Antitrust & Competition Policy Blog

A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications

Lee, Sang-Ho ; Matsumura, Toshihiro ; Sato, Susumu offer A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications.

ABSTRACT: This study formulates a new model of mixed oligopolies in free entry markets. A state-owned public enterprise is established before the game, private enterprises enter the market, and then the government chooses the degree of privatization of the public enterprise (Entry-then-Privatization Model). We find that under general demand and cost functions, the timing of privatization does not affect consumer surplus or the output of each private firm, while it does affect the equilibrium degree of privatization, number of entering firms, and output of the public firm. The equilibrium degree of privatization is too high (low) for both domestic and world welfare if private firms are domestic (foreign).

Do Merger Efficiencies Always Mitigate Price Increases?

Zhiqi Chen (Department of Economics, Carleton University) and Gang Li (School of Economics, Nanjing University) ask Do Merger Efficiencies Always Mitigate Price Increases?

ABSTRACT: In a Cournot model with differentiated products, we demonstrate that merger efficiencies in the form of lower marginal costs for the merging firms (the insiders) lead to higher post- merger prices under certain conditions. Specifically, when the degree of substitutability is low between the products offered by the two insiders but high between those by an insider and an outsider, increased merger efficiencies may exert upward rather than downward pressure on the prices of the merging firms. Our results suggest that in cases where firms engage in quantity competition, antitrust authorities should not presume that merger efficiencies will necessarily mitigate the anticompetitive effects of the merger. Prices can go up because of large efficiencies.

Antitrust Conversations with Some of the World's Most Distinguished Experts - Dennis Carlton and Guillaume Loriot

Thibault Schrepel, University of Paris-Saclay has posted Antitrust Conversations with Some of the World's Most Distinguished Experts - Dennis Carlton and Guillaume Loriot .

Abstract:

I am pleased to introduce these "Antitrust Conversations" with some of the world's most renowned antitrust law experts (law professors, economists & officials...) in which we discuss in-depth important - and controversial - issues of contemporary antitrust law.

I will update this document on a regular basis so to add the newest conversations. As of May 2017, you will find conversations with Prof. Dennis W. Carlton (Chicago Booth) and Guillaume Loriot (DG Comp).

Strategy Revision Opportunities and Collusion

Matthew Embrey (University of Sussex); Friederike Mengel (University of Essex and Maastricht University); and Ronald Peeters (Maastricht University) offer Strategy Revision Opportunities and Collusion.

ABSTRACT: This paper studies whether and how strategy revision opportunities affect levels of collusion in indefinitely repeated two-player games. Consistent with standard theory, we find that such opportunities do not affect strategy choices, or collusion levels, if the game is of strategic substitutes. In contrast, there is a strong and positive effect for games of strategic complements. Revision opportunities lead to more collusion. We discuss alternative explanations for this result.

Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University, on the Communication from the Commission on Standard Essential Patents for a European Digitalised Economy

Joshua D. Wright George Mason University - Antonin Scalia Law School, Faculty Koren W. Wong-Ervin George Mason University, Scalia Law School - Global Antitrust Institute Douglas H. Ginsburg U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty Bruce H. Kobayashi George Mason University - School of Law Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University, on the Communication from the Commission on Standard Essential Patents for a European Digitalised Economy.

ABSTRACT: This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University in response to the Communication from the Commission on Standard Essential Patents for a European Digitalized Economy. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze antitrust matters involving intellectual property rights and standard-essential patents.

Call for Papers: 1ST JIRICO GLOBAL WRITING WORKSHOP & RESEARCH COLLOQUIUM FOR YOUNG SCHOLARS

 JINDAL GLOBAL LAW SCHOOL, O. P. JINDAL GLOBAL UNIVERSITY, DELHI NCR, INDIA FROM AUGUST 17– 23, 2017

Jindal Initiative for Research on IP & Competition (JIRICO) at O.P. Jindal Global University is pleased to announce "a new writing & research colloquium" for young scholars, Ph.D. students and junior faculty scheduled to take place from August 17 to 23, 2017 in India.

