Friday, June 29, 2018


I had hoped for James Earl Jones or Colin Firth to do the reading (maybe even settling for Hugh Grant) but I recommend that people listen in to this audio version of my CPI article.


CPI PODCAST: Episode 5


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

Listen Here

June 29, 2018 | Permalink | Comments (0)

Woodstock Antitrust

Harry First, NYU describes Woodstock Antitrust.

ABSTRACT: Before there was Hipster antitrust there was Woodstock antitrust. Flourishing in the decade from 1969 to 1979, Woodstock antitrust sought to take on the central issues in antitrust. Looking back we can see a program of enforcement and proposed legislation that constituted a radical effort to fix antitrust’s shortcomings — the inability to stop the increase in concentration in the economy, or deal with durable monopolies, or cut through doctrine to reach tight oligopolies. This Essay reviews some of the efforts of Woodstock antitrust and suggests how Woodstock still echoes in today’s antitrust reform efforts.

June 29, 2018 | Permalink | Comments (0)

Postal Services: Survey of Competition Law Developments: 2017

Richard Eccles, Martin Jaeger, Janneke Kohlen, and Florence Leroux offer Postal Services: Survey of Competition Law Developments: 2017.

ABSTRACT: This article summarises the most significant competition law developments in the postal services sector in 2017, at EU level and at national level in France, Germany, the Netherlands and the UK.

June 29, 2018 | Permalink | Comments (0)

Presumptions in EU competition law

Cyril Ritter, DG Competition offers Presumptions in EU competition law.

ABSTRACT: A presumption is usually defined as using a known fact to infer another fact. However, presumptions could be defined more broadly, as including several types of logical leaps, automatisms, burden-shifting mechanisms and predispositions. Using more than 30 such ‘presumptions’ as examples, this article tries to (i) provide a description and a classification of presumptions in EU competition law; (ii) explore to what extent these presumptions are compatible with fundamental rights and general principles of EU law; (iii) explain the rationales for presumptions in EU competition law; and (d) draw conclusions for optimal enforcement.

June 29, 2018 | Permalink | Comments (0)

Are We Too Negative on Negative Fees for Payment Cardholders?

Joshua S. Gans University of Toronto - Rotman School of Management; NBER asks Are We Too Negative on Negative Fees for Payment Cardholders? Worth reading!

ABSTRACT: This paper examines regulator concerns that cash-paying consumers pay higher retail prices due to so-called ‘negative pricing’ of credit cards that emerge when cardholders face few fees but instead receive discounts, rewards and other inducements for using credit cards for transactions. It is argued here, however, that concerns that might arise in conventional markets over such pricing do not translate over to two-sided networks, of which card networks are a quintessential example.

June 29, 2018 | Permalink | Comments (0)

Thursday, June 28, 2018

Competition Advocacy and the Patent System: Promoting Competitive Markets for Technology

John Dubiansky, Federal Trade Commission advocates Competition Advocacy and the Patent System: Promoting Competitive Markets for Technology.

ABSTRACT: Current efforts at patent reform, through vehicles such as legislation, regulation, and appellate caselaw, are often met with advocacy advancing competing concerns reflecting the interests of discrete and separate groups of market participants. These viewpoints may not necessarily align with the policy goal of promoting consumer welfare. Historically, competition advocacy by competition authorities has been one mechanism for advocating for reforms that advance consumer welfare. Competition authorities such as the Federal Trade Commission have a lengthy history of empirical research and policy advocacy regarding the patent system. This paper reviews that advocacy and examines the circumstances under which competition advocacy has been employed. It observes that advocacy has been directed to two markets in which the patent system impacts competition: patents influence competition in the market for goods that embody them and patents are also themselves articles traded in technology markets. Regarding the latter form of competition, advocacy has been used to address legal doctrines that give rise to transaction costs and market failures in the market for the trade and license of patent rights.

June 28, 2018 | Permalink | Comments (0)

Inefficiencies in Essential Patent Pool Formation; Are Pool Administrators Also Involved?

Pooyan Khashabi, Ludwig Maximilian University of Munich - Institute for Strategy, Technology and Organization (ISTO) asks Inefficiencies in Essential Patent Pool Formation; Are Pool Administrators Also Involved?

