Tuesday, May 22, 2018
Stefano DellaVigna and Matthew Gentzkow study Uniform Pricing in US Retail Chains.
ABSTRACT: We show that most US food, drugstore, and mass merchandise chains charge nearly-uniform prices across stores, despite wide variation in consumer demographics and the level of competition. Estimating a model of consumer demand reveals substantial within-chain variation in price elasticities and suggests that the average chain sacrifices seven percent of profits relative to a benchmark of flexible prices. In contrast, differences in average prices between chains broadly conform to the predictions of the model. As possible explanations for nearly-uniform pricing, we discuss advertising, tacit collusion, fairness concerns, and managerial fixed costs, and find the most support for the last explanation. We show that the uniform pricing we document significantly increases the prices paid by poorer households relative to the rich, likely dampens the overall response of prices to local economic shocks, and may also shift the incidence of intra-national trade costs.
F. Scott Kieff, George Washington University - Law School; Stanford University - Hoover Institution on War, Revolution and Peace; McKool Smith discusses Private Antitrust at the U.S. International Trade Commission.
ABSTRACT: This paper, drafted as an adjudicator’s opinion in a recent case of nearly first impression, explores an approach to aligning the strengths and opportunities available through the U.S. International Trade Commission (ITC) by considering how more ordinary antitrust issues can be adjudicated through the Section 337 portion of the ITC’s docket. This might be done using existing law. The basic theme is that there are several significant reasons why even a skeptic of the ITC's Anti-dumping, Countervailing Duty, and Safeguards docket (collectively, the "Title VII" docket) – as well as an antitrust skeptic – should be significantly less worried when cases normally expected to be brought in the Title VII portion of the ITC’s docket as petitions are instead brought in the Section 337 portion of the ITC docket as complaints alleging ordinary violations of the antitrust laws. Private antitrust litigation fits well within the ITC’s Section 337 docket for several reasons. It squarely fits with the plain meaning of the ITC’s statute. It also squarely fits the well-established antitrust case law. In addition, it offers some practical benefits. Unlike the relatively easy-to-satisfy legal requirement for assessing injury in the Title VII portion of the docket, a 337 investigation involving established antitrust law would turn on the substantive legal standards within that body of established antitrust law that are seen by a broad consensus to be focused on a middle of the road attempt to represent true public interest in avoiding actual economic harm to a market as a whole. In addition, a 337 investigation, which involves initial inter-partes adversarial litigation before an Administrative Law Judge (ALJ), implicates less reliance on administrative deference than an action in the Title VII portion of the docket, and more reliance than in the Title VII portion of the docket on a detailed factual record involving the full panoply of procedural devices ordinarily available in federal court for truth-testing of evidence including cross examination of testimony, all in a timeframe likely to be significantly shorter (around 18 months) than the many years typically required for antitrust litigation in federal court. Nevertheless, at least one recent high-profile dispute involving steel imported from China shows there is at least one significant barrier that may stand as a practical obstacle to a private litigant bringing an antitrust claim under the Section 337 portion of the ITC’s docket: the doctrine that federal courts developed called “antitrust injury,” During the initial phases of such a case recently brought against Chinese importers of steel by the domestic US steel industry, with support from both companies and unions, the ALJ dismissed the antitrust complaint for lack of antitrust injury in an initial determination that was then reviewed by the Commission. The ITC affirmed. This paper explores some reasons why the antitrust injury doctrine from federal court may not be a good fit for investigations brought under Section 337 at the ITC.
Monday, May 21, 2018
Manuel Hermosilla, Johns Hopkins University - Carey Business School and Yufei Wu, Cornerstone Research have a paper on Market Size and Innovation: The Intermediary Role of Technology Licensing.
ABSTRACT: Previous literature finds that larger downstream markets fuel the innovation of new technologies by incentivizing firms to spend more on R&D. Our evidence shows that larger markets also increase the extent of licensing-based cooperation between upstream innovators and downstream commercializers. This cooperation is valuable because it pools firms' complementary capabilities. Thus, downstream market expansions could positively impact innovative outcomes even holding R&D expenditures constant. Evidence is drawn from the drug candidate licensing market, exploiting the quasi-experimental variation introduced by the enactment of the Medicare Part D program in 2003. A model for the determination of equilibrium commercialization strategies in Markets for Technology rationalizes our finding. In this framework, cooperation gains are proportional to market size but transaction costs are not. Thus, larger downstream markets foster cooperation by reducing the relative importance of the latter. To better match the empirical context, the model extends the canonical "one technology -- one application" framework of related work, to the more general case of "composite technologies," which may have more than one end-user application.