Participants will be selected from a global pool of young scholars. They will discuss their ideas, conduct original research with all other workshop participants, during the course of one week culminating in a thought-provoking working paper which will be presented by them on the last day which is the Research colloquium at New Delhi, INDIA.

Senior faculty and scholars will be invited to help guide the discussions and give comments on each paper during the course of the workshop. The commentators will be subject-area experts not only from Jindal Global Law School (JGLS), but also from our reputed partner universities spread around the world. Applicants are welcome to share names of two people who may be invited for commenting on their paper along with contact/addresses as well. Other than the workshop attendees, the colloquium audience will include invitee commentators and distinguished experts from the industry, academia and government agencies and the faculty members from O.P Jindal Global University.

JIRICO aims to promote research on relevant areas (not limited to India) at the intersection of IP laws, competition/antitrust law, economics, policy and business by assisting young scholars, including doctoral candidates and junior faculty, conduct original and inter-disciplinary research resulting in publishable papers. The participants will be required to contribute their working papers (at least 5000 words) to "JIRICO Discussion Paper Series" that will be uploaded online on the day of the Colloquium, and are given the option of contributing for a subsequent publication in a good quality, peer-reviewed journal of choice. The working papers must be developed and submitted by September 1st, 2017 for such journal publication to materialize, which is why participants are advised to plan their research and writing before the workshop.

The uniqueness of JIRICO writing & discussion workshop is to bring together and support deserving participants and assist them in their research in an incremental fashion. We expect applicants to submit an extended abstract of 750 to 1000 words consisting of (1) a topic, (2) research questions, (3) proposed methodology, (4) nature of research, (5) scope and jurisdiction of research by Saturday, July 15, 2017.

On a blind basis, participants will be selected and intimated by July 22, 2017. Previously published work or works accepted for publication elsewhere will not be considered.

Full and partial scholarships covering economy-class air travel, accommodation for the duration of the workshop, food and limited access to university services (such as library resources, sports facilities and ongoing university events) will be offered on merit basis.

We will allow co-authored works as long as the participating author fulfills the eligibility requirement stated above. In this case, only the participating author will be eligible for scholarship (full or partial).

Submissions are invited on any topic related to the intersection of law, economics, policy and business, including (but are not limited to):

1. IPR and dominance (pricing, cross-licensing, bundling, refusal etc)

2. ICT and digital markets in the new economy (issues related to SEPs and SSO)

3. Issues of extra-territoriality and comity of antitrust/competition agencies

4. New challenges for the sharing economy and e-commerce models

5. Smart cities, smart homes and legal issues

6. Paperless trade, bitcoins, Fin-tech and banking

7. Artificial Intelligence and legal issues

8. Enterprise IoT and Big Data

9. ICT and investment arbitration

10. Remedies in patent licensing disputes

Interested participants should fill and submit this Google form (link here): https://goo.gl/forms/nUPL1gMY1hfEJwp23 by Saturday, July 15, 2017.

For any queries, kindly email us on [email protected].

The proposed plan is as follows:-

 August 17th: Arrival of participants, orientation, distribution of kits and welcome.

 August 18th – August 22nd: Seminars offered by senior faculty and experts followed by focused discussions and dedicated writing sessions (on a daily basis).

 August 23rd : Research Colloquium at New Delhi.

The 5th anniversary years of Brazilian Antitrust Law: quo vadis?

Eduardo Caminati Anders, IBRAC, and Lino Beraldi, Belluzzo e Caminati Advogados and Guilherme Teno Castillho Missali, BRAC, and Lino Beraldi, Belluzzo e Caminati Advogados celebrate the Brazilian 5 year anniversary of the amended competition law.

 

Download 5th anniversay antitrust law - CPI-Article en - Caminati and Missali

Rise of the Machines: Emerging Antitrust Issues Relating to Algorithm Bias and Automation

Sheng Li, NERA Economic Consulting and Claire (Chunying) Xie, NERA Economic Consulting have written on Rise of the Machines: Emerging Antitrust Issues Relating to Algorithm Bias and Automation.

