Friday, February 28, 2020
Event:Digital Platforms – The Current Landscape and Future Trends
Date: March 5, 2020
Location:The Oberoi, Aravalli Meeting Room, New Delhi, India
Analysis Group is pleased to sponsor a panel discussion on the state of competition and regulation of digital platforms in an increasingly interconnected world. Discussants include Analysis Group Vice President Divya Mathur, Nathan Wilson and Jon Nathan of the US Federal Trade Commission, and Daniel Sokol of the University of Florida and White & Case, and Harpreet Kaur of National Law University.
Opening Remarks and Introduction of Panelists
Economics of Digital Platforms
The US Perspective
The Indian Perspective
Global Best Practices
Current Empirical Research
Questions? Please RSVP to Maybeth Soverino at firstname.lastname@example.org
Guy Aridor, Columbia University, Yeon-Koo Che, Columbia University, William Nelson, Tobias Salz, MIT identify The Economic Consequences of Data Privacy Regulation: Empirical Evidence from GDPR.
ABSTRACT: This paper studies the effects of the EU’s General Data Protection Regulation (GDPR) on the ability of firms to collect consumer data, identify consumers over time, accrue revenue via online advertising, and predict their behavior. Utilizing a novel dataset by an intermediary that spans much of the online travel industry, we perform a difference-in-differences analysis that exploits the geographic reach of GDPR. We find a 12.5% drop in the intermediary- observed consumers as a result of GDPR, suggesting that a nonnegligible number of consumers exercised the opt-out right enabled by GDPR. At the same time, the remaining consumers are more persistently trackable. This observed pattern is consistent with the hypothesis that privacy-conscious consumers substitute away from less efficient privacy protection (e.g, cookie deletion) to explicit opt out, a process that would reduce noise on remaining consumers and make them more trackable. Further in keeping with this hypothesis, we observe that the average value of the remaining consumers to advertisers has increased, offsetting most of the losses from consumers that opt-out. Our results highlight the externalities that consumer privacy decisions have both on other consumers and for firms.
Philippe Choné, National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); CESifo (Center for Economic Studies and Ifo Institute) and Lionel Wilner, National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) discuss Competition on Unobserved Attributes: The Case of the Hospital Industry.
ABSTRACT: To assess strategic interactions in industries where endogenous product characteristics are unobserved to the researcher, we propose an empirical method that brings a competition-in-utility-space framework to the data. We apply the method to the French hospital industry. The utilities offered to patients are inferred from local market shares under AKM exclusion restrictions. The hospitals' objective functions are identified thanks to the gradual introduction of stronger financial incentives over the period of study. Offering more utility to each patient entails incurring higher costs per patient, implying that utilities are mostly strategic complements. Counterfactual simulations show that stronger incentives affect market shares but have little impact on the total number of patient admissions. We quantify the resulting gains for patients and losses for hospitals.
Axel Gautier, University of Liege - Research Center on Public and Population Economics; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) and Joe Lamesch, HEC-Management School of the University of Liège have an important paper on Mergers in the Digital Economy. Worth reading!
ABSTRACT: Over the period 2015-2017, the five giant technologically leading firms, Google, Amazon, Facebook, Amazon and Microsoft (GAFAM) acquired 175 companies, from small start-ups to billion dollar deals. By investigating this intense M&A, this paper ambitions a better understanding of the Big Five's strategies. To do so, we identify 6 different user groups gravitating around these multi-sided companies along with each company's most important market segments. We then track their mergers and acquisitions and match them with the segments. This exercise shows that these five firms use M&A activity mostly to strengthen their core market segments but rarely to expand their activities into new ones. Furthermore, most of the acquired products are shut down post acquisition, which suggests that GAFAM mainly acquire firm's assets (functionality, technology, talent or IP) to integrate them in their ecosystem rather than the products and users themselves. For these tech giants, therefore, acquisition appears to be a substitute for in-house R&D. Finally, from our check for possible "killer acquisitions", it appears that just a single one in our sample could potentially be qualified as such.
Thursday, February 27, 2020
BOOK ABSTRACT: In recent years, market definition has come under attack as an analytical tool of competition law. Scholars have increasingly questioned its usefulness and feasibility. That criticism comes into sharper relief in dynamic, innovation-driven markets, which do not correspond to the static markets on which the concept of the relevant market was modelled. This book explores that controversy from a comparative legal perspective, taking into account both EU competition and US antitrust law. It examines the manifold ways in which courts and competition authorities in the EU and US have factored innovation-related considerations into market delineation, covering: innovative product markets, product differentiation, future markets, issues going beyond market definition proper – such as innovation competition, innovation markets and potential competition –, intellectual property rights, innovative aftermarkets and multi-sided platforms. This book finds that going forward, the role of market definition in dynamic contexts needs to focus on its function of market characterisation rather than on the assessment of market power.
Oliver Budzinski, Ilmenau University of Technology asks The Economics of International Competition Policy: New Challenges in the Light of Digitization?
