Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, June 25, 2018

Monopolistic Behaviour and the Good Society; An Empirical Analysis of Monopoly Power and Social Good

Eric Tichbourne, University of Western Ontario - Department of Economics address Monopolistic Behaviour and the Good Society; An Empirical Analysis of Monopoly Power and Social Good.

ABSTRACT: There is an overwhelming body of Economic theory that studies monopolies and for a good reason: a monopoly is prone to taking advantage of consumers. With the proliferation of information on a global scale, bad societal outcomes are more difficult to hide, arguably keeping in check firms with monopoly power. Theoretical analogy between economic value added and excess profits, assuming CAPM holds allows us to find a reasonable proxy for realized monopoly power profits by computing the difference the return on invested capital and the weighted-average cost of capital. In combination with the proven measurements of accounting profitability, market shares and concentration ratios, this paper argues that constrained monopoly power (given the visibility into firms in the Internet Age) is good for society. Results show that firms with monopoly power tend to be more socially responsible but in aggregate across industries and industry group the net benefit for society is marginal.

June 25, 2018 | Permalink | Comments (0)

American Express Supreme Court decision is out

See here.

I need time to digest the decision (read: I need time - I've got a number of things to get done).  My initial observation is not about the specifics of the case but merely to note a very detailed analysis about two sided markets, which should be useful to courts and agencies around the world as two sided market cases are important and becoming more so.  Some jurisdictions have got it right and others not so much.  There were lots of citations to the economics literature in the decision.  I want to particularly offer a shout out to "my" chapter authors on two sided markets for the Oxford Handbook of International Antitrust Economics, David Evans and Richard (Dick) Schmalensee, who did a really nice literature review and synthesis in their chapter The Antitrust Analysis of Multisided Platform Businesses.  Both were cited for their various articles (and excellent book) extensively.

June 25, 2018 | Permalink | Comments (0)

The Power of the Crowd in the Sharing Economy

Michal Gal, University of Haifa explores The Power of the Crowd in the Sharing Economy.

ABSTRACT: Much has been written on the ability of sharing platforms to affect market conditions. In this research we focus on another piece of the puzzle, which is often overlooked but can play a significant role in shaping market structure and conduct: the users of the platform- whether suppliers or consumers (hereinafter jointly or severally: “the crowd”). As will be shown, the power of the crowd can both positively and negatively affect social welfare. Accordingly, this paper seeks to recognize the effects of crowd power and to identify both market-based as well as regulatory solutions to increase its welfare-increasing qualities, while reducing its negative ones. 

To do so, the study develops in a three stages. The first part explores the welfare effects of the sharing economy on the crowd. This serves as a basis for the second part, which focuses on the role of the crowd in shaping sharing platform markets. The third part then explores the potential role, as well as the limitations, of regulation in ensuring that crowd actions increase welfare. As will be shown, the current legal framework which regulates crowd actions might limit the realization of some of the potential positive effects of social platforms. In particular, new thinking might be needed with regard to rules regulating the use of crowd power to counteract a dominant sharing platform’s market power.

June 25, 2018 | Permalink | Comments (0)

Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market

Marc Bourreau, Telecom ParisTech; CREST, Yutec Sun, KU Leuven and Frank Verboven, KU Leuven discuss Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market.

ABSTRACT: We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbent firms. Using an empirical oligopoly model with differentiated products, we show that the incumbents’ launch of the fighting brands can be rationalized only as a breakdown of tacit collusion. In the absence of entry the incumbents successfully colluded on restricting their product variety to avoid cannibalization; the new entry of the low-end competition made such semi-collusion more difficult to sustain because of increased business stealing incentives. Consumers gained considerably from the added variety of the new entrant and the fighting brands, and to a lesser extent from the incumbents’ price response to the entry.

June 25, 2018 | Permalink | Comments (0)

The Poverty of Competition Law

Ioannis Lianos discusses The Poverty of Competition Law.

