Antitrust & Competition Policy Blog

Antitrust in a Time of Populism

Carl Shapiro has weighed in on Antitrust in a Time of Populism.

ABSTRACT: This article discusses how to move antitrust enforcement forward in a constructive manner during a time of widespread and growing concern over the political and economic power of large corporations in the United States. Three themes are emphasized. First, a body of economic evidence supports more vigorous merger enforcement in the United States. This can and should be done in a manner consistent with sound economic principles. Tighter merger control can be achieved by utilizing the existing legal presumption against highly concentrating mergers and by reinvigorating the potential competition doctrine to block mergers between firms that may well become important direct rivals in the foreseeable future. Second, close antitrust scrutiny is appropriate for today’s largest and most powerful firms, including those in the tech sector. However, the coherence and integrity of antitrust require that successful firms not be attacked simply because they obtain dominant positions. Proper antitrust enforcement regarding unilateral conduct by dominant firms should continue to focus on identifying specific conduct that harms customers or disrupts the competitive process, especially conduct that excludes pesky, disruptive rivals. Third, while antitrust enforcement has a vital role to play in keeping markets competitive, antitrust law and antitrust institutions are ill suited to directly address concerns associated with the political power of large corporations or other public policy goals such as income inequality or job creation. Campaign finance reform, tax policy, labor, education, and other policies are far better suited to address those critical public policy goals.

Collusion with Public and Private Ownership and Innovation

Arnoud W. A. Boot, University of Amsterdam - Amsterdam Business School; Centre for Economic Policy Research (CEPR); Tinbergen Institute and Vladimir N. Vladimirov, University of Amsterdam Business School identify Collusion with Public and Private Ownership and Innovation.

ABSTRACT: We argue that public ownership gives firms the option to collude and engage in rent seeking on existing technologies. This option can enhance firm value. However, it also reduces the commitment to developing new technologies. We show that the option to collude is valuable when the expected profitability of innovation is either very low or very high. For intermediate values, private ownership dominates. By comparing antitrust lawsuits against firms that go public to firms that withdraw their IPO filings for arguably exogenous reasons, we offer evidence for our result that public firms are more likely to engage in collusion.

Recent Developments in Korean Antirust Cases Concerning FRAND-Encumbered Standard-Essential Patents

Jinyul Ju, Pusan National University summarizes Recent Developments in Korean Antirust Cases Concerning FRAND-Encumbered Standard-Essential Patents.

ABSTRACT: n Korea, there have been four antitrust cases concerning the “fair, reasonable, and non-discriminatory” (FRAND) related standard-essential patents (SEPs) in the last six years: 

(1) the Seoul Central District Court’s decision in Samsung v. Apple (August 2012); 

(2) the Korean Fair Trade Commission (KFTC)’s consent decision on Microsoft’s acquisition of Nokia (August 2015); 

(3) the Seoul High Court’s decision in Qualcomm v. KFTC (August 2012) pending in the Supreme Court; and 

(4) the KFTC’s decision against Qualcomm (January 2017) pending in the Seoul High Court. 

This article provides an analyses of the four cases, and comments on the application of the Korean Monopoly and Fair Trade Act towards FRAND-encumbered SEPs.

Common Ownership Concentration and Corporate Conduct

Martin C. Schmalz, University of Michigan, Stephen M. Ross School of Business addresses Common Ownership Concentration and Corporate Conduct.

ABSTRACT: The question whether and how ownership between strategically interacting firms affects firm behavior has been the subject of theoretical inquiry for decades. Since then, consolidation and increasing concentration in the asset management industry has led to more pronounced ownership links between firms, and recent empirical research has provided evidence for the validity of some of the literature's key predictions. The resulting antitrust concerns have received much attention from policy makers worldwide. However, the implications are more general: common ownership concentration (CoOCo) affects the objective function of the firm, and therefore has implications for all subfields of economics studying corporate behavior -- including corporate governance, strategy, industrial organization, and all of financial economics. This article connects the papers establishing the theoretical foundations, reviews the existing empirical and legal literatures, and discusses challenges and opportunities for future research.