ABSTRACT: The International Competition Network (ICN) celebrates its 20th birthday in 2020. It governs global competition by providing a cooperative forum for (mostly national) competition authorities from all around the world. In the absence of binding global competition rules and antitrust laws, it attempts to coordinate national and supranational competition policies by providing best practice recommendations and exercising peer pressure on deviating regimes. While the first twenty years of the ICN have been mostly a success story, the ubiquitous process of digitization poses new challenges to the voluntary and informal coordination of decentralized competition policies governing pro- and anticompetitive arrangements and conduct on international and intercontinental markets. First, the digitization of markets and goods increases the number of cross-border, interjurisdictional cases regarding cartels, mergers and acquisitions, as well as anticompetitive market behavior. Second, digital platforms and data-based business models increase the probability of dominant companies on intercontinental scales as well as problems of economic dependency on few global player companies. Third, the economics of digital platforms and data-based competition strategies partly differ from traditional standard economics and are still being developed in the academic world. Consequently, the previous convergence of competition policy practices across jurisdictions tends to shift towards a process of divergence with respect of how to deal with innovative pro- and anticompetitive conduct in the digital world. This essay discusses the influence of the effects from digitization on the problems of (only soft-coordinated) national competition policies in international markets like cross-border externalities, costs and burden of multiple procedures, loopholes in the protection of global competition, and the diversity of societies and competition regimes. It concludes by outlining the challenges that the ICN will face in its third decade.
Emilio Calvano, University of Bologna - Department of Economics; University of Toulouse 1 - Department of Economics; CSEF - Center for Studies in Economics and Finance and Michele Polo, Bocconi University - Department of Economics identify Market Power, Competition and Innovation in Digital Markets: A Survey.
ABSTRACT: This article focuses on the economics of digital markets with particular emphasis on those features that are commonly deemed critical for Antitrust. Digital markets are often concentrated due to network effects and due to the need of large amounts of Data for production. We review papers characterizing the nature of social harms caused by market power and the role of competition FOR the market and IN the market to relief some of that harm. Special emphasis is given to the role of (i) human attention (which is monetized and is a key input in advertising markets), (ii) Data (which is the oil that powers these markets) and (iii) innovation (incentives, entry for buyout and killer acquisitions).
Wednesday, February 26, 2020
Pre-Merger Integration Planning - Antitrust Law in the Context of Strategic Transactions with Competitors
Thomas Obersteiner, Willkie Farr & Gallagher LLP Pre-Merger discusses Integration Planning - Antitrust Law in the Context of Strategic Transactions with Competitors.
ABSTRACT: Thorough planning is key to a successful merger. When competitors want to merge, they often have to go through lengthy merger review proceedings, during which antitrust rules restrict their ability to engage in efficient joint planning. New guidelines by competition authorities recognize the need for early integration planning and explain how companies can launch joint planning prior to regulatory approval. With the right safeguards in place, companies can develop a ready-to-execute implementation plan while they try to convince the regulators to approve the deal.
Sean Sullivan, University of Iowa College of Law identifies Anticompetitive Entrenchment.
ABSTRACT: Mounting public concern with the exercise of market power in concentrated markets demands a response. While modern antitrust emphasizes the prevention of market power over reaction to its exercise, it does contain one indirect but potentially important tool for addressing problems with already existing concentration and market power: the often-overlooked theory of resistance to anticompetitive entrenchment in merger enforcement. This article explores how traditional concerns with the entrenchment of market power might be updated and reintroduced to serve as a vehicle for addressing problematic markets in the modern antitrust framework. The article explains this theory of anticompetitive entrenchment, its limits, and appropriate conditions for its use, in the context of two specific applications: (1) tacit collusion among oligopolists, and (2) the exploitation of market power by a dominant firm in a protected position.
Niccolò Galli, Max-Planck Institute for Innovation and Competition offers Patent Aggregation Redefinition and Taxonomy of Its Activities Useful for Competition Law.
ABSTRACT: Patent aggregation, or the monetisation of patents without selling patent-implementing products, is a rising practice in the electrical engineering industry. However, the complexity and distance of this phenomenon from traditional patent exercises prevent a clear assessment of its impact on innovation. On the one hand, patent aggregation may spur innovation by determining efficiencies in licensing or litigation and by conveying liquidity to inventors. On the other hand, patent aggregation might also unduly tax technological developments by enforcing otherwise dormant patents. Since the relationship between patent aggregation and innovation is uncertain, it is unsettled whether EU competition law can remedy anti-innovative patent aggregation instances. Building on existing economics and legal scholarship, this paper contributes to the competition law understanding of patent aggregation providing both a definition and a taxonomy of its identifiable activities. Accordingly, patent aggregation is redefined as any activity where electrical engineering patents, patent applications, or their commercialisations rights, aggregated under common ownership or control through direct prosecution or transfer, are then used for non-manufacturing purposes. As such, patent aggregation activities are divided into two prongs. The first one refers to the means of aggregating patents, whereas the second one comprises the non-manufacturing exploitations of aggregated patents. The crossing of the two prongs of activities determines the taxonomy of patent aggregation. The redefinition and taxonomy aid future research to evaluate the effects of patent aggregation on innovation, and, therefore, its treatment under competition law.