ABSTRACT: Technology standards are becoming increasingly important in economic extent. Facilitating and building patent pools for technology standards is a crucial part for their success, which is done by pool administrators. Practitioners believe that political economy of pool formation has lead to inefficiencies such as failures in launching new pools and inclusion of non-essential patents (pool inflation). However, the potential role of expert pool administering party on the efficiencies has not been studied yet. This paper develops a simple model of pool formation which determines the optimal strategies of a rent seeking "pool administrator". The results show that pool forming strategies by the pool administrator may contribute to failures in patent pool formation process. Also, in the environments where the essentiality claims are difficult to assess or in industries with higher pace of technology, the pool administrator may find it optimal to include the patents in the pool regardless of the essentially evaluation (pool inflation) and launch the patent pool faster.

June 28, 2018 | Permalink | Comments (0)


PDF Registration Form

Join us in Ottawa on September 27-28 for the CBA Competition Law Fall Conference – the leading Canadian event for competition law professionals.

The conference brings together all segments of the Canadian and global competition law community, including enforcement officials, in-house counsel, plaintiffs’ lawyers, defense lawyers, academics, and economists in order to share knowledge, experience, and advice regarding all areas of competition law.

Participants are exposed to thoughtful and practical insights from distinguished panels of competition law experts, and they leave the conference with a sound understanding of the leading issues in the area of competition law.


On-line registration is now open. Simply click on the REGISTER NOW button located on the right-hand side of your screen. If you do not wish to proceed with on-line registration you can print, complete and send (by fax or mail) the PDF Registration Form.

Cancellation Policy: There will be a 20% administrative charge for any cancellation received in writing prior to August 27, 2018. No refund will be given after August 27, 2018. There will be no refunds for “no-show” registrants.

Conference Rates




CBA Members

$734 + taxes


CBA Young Lawyers (Members within 5 years of call)

$530 + taxes


CBA Student Members      

$300 + taxes



$875 + taxes



Meeting Venue and Accommodations

Westin Ottawa 
11 Colonel By Drive

Ottawa, ON 
K1N 9H4
Telephone: 1-800-(WESTIN-1) or 613-560-7000

Please contact the hotel directly to make your reservation and refer to the CBA Competition Law Fall Conference to obtain the preferred rate (subject to availability). 

June 28, 2018 | Permalink | Comments (0)

Firm-Level Strategy and Global Value Chains

Mari Sako, University of Oxford - Said Business School and Ezequiel Zylberberg, MIT Industrial Performance Center study Firm-Level Strategy and Global Value Chains.

ABSTRACT: This chapter draws on three branches of management studies – corporate strategy, technology strategy, and institutional strategy – in order to develop a framework aimed at analyzing and predicting the nature and structure of GVCs. First, corporate strategy informs how firms shape GVC governance by making decisions about their boundaries (what to make and what to buy) and their portfolio of trading partners. Second, technology strategy (particularly the profiting from innovation framework (Teece, 1986)) provides insights into how firms capture the value they create when upgrading, by owning or accessing specialized complementary assets. Third, institutional strategy is a useful tool for analyzing how firms proactively influence the institutions that govern economic transactions in global value chains. These approaches help GVC research to take account of firm-level agency, which contributes to theoretical rigour, policy, and practice.

June 28, 2018 | Permalink | Comments (0)

Neutrality, Fairness or Freedom? Principles for Platform Regulation

Friso Bostoen, KU Leuven - Institute for Consumer, Competition & Market asks Neutrality, Fairness or Freedom? Principles for Platform Regulation.

ABSTRACT: The need for online platform regulation has been a topic of scholarly debate. However, reality is now catching up to and even overtaking the academic writing on this subject. France has adopted a law on platform fairness, the European Commission recently ordered Google to implement a form of search neutrality, and more regulatory initiatives are on the horizon. That is why we have to look beyond the question whether online platforms should be regulated. As actual regulation supplants the scholarly debate, we must also examine how they are being regulated. Accordingly, this article distils from the various proposals at EU and member state level a set of operational principles that can serve as a frame of reference for productive debate on platform regulation.