Stephan Breu, Swiss Centre for International Humanitarian Law; Kutafin Moscow State Law University; Universidad Complutense de Madrid (UCM) describes Blockchains and Cybercurrencies Challenging Anti Trust and Competition Law.
ABSTRACT: Blockchain technology has come to most people’s attention through Bitcoin as the leading cryptocurrency today. But the technology can be used for a lot of other applications as a way to store decentralized data and information. Blockchains are filing their records through a continuously growing number of single “blocks” which are linked and secured using cryptography. Typically, such blockchains are managed by a peer-to-peer network using a specified protocol for validating new blocks. By storing data across an international network, this new technology is operating independently of any government or central bank as it is not residing in a specific area of influence of any given regulation or jurisdiction. Also, there is the question as to which court has jurisdiction in context of blockchain disputes based on the international and anonymous structure. These systems also offer a high level of anonymity to their participants. Given these scenarios it has to be considered that blockchains with shared use of distributed ledgers by several competitors might be a considerable risk under antitrust and competition laws. To get full value for future blockchain applications, a deep cooperation and collaboration on a common platform by all participants – that often will also be competitors – will be necessary. Although collaborating to achieve an outcome more efficiently is generally not sanctioned by antitrust laws, there are still potential antitrust concerns to be considered. And finally, due to the automatic and irreversible execution of blockchain transactions, one has also to think about technical precautions for enforcing any possible court decisions. All these challenges for the future will ask for a strong self-regulation of the market participants in the digital marketplace.
Patrick Newman, Florida Southern College explains Revenge: John Sherman, Russell Alger and the Origins of the Sherman Act. Worth reading!
ABSTRACT: This paper argues that Senator John Sherman of Ohio was motivated to introduce an antitrust bill in late 1889 partly as a way of enacting revenge on his political rival, General and former Governor Russell Alger of Michigan, because Sherman believed that Alger personally had cost him the presidential nomination at the 1888 Republican national convention. When discussing his bill on the Senate floor and elsewhere, Sherman repeatedly brought up Alger’s relationship, which in reality was rather tenuous, with the well-known Diamond Match Company. The point of mentioning Alger was to hurt Alger’s future political career and his presidential aspirations in 1892. Sherman was able to pursue his revenge motive by combining it with the broader Republican goals of preserving high tariffs and attacking the trusts. As a result, this paper reinforces previous public choice literature arguing that the 1890 Sherman Act was not passed in the public interest, but instead advanced private interests.
Nick Robinson, Yale Law School; Harvard Law School, Program on the Legal Profession; Center for Policy Research (India) offers The Multiple Justifications of Occupational Licensing.
ABSTRACT: About a quarter of all workers in the United States are now in a job that requires an occupational license. As the prevalence of occupational licensing has grown so have claims that it is overused: increasing consumers’ costs and impairing labor mobility and economic freedom. To address these concerns, many policymakers and academics argue that licensing restrictions should be more closely tailored to the goal of protecting the public from harm and that, to guard against capture, practitioners should not regulate their own licensing. The federal courts, in turn, have drawn on this vision of the proper role of occupational licensing to significantly limit when and how licensing can be used through their interpretation of antitrust law and the first and fourteenth amendments of the Constitution.
This article takes a step back to argue that these critiques of occupational licensing, and the federal jurisprudence based on them, embrace a narrow view of the role of licensing in the economy that is grounded in both an embrace of economic libertarianism and an antagonism towards professional self-regulation. While this view generally recognizes licensing as justified to protect the public from harm in limited situations, it disregards a range of other values that occupational licensing has historically been understood to promote. This article draws on the social science literature to categorize these other justifications as (1) fostering communities of knowledge and competence; (2) developing relationships of trust; and (3) buffering producers from the market.
The article uses specific examples from the judiciary’s occupational licensing jurisprudence to show how acknowledging this broader set of justifications should constrain the courts from imposing a narrow view of licensing’s role in the economy. It ends by suggesting that if the federal government is to shape occupational licensing policy it is Congress and the executive, not the judiciary, which is better placed to take the lead.
