Friday, November 24, 2017

Recent Competition Judgments of the Court of Justice by José Luis da Cruz Vilaça, President of Chamber, European Court of Justice

Public Lecture

Centre of European Law

The Dickson Poon School of Law

Recent Competition Judgments of the Court of Justice by José Luis da Cruz Vilaça, President of Chamber, European Court of Justice

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

Thursday 14 December

18.30 -19.30

The Edmond J Safra Lecture Theatre, King's College London

Strand Campus

The lecture will be followed by a drinks reception

To register your place please click here

Enquiries to

November 24, 2017 | Permalink | Comments (0)

Thursday, November 23, 2017

Nominations for the 2018 Antitrust Writing Awards are open

Nominations for the 2018 Antitrust Writing Awards are open.  

The present Call for Nominations concerns 3 types of publications:

  • Best Articles: Articles published or accepted for publication in 2017, in both academic journals and professional magazines.
  • Best Soft Law: Most innovative non-enforcement tools issued by competition agencies in 2017, such as guidelines, market studies, white books, etc.

  • Best Newsletters: Leading antitrust newsletters published by law firms that outstand for coverage, contents, readership or innovation.

To nominate an Article, Soft Law or Newsletter, email a PDF version or a link to the relevant publication(s) to and indicate in the subject line: "Antitrust Writing Awards 2018: Submission."

The Editorial Committee will select 100 Articles, 30 Soft Law and 30 Newsletters.

Deadline for submission is December 1.

Winners will be invited to attend the Gala Dinner on April 10, 2018 in Washington, DC in the presence of the Board and Steering Committee Members. To see the full list of Jury Members, click here.

The Antitrust Writing Awards is a joint initiative between Concurrences Review and the George Washington University Law School. Learn more about the Jury, the Awards categories and Rules on the dedicated website here.

November 23, 2017 | Permalink | Comments (0)

GW Law program - Was It All That Bad? US Federal Antitrust Policy Since 1980 - webcast available

 It is better than today's Macy's Thanksgiving parade or the Westminster dog show.


November 23, 2017 | Permalink | Comments (0)

Rejected! Antitrust Economists As Expert Witnesses in the Post-Daubert World

Nicola Giocoli, University of Pisa - Department of Law offers Rejected! Antitrust Economists As Expert Witnesses in the Post-Daubert World.

ABSTRACT: Economists regularly appear as expert witnesses in antitrust litigations. The paper analyzes how their models and methodologies have performed vis-à-vis the standards of relevance and reliability affirmed by the US Supreme Court in its 1993 Daubert decision. Some tentative explanations for the economists’ troubles when facing a Daubert challenge in antitrust cases are provided.

November 23, 2017 | Permalink | Comments (0)

Aggregated Royalties for Top-Down FRAND Determinations: Revisiting 'Joint Negotiation'

Jorge Contreras, Utah has written on  Aggregated Royalties for Top-Down FRAND Determinations: Revisiting 'Joint Negotiation'.

ABSTRACT: In an environment in which widely-adopted technical standards may each be covered by large numbers of patents, there have been increasing calls for courts to determine “fair, reasonable and non-discriminatory” (FRAND) royalties payable to holders of standards-essential patents (SEPs) using “top-down” methodologies. Top-down royalty approaches begin with the aggregate royalty that should be payable with respect to all SEPs covering a particular standard, and then allocate a portion of the total to individual SEPs. Top-down approaches avoid many drawbacks associated with bottom-up approaches in which royalties for individual SEPs are assessed, often in an inconsistent and piecemeal manner, without regard for the other SEPs that cover the standard. Yet despite the potential benefits of top-down methodologies, one of the most promising means for determining aggregate royalty levels – joint agreement by the members of the relevant standards-development organization (SDO) – has gained little traction. The idea of SDO participants jointly negotiating FRAND royalties attracted the attention of commentators and antitrust agencies about a decade ago, when a handful of SDOs began to explore mandatory ex ante rate disclosure requirements. But few SDOs adopted such policies, and joint negotiations were never incorporated into the mainstream standardization process. One of the principal reason that SDOs have been hesitant to endorse joint royalty negotiations is the perceived risk of antitrust liability arising from concerted action among competitors. But as numerous commentators and antitrust officials have reiterated, this fear is largely misplaced in the context of industry standard-setting. Thus, SDOs should follow the lead of patent pools and begin more actively to determine aggregate patent royalty burdens for standards that they develop. In addition, antitrust and competition authorities should assure the market that collective agreement on aggregate royalty rates alone should not give rise to antitrust liability.