ABSTRACT: For a long time considered a fringe topic, of interest for developing and emergent economies, the question of inequality and poverty has recently taken centre-stage in mainstream competition law scholarship in developed countries. Some of this literature deplores the current state of competition law, which has largely ignored this issue, and argues for a different paradigm that would actively engage with economic inequality and its causes. While thought-provoking and suggesting a variety of reforms, these studies have not so far offered a coherent theoretical argument and framework explaining why equality, and its various facets, should become a concern for competition law, and how this will interact with the existing economic efficiency- and/or consumer surplus-oriented paradigm of competition law. If one is to take equity concerns seriously, it becomes essential to provide a solid theoretical framework that would engage with the arguments put forward by those defending the status quo. 

These are essentially three: 

(i) the need for competition law to develop concepts and measurement tools that justify, from a welfare perspective, the recourse to state intervention in markets, welfare being narrowly defined, for methodological and ideological reasons, 

(ii) the availability of other, presumably more effective, institutions than competition law to deal with inequality and 

(iii) the existence of a trade-off between equality and efficiency, meaning that focusing on equality may harm economic efficiency. 

The study engages with these three arguments. Taking a social contract perspective, and noting the hybrid nature of competition law, which is a tool of economic order, but also a form of social regulation, it explores the main difficulty in enriching competition law with equity concerns: the economic foundations of mainstream competition law in welfare economics, and the crucial separation of the economic efficiency dimension from that of distributive justice. It then examines alternative traditions in economic thought, which are more compatible with an egalitarian perspective. The study then turns to the institutional question, exploring the various instruments that governments dispose in order to equalise, and the respective role of more conventional tools against inequality, such as taxation, concluding that the institutional argument against equity concerns in competition law does not stand serious scrutiny. The study also critically engages with the argument that there is a trade-off between equality and efficiency, and again concludes that this argument does not stand serious scrutiny. The final part revisits the thorny question of what is to be equalised. Drawing on the idea of “complex equality”, it presents the contours of a fairness-driven competition law.

June 25, 2018 | Permalink | Comments (0)

Sunday, June 24, 2018

Platform Strategy Research Symposium - Boston University, Wednesday, July 18, 2018

Platform Strategy

See the agenda here.

June 24, 2018 | Permalink | Comments (0)

Goodbye ASCOLA NYU, Hello ASCOLA in Aix-en-Provence

The 2018 ASCOLA conference is over.  Kudos to Michal Gal (ASCOLA - Chair), Harry First (NYU Law - Host), and Spencer Waller (Chicago Loyola - Co-Sponsor) for putting together the program.  I particularly enjoyed the papers by Scott Hemphill, Spencer Waller, and Pinar Akman.

The 2019 conference will be held in Aix-en-Provence .

To join ASCOLA, see here

June 24, 2018 | Permalink | Comments (0)

Strategic Comity

Angela Zhang, HKU proposes Strategic Comity.

ABSTRACT: The determination of the extent to which US courts should enforce antitrust law against state-led export cartels has been a subject of intense debate among academics and policymakers for decades. As defendants in those cases often invoke comity-related defenses, the outcomes of these cases have turned on fact-specific inquiries into the reach and meaning of foreign laws, and the foreign sovereign’s involvement in the cartels. In the vitamin C case, the Second Circuit avoided this complicated factual inquiry by deferring to the statements of the Chinese government and abstained from exercising jurisdiction on the ground of comity. This article focuses on resolving two unanswered questions left by the court. The first is the level of deference that should be given to the statements of the foreign sovereign about the interpretation of its own laws, and the other is about the proper balancing test for comity analysis. Incorporating insights from game theory, this article argues that both issues need to be examined in light of the specific context of state-led export cartels, where the issues of antitrust law are closely entangled with trade policy and domestic politics in both the exporting and importing countries. Therefore, even if there is a strong economic rationale for the deference to a foreign sovereign’s statements, its appearance in court is neither a necessary nor a sufficient condition for the United States to grant immunity to foreign firms. Instead, comity analysis needs to be robust enough to accommodate and adapt to the changing economic and political circumstances. As illustrated by the US’ response to Japanese export cartels in the 1980s, a sole focus on the factual inquiry of the conflict of law is misleading, and may hamper the court’s adoption of optimal solutions to such cases. The findings of this article therefore suggest that US courts should accord a high level of deference to the executive branch in cases involving state-lead export cartels. In November 2017, the executive branch filed an amicus brief to the Supreme Court objecting to the Second Circuit’s conclusive deference to the MOFCOM’s statements. The Supreme Court would be wise to heed this advice.