New York state bar association 2017 Annual ANTITRUST Symposium Thursday, December 7, 2017

New York state bar association
2017 Annual ANTITRUST Symposium
Multi-Sided Antitrust Markets: Smoke & Mirrors or Dynamic Competition?
Thursday, December 7, 2017 | 8:30 a.m. – 11:30 a.m.

Harvard Club of New York City,
Cambridge Room
35 West 44th Street, New York, NY 10036

Breakfast: 8:30 a.m. – 9:00 a.m.
Overture & Act I: 9:00 a.m. – 10:00 a.m.
Intermission: 10:00 a.m. – 10:15 a.m.
Act II & Denouement: 10:15 a.m. – 11:30 a.m.
Register for live and webcast attendance at
http://www.nysba.org/store/events/registration.aspx?event=ANTIFA17

For more information, contact Tiffany Bardwell at [email protected]

Moderator
William H. Rooney
Partner, Willkie Farr & Gallagher LLP

“Judge”
David S. Evans
Chairman, Global Economics Group

“DOJ”
Richard Alan Arnold
Shareholder, Kenny Nachwalter P.A.

Alan S. Frankel
President, Coherent Economics LLC

Silicon Standard
Richard Parker
Partner, O’Melveny & Myers LLP

Martha S. Samuelson
CEO and Chairman, Analysis Group

Download 2017 Fall Forum News Article (1)

Download NYSBA Annual Antitrust Symposium Flyer 2017_d18

Competition Law in the Philippines: Economic, Legal and Institutional Context

Mel Marquis, European University Institute - Department of Law (LAW) explores Competition Law in the Philippines: Economic, Legal and Institutional Context.

ABSTRACT: Where democracy is fragile and institutions function poorly, particularly in a developing country, competition law faces tremendous challenges. Getting a new agency started and ensuring the successful launch and implementation of a new competition law framework cannot be taken for granted. Yet the effort and resource commitments must be made. This article introduces the new competition regime in the Philippines. From a general perspective it recalls that while competition law does not by itself guarantee sustainable and inclusive growth and development, it is a desirable part of a broader ensemble of policies that can promote those aims. In more country-specific terms, the new law discussed here—the Competition Act 2015, fully effective since the summer of 2017—can only be properly considered by understanding the Philippines itself. The article therefore surveys the country’s governance and institutions; its economy; and the roles of the rule of law and the courts. The legal and institutional framework specific to competition law and policy is then analysed at length. The substance of the Act, the enforcement and sanctioning powers of the Philippine Competition Commission, and relevant legal procedures are all examined. Now that the legislator has established a promising statutory framework, it is time to focus on the difficult tasks of implementation and deep culture change.

Marketing Agencies and Collusive Bidding in Online Ad Auctions

Francesco Decarolis, Maris Goldmanis, and Antonio Penta explain Marketing Agencies and Collusive Bidding in Online Ad Auctions.

ABSTRACT: The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency.

The Economics of Attention Markets

David Evans, Global Economics Group has a new paper in The Economics of Attention Markets.

ABSTRACT: This paper describes the fundamental economic features of the attention market in which platforms acquire time from consumers and sell access to that time to advertisers who want to deliver messages to those consumers. It introduces an economic framework for analyzing the allocation of time and shows that the attention market is an enormous part of the economy based on the value of time contributed to it. In 2016, based on conservative estimates, American adults spent 437 billion hours, worth at least $7.1 trillion in terms of foregone wages, consuming content on ad-supported media. The paper shows that the exchange of content for time internalizes externalities between consumers and advertisers and that the use of content to harvest attention results in significant economic efficiencies. It then presents a simple model of the attention market, based on platforms competing for scarce attention and selling into a competitive market for advertising, and shows that this model is broadly consistent with key empirical regularities. Lastly, the paper shows that the attention market likely generates considerable consumer surplus from content creation as well as economic efficiency from intensifying competition through the delivery of advertising messages, many of which consumers would have avoided if they could.