June 28, 2018 | Permalink | Comments (0)

Wednesday, June 27, 2018

Why Network Effects Matter Less Than They Used To

Catherine Tucker (MIT) has a short piece in the Harvard Business Review  on Why Network Effects Matter Less Than They Used To.  Given this week's Supreme Court American Express case, it is worth a read.  Some highlights:

For one thing, today’s network effects are not tied to a particular piece of hardware, like a desktop computer. Since 2000 and the desktop era, we have seen the evolution of multiple different devices, such as smartphones, tablets, and digital assistants such as Alexa. This means that network effects are no longer intertwined with a particular piece of hardware, as was the case with the desktop computer in the 1990s. Instead, any notions of scale for technology companies depend on user profiles that can be ported to multiple different hardware platforms.

This means that platforms which exhibit network effects may be purely digital. Social networks, ride-hailing apps, or digital marketplaces do not depend on any one type of hardware, and as a consequence it costs very little for users to try new ones out. Having five different social media apps on my phone is not a problem at all. Having five different desktops with different operating systems, on the other hand, is clunky. 


Scale will not bring future competitive advantage through network effects if your customers can all leave tomorrow.

Some people argue that digital platforms can be made sticky through customers owning data through a platform. The theory is that data stored in one place can lead to lock-in which in turn will power up network effects.

However, history belies this.


June 27, 2018 | Permalink | Comments (0)

Go Upscale? Quality Competition between National Brand and Store Brand

Tulika Chakraborty, John Molson School of Business, Concordia University, Satyaveer Singh Chauhan, John Molson School of Business, Concordia University, and Xiao Huang, John Molson School of Business, Concordia University ask Go Upscale? Quality Competition between National Brand and Store Brand.

ABSTRACT: It is commonly assumed in private label literature that store brands are of lower quality than competing national brands. In this paper, we contest this notion by studying quality competition between a national- brand manufacturer and a store-brand retailer. The manufacturer sells its national-brand products through the retailer who produces a competing store brand at the same time. The two parties first invest in their brand qualities, after which the manufacture determines the wholesale price for the national brand and the retailer decides the retail prices for both brands. With a general quality-dependent cost structure, we explicitly characterize the equilibrium in both price and quality levels under various channel power structures. The results suggest that the store brand could possibly be of higher quality than the national brand even in absence of cost disparity; however, the store brand will charge a lower retail price whether its quality is superior to the national brand or not. Further, price competition and quality competition bear opposite implications on equilibrium solutions as well as profitability levels. Surprisingly, the manufacturer may benefit from a more costly production or quality investment scenario, while both the retailer and the supply chain will suffer from the same. The paper highlights the importance of accounting for quality decisions in the study of private label products.

June 27, 2018 | Permalink | Comments (0)

Britain is rationing beer! Is this a competition matter for the CMA?

"Another reason to leave the UK due to Brexit" says one of my London based German friends. According to this CNN story, the UK is rationing beer. They are out of carbon dioxide and so they can't make enough beer. During the World Cup this will mean riots!  I thought food rationing was a distant post WWII memory in the UK.  Worse, this is not even happening under the "socialist paradise" of Corbyn but under a market oriented government.

Is there a role for the CMA?  Of course.  Alcohol related issues of distribution/vertical restraints, buyer power, potential collusion across the supply chain, the rise of craft breweries, alternatives to beer in the sale of wine, spirits and "fruity" alcoholic bevarages like hard cider and hard lemonade (note: in the US we don't have hard lemonade - we also don't have Mars bars or much market penetration of Cadbury bars or similar bars like Aero) seems to be worthy of a sector report.

June 27, 2018 | Permalink | Comments (0)

The Merger Incipiency Doctrine and the Importance of 'Redundant' Competitors

Peter Carstensen, University of Wisconsin Law School and Robert H. Lande, University of Baltimore - School of Law attack The Merger Incipiency Doctrine and the Importance of 'Redundant' Competitors.

ABSTRACT: The enforcers and the courts have not implemented the merger incipiency doctrine in the vigorous manner Congress intended. We believe one important reason for this failure is that, until now, the logic underlying this doctrine has never been explained. The purpose of this article is to demonstrate that markets’ need for “protective redundancy” explains the incipiency policy. We are writing this article in the hope that this will cause the enforcers and courts to implement significantly more stringent merger enforcement.

To vastly oversimplify, the current enforcement approach assumes that if N significant competitors are necessary for competition, N-1 competitors could well be anticompetitive, but blocking an N 1 merger would not confer any gains. Because many enforcers and judges erroneously assume that mergers among major competitors usually result in significant gains to efficiency and innovation, they believe that blocking mergers to the N 1 level would impose significant costs on the economy.