ABSTRACT: Artificial intelligence-driven automation has been hailed as a key driver of the “Fourth Industrial Revolution,” but there have also been warnings that they “have the potential to disrupt the current livelihoods of millions of Americans.” As automation reshapes competitive landscapes across industries, new antitrust issues will undoubtedly arise. This paper focuses on two areas of automation that have begun to draw attention from antitrust regulators: algorithm bias in online services and potential price fixing resulting from automated pricing algorithms.

Retooling the Patent-Antitrust Intersection: Insights from Behavioral Economics

Daryl Lim, John Marshall Law is Retooling the Patent-Antitrust Intersection: Insights from Behavioral Economics.

ABSTRACT: Behavioral economics has been embraced in finance and implemented by the government. In IP law, scholars have argued it can inform non-obviousness analyses, decipher patent damages, and develop a more nuanced narrative for incentivizing innovation. In antitrust law, scholars have argued for a larger role for behavioral economics in antitrust law more generally. Yet to date, there has been no consideration of the role of behavioral economics at the patent-antitrust intersection.

In presenting pioneering work on the issue, this Article explains the role heuristics and biases play at the patent-antitrust intersection, and identifies specific ways that courts can take them into account. If antitrust law based on neoclassical economics were analogized to an app, behavioral economics would be a patch, not an overhaul of the status quo. A court that understands how patentees, licensees, consumers, and enforcers decide can more accurately contextualize and assess competing narratives and articulate more effective remedies. In other words, behavioral economics can help judges better understand how to use the rule of reason to achieve more dynamically efficient outcomes.

Through the lens of patents, Part II traces how the discretion given to courts in applying the rule of reason has empowered them to treat patents first with disdain, and then with veneration under antitrust law. This shift parallels the ascendance of the importance of IP industries to the national economy and the rise of neoclassical economics. It also explains how the quest for dynamic efficiency has resulted in antitrust ennui, before mounting three challenges to the belief that antitrust policy deference toward patent owners promotes innovation. These challenges are that (1) deference underestimates anticompetitive harm and undervalues the value of gains from intervention, (2) courts are inconsistent about their insecurities in regulating innovation through antitrust: they worry about getting it wrong in exclusionary abuses and yet approach vertical restraints and merger analysis with surprising confidence, and (3) patent deference is suspect as a matter of patent policy.

Part III explains how Actavis’s requirement to scrutinize permissible patent conduct through the rule of reason also creates the challenge of developing a coherent and predictable framework of doing so. It argues that Kimble empowers courts to incorporate insights from behavioral economics. In doing so, courts can become more aware of their own cognitive biases and those of the parties appearing before them, giving them a chance to reach more dynamically efficient outcomes.

Part IV addresses the three criticisms against behavioral economics most pertinent to the patent-antitrust intersection: (1) that irrational conduct is irrelevant to antitrust analysis, (2) that behavioral economics fails to provide predictability to antirust analysis, and (3) behavioral economics experiments are anecdotal and fail to provide antitrust with a generalizable organizing principle.

Part IV then identifies four areas where behavioral economics can help courts reach better outcomes: (1) analyzing anticompetitive harm and procompetitive justifications, by contrasting the Court of Appeals for the D.C. Circuit’s approaches in Microsoft and Rambus, as well as the Supreme Court’s approaches in Actavis and Kimble, (2) empowering judges by enlarging the role of intent, with lessons drawn from cases such as Aspen Skiing, McWane, and Intellectual Ventures, (3) determining market power and lock-ins in aftermarkets, with lessons drawn from Kodak and FRAND (fair, reasonable, and nondiscriminatory) litigation, and (4) crafting smarter remedies by looking at the EU’s Microsoft decision. The discussion draws on past, recent, and ongoing cases to illustrate each area. Part V identifies areas for future research and concludes.

Naughty Firms, Noisy Disclosure

Thomas Bourveau, Hong Kong University of Science & Technology (HKUST), Guoman SHE, Hong Kong University of Science & Technology (HKUST) - Department of Accounting, and Alminas Zaldokas, Hong Kong University of Science & Technology (HKUST) - Department of Finance have an interesting paper on Naughty Firms, Noisy Disclosure. Worth reading!