Forward Contracts, Market Structure, and the Welfare Effects of Mergers

Nathan H. Miller and Joseph U. Podwol examine Forward Contracts, Market Structure, and the Welfare Effects of Mergers.

ABSTRACT:  We examine how forward contracts affect economic outcomes under generalized market structures. In the model, forward contracts discipline the exercise of market power by making profit less sensitive to changes in output. This impact is greatest in markets with intermediate levels of concentration. Mergers reduce the use of forward contracts in equilibrium and, in markets that are sufficiently concentrated, this ampli-fies the adverse effects on consumer surplus. Additional analyses of merger profitability and collusion are provided. Throughout, we illustrate and extend the theoretical re-sults using Monte Carlo simulations. The results have practical relevance for antitrust enforcement.

European Competition Law: Enforcement or Regulation after Intel?

D. Daniel Sokol, University of Florida  asks European Competition Law: Enforcement or Regulation after Intel?

ABSTRACT: The EUCJ Intel decision is a reminder that European competition law looks different from that of the North American jurisdictions where economic effects drive enforcement policy and a tradition of due process and procedural fairness exists. Intel suggests limits to DG Competition’s enforcement with regard to due process and is a wake up call for DG Competition to reiterate its commitment to procedural fairness.

Although there is some gap as between North American and European views on economic effects in cases, Intel suggests that this gap may be narrowing. Intel provides a road-map for further reworking of European case law towards more of an effects based approach. Perhaps Intel offers European competition law a GTE Sylvania-like moment with regard to an effects based approach to conduct, where cases had hereunto been form based “by object.”

Principles for Regulating Uber and Other Intermediation Platforms in the EU

Damien Geradin, Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws advocates Principles for Regulating Uber and Other Intermediation Platforms in the EU.

ABSTRACT: Since its entry on the European market, Uber has faced significant regulatory challenges, including lawsuits in several Member States. While some have described the opinions adopted by AG Szpunar in the Spanish and French preliminary ruling cases as a further setback for Uber, this paper shows that even if the CJEU was to follow the approach of AG Szpunar whereby Uber’s activities are transport services rather than information society services as argued by the company and by certain intervening parties in the proceedings, its judgments would have little impact on Uber’s activities. In fact, there is a regulatory momentum for Uber and other intermediation platforms as several Member States have adopted reforms aimed to regulate the services provided by these platforms in a way that allows them to operate at scale and contribute to improve urban mobility, while ensuring that these services are provided in a safe and transparent manner. This paper discussed these reforms and whether they meet good principles of regulation.

Common Ownership Concentration and Corporate Conduct

Martin C. Schmalz, University of Michigan, Stephen M. Ross School of Business addresses Common Ownership Concentration and Corporate Conduct.

ABSTRACT: The question whether and how ownership between strategically interacting firms affects firm behavior has been the subject of theoretical inquiry for decades. Since then, consolidation and increasing concentration in the asset management industry has led to more pronounced ownership links between firms, and recent empirical research has provided evidence for the validity of some of the literature's key predictions. The resulting antitrust concerns have received much attention from policy makers worldwide. However, the implications are more general: common ownership concentration (CoOCo) affects the objective function of the firm, and therefore has implications for all subfields of economics studying corporate behavior -- including corporate governance, strategy, industrial organization, and all of financial economics. This article connects the papers establishing the theoretical foundations, reviews the existing empirical and legal literatures, and discusses challenges and opportunities for future research.

Information Technology and Industry Concentration

James E. Bessen, Boston University - School of Law; Research on Innovation has written on Information Technology and Industry Concentration.

ABSTRACT: Industry concentration has been rising in the US since 1980. Why? This paper explores the role of proprietary information technology systems (IT), which could increase industry concentration by raising the productivity of top firms relative to others. Using instrumental variable estimates, this paper finds that industry IT system use is strongly associated with the level and growth of industry concentration. The paper also finds that IT system use is associated with greater plant size, greater labor productivity, and greater operating margins for the top four firms in each industry compared to the rest. Successful IT systems appear to play a major role in the recent increases in industry concentration and in profit margins, moreso than a general decline in competition.