Saturday, May 19, 2018
13th ASCOLA Conference
June 21– 23 June 2018
THE EFFECTS OF DIGITIZATION, GLOBALIZATION AND
NATIONALISM ON COMPETITION LAW
+ WORKSHOP on Additional Competition Law Issues
THURSDAY June 21, 2018 [Greenberg Lounge, Vanderbilt Hall, 40 Washington Square South]
1:00-2:00pm Ascola Board Meeting (members of the board only) [Vanderbilt Hall, room 202]
1:30-2:00pm Registration and coffee for Pre-conference attendees (all welcome!!)
2:00-3:00pm Pre-conference: How to Write a High Quality Academic Article?
Moderator: Harry First (NYU)
Panelists: Pinar Akman (University of Leeds); Josef Drexl (Max Planck Institute for Innovation and Competition); Michal Gal, (University of Haifa); Pablo Ibanez-Colomo (London School of Economics); Spencer Weber Waller (Loyola University Chicago)
3:00-3:30pm Registration and Coffee
3:30-5:45pm Welcome by Michal Gal (ASCOLA Chair); Harry First (NYU); and Spencer Weber Waller (Loyola University Chicago)
Keynote: Carl Shapiro (UC Berkeley), "Big Tech Meets Antitrust: What's Next?"
Panel I: Competition Policy in the Age of Protectionism
Panel chair: Eleanor Fox (NYU(
- Spencer Weber Waller (Loyola University Chicago), “Antitrust and democracy: Democracy in antitrust”
- Maciej Bernatt (University of Warsaw), “Anti-institutional populism and antitrust: Setting the scene”
5:45-6:45pm Expert Panel: Merger Analysis: What Is the Right Approach?
Moderator: Scott Hemphill (NYU)
Panelists: Louis Kaplow (Harvard); Daniel Rubinfeld (NYU and UC Berkeley)
7:00-8:00pm Welcome reception [Vanderbilt Hall, room 110]
FRIDAY June 22, 2018 [Greenberg Lounge, Vanderbilt Hall]
9:00-10:30am Panel II: Competition Law in the Digitization Era
Panel chair: Tim Wu (Columbia University)
- Pinar Akman (University of Leeds), “Commercial agency in the digital era: The legal charaterisation of online platforms under competition law”
- Salil Mehra (Temple University), “Antitrust’s counter-revolution: Too soon?”
- John Newman (University of Memphis), “Are digital markets different?”
- Simonetta Vezzoso (University of Trento), “FinTech, TechFin, and Competitive Markets: What Could Possibly Go Wrong?"
10:30-11:30am Coffee break
11:30-1:00pm Panel III: Competition Law in the Digitization Era
Panel chair: Michal Gal (University of Haifa)
- Nicolo Zingales (University of Sussex), “Antitrust intent in an age of algorithmic nudging”
- Jan Blockx (University of Antwerpen), “Policing price bots: Algorithms and collusion”
- Ulrich Schwalbe (University of Hohenheim), “Algorithms, machine learning, and collusion”
- Niccolo Colombo (University of Sussex), “Virtual competition: Human liability vis-à-vis artificial intelligence’s anticompetitive behaviors”
2:15-3:45pm Parallel workshop panel sessions (see separate workshop schedule)
3:45-4:15pm Coffee break and Poster Session I [Golding Lounge, 2nd Floor, Vanderbilt Hall]
4:15-6:00pm Panel IV: Datafication and Competition Law
Panel chair: Daniel Sokol (University of Florida)
- Mariateresa Maggiolino (Bocconi University) and Giuseppe Colangelo (Luiss University), “Data accumulation and the privacy-antitrust interface”
- Wolfgang Kerber (University of Marburg), “Data governance in connected cars, access to in-vehicle data, and competition law”
- Yane Svetiev and Giacomo Tagiuri (Bocconi University), “The opportunities and dislocations of technological change: Competition law as a coping mechanism”
- Scott Hemphill (NYU), “Anticompetitive trademark settlements”
- Claudio Lombardi (KIMEP School of Law), “Digital news for a rave new world: Competition and public interest in the scramble over data”
6:00-6:45pm General Assembly of all ASCOLA Members
Discussion on Code of Conduct led by Ioannis Lianos (University College London)
7:00-9:00pm Dinner [Lipton Hall, 108 West 3rd Street]
Keynote: Greg Ip (Chief Economics Commentator, The Wall Street Journal): “Techopoly: Is Big Tech Too Big?”
