Antitrust & Competition Policy Blog

Selective Distribution and Online Marketplace Restrictions Under EU Competition Rules after Coty Prestige

Giuseppe Colangelo, University of Basilicata, Department of Mathematics, Computer Science and Economics; Stanford Law School; LUISS Guido Carli, Department of Business and Management; Bocconi University - Department of Law and Valerio Torti, LUISS University of Rome; European University of Rome analyze Selective Distribution and Online Marketplace Restrictions Under EU Competition Rules after Coty Prestige.

ABSTRACT: Given the impressive growth of Internet shopping, one may wonder how the antitrust rules on selective distribution systems might fit in the context of online sales. Indeed, the online sales phenomenon has attracted significant attention in recent years in several Member States, mainly by the question on the extent to which restrictions limiting the ability of retailers to sell via online marketplaces are compatible with competition rules. No wonder the Coty Prestige judgment is so much-awaited. The ruling is expected to shape the future of EU e-commerce affecting online markets, the luxury industry and Internet platforms.

Anticompetitive Mergers in Labor Markets

Ioana Marinescu, University of Pennsylvania - School of Social Policy & Practice, and Herbert Hovenkamp, University of Pennsylvania Law School; University of Pennsylvania - The Wharton School; University College London have a new paper on Anticompetitive Mergers in Labor Markets.

ABSTRACT: Mergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase. Although that principle is widely recognized, very few litigated cases have applied merger law to buyers. This article concerns an even more rarefied subset, and one that has barely been mentioned. Nevertheless, its implications are staggering. Some mergers may be unlawful because they injure competition in the labor market by enabling the post-merger firm anticompetitively to suppress wages or salaries. To the best of our knowledge no court has ever condemned a merger for this reason.

Credit Cards, Counterfactuals and Antitrust Damages: The UK MasterCard litigations

Cento Veljanovski has written on Credit Cards, Counterfactuals and Antitrust Damages: The UK MasterCard litigations.

ABSTRACT: Arising from the European Commission’s MasterCard decision but not necessarily relying on it in law, there are about 25 separate standalone and group follow-on retailer actions in the English courts seeking damages from MasterCard for excessive interchange fees including a collective action against MasterCard on behalf of all UK consumers. The first of these retailers’ actions was decided in July 2016 when the Competition Appeal Tribunal (CAT) in Sainsbury’s v MasterCard(‘Sainsbury’s’) found that MasterCard had infringed Article 101 (and the equivalent UK Competition Act 1998 s 2) and was ordered to pay Sainsbury’s £68 million plus interest in damages. Six months later the England and Wales High Court in Asda v MasterCard(‘Asda’) found that MasterCard had not infringed Article 101.

 

State Aid and the Energy Sector

Leigh Hancher, Adrien de Hauteclocque, and Francesco Maria Salerno have edited State Aid and the Energy Sector.

BOOK ABSTRACT:  This important new work offers a comprehensive and compelling account of State aid law and policy and its application to the energy sector. Clearly structured and offering meticulous detail and robust analysis, it is required reading for all practitioners in the field. The volume explores general questions from the definition of State aid to its application in Member States by national courts. It also examines questions of procedure, questions of compatibility, and State aid and the EEA. It is an invaluable tool for lawyers, policymakers and tax professionals specialising in State aid law and energy law, written by a team of leading practitioners and academics in the field.

AAI 19th Annual Conference "Antitrust at a Crossroads - Plotting the Course for the Next Decade" Date: June 21, 2018

AAI 19th Annual Conference "Antitrust at a Crossroads - Plotting the Course for the Next Decade"

Register here.

 

Date: June 21, 2018

Location: National Press Club, Washington DC

On Thursday June 21, 2018, the American Antitrust Institute will host its 19th Annual Conference “Antitrust at a Crossroads: Plotting the Policy Course for the Next Decade.” Experts from law, economics, and policy will offer insight via four panels:

• Antitrust and Workers — Agreements, Mergers, and Monopsony
  As American workers struggle to navigate an economy characterized by increasing corporate concentration, experts have begun to focus greater attention on anticompetitive conduct in labor markets. This panel will explore applications of the antitrust laws to prohibit the exercise of buyer power that harms competition and suppresses wages and salaries. Among other things, panelists will discuss landmark civil cases challenging employer no-poaching and no-hiring agreements, the Department of Justice’s movement toward prosecuting naked wage-fixing and no-poaching agreements criminally, and recent scholarship addressing the role of merger enforcement in preserving buy-side competition.
   