The jurisdictional delimitation in the Chinese Anti-Monopoly Law public enforcement regime: the inevitable overstepping of authority and the implications

Xingyu Yan has a paper on The jurisdictional delimitation in the Chinese Anti-Monopoly Law public enforcement regime: the inevitable overstepping of authority and the implications.

ABSTRACT: Following the adoption of the Anti-Monopoly Law (AML) in 2007, China established a public enforcement regime that has three equal-ranking authorities. The legislative history of the AML suggests that this was a backward-looking compromise reached between the three central administrative agencies (the Ministry of Commerce (MOFCOM), the National Development and Reform Commission (NDRC), and the State Administration for Industry and Commerce (SAIC)), instead of a forward-looking design choice. This article focuses on the jurisdictional delimitation between the NDRC and the SAIC, a delimitation assigning the enforcement responsibilities based on whether an allegedly anticompetitive conduct is price related or not. This article first describes the jurisdictional delimitation as defined in the relevant legal documents. On that basis, it examines the legal and the economic rationales behind this delimitation. Subsequently, this article investigates to what extent this delimitation has been adhered to in practice, and there it identifies three problematic scenarios, which indicate the inevitability of the two agencies overstepping their respective authority in practice. This article finds that this delimitation is likely to induce the following problems: uncertainty on supplementary enforcement and follow-on civil actions, uncontrolled agency discretion, and distortive theories of harm. Therefore, it suggests that this jurisdictional delimitation should be removed.

Invigorating Vertical Merger Enforcement

Steve Salop, Georgetown advocates Invigorating Vertical Merger Enforcement.

ABSTRACT: This short symposium article explains why and how vertical merger enforcement can and should be invigorated. Vertical merger enforcement has been an intended victim of an overdose of Chicago-School economics and laissez-faire ideology. In our modern market system, vigorous vertical merger enforcement is a necessity. Stronger enforcement is particularly important in markets where economies of scale and network effects lead to barriers to entry and durable market power. Even when there are parallel vertical mergers, the result may well be an anticompetitive reciprocal dealing coordinated equilibrium rather than intense competition among efficient integrated firms. Stronger enforcement would involve several steps, including recognition that claims of elimination of double marginalization and single monopoly profits do not deserve to be silver bullets and that structural remedies are preferred over behavioral relief.

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Matthias Hunold, Düsseldorf Institute for Competition Economics (DICE), Kai Hüschelrath, Centre for European Economic Research (ZEW), Ulrich Laitenberger, Telecom ParisTech; Centre for European Economic Research (ZEW); KU Leuven - Department of Managerial Economics, Strategy, and Innovation, and Johannes Muthers, University of Würzburg - Institute of Economics and Social Sciences offer Competition, Collusion and Spatial Sales Patterns - Theory and Evidence.

ABSTRACT: We study competition in markets with significant transport costs and capacity constraints. We compare the cases of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers that are closer to plants of competitors. By means of a rich micro-level data set of the cement industry in Germany, we provide empirical evidence in support of this result. Controlling for other potentially confounding factors, such as the number of production plants and demand, we find that the transport distances between suppliers and customers were on average significantly lower in cartel years than in non-cartel years.

Conditional Pricing Practices – A Short Primer

Patrick DeGraba, Federal Trade Commission - Antitrust I, Patrick Greenlee, U.S. Department of Justice - Antitrust Division, and Daniel P. O'Brien, Bates White Economic Consulting offer Conditional Pricing Practices – A Short Primer.

ABSTRACT: Conditional pricing practices are pricing strategies in which a seller conditions its prices on factors such as volume, the set of products purchased, or the buyer’s share of purchases from the seller. This short primer provides a unifying overview of the economic literature that addresses these practices.

Enter the Dragon: Import Penetration and Innovation

Erik Lie, University of Iowa - Henry B. Tippie College of Business and Keyang Daniel Yang, University of Iowa examine Enter the Dragon: Import Penetration and Innovation.