November 23, 2017 | Permalink | Comments (0)

CRA Annual Brussels Conference - Tuesday 12 December 2017


November 23, 2017 | Permalink | Comments (0)

Tech Wars: Return of the Conglomerate - Throwback or Dawn of a New Series for Competition in the Digital Era?

Yong Lim, Seoul National asks Tech Wars: Return of the Conglomerate - Throwback or Dawn of a New Series for Competition in the Digital Era?

ABSTRACT: There was once a time when conglomerates roamed supreme in the realms of the market. These large and colorful beasts were recognized as the dominant species of the corporate form, and were the subject of both praise and fear. Then beginning in the 1980s, their fate suddenly changed for the worse, and under the assault of so-called “bust up takeovers” these creatures receded from the corporate scene. This led commentators to observe by the turn of the century that the once vaunted conglomerate form was under the risk of becoming an “endangered” species. Or so they believed.

The conglomerate model has begun to stage a comeback in a seemingly unlikely place for what many have relegated as an old-fashioned (and even ill-conceived) relic of the past – none other than the high-flying and perennially evolving tech industry. This astonishing return of the conglomerate model has coincided with an intriguing change in the nature of competition for the high-tech industry, particularly where platform businesses that harness network effects are involved. To put it bluntly, competition in the tech industry in the digital era has morphed into a multi-contact war – a war between conglomerate-like businesses, with clashes ensuing on multiple battlefields.

What does this then portend for antitrust law and analysis? Both the change in the competitive nature of the tech industry and the concomitant resurgence of the conglomerate model in today’s digital era have garnered little, if any, substantive attention so far within antitrust circles. This does not mean that the multi-dimensional characteristics of market competition involving the tech industry has been completely overlooked. Much ink has been spilt over the attributes of multi-sided markets, and the network effects that course through platforms straddling such multiple dimensions of the market. Nor is the consideration of multi-contact competition completely novel for antitrust. Antitrust has grappled with aspects of multi-contact competition going back to as far as more than half a century ago, mostly in the context of conglomerate mergers. But, there has not yet been a proper analysis of the recent rise of multi-contact competition waged by conglomerate businesses (either in substance or true form) in today’s tech industry. This essay is a preliminary foray into certain key aspects of multi-contact competition waged by conglomerate businesses in the tech industry, and its implications for antitrust law and analysis. Through the discussion, we will observe how insights from the field of strategic management can prove invaluable for the analysis, and that the careful consideration of the firm’s strategy is a prerequisite to properly analyzing this phenomenon, as it should be for antitrust analysis in general.

November 23, 2017 | Permalink | Comments (0)

Barriers to Fair Competition

Yongwei Chen, Peking University and Yiqun Ye, Peking University - Peking University Law School study Barriers to Fair Competition.

ABSTRACT: This paper analyses three types of barriers that lead to market distortion: market segmentation, industry monopoly and industrial policy. Then we estimate the efficiency and welfare loss caused by these three distortions. The results show that the loss caused by market segmentation and industry monopoly respectively account for 6.42% and 18% of annual GDP. And either market segmentation or industry monopoly has been deeply influenced by industrial policies. We must correct these distortions if we truly want to establish a unified, open market system with orderly competition identified by the third plenary session of the 18th Communist Party Central Committee of CPC. To achieve this goal, we should not only change policies, but also reform institutions.

November 23, 2017 | Permalink | Comments (0)

Wednesday, November 22, 2017

The Rule of Reason

Herb Hovenkamp, Penn has written on The Rule of Reason.

ABSTRACT: Antitrust’s rule of reason was born out of a thirty year (1897-1927) division among Supreme Court Justices about the proper way to assess multi-firm restraints on competition. By the late 1920s the basic contours of the rule for restraints among competitors was roughly established. Antitrust policy toward vertical restraints remained much more unstable, however, largely because their effects were so poorly understood.

