Bans.

ABSTRACT: The strive for tighter control of distribution, quality and price - has led an increasing number of producers to include restrictions on the use of online marketplaces in their selective distribution agreements. This paper considers the effects of such restrictions and the legal approach they call for. While acknowledging the legitimacy of proportionate restrictions on distribution, the article illustrates how an absolute ban on the use of online marketplaces has a detrimental effect on market transparency, price competition, entry and expansion. The discussion illustrates how the legitimate interests of producers may be protected through less onerous means, without the increase in consumers’ search costs and the dampening of price competition. With that in mind, it is argued that these restrictions should be analysed on a case-by-case basis and should not benefit from the Vertical Block Exemption. Furthermore, the article considers whether absent proportionality and objective justification, the harmful effect of online marketplace bans, justifies their condemnation as anticompetitive by object.

December 22, 2016 | Permalink | Comments (0)

The Costs and Benefits of Antitrust Consents

Joshua D. Wright, George Mason University - Antonin Scalia Law School, Faculty and Douglas H. Ginsburg, U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty discuss The Costs and Benefits of Antitrust Consents.

ABSTRACT: Over the last three decades, the United States Federal Trade Commission and the Antitrust Division of the Department of Justice have undergone a dramatic shift toward greater reliance upon consent decrees rather than litigation to resolve antitrust disputes. As many national competition agencies examine the desirability of adopting a similar approach, we focus upon identifying and analyzing the costs and benefits associated with a marginal shift along the continuum from an enforcement model of agency behavior to a regulatory regime. We rely upon the U.S. experience to substantiate our claim that the costs associated with such a marginal shift toward the regulatory model, including the potential distortion in the development of substantive antitrust doctrine, are often under appreciated and discernable only in the long run. We acknowledge that consent decrees can and should be a part of an antitrust agency’s toolkit for resolving antitrust disputes. We contend merely that a full accounting of the benefits and costs of reliance upon consent decrees is necessary to inform this important strategic decision for competition agencies.


December 22, 2016 | Permalink | Comments (0)



ABSTRACT:  Most-favored-customer (MFC) clauses adopted by online platforms in their relevant contractual relationships guarantee to an online platform that a supplier will treat the platform as favorably as the supplier's most-favored-customer concerning price, availability, and similar terms of a given transaction. These clauses are a fundamental aspect of the business models of some of the world's leading companies such as Apple, Amazon, Expedia, and the like. The competition law implications of these clauses have been one of the key concerns of more than a dozen competition authorities around the world in recent years. The competition authorities involved have adopted different approaches and reached different substantive and procedural outcomes, sometimes in proceedings that concern the application of the same legal rule to the same practice of the same company. This is best demonstrated by the line of investigations against certain online travel agents in Europe. This article posits that such diverging approaches lead to legal and business uncertainty, as well as to procedurally unfair and substantively incorrect assessments. In an effort to rectify this suboptimal situation, this article provides a comprehensive, principled approach for the assessment of platform MFC clauses under competition law—in particular, under EU competition law.

December 22, 2016 | Permalink | Comments (0)

Wednesday, December 21, 2016

Communiqué that has been prepared for the last edition of the Rome Antitrust Forum (organized by Alberto Heimler, Giorgio Monti and Mel Marquis)

Communiqué of 25 November 2016



Summary of the third annual meeting of the Forum on 25 November 2016

The Rome Antitrust Forum is an initiative co-organised by the Scuola Nazionale dell’Amministrazione (Rome) and the Law Department of the European University Institute (Florence). The purpose of the Forum is to bring together distinguished antitrust practitioners (both lawyers and economists), leading figures in antitrust enforcement from abroad and representatives of the Italian Competition Authority to discuss, on a non-attributable basis, the way in which the Italian system of antitrust enforcement operates. The Forum facilitates an exchange of views among participants in order to identify key challenges confronting antitrust enforcement in Italy. The Forum ends with some suggestions and recommendations which could lead to a more effective system of antitrust enforcement in Italy.

This year the Forum considered two issues: the role of priority setting in antitrust enforcement and the challenges associated with the ex post evaluation of antitrust enforcement decisions.

Below we set out some of the major questions that emerged from the discussions among the Forum participants. We conclude with some policy suggestions.

Priority setting: what are the options for the AGCM?  

The Italian Authority does not set explicit priorities. Since the initial implicit priority to promote competition in public utility industries (1990-1997), the AGCM has prioritised rigorous enforcement of antitrust law based on European established practices (1998-2005), an adoption of a consumer oriented enforcement agenda (2005-2011) and a return to addressing more established practices, such as price-fixing cartels (2011 to present). Furthermore, over the years the Authority tried in its annual report to rationalise the enforcement record by identifying a common thread across decided cases, but this has been more an ex post exercise than a guide for action.