• Innovation and Antitrust — Sword or Shield?
  Promoting innovation is widely recognized to be a critical, if not the most important, goal of antitrust law. In practice, however, harm to innovation is just as often used as a defense to antitrust claims, particularly where intellectual property rights are involved. This panel of experts will address several hot topics at the edge of this divide, including: antitrust claims involving product redesign and product hopping, developments in the Noerr-Pennington doctrine and sham litigation, the antitrust treatment of FRAND breaches and SSO rules, and the use of the potential competition doctrine as a means to protect nascent competition and promote innovation.
   
• Vertical Merger Enforcement — Competitive Effects, Remedies, and Guidelines
  Vertical merger proposals in key sectors such as telecommunications, media, agricultural biotechnology, and healthcare continue to pile up. Once a lower-profile area of enforcement, vertical mergers are now a hot topic that have generated debate over competitive effects and past remedies. This panel will take up three important, interrelated topics in vertical merger enforcement. Panelists will first discuss recent developments in framing theories of harm around bargaining leverage and exclusionary effects and anticompetitive coordination. In light of controversy in past vertical merger cases, panelists will then turn to how enforcement should address the question of effectiveness of conduct remedies. Finally, the panel will take up the question of whether more guidance on how the antitrust agencies will evaluate vertical mergers is warranted, through an update and/or formalization of the 1984 vertical merger guidelines.
   
• Oyez! Antitrust and the Supreme Court
  This term at the Supreme Court has been a busy one for antitrust cases and could be quite significant. The leading case, Ohio v. Amex, may have wide ramifications beyond its practical implications for credit-card merchant fees and two-sided markets. Fundamental antitrust issues of market definition and the operation of the rule of reason are at stake. Animal Science v. Hebei raises important questions involving international comity and export cartels.  And Salt River v. Tesla indicates that the Court is poised to resolve a split in the circuits over the state-action doctrine. Our panel of leading Supreme Court advocates will address these cases and other antitrust developments at the Court, including potentially momentous cert petitions.

The conference will include a gala luncheon featuring a keynote address, the 2018 AAI Antitrust Achievement Award, and the Jerry S. Cohen Award for Antitrust Scholarship.  CLE credits will be available.  This program was made possible by support from our 2018 Sponsors.

Registration Fees:
Early Bird (until May 18): $450
Government and Academic Rate: $150

Members of the media are present at most AAI events. Speakers and participants should be aware that the media are on background during AAI events. If a member of the media wishes to quote or cite from the live proceedings of AAI events, they are asked to contact specific sources for permission. 

Competition for Advertisers and for Viewers in Media Markets

Simon P. Anderson, University of Virginia - Department of Economics, Øystein Foros, Norwegian School of Economics (NHH) - Department of Business and Management Science, and Hans Jarle Kind, Norwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute); Norwegian School of Economics (NHH) - Department of Economics study Competition for Advertisers and for Viewers in Media Markets.

ABSTRACT:  Standard models of advertising‐financed media assume consumers patronise a single‐media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi‐home. The principle of incremental pricing implies that multi‐homing consumers are less valuable to platforms. Then entry of new platforms decreases advertisement prices, while a merger increases them, and advertisement‐financed platforms may suffer if a public broadcaster carries advertisements. Platforms may bias content against multi‐homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.

MOBILE PHONE REGULATION: THE EFFECTS OF PROHIBITING HANDSET BUNDLING IN FINLAND

Thomas W Hazlett, Sarah Oh and Brent Skorup  examine MOBILE PHONE REGULATION: THE EFFECTS OF PROHIBITING HANDSET BUNDLING IN FINLAND.