Best Junior Paper Award: Presented by Josef Drexl (Max Planck Institute for Innovation and Competition)
SATURDAY June 23, 2018 [Greenberg Lounge, Vanderbilt Hall]
9:00-10:45am Parallel workshop panel sessions (see separate workshop schedule)
10:45-11:15am Coffee break and Poster Session II [Golding Lounge, 2nd Floor, Vanderbilt Hall]
11:15-12:45pm Panel V: Datafication and Competition Law
Panel chair: Harry First (NYU)
- Ramsi Woodcock (Georgia State University), “Price as rationing: The antitrust case against dynamic pricing”
- Margherita Colangelo (University of Roma Tre), “Antitrust Implications of Most Favoured Nation Clauses in online markets”
- Marco Botta and Klaus Wiedemann (Max Plack Institute for Competition and Innovation), “Remedies against exploitative conducts in the data economy”
- Claudia Seitz (University of Basel), “Digitization in the life sciences in the light of competition law”
Michal Gal, Harry First, and Spencer Weber Waller
Parellel Panel Session I (panels 1-6)
Friday, June 22 2:15-3:45pm
Some of the papers will also be presented in Poster Session I
Panel 1: Competition Law and the Digital Environment [Vanderbilt Hall, room 201]
Panel chair: Wolfgang Kerber (Philipps University Marburg)
- Robin Feldman and Nick Thieme (UC Hastings College of Law), “Artificial intelligence, innovation & competition”
- Guilherme Misale (University of São Paulo) and Yan Vieira (School of Economics of Fundação Getulio Vargas), “A sociology of competition assessment of price setting algorithms under the realm of antitrust law: A battle of bots?”
- Maria Ioannidou (Queen Mary University), “Increasing consumers’ trust in digital markets”
- Argyri Panezi (European University Institute), “Digitization rush: Claiming new territories in the digital space: A story on Google, French nationalism, and the new frontiers for competition over digitized resources”
Panel 2: Mergers [Vanderbilt Hall, room 202]
Panel chair: Björn Lundqvist (Stockholm)
- Ioannis Lianos (University College London), ““Food Sovereignty” and global food value chains: A comparative perspective on the competition review of mega-mergers in the agrochem sector”
- Marco Botta (Max Planck Institute for Competition and Innovation) and Federico Ghezzi (Bocconi University), “Protectionism and national champions v. European merger control; the possible spill-over effects of the draft ECN+ Directive”
- Xiaomin Fang (Nanjing University), “The Chinese Antitrust Law under the Influence of Globalization: Global Insight into Merger Control”
- Luis Morais (University of Lisbon) and Lúcio Féteira (European University Institute), “Too Interconnected to Merge? Some reflections on competition law enforcement in the globalized world of digital finance”
Panel 3: Big Data, Data Rights and Competition Law [Vanderbilt Hall, room 208]
Panel chair: Rupprecht Potsdam (Heinrich Heine University)
- Fabiana Di Porto (University of Salento) and Gustavo Ghidi (University of Milan), "Exploitation of big data: From market dominance to societal hegemony. Analysis, and containment"
- Valeria Falce (European University of Rome), “Sui generis right on data and competition law in the data driven economy: Is the abuse of right doctrine a possible alley?”
- Klaudia Majcher (Institute for European Studies), “The concept of coherence theorizing about the intersections between competition and data protection law”
- Juliana Domingues (University of São Paulo), “Big data and the Brazilian antitrust law: Management and Competence”
Panel 4: Platforms [Vanderbilt Hall, room 216]
Panel chair: Thomas Cheng (University of Hong Kong)
- Mark Patterson (Fordham University), “Modularity, interfaces, and competition in technology markets”
- Daniel Mândrescu (Europa Institute Leiden University), “Applying (EU) competition law to online platforms: Reflections on the definition of the relevant market”
- Toshiaki Takigawa (Kansai University), “Super platforms, big data, and the competition law: The Japanese approach in comparison with the US and EU”
- Francesco Ducci (University of Toronto), “Rule of reason in two-sided market”
Panel 5: Digitization [Furman Hall, 245 Sullivan Street, room 118]
Panel chair: David Bosco (Aix en Provence)
- Inge Graef (Tilburg), “How to revitalize exploitative abuse for digital markets: From national to EU approaches?”