ABSTRACT: We examine the effect of Chinese import penetration on the innovation activities of US manufacturers. We find that firms boost innovation in response to greater import penetration. The boost in innovation builds on narrow focus and familiar technology and results in greater product differentiation. However, in the years after the import penetration, the firms gradually and significantly reduce innovation. As an ancillary finding, we document that import competition prompts firms to scale back capital expenditures. Combined, our evidence suggests that Chinese import penetration spurs US firms to rapidly, but temporarily, increase innovation to dodge price competition.

Janet D. Steiger Fellowship Project Summer 2018

Consumer Protection Fellowship Project Enters Fourteenth Year

The Janet D. Steiger Fellowship Project provides law students the extraordinary opportunity to work in the consumer protection departments of state and territorial Offices of Attorneys General and other consumer protection agencies throughout the United States. The eight to ten week paid Fellowships were initiated in 2004 by the ABA Section of Antitrust Law, in cooperation with the National Association of Attorneys General, as a consumer protection outreach initiative to introduce law students to the rewards of legal careers in public service.  A total of 325 Steiger Fellowships have been awarded through the summer of 2017.

DOWNLOAD THE APPLICATION

The first and second year law students who have served as Steiger Fellows have characterized their experiences as truly rewarding, often well beyond their expectations. A number of students have said that for the first time they are considering law careers in public service, and several have already entered public service upon graduation.

Each of the highly motivated Steiger Fellows provides tangible, meaningful assistance to states and territories that are in substantial need of additional resources to fulfill their consumer protection mission. Offices that have hosted Steiger Fellows in the past have characterized the Fellows' work as exemplary, and have often described the students as some of the most talented interns the offices have ever attracted.

The Council of the Section approved funding for states to participate in the 2018 Steiger Fellowship Project. Each selected student will receive a $6,000 stipend (subject to certain federal taxes and administered through the offices of the state attorneys general). This Project continues to be a tribute to the memory of the late Janet D. Steiger, one of America's great public servants who, during her remarkable tenure as FTC Chairman, dramatically improved cooperation, communication and coordination between state and federal consumer protection and antitrust enforcement agencies.

The states and territories that will receive Steiger Fellows during the summer of 2018 are:

^Arizona	^%Kansas	*^%New Hampshire	%Tennessee
^%Arkansas	%^Kentucky	%New Jersey	^%Texas
^%Connecticut	%Maryland	%^New York	%*Utah
%Florida	%Massachusetts	^%Ohio	^Vermont
^%Georgia	%Mississippi	^%Oregon	^%Virginia
^%Hawaii	%^Montana	^%Pennsylvania	%Washington
%^Indiana	^%Nebraska	%*South Carolina	^%West Virginia
%^Iowa	^%Nevada	^%South Dakota	%Wisconsin
			%Wyoming

*Note: *Will only accept 2Ls ^8 Week Term of Service   %10 Week Term of Service 

Applications will be reviewed after the deadline date of January 23, 2018.

NEW YORK BAR FOUNDATION 2018 ANTITRUST SECTION LAW STUDENT FELLOWSHIP

THE NEW YORK BAR FOUNDATION

2018 ANTITRUST SECTION
LAW STUDENT FELLOWSHIP

The New York Bar Foundation is pleased to announce the 2018 Antitrust Section Law Student Fellowship, which has been established by the Foundation through gifts from the Antitrust Section of the New York State Bar Association.  The Fellowship will be awarded to up to four current first or second year law students to work on antitrust and related matters in the public sector in the State of New York during the Summer of 2018.

About Antitrust Law

Antitrust laws prohibit business practices that deprive consumers of the benefits of competition, including conduct that may result in higher prices for products or harm consumers by discouraging innovation or depriving them of greater choices.  Antitrust laws can be enforced through criminal or civil investigations and cases.  Federal and state antitrust agencies have authority to enforce antitrust laws in the U.S.  In addition, there are many other countries with antitrust/competition laws.  Antitrust investigations often involve consideration of economic relationships among companies and other participants in an industry and overall market dynamics. 