ABSTRACT: Vertical restrictions have theoretically ambiguous efficiency effects. Marketplace evidence is, therefore, required to reveal the presence of anticompetitive foreclosure. The bundling of mobile phones with cellular network service offers one such market test. One EU member, Finland, prohibited tying arrangements for mobile service and mobile handsets in wireless broadband markets, and then cleanly ended this prohibition in April 2006. We compare the growth in Finnish third-generation (3G) uptake against other European markets using quarterly data from first quarter 2006 through fourth quarter 2012. An output effects model adjusting for market-specific factors suggests 3G penetration growth in Finland increased substantially following market reform.

 

Assistant Attorney General Makan Delrahim Delivers Remarks at the Antitrust Division's Second Roundtable on Competition and Deregulation

See here for the speech.

Highlights:

I am happy to report that several initiatives are now underway at the Division: An emphasis on structural relief in remedying anticompetitive mergers as the Supreme Court has emphasized repeatedly; improvements to consent decrees to make them more enforceable and less regulatory; the establishment of the Office of Decree Enforcement; and an initiative to terminate legacy antitrust judgments.

 

Empirical Evidence of Drug Companies Using Citizen Petitions to Hold Off Competition

Robin Feldman, University of California Hastings College of the Law, John Gray, University of California Hastings College of the Law, and Giora Ashkenazi, University of California Hastings College of the Law offer Empirical Evidence of Drug Companies Using Citizen Petitions to Hold Off Competition.

ABSTRACT: The FDA’s citizen petition process was created in the 1970s as part of an effort to fashion more participatory regimes, in which ordinary citizens could access the administrative process. The theoretical underpinnings hypothesize that a participatory structure will prevent regulatory agencies from being captured by the very industries they were intended to police. Anecdotal evidence suggests, however, that the FDA’s citizen petition process may have taken a different turn. This empirical study explores whether pharmaceutical companies are systematically using citizen petitions to try to delay the approval of generic competitors. Delaying generic entry of a drug — even by a few months — can be worth hundreds of millions of dollars of additional revenue, a cost ultimately borne by consumers and government agencies in the form of high drug prices. 

The study provides empirical evidence that the citizen petition process at the FDA has now become a key avenue for strategic behavior by pharmaceutical companies to delay entry of generic competition. It is a far cry from the “participatory citizen” notion that fueled the creation of such avenues at regulatory agencies. The article concludes by examining the nature of the problem and exploring the feasibility of three types of approaches to curb the behavior. These include: 1) a simple prohibition, if one were to conclude that most behavior in the category is likely to be inappropriate; 2) procedural blocks to ensure that the behavior cannot create sub-optimal results; or 3) punitive measures as a deterrent.

Donald Turner, Vertical Restraints, and the Inhospitality Tradition of Antitrust

M. Niefer, Antitrust Div., US Dept. of Justice has written on Donald Turner, Vertical Restraints, and the Inhospitality Tradition of Antitrust.

ABSTRACT: Donald Turner famously said that he approached territorial and customer restraints on distribution “not hospitably, in the tradition of the common law, but inhospitably, in the tradition of antitrust law.” That statement has become emblematic to many commentators of a crude approach to non-price vertical restraints that improperly considered them per se illegal, denying businesses and consumers the benefits of pro-competitive practices. Turner, however, was more hospitable toward such restraints than his remark suggests. In each of the three most important Supreme Court cases that dealt with non-price vertical restraints—White Motor, Schwinn, and Sylvania—Turner argued for rule of reason treatment because he believed the restraints could be pro-competitive. His work as an academic, a policy maker, and an advocate over the course of more than fifteen years helped move the Court and antitrust enforcers toward the rule of reason. His work also illustrates the way in which Turner influenced the evolution of antitrust more generally by infusing it with economics, tempered by an appreciation of the practical difficulties of administering the law. This approach to antitrust led Turner to advocate for the use of presumptions grounded in economics to give structure to the rule of reason, anticipating later commentary on the “limits” of antitrust.

Japanese Approaches to Extraterritoriality in Competition Law

Marek Martyniszyn, Queen's University Belfast offers Japanese Approaches to Extraterritoriality in Competition Law.

ABSTRACT: Extraterritorial application of domestic competition law is an important feature of the current regulatory framework governing anticompetitive conduct. Japan was initially hesitant to apply its Anti-Monopoly Act in such a manner. However, the last two decades show a significant shift in its approach. Japan has gradually embraced extraterritoriality and the Japan Fair Trade Commission has actively enforced competition law in a purely offshore context. This article investigates this evolution as well as the most recent and controversial cases in which Japan applied its laws in a distinctive manner unseen to date.