June 24, 2018 | Permalink | Comments (0)

Friday, June 22, 2018

FTC Announces Hearings On Competition and Consumer Protection in the 21st Century - very important

In what I believe will help frame antitrust and consumer protection for a considerable time, the FTC Announces Hearings On Competition and Consumer Protection in the 21st Century.

The press release is below:

The Federal Trade Commission today announced that the agency will hold a series of public hearings on whether broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to competition and consumer protection enforcement law, enforcement priorities, and policy. The multi-day, multi-part hearings, which will take place this fall and winter, will be similar in form and structure to the FTC’s 1995 “Global Competition and Innovation Hearings” under the leadership of then-Chairman Robert Pitofsky. 

“The FTC has always been committed to self-examination and critical thinking, to ensure that our enforcement and policy efforts keep pace with changes in the economy,” FTC Chairman Joe Simons commented today. “When the FTC periodically engages in serious reflection and evaluation, we are better able to promote competition and innovation, protect consumers, and shape the law, so that free markets continue to thrive.”

The hearings and public comment process will provide opportunities for FTC staff and leadership to listen to interested persons and outside experts representing a broad and diverse range of viewpoints. Additionally, the hearings will stimulate thoughtful internal and external evaluation of the FTC’s near- and long-term law enforcement and policy agenda. The hearings may identify areas for enforcement and policy guidance, including improvements to the agency’s investigation and law enforcement processes, as well as areas that warrant additional study.

In advance of these hearings, public comments on any of the following topics may be submitted to the FTC: 

  1. The state of antitrust and consumer protection law and enforcement, and their development, since the Pitofsky hearings;
  2. Competition and consumer protection issues in communication, information, and media technology networks;
  3. The identification and measurement of market power and entry barriers, and the evaluation of collusive, exclusionary, or predatory conduct or conduct that violates the consumer protection statutes enforced by the FTC, in markets featuring “platform” businesses;
  4. The intersection between privacy, big data, and competition;
  5. The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters;
  6. Evaluating the competitive effects of corporate acquisitions and mergers;
  7. Evidence and analysis of monopsony power, including but not limited to, in labor markets;
  8. The role of intellectual property and competition policy in promoting innovation; 
  9. The consumer welfare implications associated with the use of algorithmic decision tools, artificial intelligence, and predictive analytics;
  10. The interpretation and harmonization of state and federal statutes and regulations that prohibit unfair and deceptive acts and practices; and
  11. The agency’s investigation, enforcement, and remedial processes.

The Commission will invite public comment in stages throughout the term of the hearings.

  • Through August 20, 2018, the Commission will accept public comment on the topics identified in the announcement. Each topic description includes issues of particular interest to the Commission, but comments need not be restricted to these subjects.
  • Additionally, the Commission will invite comments on the topic of each hearing session. The FTC will issue a news release before each session to inform the public of the agenda, the date and location, and instructions on submitting comment.
  • The Commission will also invite public comment upon completion of the entire series of hearings.

Public comments may address one or more of the above topics generally, or may address them with respect to a specific industry, such as the health care, high-tech, or energy industries.  Any additional topics for comment will be identified in later notices.

The hearings will begin in September 2018 and are expected to continue through January 2019, and will consist of 15 to 20 public sessions. All hearings will be webcast, transcribed, and placed on the public record. A dedicated website for information about the hearings including the schedule as it evolves can be found at

Public Comments:  Interested parties are invited to submit written comments on the topics listed above to the FTC, either electronically at or in paper form. FTC staff may use these comments in any subsequent reports or policy papers.  Comments should refer to “Competition and Consumer Protection in the 21st Century Hearings, Project Number P181201.” If an interested party wishes to comment on multiple topics, we encourage filing a separate comment for each topic. If an interested party wishes to make general comments about the hearings, we encourage filing a comment in response to Topic 1. For this stage of the public comment process, comments will be accepted until August 20, 2018.