ABSTRACT: We empirically study how collusion in the product markets affects firms’ financial disclosure strategies. By exploiting exogenous variations to the costs of illegal price- fixing, we find that U.S. firms start sharing more detailed information in their financial disclosure about their customers, contracts, and products, potentially benefiting peers and helping to tacitly coordinate actions in product markets. At the same time, the disclosure on firms’ competitive environment, which might benefit antitrust regulators, becomes more murky. Our findings suggest that transparency in financial statements can come at the expense of consumer welfare.

What Has Been Happening to Aggregate Concentration in the U.S. Economy in the 21st Century?

Lawrence J. White, New York University (NYU) - Leonard N. Stern School of Business, Department of Economics and Jasper Yang, New York University (NYU) - Leonard N. Stern School of Business ask What Has Been Happening to Aggregate Concentration in the U.S. Economy in the 21st Century?

ABSTRACT: Fifteen years ago White (2002) provided estimates of aggregate concentration in the U.S. economy – the percentage of aggregate economic activity that could be attributed to the largest “X” companies – that covered primarily the last quarter of the 20th century. Those data sets showed that despite major merger waves during that period, aggregate concentration at the end of the 1990s was lower than it had been in the early 1980s, although there had been some upward movement after the mid 1990s.

Since then (to our knowledge) there have been no studies that have updated/extended those data. Major mergers are again prominent during the period since the millennium, which has also been marked by historic business cycles as well as by frequent mentions of phrases such as “Big Oil”, “Big Pharma”, “Big Food”, “Big Tech”, etc., in popular descriptions of the U.S. economy.

This paper extends the earlier data series into the first two decades of the 21st century. We find that there has indeed been a moderate but continued increase in aggregate concentration since the mid 1990s. This increase appears in data on employment and payroll that have been compiled by the U.S. Bureau of the Census, as well as employment and profits data that are drawn from the annual “Fortune 500” lists. This increase does not, however, appear to have raised aggregate concentration above the levels of the early 1980s.

This paper also computes annual Gini coefficients for 1988-2014 for employment by firm size and payroll by firm size. We find gradual annual increases in both sets of Gini coefficients for this time period. These increases appear to be due to increases in the sizes of larger firms generally and not just increases by the largest firms. 

Treatment of Buyer Power in Competition Law: Case of Supermarket Retail Sector in Kenya

Victor B. Nzomo, University of Cape Town (UCT), Faculty of Law; Strathmore University Law School offers a Treatment of Buyer Power in Competition Law: Case of Supermarket Retail Sector in Kenya.

ABSTRACT: This paper begins by examining the various approaches to defining buyer power in competition law literature, followed by an overview of Kenya's attempts to control buyer power through merger control and restrictive trade practices in the supermarket retail sector. Thereafter this paper focuses on the new provisions on buyer power introduced in the Competition (Amendment) Act, 2016 which came into effect on 13 January 2017. This paper argues that the proper enforcement of this new law may address some of the anti-competitive effects arising from the exploitative exercise of buyer power. 

Comparing the Competition Law Regimes of the United States and India

Richard J. Pierce Jr., George Washington University Law School is Comparing the Competition Law Regimes of the United States and India.

ABSTRACT: In this article, Professor Pierce compares the oldest system of competition law — the U.S. system — with one of the youngest systems of competition law — the Indian system. He identifies several strengths and weaknesses of the U.S. system. He then gives the Indian Parliament high marks for creating an institutional environment that has the potential to produce an excellent body of law.

Why the New Merger Control Thresholds in Germany?

Juliane Scholl asks Why the New Merger Control Thresholds in Germany?

ABSTRACT: The Ninth Amendment to the German Act against Restraints of Competition is about to enter into force. Adapting the German competition law to the developments of the digital economy figures among the key issues of the amendment. Besides, the amendment will also transpose the EU directive on cartel damage claims 2014/104/EU, and align the German competition penalty system to the EU rules.

Tax Concessions for Multinationals: In or Out of the Reach of State Aid Law?

Thomas Jaeger asks Tax Concessions for Multinationals: In or Out of the Reach of State Aid Law?