Other authorities do it differently. They explicitly identify a set of priorities which are then made public and are meant to solicit complaints and signal likely ex officio cases. A prominent example is set by the UK Competition and Markets Authority (CMA). The CMA formalises its priorities by assessing each possible action in light of four factors: the likely market impact of the action, its costs, the risks that would be incurred, and the strategic significance of the matter at hand. This approach ensures that all likely action is assessed internally using a common metric.[1]  In addition to this prioritisation of specific actions, the CMA also sets out its annual priorities. For example, in 2016 the CMA identified the following as strategic priorities: favouring consumer access to markets and eliminating unjustified barriers to their freedom of choice, and promoting competition in online and digital markets, in regulated and infrastructure markets, in markets for public services and in sectors that are important to economic growth. More specifically, the CMA “seek[s] a balanced portfolio of cases – including large cases that have wider impact, and smaller, more local cases, that send the message that no business is beyond the reach of competition enforcement”.[2]

There are great advantages in making public the priorities that are being set by the Authority. First, the process of identifying priorities and making them public may lead to a debate on the competitive constraints of the Italian economy and on the benefits of antitrust interventions. Furthermore, making priorities public may induce the public to report to the Authority possible violations. At the same time, firms would be discouraged from violating the law in sectors where the Authority’s interventions may be more probable. Finally, setting priorities may make the Authority more accountable as regards both the quality of the priorities it sets and its capacity to sustain them.

The process by which priorities are set is particularly important. Priorities should not simply be declared based on a priori convictions. The Authority should make an effort to consult producers and consumers in critical sectors, together with the relevant regulators, in order to better understand the competition issues involved and in order to intervene in a more focussed manner. Publishing its draft priorities may help the Authority to acquire relevant information from the public and arrive at greater precision and coherence.

Of course, the AGCM has a general obligation to pursue any case brought to its attention. Priority setting should not be an instrument for denying a complainant’s request for a necessary intervention; rather, it should be an instrument for enlarging the information set at the disposal of the AGCM, and for inducing complainants who might not otherwise do so to report their case to the AGCM. Setting priorities thus expands the possibilities of the Authority, it does not reduce them.

Ex post evaluation: case selection and lessons learned

The OECD Competition Committee has produced guidance for ex post evaluation exercises and has conducted two seminars on practical experiences with regard to ex post evaluation. In the course of the drafting process, most OECD Member State delegations showed a great interest in the issue, but then, when the guidance was made public, very few decided to undertake ex post evaluations. Indeed, ex post evaluation of antitrust decisions is strongly advocated by the academic community but it is unfortunately still considered almost irrelevant by most authorities, case handlers and policy makers. At most, the perception seems to be that ex post evaluation mainly has a marketing function: it can show how good and relevant the Authority has been, and it ensures that the Government will support of the institution.

But there are many other benefits associated with ex post evaluation, and these are of a strategic nature.

First of all, ex post evaluation can answer questions that are outside the sphere of control of the judge. In a world of mechanical rules - it is prohibited to drive faster than 50 km per hour - the only role for ex post evaluation of decisions is to promote a change in the rules. But in a world of qualitative prohibitions - it is prohibited to drive dangerously - ex post evaluation can challenge existing preconceptions or hypotheses, which may relate, for example, to dominance and to restrictions of competition. Ex post evaluation can also measure the benefits resulting from enforcement. Such an exercise differs from that undertaken by a judge evaluating the legality of a decision on the basis of rules, facts and precedents.

The main objective of ex post evaluation in antitrust is to improve decision-making: learning from experience, building on techniques that work, and correcting mistakes. Two large series of ex post evaluations by the US Federal Trade Commission (hospital mergers and the petroleum industry) led to policy improvements in both areas. Results from retrospective studies helped the UK CMA to shape institutional details (e.g., merger assessment guidelines). At the level of the EU, the Commission in 2005 generated a valuable ex post study on merger remedies which informed significant revisions of the Commission’s Remedies Notice.[3] More recently, the Commission completed a detailed analysis of all its interventions in the energy market which will probably affect the future approach of the EU in that area.[4] In the telecoms sector, the Netherlands Authority for Consumers and Markets partnered with the Austrian sectoral regulator and with the Commission to study price effects following two mergers, approved in 2006 and 2007, which affected each of the two countries concerned.[5]

Econometric techniques are particularly suitable for comparing situations where antitrust interventions have resulted in a change: a merger has been authorized, a cartel has been prohibited, or an abuse has been stopped.