- Jörg Hoffmann, Mor Bakhoum, and Francisco Beneke (Max Planck Institute for Competition and Innovation), “Digitization in developing countries: Big data, big impact -competition policy implications of evolving data torrents in developing countries”
- Maria Fernanda Caporale Madi (Erasmus University), “Vertical agreements in the digital market and the challenges to antitrust enforcement”
- Beata Mäihäniemi (University of Helsinki), “‘Lessons from the recent Commission’s decision on Google to favour oneself or not, that is the question’”
Panel 6: Competition Law: General Issues [Furman Hall, 245 Sullivan Street, room 120]
Panel chair: Josef Drexl (Max Planck Institute for Competition and Innovation)
- Francisco Marcos (IE Law School), “Cosmetic antitrust and procrastination in the enforcement of antitrust rules”
- Ittai Paldor (Hebrew University), “Cross ownership by institutional investors – is there really anything to fear? A theory of ‘unilateral coordination’”
- Or Brook (University of Amsterdam), “Priority setting as a double-edged sword: How modernizations strengthen the role of non-competition interests in Article 101 TFEU”
- Catalin Rusu (Radboud University Nijmegen), “The real challenge of boosting the EU competition law enforcement powers of national competition authorities: In need of a reframed formula?”
Parellel Panel Session II (panels 7-12)
Saturday, June 23 9:00-10:45am
Some of the papers will also be presented in Poster Session II
Panel 7: Competition Law and IP [Vanderbilt Hall, room 201]
Panel chair: Axel Walz (Max Planck Institute for Competition and Innovation)
- Laura Zoboli and Maria Lillà Montagnani (Bocconi University), “The European geo-blocking regulation between competition and copyright law: Servant of two masters?”
- Thomas Cheng (University of Hong Kong), “The patent-antitrust interface in developing countries”
- Konstantina Bania (Tilburg Law and Economics Center), “The effects of the digitization of broadcasting on EU competition law: A tale of EU copyright policies”
- Hedvig Schmidt (University of Southampton), “Fantastic Beasts and how to deal with them under the competition rules - Patent Assertion Entities and the interface between competition law and IP rights”
- Sofia Pais (Catholica Porto), “Pay for delay agreements: Squaring the circle”
Panel 8: Nationalism and Competition Law [Vanderbilt Hall, room 202]
Panel chair: Francisco Marcos (IE Law School)
- Barry Rodger (University of Strathclyde), “UK Competition law post-Brexit: Divergence from EU law, re-nationalisation and re-politicisation?”
- Kanoknai Thawonphanit (Kiel University), “Fear of false positive as nationalism in disguise: The major challenge to Thai competition law”
- Jonathan Galloway (University of Newcastle), “Regulatory globalisation in reverse: When international enforcement waves crash against national characteristics”
- Masako Wakui (Osaka City University Graduate School of Law), “Liner Shipping Exemption: Global issue demanding international coordination to counter "national interest" claim”
Panel 9: Competition Law and the Digital Environment II [Vanderbilt Hall, room 208]
Panel chair: Caron Beaton Wells (University of Melbourne)
- Björn Lundqvist (Stockholm University), “Standardization for the digital economy: The Issue of interoperability v. industrial policy”
- Stefan Holzweber (Institut für Unternehmens-und Wirtschaftsrecht), “Changed beyond recognition? Tying and bundling in the digital era”
- Maria Ioannidou (Queen Mary University), “Increasing consumers’ trust in digital markets”
- Juha Vesala (University of Helsinki), “Artificial creativity and antitrust”
- Anca Chirita (University of Dyrham), “Data-Driven mergers under EU competition law”
Panel 10: Recent European Competition Law Developments [Vanderbilt Hall, room 216]
Panel chair: Ioannis Lianos (University College London)
- Pablo Ibanez-Colomo (London School of Economics), “Regulatory capture in the new EU competition law”
- Piotr Semeniuk (University of Warsaw), “Does EU competition law favor particular countries?”