This article provides a litigation field guide for antitrust claims under the rule of reason – or more precisely, for situations when application of the rule of reason is likely. At the time pleadings are drafted and even up to the point of summary judgment, the parties are often uncertain whether a court will apply the rule of reason. Because the choice of rule presents a question of law, it is generally established prior to trial. The first section examines pleading and summary judgment rules, including the role of stare decisis, arguing that stare decisis should apply to a mode of analysis rather than to a specific class of restraints. Then it discusses numerous problems surrounding the burden of proof and the quality of evidence needed to shift the burden or get to a jury. I argue that the plaintiff’s burden for a prima facie case should be relatively stringent for the market power requirement, but relatively light for proof of an anticompetitive act.

I also show why a consumer welfare standard for antitrust violations is the only manageable one for evaluating practices under the rule of reason. The alternative, general welfare standard requires that all consumer losses be quantified and compared with producer efficiency gains, as well as likely effects on others. Aside from any substantive reasons for preferring a consumer welfare standard, a general welfare standard is impossible to apply in any but the most obvious cases. The consumer welfare standard queries only whether output will be higher or lower (or prices lower or higher) under the restraint. This query can be difficult enough but is nevertheless much simpler than the proof requirements for a general welfare standard. Finally, this section examines the possibility of truncated, or “quick look,” analysis as an alternative to both the rule of reason and the per se rule, arguing against recognition of any categorical “quick look.” I conclude with a brief discussion of “balancing,” and why the rule of reason’s staged set of queries is designed so that courts can avoid balancing whenever possible.

The next section considers how to identify the types of conduct to which antitrust’s rule of reason should be applied. It also examines the question of appropriate remedies, particularly when the basic features of joint activity are either unchallenged or conceded to be competitive, but a specific provision or practice threatens competition. Then it turns briefly to the special case of antitrust restraints in markets for intellectual property rights. A final section examines the market structure requirements for antitrust rule of reason cases, including vertical agreements as well as agreements that have both horizontal and vertical elements. For rule of reason cases involving collaborative conduct generally, market power requirements should be less than those for single firm conduct. The principal exception is vertical exclusionary agreements (mainly, tying and exclusive dealing), where power requirements should be equivalent to those used in monopolization cases.

November 22, 2017 | Permalink | Comments (0)

Big Data and Personalised Price Discrimination in EU Competition Law

Christopher Townley, King's College London – The Dickson Poon School of Law; A Dickson Poon Transnational Law Institute, Eric Morrison, King's College London, and Karen Yeung, The Dickson Poon School of Law provide a theory on Big Data and Personalised Price Discrimination in EU Competition Law.

ABSTRACT: The networked digital revolution is ushering in a new data-driven age, powered by the engine of Big Data. We generate a massive volume of digital data in our everyday lives via our on-line interactions, which can now be tracked on a continuous and highly granular basis. Being able to track this data has radically disrupted the retail sector through, amongst other things, digital personalisation. However, this is no longer limited to shopping recommendations and advertising delivered to our smartphones, laptops and other mobile devices, but may extend to the prices at which goods and services are offered to customers in on-line environments, making it possible for two individuals to be offered exactly the same product, at precisely the same time, but at different prices, based on an algorithmic assessment of each shopper’s predicted willingness to pay. This is done by mining consumers’ digital footprints, using machine learning algorithms to enable digital retailers to predict the price that individual consumers (‘final end users’) are willing to pay for particular items, and thus offer them different prices. This phenomenon, which we dub ‘algorithmic consumer price discrimination’ (ACPD) forms the focus of this paper. 

The practice of price discrimination, which we define as “… charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ…” is hardly a new phenomenon. Familiar forms include loyalty discounts, volume or multi-buy discounts, and the offering of status based discounts for students, old-age pensioners and the unemployed. However, the technological capacities of Big Data substantially enhance the ability of digital retailers to engage in much more precise, targeted and dynamic forms of price discrimination that were not previously possible. 