Why should enforcement preserve apparent “redundancy”? First, the relationship between concentration and competition, and between concentration and innovation, is uncertain. Underestimating the minimum necessary number of firms needed for competition and for innovation is likely to result in harm to consumer welfare. Second, one or more of the N firms frequently can wither or implode as a result of normal competition, or from an unexpected shock to the market, often surprisingly quickly. This leaves only N-1 or N-2 remaining significant competitors. Finally, when enforcers challenge a merger that would have resulted in N competitors, they often allow the merger subject to complex remedies. But if the remedy fails, as they often do, the market will have too few competitors by the enforcers’ own estimate. Taken together these scenarios often leave markets with too few firms.

The attenuation of the incipiency doctrine has allowed many mergers that have resulted in higher prices and lower levels of innovation. This has been shown by recent empirical work evaluating the consequences of major mergers. Moreover, other empirical work shows that significant mergers rarely produce significant efficiency gains and often result in losses to innovation.

A revitalized incipiency doctrine would retain the “protective redundancy” that would preserve competition, while sacrificing little or nothing in terms of efficiency or innovation. The enforcers and the courts should implement this policy much more aggressively.

June 27, 2018 | Permalink | Comments (0)

Impact of Free Trade Agreement Use on Import Prices

Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Hiroshi Mukunoki, and Shujiro Urata study the Impact of Free Trade Agreement Use on Import Prices.

ABSTRACT: We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate the effects of FTA use on prices by controlling for differences in importing-firm characteristics. There are three main findings. First, the effect of FTA use is overestimated when not controlling for importing firm-related fixed effects. Second, on average, firms’ FTA use reduces tariffs by 12 percentage points and raises import prices by 3.6–6.7 percent. Third, in general, we do not find a price rise resulting from the costs of complying with rules of origin.

June 27, 2018 | Permalink | Comments (0)

Productivity and Prices in Manufacturing During an Era of Rising Concentration

Sam Peltzman, University of Chicago explores Productivity and Prices in Manufacturing During an Era of Rising ConcentrationWorth reading!

ABSTRACT: Concentration has increased over the last 30 years or so in a variety of industries. This development has raised concern about weakened competition and resulting harm to consumers. Calls for tougher antitrust enforcement have become louder. There is also concern that rising concentration may be at least symptomatically related to declining business dynamism and lower productivity growth. There is, however, only sporadic evidence on these matters. This paper provides more systematic evidence on the interplay between concentration, prices and productivity across several hundred US manufacturing industries over two 15 year periods from 1982-2012. The consistent pattern is that high and rising concentration has been on average associated with better productivity growth. Rising concentration has also been associated with widening margins of price over input costs. On balance, the net price effects are trivial. Accordingly some skepticism about tougher merger policy may be warranted, since this would risk harm to productivity without benefiting consumers.

June 27, 2018 | Permalink | Comments (0)

Tuesday, June 26, 2018

Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing

Elena Argentesi, University of Bologna - Department of Economics, Paolo Buccirossi, LEAR, Roberto Cervone, Tomaso Duso, German Institute for Economic Research (DIW Berlin); Duesseldorf Institute for Competition Economics (DICE), and Alessia Marrazzo ask Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing.

ABSTRACT: Assortment decisions are key strategic instruments for firms responding to local market conditions. We assess this claim by studying the effect of a national merger between two large Dutch supermarket chains on prices and on the depth as well as composition of assortment. We adopt a difference-in-differences strategy that exploits local variation in the merger’s effects, controlling for selection on observables when defining our control group through a matching procedure. We show that the local change in competitive conditions due to the merger did not affect individual products’ prices but it led the merging parties to reposition their assortment and increase average category prices. While the low-variety and low-price target’s stores reduced the depth of their assortment when in direct competition with the acquirer’s stores, the latter increased their product variety. By analyzing the effect of the merger on category prices, we find that the target most likely dropped high priced products, while the acquirer added more of them. Thus, the merging firms reposition their product offerings in order to avoid cannibalization and lessen local competition. Further, we show that other dimensions of heterogeneity, such as market concentration, whether a divestiture was imposed by the Dutch competition authority, and the re-branding strategy of the target stores, are important for explaining the post-merger dynamics. A simple theoretical model of local-market variety competition explains most of our findings.