If you prefer to file a comment in hard copy, write ‘‘Competition and Consumer Protection in the 21st Century Hearing, Project Number P181201,” on your comment and on the envelope and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex C), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex C), Washington, DC 20024.

The FTC Act and other laws that the Commission administers permit the collection of public comments. More information, including routine uses permitted by the Privacy Act, may be found in the FTC’s privacy policy, available at

For Further Information Contact:  Derek Moore, Office of Policy Planning, 202-326-3367, John Dubiansky, Office of Policy Planning, 202-326-2182 or email us at sends e-mail).

June 22, 2018 | Permalink | Comments (0)

Debarment and Collusion in Procurement Auctions

Claudia Cerrone, Max Planck Institute for Research on Collective Goods, Yoan Hermstrüwer, Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Department of Law, and Pedro Brito Robalo, Max Planck Institute, Bonn study Debarment and Collusion in Procurement Auctions.

ABSTRACT: This paper explores the impact of debarment as a deterrent of collusion in first-price procurement auctions. We develop a procurement auction model where bidders can form bidding rings, and derive the bidding and collusive behavior under no sanction, debarment and fines. The model's predictions are tested through a lab experiment. We find that debarment and fines both reduce collusion and bids. The deterrent effect of debarment increases in its length. However, the debarment of colluding bidders reduces efficiency and increases the bids of non-debarred bidders. The latter suggests that the market size reduction resulting from debarment may trigger tacit collusion.

June 22, 2018 | Permalink | Comments (0)

CCP Research Bulletin Spring 2018

CCP Research Bulletin


Spring 2018

In Issue 35:

CCP Research Bulletin Issue 32

Price and Behavioural Signals to Encourage Household Water Conservation  Liang Lu, David Deller & Morten Hviid

Do e-auctions Increase the Risk of Bid Rigging? Penelope Alexia Giosa

Data as an Entry Barrier: Does Data Portability Foster Competition in Internet Markets?  Wynne Lam

The EU Damages Directive and Stakeholders' Involvement Sebastian Peyer

UKERC-funded Project: Energy Affordability and Old Age: Expenditure versus self-reported perceptions  David Deller & Catherine Waddams Price

Does the Prime Minister's Unexpected Discussion of Competition Policy Signal a Softening of Brexit? [Competition Policy Blog Post]  Andreas Stephan

Autumn 2017

In Issue 34:

CCP Research Bulletin Issue 32

Do People Really Want to be Nudged  Robert Sugden

At a Crossroads in EU Merger Control  David Reader

Market Power and the Laffer Curve  Eugenio Miravete, Katja Seim & Jeff Thurk

Regulators after the 'Great Repeal' Act Tola Amodu

UKERC-funded Project: Energy Regulation and Fuel Poverty under the Energy Justice Lens  Elizabeth Errington

The Deterrence Value of Competition Policy Can and Should be Measured [Competition Policy Blog Post]  Stephen Davies

June 22, 2018 | Permalink | Comments (0)

Competition Law and the Welfare State

Okeoghene Odudu, University of Cambridge - Faculty of Law writes on Competition Law and the Welfare State.

ABSTRACT: In social market economies, specific goods, such as education and health-care, are taken out of the marketplace and provided to all citizens on a strictly egalitarian basis. The provision of goods or services outwith the market context might suggest competition law has no role, since a pre-requisite to the application of competition law is market activity. The purpose of this paper is to explain why competition law applies, and ought to apply, in the context of welfare provision. It argues that competition law has relevance not only in relation to “markets” properly so called but extends to cover all systems in which there is an “incentive to improve.” The main challenge then becomes to develop and adapt competition law and its enforcement for contexts in which all the features of a market properly so called are not present.

June 22, 2018 | Permalink | Comments (0)

Match Quality, Search, and the Internet Market for Used Books

Glenn Ellison ; Sara Fisher Ellison study Match Quality, Search, and the Internet Market for Used Books.