There are many areas of law that might mount a response to rising public anxieties associated with these practices. Our paper examines ACPD from the perspective of competition law through which we seek to evaluate ACPD by reference to two contrasting normative values: economic efficiency, on the one hand, and fairness or equity on the other. Competition law provides a unique lens for interrogating the social implications of ACPD due to its distinctive character as a form of ‘economic law’ that is intended to protect and strengthen the process of rivalry in the marketplace. Although ‘traditional’ forms of price discrimination have long been the subject of economic analysis to evaluate whether they are economically efficient, algorithmic price discrimination has hitherto attracted relatively little critical analysis. As we demonstrate in Section 2, the incentives for firms to engage in ACPD often exist. We find that consumers are in the aggregate often better off, economically, when sellers can price discriminate in this way, thereby enhancing consumer surplus. However, this is not always the case. Furthermore, whether EU competition law is solely and exclusively concerned with economic efficiency, or whether it provides scope for non-efficiency based considerations in the application of its provisions, is a matter of debate. Accordingly, in Section 3 we evaluate ACPD by reference to its fairness or justice (which we also call equity) understood in three distinct (and sometimes overlapping) ways: (a) the perceived fairness of pricing practices; (b) unfair dealing between online retailers and consumers (corrective justice); and (c) fairness as a requirement of distributive (or collective) justice. For each of these understandings of fairness, we identify points of convergence and conflict with economic evaluations of the effects of ACPD on aggregate consumer welfare. No Article 102 cases have directly considered the legality of ACPD. Section 4 therefore interrogates existing Article 102 case law to ascertain whether ACPD would likely breach this provision. Because the current legal position is unclear, Section 5 draws together the efficiency and fairness evaluations by considering whether ACPD should be regarded as unlawful under EU competition law. We argue that where ACPD increases both consumer surplus and fairness, it should not breach Article 102. Conversely, where ACPD undermines both consumer welfare and fairness, then such practices should be unlawful under Article 102. However, because economic and fairness evaluations of ACPD may conflict in specific cases, Section 5 also considers whether, in the light of the underlying justifications for EU competition law and the EU’s foundational principles, ACPD should be considered a violation of Article 102 where it undermines justice or equity, even though it may enhance consumer surplus, and vice versa. We deal with the clashes between these goals in two ways: first, we offer a partial reconciliation between these goals, by supplementing conventional economic analysis with insights from behavioural economics, thus enabling some fairness considerations that affect consumer welfare to be taken into account. Secondly, we suggest that fairness should have a secondary role when Article 102 is applied to ACPD, in the form of a ‘defence’ to an allegation of abuse of market power. On our suggested account, ACPD which reduces consumer surplus may nonetheless avoid falling foul of Article 102 if it can be justified on grounds of fairness. Section 6 concludes, suggesting that EU competition law may have a valuable but limited role to play in redressing some of the adverse impacts of ACPD, primarily by focusing on the consumer welfare effects of ACPD, and in which considerations of fairness and justice play a relevant, but nonetheless subsidiary, role. Competition law cannot, and should not, seek to solve all the social problems associated with market behaviour, including data-driven forms of personalised pricing.

November 22, 2017 | Permalink | Comments (0)

Antitrust and the Design of Production

Herb Hovenkamp, Penn contemplates Antitrust and the Design of Production.

ABSTRACT: Both economics and antitrust policy have traditionally distinguished “production” from “distribution.” The former is concerned with how products are designed and built, the latter with how they are placed into the hands of consumers. Nothing in the language of the antitrust laws suggests much concern with production as such. Although courts do not view it that way, even per se unlawful naked price fixing among rivals is a restraint on distribution rather than production. Naked price fixing assumes a product that has already been designed and built, and the important cartel decision is what should be each firm’s output, or the price charged to buyers. At the same time, however, many price agreements among rivals are in fact a part of design or production rather than distribution.

Many of the difficulties that antitrust law has had with vertical restraints arose because antitrust courts mistakenly viewed a practice as part of distribution when it was really part of design or production. Agreements that seem nominally to be about distribution or price are in fact mechanisms by which firms share design and production activities. For example, tying arrangements are not simply ways of pricing finished goods. Rather, as the long history of tying-like practices in patent law illustrates, most tying is the consequence of a design or production choice or else a mechanism for sharing entrepreneurial risk.

Particularly misunderstood are variable proportion, or metering, ties. Ignoring incentive effects, when the seller has a monopoly in the tying product and the tied product is perfectly competitive, such ties may reduce short run consumer welfare from the single monopoly price, at least if they also reduce output of the durable good. However, that result is trivial across the range of litigated variable proportion tying cases. The sellers in these cases are virtually never monopolists or even close. When metering ties are imposed by non-monopolists the welfare effects are unambiguously positive.

An antitrust policy driven by concerns for consumer welfare should favor design and production initiatives but disfavor restraints on pricing. Indeed, it is more important for antitrust policy to get the innovation question right than to be right on price, because innovation has the potential to affect economic development much more dramatically, and in both directions. That is, just as innovation benefits the economy by a greater amount than price competition under constant technology, so too a restraint on innovation can do greater harm.