- Victoria Daskalova (University of Twente), “Counterproductive regulation? The EU’s (mis)adventures in regulating unfair trading practices in the food supply chain”
- Peter Whelan (University of Leeds), “Parental liability in EU competition law: An examination of its deterrence-based justification"
- Petra Pipkova (Law Faculty Charles University), “The harm is higher than zero: The “new” presumption that cartels cause harm in the EU”
Panel 11: Globalization of Competition Law [Furman Hall, 245 Sullivan Street, room 118]
Panel chair: Valeria Falce (European University of Rome)
- Galyna Kostiukevych (European University Institute), “Anticompetitive conduct within global value chains and beyond”
- Peter Behrens (University of Hamburg), “Globalization and the protection of competition in the EU: The extraterritorial application of EU competition rules”
- Marek Martyniszn (Queen's University Belfast), “Competitive harm crossing borders: Regulatory gaps and a way forward”
- Magali Eben (University of Leeds), “Priority setting as a double-edged sword: How modernizations strengthen the role of non-competition interests in Article 101 TFEU”
Panel 12: Remedies [Furman Hall, 245 Sullivan Street, room 120]
Panel chair: Fabiana Di Porto (University of Salento)
- Pinelopi Alexia Giosa (University of East Anglia), “Damages claims for bid rigging in europe: A storm in a tea cup?”
- Florian Wagner-von Papp (University College London), “The extraterritorial reach of remedies from a European perspective”
- Antonio Martin-Laborda (Charles III University of Madrid), “Harmonisation and divergence in european tort law: Causation and fault in antitrust damages”
- Urska Petrovcic (European University Institute), “The Unsettled Role of EU competition law in addressing injunctions for standard-essential patents”
- Alexandra Mikroulea (University of Athens), “Non-performing loans, electronic platforms and competition law”
Friday, May 18, 2018
Josh Wright and Doug Ginsburg offer The Economic Analysis of Antitrust Consents.
ABSTRACT: Henry G. Manne, our friend, Mentor, and colleague, was a pioneer in the economic analysis of law. By consistently challenging the notion that existing institutions were well understood, he expanded the domain of economics to new and fertile ground. In that spirit, our goal in this article is to bring out of the shadows an institution that has thus far evaded the light of economic analysis: antitrust consents. In our view, competition authorities around the world should be asking themselves what ratio of litigation to settlement is optimal for their agency. Over the last 35 years, the United States Federal Trade Commission and the Antitrust Division of the Department of Justice have shifted dramatically toward greater reliance upon consent decrees than upon litigation to resolve antitrust disputes. As an aid to national competition agencies considering the desirability of adopting a similar approach, we focus upon the importance of economic analysis in evaluating movement along the continuum from a law enforcement model to a regulatory model of agency behavior. We draw upon the U.S. experience to substantiate our claim that the costs associated with a shift toward the regulatory model, including the potential distortion in the development of substantive antitrust doctrine, may be under‐appreciated and discernable only in the long run. We acknowledge that consent decrees can and should be an important tool in an antitrust agency’s toolkit for resolving antitrust disputes. We contend, however, that a full economic analysis of reliance primarily upon consent decrees is necessary to inform each competition agency’s strategic decision about the optimal mix of law enforcement and regulatory techniques.
Hyunchul Kim, Sungkyunkwan University and Jungwon Yeo, Singapore Management University do Multiproduct Search and Retail Pricing: Some Empirical Results.
ABSTRACT: The existence of fixed costs of shopping (or search) and consumers' tendency to shop for multiple products induces multiproduct retailers to price otherwise independent products with consideration for one another. Theoretical papers have provided insight into how multiproduct retailers price their products in such an environment. We herein empirically test theories on multiproduct pricing, focusing on Lal and Matutes (1994), Chen and Ray (2012) and Rhodes (2015). Using supermarket scanner data, we provide evidence supporting the exploitive cross-subsidization proposed by Chen and Ray (2012). We also find the effect of economies of scale in search on firms' pricing behavior characterized by Rhodes (2015).
Zhijun Chen, Department of Economics, Monash University, Chongwoo Choe, Monash University - Department of Economics, and Noriaki Matsushima, Osaka University - Institute of Social and Economic Research (ISER) identify Competitive Personalized Pricing.
ABSTRACT: We study a duopoly model where each firm chooses personalized prices for its targeted consumers, who can be active or passive in identity management. Active consumers can bypass price discrimination and have access to the price offered to non-targeted consumers, which passive consumers cannot. When all consumers are passive, personalized pricing leads to intense competition and total industry profit lower than that under the Hoteling equilibrium. But market is always fully covered. Active consumers raise the firm's cost of serving non-targeted consumers, which softens competition. When firms have sufficiently large and non-overlapping target segments, active consumers enable firms to extract full surplus from their targeted consumers through perfect price discrimination. With active consumers, firms also choose not to serve the entire market when the commonly non-targeted market segment is small. Thus active identity management can lead to lower consumer surplus and lower social welfare. We also discuss the regulatory implications for the use of consumer information by firms as well as the implications for management.