The Future of Article 102 TFEU after Intel

Pablo Ibáñez Colomo, London School of Economics looks into The Future of Article 102 TFEU after Intel.

ABSTRACT: The Court judgment in Intel clarifies two crucial aspects relating to the interpretation of Article 102 TFEU. As a matter of principle, the provision is only concerned with the exclusion of rivals that are as efficient as the dominant firm. Dominant firms can adduce evidence rebutting the presumption that exclusive dealing and loyalty rebates are capable of having anticompetitive effects. It is possible to infer from the judgment an analytical framework applying to all abusive practices.

Key Developments in State Aid Law in 2017

Falk Schöning, David Dauchez, and Myrto Tagara offer Key Developments in State Aid Law in 2017.

ABSTRACT: The European Commission enforcement policy regarding national tax rulings and restructuring aid measures triggered particular media attention due to the financial magnitude of the measures involved. The Court of Justice has rendered several judgments that contain useful clarifications on the notion of aid (i.e. concept of economic activity, concept of State intervention and State resources, distinction between new and existing aid), selectivity, the notion of service of general economic interest as well as on procedural aspects of State aid investigations. The European Commission nearly finalised its State aid modernisation programme through the implementation of an exemption for ports and airports. As part of Brexit discussions, the implications of Brexit on State aid control have attracted significant debate.

Case T-704/14 – Marine Harvest v Commission: On ‘Gun Jumping’ and Public Bids

Massimiliano Kadar describes Case T-704/14 – Marine Harvest v Commission: On ‘Gun Jumping’ and Public Bids.

ABSTRACT: On 26 October 2017, the General Court issued its judgment in the Marine Harvest v Commission case (EU:T:2017:753, the ‘Judgment’), upholding the European Commission (‘Commission’) decision of 23 July 2014 that imposed on Marine Harvest A.S.A. (‘Marine Harvest’) a fine of EUR 20 million for having implemented its acquisition of Morpol ASA (‘Morpol’) before it was notified and declared compatible with the Internal Market (the ‘Decision’). The Judgment brings additional clarity on several issues related to early implementation of a concentration (also known as ‘gun jumping’),1 particularly in the case where the target of the acquisition is listed on a public stock exchange. In addition, it contains important indications as to the General Court’s thinking on the applicability of general legal principles, such as the ne bis in idem principle, in the field of European Union competition law.

Department of Justice Announces Initiative to Terminate “Legacy” Antitrust Judgments

See here.

ISCI - CRESSE Latin American Summer School on the Economics of Competition Policy 10 – 13 Dec. 2018, Chile

ISCI - CRESSE Latin American Summer School on the Economics of Competition Policy 10 – 13 Dec. 2018, Chile   We are pleased to announce the realization of the ISCI-CRESSE Summer School, a high quality 4 day program on the Economics of Competition Policy. This Summer School will offer you, one-of-a-kind opportunity for intellectual deliberation and debate. Study our globalized course content with faculty from top global universities.   Participants will have the opportunity to engage and contribute to the forefront of the public debate in Competition Law, by interacting with other professionals working in the area in different countries. If you are economists from antitrust agencies, competition tribunals, consultancies and law firms, feel welcome to join this year ISCI-CRESSE Summer School.     School Dates: 10 – 13 Dec. 2018. Venue: Fiscalía Nacional Económica, Santiago de Chile. Registration Fee: €650 by Sept. 30th. 2018/ €750 (late registration). Language of Instruction: English More information: [email protected] or www.isci-cresse.cl   Course Highlights Market Definition and Assessment of Market Power. Abuse of Dominance and Vertical Restraints I: Predation, Margin Squeeze / Refusal to Deal, Tying. Abuse of Dominance and Vertical Restraints II: Exclusive Contracts and Loyalty Rebates. Economics of Merger Assessment.  Economics of Collusion.  Applications of Econometrics in Competition Policy.  Collusion and Mergers In Input Markets.  Collusion in Auctions.  Course Instructors 2018   Leonardo J. Basso Universidad de Chile Complex Engineering Systems Institute, ISCI   Nicolás Figueroa Pontificia Universidad Católica de Chile Complex Engineering Systems Institute, ISCI   Joseph Harrington University of Pennsylvania CRESSE Scientific Committee   Yannis Katsoulacos Athens University of Economics and Business CRESSE Scientific Committee   Juan Pablo Montero Pontificia Universidad Católica de Chile Complex Engineering Systems Institute, ISCI   Thomas Ross University of British Columbia CRESSE Scientific Committee   Frank Verboven  KU Leuven