ABSTRACT: This paper examines the effect of the Internet on markets in which match-quality is important, including an analysis of the market for used books. A model in which sellers of unusual objects wait for high-value buyers to arrive brings out match quality and competition effects through which improved search technologies may increase both price dispersion and social welfare. A reduced-form empirical analysis finds support for a number of more nuanced predictions of the model in the context of the used book market, exploiting both cross-sectional differences across books and time-series differences in the wake of Amazon's acquisition and incorporation of a large used book marketplace. The paper develops a framework for structural estimation of a model based on the theory. The estimates suggest that the shift to Internet sales substantially increased both seller profits and consumer surplus.

June 22, 2018 | Permalink | Comments (0)

Thursday, June 21, 2018

Bank competition and financial system stability in a developing economy: does bank capitalization and size matter?

Patrick Mumbi Chilese asks Bank competition and financial system stability in a developing economy: does bank capitalization and size matter?

ABSTRACT: This study investigates the effect of bank competition, bank size, diversification and capitalization on risk taking behavior of commercial banks using panel data from Zambia. In addition, the study investigates the effect of capitalization and bank size on the bank competition-stability nexus. The empirical analysis is performed in two stages. In the first stage, time varying bank-specific Lerner Index is estimated. Then this measure of market power as well as other control variables are regressed on measures of bank soundness such as credit risk and overall stability (Z-Score and ZROE). Using a quarterly panel data of Zambian Banks covering the period Q1 2005 to Q4 2016, in general results from the study show that there is a positive relationship between market power and bank stability. In particular, results show that an increase in market power reduces a banks credit risk while it increases overall bank stability. These results are consistent with the ‘concentration-stability’ hypothesis common in some empirical literature. Furthermore, bank size and capitalization are associated with improvement in bank stability while lack of income diversification reduces bank stability. Finally, results of this study also indicate that larger and well-capitalized banks with market power are more stable than smaller and less capitalized ones. Policy implications for supervisory authorities in Zambia and other developing countries can be drawn from this study. First, there is need for supervisory authorities in Zambia to tread carefully with regard to enhancing competition in the banking sector as the results clearly indicate that it can have negative effects on financial stability. Secondly, results in this study render support to the use of stringent capital requirements under the Basel II and Basel III. Finally, it would be prudent for supervisory policies to include income diversification regulations thresholds among the commercial banks.

June 21, 2018 | Permalink | Comments (0)

Buyer Group and Buyer Power When Sellers Compete

Jeon, Doh-Shin and Menicucci, Domenico discuss Buyer Group and Buyer Power When Sellers Compete.

ABSTRACT: We study how buyer group affects buyer power when sellers compete with non-linear tariffs and buyers operate in separate markets. In the baseline model of two symmetric sellers and two symmetric buyers, we characterize the set of equilibria under buyer group, the set without buyer group and compare both. We find that the interval of each buyer's equilibrium payoffs without buyer group is a strict subset of the interval under buyer group if each seller's cost function is strictly convex, whereas the two intervals are identical if the cost function is concave. Our result implies that buyer group has no effect when the cost function is concave. When it is strictly convex, buyer group strictly reduces the buyers' payoff as long as, under buyer group, we select the Pareto-dominant equilibrium in terms of the sellers' payoffs. We extend this result to asymmetric settings with an arbitrary number of buyers.

June 21, 2018 | Permalink | Comments (0)

The Death of the Tunney Act at the Hands of an Activist D.C. Circuit

Darren Bush, University of Houston laments The Death of the Tunney Act at the Hands of an Activist D.C. Circuit.