By focusing so much on price, antitrust policy has often missed the point of some arrangements, particularly those that involve new technologies or innovations in business organization. In the process, it has confused innovation with monopoly. For example, antitrust’s long war with tying arrangements occurred because litigants and courts were obsessed with pricing and either never queried or else did not appreciate how tying relates to innovation and production. By their nature, innovations upset a market’s equilibrium, producing temporarily higher returns. As a result, a common feature of innovation is short-run prices that are above cost and welfare reducing to the myopic eye. These are essential features of innovation-intensive markets, however, and in such cases the social cost of false condemnation is high.

November 22, 2017 | Permalink | Comments (0)

Taming the Shrew: There's No Need for a New Market Power Definition for the Digital Economy

Hedvig Schmidt, University of Southampton - School of Law describes Taming the Shrew: There's No Need for a New Market Power Definition for the Digital Economy.

ABSTRACT: The digital economy is all around us in our every-day lives and we rely on digital products more and more. Approximately 2 billion people are connected to the internet worldwide – a figure that is said to increase to 3 billion in the near future. 

The European Commission recognises that the digital economy ‘… is the single most important driver of innovation, competitiveness and growth, and it holds huge potential for European entrepreneurs and small and medium-sized enterprises (SMEs)’. 

The importance placed on the digital economy has recently been emphasised by the attention granted to the Google Shopping case, in which the European Commission found Google to have abused its dominant position as a search engine by giving an illegal advantage to its own comparison shopping service. In doing so it denied other companies to compete on merits and innovate as well as denying European consumers a genuine choice of services. 

Interestingly, European businesses are lagging behind those from other regions in the world in their exploitation of the digital economy. The European Commission is therefore intent on providing support in various forms to its own companies and improve their competitiveness globally. One of the many ways to encourage growth is by ensuring that there is a strong competition policy in place that can boost competition and innovation. The challenge is whether the competition rules (i.e. Article 101 and 102TFEU and the Merger Regulation) are still fit for purpose when dealing with the digital economy? That is, are we able to continue to make use of the traditional competition law tools with respect to the digital economy? Especially, when the digital economy appears to present new and different market characteristics that test our traditional understanding of competition within a market. The digital economy has been branded as having a ‘competition-to-dominance trait’, meaning that the market characteristics lend themselves to ‘automatically’ creating market power for the company that fulfils certain conditions. Therefore at the heart of this paper is the question, should market power in relation to unilateral conduct be defined differently in the digital economy, under the notion that the digital economy is an untameable shrew within the current competition rules.

November 22, 2017 | Permalink | Comments (0)

Tuesday, November 21, 2017

Minority Share Acquisitions and Collusion: Evidence from the Introduction of National Leniency Programs

Sven Heim, Centre for European Economic Research (ZEW), 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 Yossi Spiegel, Tel Aviv Univesity, Coller School of Management; Centre for Economic Policy Research (CEPR); Centre for European Economic Research (ZEW) research Minority Share Acquisitions and Collusion: Evidence from the Introduction of National Leniency Programs.

ABSTRACT: There is a growing concern that minority shareholding (MS) in rival firms may facilitate collusion. To examine this concern, we exploit the fact that leniency programs (LPs) are generally recognized as a shock that destabilizes collusive agreements and study the effect that the introduction of an LP has on horizontal MS acquisitions. Using data from 63 countries over the period 1990-2013, we find a large increase in horizontal MS acquisitions in the year in which an LP is introduced, especially in large rivals. The effect is present however only in countries with an effective antitrust enforcement and low levels of corruption and only when the acquisitions involve stakes of 10%-20%. These results suggest that MS acquisitions may stabilize collusive agreements that were destabilized by the introduction of the LP.

November 21, 2017 | Permalink | Comments (0)

The Assessment of Challenges to Competition Enforcement in Egypt: The Informal Economy and Governmental Intervention(s)

Mohamed Elfar, Queen Mary - University of London offers The Assessment of Challenges to Competition Enforcement in Egypt: The Informal Economy and Governmental Intervention(s).

ABSTRACT: There are differences between developing and developed countries market structures. This may presuppose differences in enforcement policies and priorities. While giving priority to inter-brand competition, intra-brand competition should not be undermined. The article explores the case of Egypt, as a representative to developing countries, by assessing its enforcement policy of intra-brand competition. The article also recommends a way forward in light of international best practices.