ABSTRACT: The Fiat1 and Apple2 Decisions are part of a number of state aid procedures opened by the Commission in the wake of the so-called LuxLeaks affair. LuxLeaks is the popular name for a widespread scheme of advance tax ruling arrangements uncovered by journalists in late 2014. The scheme uncovered concerned over three hundred large multinational corporations – among them Fiat – and had been applied from 2002 onward. Large multinationals were allegedly offered very favorable tax treatment by national tax authorities on a case-by-case basis: Authorities issued binding written advance interpretations of the law in relation to the undertaking concerned (so-called advance tax rulings).

DEI v Commission: Application of Article 106 TFEU to Preferential Rights for Electricity Incumbent Post-market Liberalisation

Kyriakos Fountoukakos, Herbert Smith describes DEI v Commission: Application of Article 106 TFEU to Preferential Rights for Electricity Incumbent Post-market Liberalisation.

ABSTRACT: Judgments of the General Court of 15 December 2016 in cases T-169/08 RENV and T-421/09 RENV – DEI v Commission In a referral back by the Court of Justice of the European Union (the ‘CJEU’) on the remaining pleas in the Greek lignite appeals, the General Court of the European Union (the ‘General Court’) held that the EU Commission had not erred in its assessment of the relevant market and of the inequality of opportunity in favour of state-owned electricity incumbent Dimosia Epicheirisi Ilektrismou AE (‘DEI’) which was distortive of competition, had respected the fundamental EU principles of legal certainty, legitimate expectations and proportionality and had complied with its duty to state reasons.

It's a Conspiracy! Or Is It? The Difficulty With the Economic Torts as ‘Alternative’ Causes of Action for Competition Law Damages Actions in UK Courts

Grant Stirling discusses It's a Conspiracy! Or Is It? The Difficulty With the Economic Torts as ‘Alternative’ Causes of Action for Competition Law Damages Actions in UK Courts.

ABSTRACT: The cause of action upon which damages actions brought in the UK courts under either EU or UK competition law are generally founded is breach of statutory duty. In two cases from recent years, however—both follow-on actions brought against parties held under regulatory decisions to have partaken in illegal cartels—an attempt has been made to invoke the torts of conspiracy by unlawful means and/or unlawful interference, as causes of action. This article asks why a claimant might attempt to found an action in unlawful means conspiracy or unlawful interference, in addition to, or as an alternative to, an action for breach of statutory duty, when bringing a damages action against a cartelist.

Toshiba v Commission: Court of Justice Eases Burden on Commission to Fine Parent Companies for Competition Law Infringements by Joint Ventures

Jacquelyn MacLennan and Aqeel Kadri examine Toshiba v Commission: Court of Justice Eases Burden on Commission to Fine Parent Companies for Competition Law Infringements by Joint Ventures.

ABSTRACT: Case C-623/15 P Toshiba v Commission EU:C:2017:21 The Court of Justice confirms that companies with minority stakes in joint ventures are at risk of liability even where they play a minor role in the management of the joint venture.

Collusion in Public Contracts Procurement: Suppliers of School Cleaning Services Fined for Bid Rigging (Italy)

Michele Giannino describes Collusion in Public Contracts Procurement: Suppliers of School Cleaning Services Fined for Bid Rigging (Italy).

ABSTRACT: Over the past years the Italian Competition Authority (ICA) has taken an aggressive enforcement stance against bid rigging arrangements. To establish a bid rigging, the ICA is subject to the same evidentiary onus as the European Commission, having to prove anomaly bidding patterns, the lack of alternative plausible explanation for such conducts as wells as contacts and exchange of sensitive information between the colluders. In School Cleaning Services, the ICA found that a consortium of operators and three other firms breached Article 101 TFEU for collusive tendering and imposed fines amounting to the impressive sum of 113 million.

Confidentiality of Leniency Material vis-à-vis Criminal Prosecution (Chile)

Jaime Barahona has written on Confidentiality of Leniency Material vis-à-vis Criminal Prosecution (Chile).

ABSTRACT: This article describes the institutional setting and the legal arguments that were confronted by the interested parties before the Constitutional Tribunal of Chile (‘Constitutional Tribunal’ or ‘the tribunal’) in the 2016 decision that rejected a request for criminal prosecutors to have full access to leniency material and confidential information.