ABSTRACT: The Tunney Act and its 2004 Amendment have sought to eliminate judicial rubber-stamping of anti-trust consent decrees. Congress sought to assure meaningful judicial review of consent decrees to assure they were in the public interest. The caselaw in the D.C. Circuit undermines the purpose, intent, and plain meaning of the Tunney Act by arguing that such review would present separation of powers issues, an argument at best disingenuous in light of other settlements readily rejected within the Circuit. The Article commences with a review of the legislative history of the original Tunney Act. The article next examines the D.C. Circuit cases against that the drafters of the Amendment to the Tunney Act are rebelling. This legislative history is highlighted and extended in the legislative history of the 2004 Tunney Act Amendment. The article next describes how D.C. district courts uniformly ignore and dismiss the Congressional intent behind the 2004 Amendment under the auspices of prosecutorial discretion. Finally, the Article tackles the (false) problem of separation of powers the D.C. Circuit case law presents and proposes a solution to this deadlock that is true to the original intent of the Tunney Act.

June 21, 2018 | Permalink | Comments (0)

An Antitrust Allegory, Episode II: The Section 2 Trap

Darren Bush, University of Houston Law Center offers An Antitrust Allegory, Episode II: The Section 2 Trap.

ABSTRACT: This article is an allegory. The year is 2030, with the Supreme Court taking up an all-too familiar present-day antitrust problem of a dominant firm on one side and a cartel on the other. Using precedent from present day, the future Supreme Court deftly rules that Goliath beats David and his gang of giant-slayers. The antitrust moral of the story: The only hope for David is to become just like Goliath through merger.

June 21, 2018 | Permalink | Comments (0)

Wednesday, June 20, 2018

Out of the DOJ Ashes Rises the FTC Phoenix: How to Enhance Antitrust Enforcement by Eliminating an Antitrust Enforcement Agency

Darren Bush, Houston Law has a controversial idea, Out of the DOJ Ashes Rises the FTC Phoenix: How to Enhance Antitrust Enforcement by Eliminating an Antitrust Enforcement Agency.

ABSTRACT: Congress passed the Federal Trade Commission Act in 1914, displeased with its initial foray into competition policy, the Sherman Act. Congress desired to create a Commission comprised of “trained, skillful [people]…. clothed with adequate authority” who could provide “more complete and accurate knowledge” of the practices of business and inform the courts and the Department of Justice. After 100 years, the system of consumer protection and competition policy in place stands in sharp contrast to the vision of Congress. This paper argues that it is time to restore the FTC to prominence Congress intended by eliminating the bulk of the DOJ's Antitrust authority.

June 20, 2018 | Permalink | Comments (0)

Optimizing Private Antitrust Enforcement in Health Care

Anne Marie Helm, University of California Hastings College of the Law is Optimizing Private Antitrust Enforcement in Health Care.

ABSTRACT: Americans are paying too much for health care services and insurance, in large part due to insufficiently competitive markets. Waves of consolidation have fortified providers and insurers with market power, resulting in higher prices and lower quality for consumers. As antidotes, advocates have proposed various legislative, regulatory, and enforcement solutions. Yet, unlike public antitrust enforcement, private antitrust enforcement is either not mentioned or criticized as sour grapes from competitors or a money grab by consumers. Instead of ignoring or bashing private litigation, those looking to address the health care pricing crisis in the United States should be looking to optimize it. Effective private enforcement can restore competition, deter antitrust violations, and compensate victims in the markets for health care services and insurance. For plaintiffs, the key to optimizing private antitrust enforcement is overcoming the unavoidable challenges in litigating these cases-from satisfying pleading standards and establishing standing, to defining relevant markets. This article explains the key obstacles involved in these cases and tracks recent and current plaintiffs whose experiences provide insight.

June 20, 2018 | Permalink | Comments (0)

Taking Quality of Healthcare Seriously in Provider Merger Analysis

Kent Bernard, Fordham University School of Law is Taking Quality of Healthcare Seriously in Provider Merger Analysis.

ABSTRACT: Traditionally, antitrust has not had a way to quantify the benefits of better healthcare outcomes from a potential merger, to balance them against the potential for increased costs. However, a branch of health care economics lets us make that calculation. It has not been used in antitrust analysis to date, but U.S. law is flexible enough to allow such an approach and the 2010 Horizontal Merger Guidelines contemplate it in Section 5. It enables us to use established procedures to put the quality of care into healthcare merger analysis.

June 20, 2018 | Permalink | Comments (0)