The choice of the data to be used in the analysis is crucial, as the data heavily influence the exact design of the evaluation framework. Very often, data are available but they may be particularly costly to gather. This is why rigorous quantitative analysis could be complemented by qualitative analysis that could shed some light on the validity of past decisions. Sometimes qualitative analysis can be a substitute for rigorous econometric analysis.

For example, the Competition Authority of New Zealand recently decided to examine whether or not anticipated market developments that were key to a number of its merger decisions materialised as predicted. The purpose was to refine and improve the techniques and types of evidence used in forming those expectations.

The Competition Authority selected all merger decisions in which mergers were cleared primarily because strong expectations were formed around one or more of four clear-cut issues:

  1. barriers to entry in the market were low and entry was likely;
  2. there would have been enough effective competition in the market after the merger;
  3. divestiture would satisfy competition concerns; or
  4. buyers had countervailing power because they could sponsor entry.

The study thus does not seek to determine whether the decisions were appropriate; instead, the aim is to test the validity of the main expectations about the evolution of the market that had led to the merger clearances. The Competition Authority considers this to be easier to achieve in terms of time, data availability and resources, and it expects that the exercise will lead to an evaluation, although incomplete, of the appropriateness of the decision making process.[6]

These qualitative analyses are much less costly and burdensome than rigorous econometric ones. However, if a competition agency should decide to undertake them, especially because of the lack of sufficient resources (both financial and technical), the results achieved should still be made public in appropriate forms and subject to academic and scientific control.


In brief, the recommendations by the Forum on priority setting and ex post evaluation are as follows:

(Priority setting)

  • Undertaking a participatory process of priority setting would help the Italian Authority to identify (what are perceived to be) the most severe restraints of competition in the Italian economy;
  • Market players, academics, governments and EU Commission officials could all be asked to provide input for the process of priority setting, and to comment on initial drafts;
  • Setting strategic priorities could be undertaken for example every seven years when a new Chair is nominated and the Authority’s priorities could be adapted on a yearly basis according to what has been learned from experience;
  • Publishing priorities would signal to the public the importance of complaints and the fact that such complaints will be part of a strategic process undertaken by the Authority;
  • Publishing priorities would make the Authority more aware of the importance of ex officio cases;
  • Publishing priorities would make the Authority more accountable and enhance its ability to deliver value for money;


(Ex post evaluation)

  • Outside the context of cartels, most decisions and most remedies are based on some speculation as to how the market will respond. Therefore, ex post evaluation of antitrust decisions should be undertaken in order to learn from experience and to be better able in the future to anticipate market responses;
  • Ex post evaluation is complementary to judicial review, and it is particularly relevant in understanding the effectiveness of remedies and commitments and in evaluating the effects of an authorised merger;
  • Quantitative ex post evaluation is possible when data are available, both before and after the triggering event (i.e., the antitrust decision), and the use of econometrics techniques can help to draw rigorous conclusions about what happened;
  • While the decision regarding which cases to subject to an ex post evaluation should be made internally, econometric analysis can also be done by external consultants - with the direct involvement of the Authority in all stages of the process;
  • In any case, in order to guarantee its quality, the whole process and results should be subject to the control by the scientific community;
  • Qualitative ex post evaluation is also very important, and it can verify or falsify the hypotheses on which the Authority’s decisions were based: barriers to entry, the extent of the geographic and product markets, countervailing market power, etc.;
  • Qualitative analysis is best done internally. Its results should be made public so as to provide a guide for future decisions and a strategic tool for evolution in antitrust enforcement.


[1] See Prioritisation principles for the CMA, 2014,

[2] See Competition and Markets Authority Annual Plan 2016/17,, paragraph 2.7.

[3] See DG COMP, Merger Remedies Study (public version), 2005,; Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004, [2008] OJ C 267/1.

[4] See Commission, The economic impact of enforcement of competition policies on the functioning of EU energy markets, 2016,

[5] See

[6] See OECD, Reference guide on ex-post evaluation of competition agencies’ enforcement decisions, 2016,

December 21, 2016 | Permalink | Comments (0)

Cartel Dating

H. Peter Boswijk, University of Amsterdam - Amsterdam School of Economics; Tinbergen Institute, Maurice J. G. Bun, University of Amsterdam (UVA) - Department of Quantitative Economics; Tinbergen Institute, and Maarten Pieter Schinkel, University of Amsterdam - Amsterdam Center for Law & Economics (ACLE); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) are Cartel Dating.