November 21, 2017 | Permalink | Comments (0)

Merger Activity in the Factors of Production Segments of the Food Value Chain: - A Critical Assessment of the Bayer/Monsanto merger

Ioannis Lianos and Dmitry Katalevsky have published a policy paper on Merger Activity in the Factors of Production Segments of the Food Value Chain: - A Critical Assessment of the Bayer/Monsanto merger.

ABSTRACT: The Bayer/Monsanto merger forms part of the recent wave of mega-mergers that has transformed the structure of the factors of production segments of the global food value chain in recent decades. If it is approved, it will lead to the creation of a tight oligopoly of three multinationals that will control almost 2/3 of the global production in seeds and agro-chems, as well as the valuable Big Data and IT platforms that are crucial for “smart farming”. This high level of concentration will undoubtedly lead to price rises for seeds and pesticides, the increase of the technological and economic dependence of farmers on a few global integrated one-stop shop platforms, the reduction of independent centres of innovation activity in the industry and consequently of innovation, due to reduced competition. More importantly, this merger is about control of the global food value chains as well as of the direction of the innovative effort in this industry in the next few decades. Recent technological advances enable us to envision a future away from the agro-chem model of agricultural production, with the adoption of a production model that is respectful of the environment and biodiversity, and also providing smallholders more opportunities to increase their revenue and the independence to invest in innovative ways of farming. By ensuring that the global food value chain remains tightly controlled by three mega-corporations (and their integrated platforms), the recent merger wave in this industry will lead to entrench the market power of the dominant players for the decades to come and to freeze the innovative effort to R&D that is compatible with the business model of the incumbents.

November 21, 2017 | Permalink | Comments (0)

Tariffs, R&D, and Two Merger Policies

ARZANDEH, Mehdi and GUNAY, Hikmet explore Tariffs, R&D, and Two Merger Policies.

ABSTRACT: In an international Cournot oligopoly model, we compare two different merger policies when firms are merging endogenously and engage in research and development (R&D). In the benchmark model, countries set optimal tariff levels but do not have merger policy. If ex-ante identical firms merge internationally, they have an ex-post cost advantage over the outsiders due to tariff savings. This gives the merger an incentive to increase its R&D investment, which increases the cost dispersion further; therefore, the merger paradox, where each firm wants to be an outsider, disappears when R&D is efficient. As a result, we find different equilibrium market structures depending on the efficiency of R&D. In the second part, we compare two different merger policies, one that puts emphasis on welfare (roughly the Canadian merger policy) and another one that puts emphasis on consumer surplus (roughly the European Union’s merger policy). We show that under the “welfare-increasing” merger policy, monopoly is the equilibrium market structure when R&D is very efficient. This explains why a merger, which created a monopoly, was approved in Canada. As R&D becomes less efficient, the equilibrium market structures become less concentrated under the two different merger policies. Each merger policy can be global welfare maximizing depending on the efficiency of R&D; however, the “consumer-surplus-increasing” merger policy is optimal for a wider range of parameters.

November 21, 2017 | Permalink | Comments (0)

Monday, November 20, 2017

Per Unit vs. Ad Valorem Royalty Licensing

Cuihong Fan (Shanghai University of Finance and Economics) ; Byoung Heon Jun (Department of Economics, Korea University, Seoul, Republic of Korea) ; Elmar G. Wolfstetter (Department of Economics, Korea University, Seoul, Republic of Korea) analyze Per Unit vs. Ad Valorem Royalty Licensing.

ABSTRACT: We consider the licensing of a non-drastic innovation by an innovator who interacts with a potential licensee in a downstream Cournot market. We compare two kinds of license contracts: per unit and ad valorem, combined with fixed fees. Assuming that antitrust authorities apply the same principle to review ad valorem royalty license contracts which they apply to per unit royalty license contracts, we show that per unit royalty licensing is more profitable if the licensor is more efficient in using the innovation, whereas ad valorem royalty licensing is more profitable if the licensee is more efficient. This explains why and when these licensing schemes should be observed.