Thursday, May 17, 2018
Deputy Assistant Attorney General Barry Nigro Delivers Keynote Remarks at the American Bar Association's Antitrust in Healthcare Conference
Deputy Assistant Attorney General Barry Nigro Delivers Keynote Remarks at the American Bar Association's Antitrust in Healthcare Conference is available here:
Key takeaways for the speech:
- "Combatting rising healthcare prices has been, and under the new Administration will continue to be, a priority for the Division."
- "where appropriate, the Division intends to consider bringing actions for damages to recover on behalf of the taxpayers. Section 4 of the Clayton Act enables civil litigants who have been harmed “by reason of” an antitrust violation to recover treble damages; Section 4A does the same for the government."
- "When the state action doctrine puts a potentially anticompetitive state regulation (or action pursuant to that regulation) beyond the reach of federal antitrust law, the Division has urged state legislatures to consider the negative effects on competition."
- "Certification, and licensing when governed by a group of competitors, has important parallels to standard setting, which as many know is an area of interest to the Division. Both certification and standard setting set conditions for participating in the market, and both confer important economic advantages to those who qualify. In addition, both certification bodies and standard setting organizations often bring together competitors. It is well-understood by both courts and antitrust enforcers that SSOs 'can be rife with opportunities for anticompetitive activity.'"
Fordham 45th Annual Conference on International Antitrust Law and Policy + Antitrust Economics Workshop
Jarleth Burke has a new book on A Critical Account of Article 106(2) TFEU Government Failure in Public Service Provision.
BOOK ABSTRACT: A Critical Account of Article 106(2) TFEU: Government Failure in Public Service Provision offers a sceptical perspective on how EU law applies to public services. Article 106(2) provides that other Treaty rules may be disapplied in order to sustain a Service of General Economic Interest (SGEI). The rhetorical presentation of Article 106(2) is as a strict exception. As a result, Article 106(2) is often presented as a threat to Europe's public service tradition. This book challenges those shibboleths by using the concept of government failure. It is concerned with instances of government intervention that are unnecessary, generate avoidable inefficiencies, or that can be bettered so as to realise general interest goals more efficaciously. As an element of the government failure critique, a market feasibility test incorporating the concept of market failure is used to expose laxity in the review of general interests under Article 106(2). Complementing that, the process of disapplying other Treaty rules under Article 106(2) is shown to have evolved from being strict to being highly indulgent of SGEI providers, with a relatively recent but only partial correction post Altmark. Overall, the strict exception label for Article 106(2) does not hold. Moreover, it is contingent and presents no legitimate general interest related threat to the organisation and delivery of public services. A comprehensive re-orientation of Article 106(2) on issues of proof is required, as is greater reliance on market counterfactuals, and much more careful separation of objectives and means in SGEI operation and design. Through these measures, the toleration of government failure can be stemmed and Article 106(2)'s contingency reduced.
Giulio Federico, Chief Economist Team, DG Competition, European Commission; Barcelona Graduate School of Economics (Barcelona GSE), Gregor Langus, European Union - European Commission, and Tommaso M. Valletti, Imperial College Business School; University of Rome, Tor Vergata - Department of Financial and Quantitative Economics; Centre for Economic Policy Research (CEPR) address Horizontal Mergers and Product Innovation.
ABSTRACT: We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the "price coordination" channel and the internalization of the "innovation externality". We solve the model numerically and find that price coordination between the two products of the merged firm tends to stimulate innovation, while internalization of the innovation externality depresses it. The latter effect is stronger in our simulations and, as a result, the merger leads to lower innovation incentives for the merged entity, absent cost efficiencies and knowledge spillovers. In our numerical analysis both overall innovation and consumer welfare fall after a merger.
Burton Ong, National University of Singapore has edited The Regionalisation of Competition Law and Policy within the ASEAN Economic Community.
BOOK ABSTRACT: This edited volume of essays examines a wide range of issues related to the regionalisation of competition policy in South East Asia, where the ten member states of ASEAN have launched the ASEAN Economic Community (AEC). Written by a diverse group of academics, practitioners and policy-makers, this book explore issues such as the role of competition policy in facilitating the market-integration ambitions of the ASEAN member states, the challenges arising from divergences in the national competition law regimes of the ASEAN member states, and the absence of a supranational legal framework and the future of competition policy in light of the AEC Blueprint 2025. Given the nexus between regional competition policy and regional market integration, this book will be of particular interest to lawyers, economists and policymakers working in the fields of competition law and regional trade law.