Fellowship Program Goals

Provide law students an opportunity to experience antitrust and government investigations practice during the summer after their first or second year of law school and to increase the representation of lawyers from a diverse range of backgrounds in the practice of antitrust law in New York.  The ultimate goal of the Fellowship is to forge relationships among antitrust practitioners throughout the State of New York and foster greater diversity in the antitrust bar.  Through the Fellowship, a student will be provided a meaningful and appropriately supervised work experience in the New York Office of New York Attorney General, Antitrust Bureau; the Federal Trade Commission, Northeast Region; or the Department of Justice Antitrust Division, New York Office.

The Fellowship

1. Up to four (4) Fellowships, each currently valued at $6,000, will be awarded to students to spend the summer of 2018 (10 weeks) working on antitrust matters in one of the following agencies: the New York Office of New York Attorney General, Antitrust Bureau; Federal Trade Commission, Northeast Region; or Department of Justice Antitrust Division, New York Office.
   
   Proof of U.S. citizenship may be required for employment with federal law enforcement agencies.
2. The Fellows will be guest members of the NYSBA Antitrust Section for two years starting with the award of the Fellowship.
3. The Fellows will be invited to attend Executive Committee meetings of the NYSBA Antitrust Section during the Summer and Fall of 2018.
4. The Fellows will be announced no later than February 28, 2018.

 

Eligibility

The Fellowship is open to all first-year (1L) and second-year (2L) students (as of the Fall 2017 semester) who are capable of fulfilling the requested work hours and responsibilities and meet the criteria under the heading “Judging” below.

Fellowship Length

The Fellowship will take place during the summer of 2018 for a period of 10 weeks, between June and August 2018; the precise dates will be provided when the fellowship is awarded. The expected work requirement per week generally will be 35 to 40 hours.

Location of Fellowship

The 2018 Fellowship will take place in one of the following agencies: the New York Office of New York Attorney General, Antitrust Bureau; Federal Trade Commission, Northeast Region; or Department of Justice Antitrust Division, New York Office. Fellowship finalists will be interviewed in New York City in early 2018.

Payment of Fellowship

Each Fellow will receive $3,000 at the start of the Fellowship with the remaining $3,000 paid to each Fellow at the end of the Fellowship (no federal or state income taxes will be withheld and a 1099 will be issued to the student by January 31, 2019).

Housing and Other Expenses

Housing, transportation and all other expenses to participate in the Fellowship will be provided by the student. Finalists’ costs of out of town travel to participate in interviews in New York City may be reimbursed.

Fellowship Application Requirements

The applicant must submit the following:

1. A completed application (application form below)
2. Cover letter of interest
3. Unofficial law school transcript (if available)
4. Unofficial undergraduate school transcript
5. Resume
6. Two letters of recommendation
7. One writing sample on any topic related to the law. The writing sample must be at least five pages but shall not exceed 10 typed pages double-spaced.

Deadline  

All hard copy materials must be submitted by mail with a postmark on or before

January 12, 2018.

Judging  

A Fellowship Committee will undertake a careful review of all applications for the Fellowship, and will consider the criteria below in evaluating each candidate. No single criterion or combination of criteria will be dispositive.

1. Work experience.
2. Academic record.
3. Leadership experience.
4. Extracurricular activities and community service.
5. Quality of written expression.
6. Maturity, integrity and professionalism.
7. Content and quality of application materials.
8. Demonstrated interest in antitrust and/or consumer protection.
9. New York permanent residence or demonstrated intent to reside and practice law in New York following graduation from law school.
10. Diverse background (g., Asian/Pacific Islander, Black/African American, Latino/a, LGBT, Native American/Alaska Native, Physically Disabled.)
11. Any other relevant factors.

Submission  

All materials must be submitted by mail with a postmark on or before January 12, 2018.

Mail to:

ANTITRUST FELLOWSHIP

THE NEW YORK BAR FOUNDATION

ONE ELK STREET

ALBANY, NY 12207