November 20, 2017 | Permalink | Comments (0)

Optimal Licensing of Technology in the Face of (Asymmetric) Competition

Cuihong Fan (Shanghai University of Finance and Economics) ; Byoung Heon Jun (Department of Economics, Korea University, Seoul, Republic of Korea) ; Elmar G. Wolfstetter (Department of Economics, Korea University, Seoul, Republic of Korea) offer Optimal Licensing of Technology in the Face of (Asymmetric) Competition.

ABSTRACT: We reconsider the optimal licensing of technology by an incumbent firm in the presence of multiple potential licensees. In a first step we show that competition among potential licensees has a drastic effect on optimal two-part tariff contracts. We then introduce more general mechanisms and design a dynamic mechanism that extracts the maximum industry profit while reducing the potential licensees' payoff to the minimum level that they can assure themselves. That mechanism can be viewed as a generalized "chutzpah" mechanism, generalized because it employs royalties to maximize the industry profit. It awards licenses to all firms and prescribes maximum permitted royalty rates plus positive fixed fees.

November 20, 2017 | Permalink | Comments (0)

Live streaming today: Was It All That Bad? U.S. Federal Antitrust Policy Since 1980 - today 2-6pm EST

For those of you who cannot make it live to the excellent program at GW Law School, Was It All That Bad? U.S. Federal Antitrust Policy Since 1980, we have the ability to live stream it here.

Was It All That Bad? U.S. Federal Antitrust Policy Since 1980

A substantial body of modern academic and popular commentary argues that US federal antitrust policy since the 1970s failed badly by tolerating significant increases in concentration, including the emergence of dominant firms in many commercial sectors.  This critique calls for a significant redirection of policy to control mergers more severely, to attack improper exclusion by dominant enterprises, and, perhaps, to deconcentrate certain industries. 

This symposium brings together academics and practitioners who have served in leadership positions at the Department of Justice Antitrust Division and the Federal Trade Commission at various times since 1980.  The participants will assess the performance of federal enforcement policy over the past three decades and discuss possible refinements going ahead.


  • Kevin Arquit, Weil
  • William Baer, Arnold Porter Kaye Scholer
  • William Blumenthal, Sidley
  • Debbie Feinstein, Arnold Porter Kaye Scholer (TBC)
  • Andrew Gavil, Howard University
  • Renata Hesse, Sullivan & Cromwell
  • William Kovacic, The George Washington University Law School
  • Jonathan Leibowitz, Davis Polk
  • Aviv Nevo, University of Pennsylvania
  • James Rill, Baker Botts
  • Jeffrey Schmidt, Linklaters
  • Daniel Sokol, University of Florida


1:30 pm to 2 pm: Registration

2 pm: Welcome and Introduction

2:15 to 3:45 pm: Antitrust Goals (and Is Big Bad)?

Moderator - William Kovacic


  • Kevin Arquit
  • Bill Baer
  • Aviv Nevo
  • Jim Rill
  • Jeff Schmidt

3:45 to 4 pm: Coffee Break

4 to 5:30 pm: Do We Need to Change Statutes, Case Law, or Agency Practice for Effective Enforcement in Mergers and Conduct?

Moderator - Daniel Sokol


  • Bill Blumenthal
  • Debbie Feinstein (TBC)
  • Andy Gavil
  • Renata Hesse
  • Jon Leibowitz

5:30 to 6 pm: Closing Remarks and Discussion

  • Daniel Sokol

November 20, 2017 | Permalink | Comments (0)

The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry

Georgios Zervas, Davide Proserpio, and John W. Byers study The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry.

ABSTRACT: Peer-to-peer markets, collectively known as the sharing economy, have emerged as alternative suppliers of goods and services traditionally provided by long-established industries. The authors explore the economic impact of the sharing economy on incumbent firms by studying the case of Airbnb, a prominent platform for short-term accommodations. They analyze Airbnb’s entry into the state of Texas and quantify its impact on the Texas hotel industry over the subsequent decade. In Austin, where Airbnb supply is highest, the causal impact on hotel revenue is in the 8%–10% range; moreover, the impact is nonuniform, with lower-priced hotels and hotels that do not cater to business travelers being the most affected. The impact manifests itself primarily through less aggressive hotel room pricing, benefiting all consumers, not just participants in the sharing economy. The price response is especially pronounced during periods of peak demand, such as during the South by Southwest festival, and is due to a differentiating feature of peer-to-peer platforms—enabling instantaneous supply to scale to meet demand.

November 20, 2017 | Permalink | Comments (0)