The Impact of Big Data on Firm Performance: An Empirical Investigation

Patrick Bajari, Victor Chernozhukov, Ali Hortacsu, and Junichi Suzuki have an interesting paper on The Impact of Big Data on Firm Performance: An Empirical Investigation. Worth downloading!

ABSTRACT: In academic and policy circles, there has been considerable interest in the impact of “big data” on firm performance. We examine the question of how the amount of data impacts the accuracy of Machine Learned models of weekly retail product forecasts using a proprietary data set obtained from Amazon. We examine the accuracy of forecasts in two relevant dimensions: the number of products (N), and the number of time periods for which a product is available for sale (T). Theory suggests diminishing returns to larger N and T, with relative forecast errors diminishing at rate 1/√N+1/√T. Empirical results indicate gains in forecast improvement in the T dimension; as more and more data is available for a particular product, demand forecasts for that product improve over time, though with diminishing returns to scale. In contrast, we find an essentially flat N effect across the various lines of merchandise: with a few exceptions, expansion in the number of retail products within a category does not appear associated with increases in forecast performance. We do find that the firm’s overall forecast performance, controlling for N and T effects across product lines, has improved over time, suggesting gradual improvements in forecasting from the introduction of new models and improved technology.

Black Sea Port in Georgia Scrutinised by the Georgian Competition Authority Relying upon EU Case Law as Plans for Expansion Rejected

Nino Kobadze has written on Black Sea Port in Georgia Scrutinised by the Georgian Competition Authority Relying upon EU Case Law as Plans for Expansion Rejected.

ABSTRACT: On 21 April 2017 the Georgian Competition Authority (the Competition Authority) reached a decision relating to abuse of dominance proceedings brought against the port operating company based in the Georgian port of Poti situated on the Black Sea (the Decision). The Competition Authority determined that the decision of the company operating the port of Poti (PPC)1 to introduce fixed integrated tariffs for disembarking, transportation and the storage of goods would constitute a violation of the Georgian Law on Competition.2 The Competition Authority found that PPC holds a monopoly and has profited for a number of years from exclusive rights for certain services in the port. In its Decision the Competition Authority largely relied on the case law of the EU and Member States.

Do Retail Mergers Affect Competition? Evidence from Grocery Retailing

Daniel S. Hosken, Federal Trade Commission, Luke Olson, Federal Trade Commission, and Loren Smith, Federal Trade Commission ask Do Retail Mergers Affect Competition? Evidence from Grocery Retailing.  Worth downloading!

ABSTRACT: This study estimates the price effects of horizontal mergers in the U.S. grocery retailing industry. We examine fourteen regions affected by mergers, including mergers in highly concentrated and relatively unconcentrated markets. We identify price effects by comparing markets affected by mergers to unaffected markets using difference‐in‐difference estimation with three different comparison groups, propensity score weights, and by using the synthetic control method. Our results are robust to the choice of control group and estimation technique. We find that mergers in highly concentrated markets are most frequently associated with price increases, and mergers in less concentrated markets are most often associated with price decreases.

Antitrust Law and Economics Faculty and Practitioners of Romanian Origin?

At the Spring Meeting I got together for dinner with a friend from Toronto, who like me is of Romanian Jewish origin (in my case we are mixed from a number of places in Europe but my mother's mother was supersized in personality even though short in physical stature).  My parents had just visited the tombstone of my great grandmother in Bucharest the week of the Spring Meeting so Romania was on my mind as much as bundled discounts, tacit collusion and vertical merger remedies. 

Rather than use 23andMe or Ancestry.com, I thought to just ask on the blog who within the competition law and economics community also might be of Romanian Jewish ancestry.  Please email me if you are as I am compiling a list.