ABSTRACT: The begin and end dates of cartels are often ambiguous, despite competition authorities stating them with precision. The legally established infringement period(s), based on documentary evidence, need not coincide with the period(s) of actual cartel effects. In this paper, we show that misdating cartel effects leads to a (weak) overestimation of but-for prices and an underestimation of overcharges. Total overcharges based on comparing but-for prices to actual prices are a (weak) underestimation of the true amount overcharged, irrespective of the type and size of the misdating. The bias in antitrust damage estimation based on predicted cartel prices can have either sign. We extend the before-during-and-after method with an empirical cartel dating procedure that uses multiple structural break tests to determine the actual begin and end date(s) of the effects of collusive agreements. Empirical findings in the European Sodium Chlorate cartel corroborate our theoretical results.



December 21, 2016 | Permalink | Comments (0)

On the Relevance of Market Power

Louis Kaplow has a fascinating article On the Relevance of Market Power. Worth downloading!

ABSTRACT: Market power is the most important determinant of liability in competition law cases throughout the world. Yet fundamental questions on the relevance of market power are underanalyzed, if examined at all: When and why should we inquire into market power? How much should we require? Should market power be viewed as one thing, regardless of the practice under scrutiny and independent of the pertinent anticompetitive and procompetitive explanations for its use? Does each component of market power have the same probative force? Or even influence optimal liability determinations in the same direction? This Article’s ground-up investigation of market power finds that the answers often differ from what is generally believed and sometimes are surprising — notably, higher levels of certain market power measures or particular market power components sometimes disfavor liability. This gulf between conventional wisdom and correct understanding suggests the need to redirect research agendas, agency guidance, and competition law doctrine.

December 21, 2016 | Permalink | Comments (0)

Tuesday, December 20, 2016

On the Use of Price-Cost Tests in Loyalty Discounts and Exclusive Dealing Arrangements: Which Implications from Economic Theory?

Chiara Fumagalli, Bocconi University - Department of Economics; Centre for Economic Policy Research (CEPR) and Massimo Motta, Universitat Pompeu Fabra ask On the Use of Price-Cost Tests in Loyalty Discounts and Exclusive Dealing Arrangements: Which Implications from Economic Theory?

ABSTRACT: Recent cases in the US (Meritor, Eisai) and in the EU (Intel ) have revived the debate on the use of price-cost tests in loyalty discount cases. We draw on existing recent economic theories of exclusion and develop new formal material to argue that economics alone does not justify applying a price-cost test to predation but not to loyalty discounts. Still, the latter contain features (they reference rivals and allow to discriminate across buyers and/or units bought) that have a higher exclusionary potential than the former, and this may well warrant closer scrutiny and more severe treatment from antitrust agencies and courts.



December 20, 2016 | Permalink | Comments (0)

Patent Disclosures and Standard-Setting

Josh Lerner, Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER), Haris Tabakovic, Harvard Business School and Jean Tirole, University of Toulouse 1 - Industrial Economic Institute (IDEI); University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ); Centre for Economic Policy Research (CEPR) examine Patent Disclosures and Standard-Setting.

ABSTRACT: A key role of standard setting organizations (SSOs) is to aggregate information on relevant intellectual property (IP) claims before deciding on a standard. This article explores the firms’ strategies in response to IP disclosure requirements — in particular, the choice between specific and generic disclosures of IP — and the optimal response by SSOs, including the royalty rate setting. We show that firms with a stronger downstream presence are more likely to opt for a generic disclosure, as are those with lower quality patents. We empirically examine patent disclosures made to seven large SSOs, and find results consistent with theoretical predictions.



December 20, 2016 | Permalink | Comments (0)

Monday, December 19, 2016

A neglected theory of harm: joint ventures as facilitators of collusion across markets

Thomas Cheng (HKU) and Kelvin Kwok (HKU) offer A neglected theory of harm: joint ventures as facilitators of collusion across markets.

ABSTRACT:  While there has been extensive discussion in the antitrust literature on the procompetitive and anticompetitive effects of joint ventures, there is a lack of systematic analysis on the potential of a joint venture to have collusive harm beyond its home market. This article aims to fill the gap in the literature by systematically accounting for the possible ways in which a joint venture can facilitate collusion by its members outside of the venture’s home market, namely: (i) as a punitive mechanism for the cartel; (ii) as a provider of an important input; and (iii) as a facilitator of information exchange. In addition to discussing these theories of harm, this article will attempt to offer some ways in which such anticompetitive concerns raised by joint ventures can be alleviated or addressed under US antitrust law, including ex ante behavioural remedies and ex post conduct enforcement. The proposals are intended to preserve the efficiency-enhancing potential of joint ventures by permitting them as long as their collusion facilitating potential can be reasonably contained.

December 19, 2016 | Permalink | Comments (0)