Timo Klein, University of Amsterdam - Amsterdam School of Economics (ASE) and Maarten Pieter Schinkel, University of Amsterdam - Amsterdam Center for Law & Economics (ACLE) identify Cartel Stability by a Margin.
ABSTRACT: Firms may engage in collusion only if they are better off by a sufficiently wide margin. Such a cartel safety margin can cover costs of colluding and insure participants against risky aspects of it, such as unforeseeable changes in market conditions, unpredictable internal tensions, sharpened public enforcement or inestimable liability for antitrust damages. Accounting for a required margin provides new unambiguous comparative statics of variations in market characteristics on cartel stability where these are otherwise not a priori available. The margin reduces the comparative negative effect that a change in the gain from deviating following a market structure change has on cartel stability. More specifically, we find that both lower marginal cost and reduced product differentiation increase cartel stability. Implications for competition policy include that merger efficiencies may increase the risk of coordinated effects.
Wednesday, May 16, 2018
Mark A. Lemley, Stanford Law School and Timothy Simcoe, Boston University - Questrom School of Business; NBER ask How Essential are Standard-Essential Patents?
ABSTRACT: Courts, commentators, and companies have devoted enormous time and energy to the problem of standard-essential patents (SEPs) – patents that cover (or at least are claimed to cover) industry standards. With billions of dollars at stake, there has been a great deal of litigation and even more lobbying and writing about problems such as how if at all standard-setting organizations (SSOs) should limit enforcement of patent rights, whether a promise to license SEPs on fair, reasonable, and non-discriminatory (FRAND) terms is enforceable in court or in arbitration, what a FRAND royalty is, and whether a refusal to comply with a FRAND commitment violates the antitrust laws.
In this study, we explore what happens when SEPs go to court. What we found surprised us. We expected that proving infringement of a SEP would be easy – they are, after all, supposed to be essential – but that the breadth of the patents might make them invalid. In fact, the evidence shows the opposite. SEPs are more likely to be held valid than a matched set of litigated non-SEP patents, but they are significantly less likely to be infringed. Standard-essential patents, then, don’t seem to be all that essential, at least when they make it to court.
At least part of the explanation for this surprising result comes from another one of our findings: many SEPs asserted in court are asserted by non-practicing entities (NPEs), also known as patent trolls. NPEs do much worse in court, even when they assert SEPs. And the fact that they have acquired a large number of the SEPs enforced in court may bring the overall win rate down significantly.
Our results have interesting implications for the policy debates over both SEPs and NPEs. Standard-essential patents may not be so essential after all, perhaps because companies tend to err on the size of over-disclosing patents that may or may not be essential. The failure of NPEs to win cases even with what seem like they should be a strong set of patents raises interesting questions about the role of NPEs in patent law and the policy efforts to curb patent litigation abuse.
Giuseppe Colangelo and Mariateresa Maggiolino are Applying Two-Sided Markets Theory: The MasterCard and American Express Decisions.
ABSTRACT: Since the seminal papers by Rochet and Tirole, the payment card industry has represented an elected field of study for the economic features of multisided markets and their effects on both regulation and antitrust analysis. The recent judgements of the UK High Court of Justice in MasterCard and of the US Court of Appeals for the Second Circuit in American Express are particularly relevant because they are the first to concretely apply the economic theory of multisided markets to the payment card industry. In particular, given the nature of multisided markets, the coexistence of different business models, and the dualistic competitive interpretation of the conduct, courts have emphasised the need to articulate a judgement around counterfactual hypotheses. This is a way to measure the actual impact on competition, testing the realistic scenario that would occur if the investigated conduct was absent, so as to give appropriate consideration to the business model of the single platform. The same reasoning that makes us consider advantageous a flexible antitrust approach forces us to be critical of the current US and EU regulation of payment systems.
Jorge Padilla (Compass Lexecon) asks Should Profit Margins Play a More Decisive Role in Horizontal Merger Control?
ABSTRACT: In a recent speech, DG Competition’s Chief Competition Economist, Prof Tommaso Valletti explained that, while there is no evidence of increased market concentration in the five largest European countries (EU-5), profit margins have increased since 2010, reaching a historical maximum in 2016. In his view, the upward trend in profit margins ought to have implications for competition policy in general and, in particular, for merger control.