June 26, 2018 | Permalink | Comments (0)

Export Cartels and the Case for Global Welfare

Michael Ristaniemi, University of Turku, Faculty of Law discusses Export Cartels and the Case for Global Welfare.

ABSTRACT: Export cartels are generally exempted from domestic competition laws. The status quo causes inefficiencies and unnecessary friction in various markets around the world. As such, their treatment represents a gap in international antitrust. Despite several attempts, multilaterally agreed restrictions on export cartels elude the international community for a number of reasons, such as market access demands and protecting 'national champions'. This essay examines trade friction occurring in the form of export cartels: what are they, are they problematic, and whom do they affect most? It explores the challenges that have prevented deeper international cooperation to address export cartels by building on prior legal discourse, in order to identify those issues on which a resolution hinges. The essay concludes by proposing both substantive resolutions as well as appropriate facilitators for negotiations and enforcers of a resolution.

June 26, 2018 | Permalink | Comments (0)

Books and Olive Oil: Why Antitrust Must Deal with Consolidated Corporate Power

Carl T. Bogus, Roger Williams University School of Law describes Books and Olive Oil: Why Antitrust Must Deal with Consolidated Corporate Power.

ABSTRACT: Following an epic battle in the marketplace between Apple Inc. and major book publishers, on one side, and Amazon, on the other side, the U.S. Department of Justice and thirty-three states filed an antitrust lawsuit against Apple and the publishers, alleging that they had conspired to fix the prices of ebooks. Both the district court and a divided panel of the U.S. Court of Appeals for the Second Circuit decided the case in the governments’ favor. This article argues that government regulators and the courts took the wrong side in the dispute, and did so because of fundamental flaws in current antitrust policy. Following the standard approach, regulators and the courts ignored unique aspects of the industry and treated books just as they would have treated cans of olive oil. Focusing exclusively on consumer welfare – that is, consumer prices and total industry output – regulators and the courts ignored critical social, cultural, and political ramifications of the dispute. Moreover, the widely accepted view that business firms are rational profit maximizers led regulators and the courts into making serious factual misjudgments. While there are many calls for antitrust reform, most are limited to calls for more rigorous application of existing doctrine. This case study demonstrates why that is inadequate and a paradigm shift in antitrust policy is required.

June 26, 2018 | Permalink | Comments (0)

The Case for Doing Nothing About Institutional Investors’ Common Ownership of Small Stakes in Competing Firms

Thomas A. Lambert, University of Missouri - School of Law and Michael E. Sykuta, University of Missouri at Columbia argue The Case for Doing Nothing About Institutional Investors’ Common Ownership of Small Stakes in Competing Firms.

ABSTRACT: Recent empirical research purports to demonstrate that institutional investors’ “common ownership” of small stakes in competing firms causes those firms to compete less aggressively, injuring consumers. A number of prominent antitrust scholars have cited this research as grounds for limiting the degree to which institutional investors may hold stakes in multiple firms that compete in any concentrated market. This Article contends that the purported competitive problem is overblown and that the proposed solutions would reduce overall social welfare. 

With respect to the purported problem, we show that the theory of anticompetitive harm from institutional investors’ common ownership is implausible and that the empirical studies supporting the theory are methodologically unsound. The theory fails to account for the fact that intra-industry diversified institutional investors are also inter-industry diversified and rests upon unrealistic assumptions about managerial decision-making. The empirical studies purporting to demonstrate anticompetitive harm from common ownership are deficient because they inaccurately assess institutional investors’ economic interests and employ an endogenous measure that precludes causal inferences.

Even if institutional investors’ common ownership of competing firms did soften market competition somewhat, the proposed policy solutions would themselves create welfare losses that would overwhelm any social benefits they secured. The proposed policy solutions would create tremendous new decision costs for business planners and adjudicators and would raise error costs by eliminating welfare-enhancing investment options and/or exacerbating corporate agency costs.

In light of these problems with the purported problem and shortcomings of the proposed solutions, the optimal regulatory approach — at least, on the current empirical record — is to do nothing about institutional investors’ common ownership of small stakes in competing firms.

June 26, 2018 | Permalink | Comments (0)