Deputy Assistant Attorney General of the Antitrust Division Bernard (Barry) A. Nigro, Jr Delivers Remarks at the George Mason Law Review 23rd Annual Antitrust Symposium
20th Annual Loyola Antitrust Colloquium
April 17, 2020
Institute for consumer Antittrust Studies
Loyola University Chicago
School of Law
|8:30 AM||Continental Breakfast and Registration
Loyola University Chicago School of Law
10th Floor Power Rogers & Smith Ceremonial Courtroom
25 E. Pearson Chicago, IL. 60611
|9:10 AM||Welcome Professor Spencer Weber Waller
Professor and Director
Institute for Consumer Antitrust Studies
Loyola University Chicago School of Law
Christine Bartholomew, University at Buffalo School of Law
Deciphering Antitrust Settlements
Andy Gavil, Howard Law School, Washington, DC
|10:30 AM||Coffee Break|
Christopher Leslie, UCI Law
Jack Kirkwood, Seattle Law School
25 E. Pearson
Hon. Phil Weiser
Antitrust Remedies and Dynamic Industries
Maurice Stucke & Ariel Ezarachi, Competition Overdose, Book Presentation
Ramsi Woodcock, University of Kentucky College of Law
|2:45 PM||Ice Cream Sundae Break and Book Signing by Professors Stucke & Ezrachi|
The Political Face of Antitrust: 2020 Legislation and Campaign Proposals
Robert Lande, University of Baltimore School of Law
|6:30 PM||Colloquium Dinner
Osteria Via Stato
620 N. State St.
Chicago, IL 60611
Normative Goals in Merger Control: Why Merger Control Should Not Attempt to Achieve 'Better' Outcomes than Competition
Stefan Thomas, University of Tuebingen - Faculty of Law discusses Normative Goals in Merger Control: Why Merger Control Should Not Attempt to Achieve 'Better' Outcomes than Competition.
ABSTRACT: Recent academic discourse and economic events on both sides of the Atlantic have cast doubt over the paradigms of antitrust enforcement as we know them. Critical observers state that current policies fall short of addressing the wider societal implications of a market economy, inter alia in merger control. The interests of employees in decent wages, merger impacts on the environment, or the pursuit of a governmental industrial policy are claimed to deserve recognition beyond the traditional consumer welfare paradigm. Extending the merger analysis to such normative goals, however, comes with tradeoffs: It is prone to convey merger enforcement to a paternalistic control of market outcomes. Moreover, antitrust agencies will become exposed to a plethora of irreconcilable societal expectations and group interests. Eventually, the normativity approach will lead to an increased politicization of merger enforcement and weaken competition as a design-principle for a market economy. This article claims that society at large is better served with a merger control regime that devotes itself to consumer welfare through competition as a mono-teleology.
Tuesday, February 25, 2020
Claire Chambolle, Ecole Polytechnique, Paris - Laboratoire d'Econometrie; National Institute for Agricultural Research (INRA) and Hugo Molina, French National Institute for Agricultural Research (INRA) address Buyer Power, Upstream Bundling, and Foreclosure.
ABSTRACT: This article provides a new rationale for the "leverage theory" of bundling in vertical markets. We analyze a framework with a capacity-constrained retailer and uncover that buyer power explains the emergence of bundling practices by a multi-product manufacturer to foreclose a more efficient upstream rival. We further show that the retailer may counteract this adverse effect by expanding its stocking capacity and distribute all products to consumers. Finally, our theory highlights that a ban on bundling practices may restore the retailer's incentives to restrict its stocking capacity which generates detrimental effects for welfare.
Herbert Hovenkamp, University of Pennsylvania Law School describes Justice Department's New Position on Patents, Standard Setting, and Injunctions.
ABSTRACT: A deep split in American innovation policy has arisen between new economy and old economy innovation. In a recent policy statement, the Antitrust Division of the Justice Department takes a position that tilts more toward the old economy. Its December, 2019, policy statement on remedies for Standard Essential Patents issued jointly with the U.S. Patent and Trademark Office and the National Institute of Standards and Technology reflects this movement.
The policy statement as a whole contains two noteworthy problems: one is a glaring omission, and the other is a mischaracterization of the scope of antitrust liability. Both positions are strongly relevant to the pending Qualcomm litigation in the Ninth Circuit.
First, the Statement say nothing about the conduct of patent holders. The Patent Act authorizes patent injunctions “in accordance with the principles of equity.” Under the equitable principle of “unclean hands,” a patentee who is in serious default of its own legal obligations cannot obtain an injunction, at least not until its own bad conduct has been terminated.
Second, the Statement’s declaration that FRAND disputes do not raise antitrust issues is false. In the first instance FRAND disputes are about contracts. But if a firm’s anticompetitive use of FRAND-encumbered patents meets the power and conduct requirements of the antitrust laws it can be unlawful under them as well.
Guidelines from the government are very useful when they state the law or an agency’s own enforcement position, or when they clarify ambiguities. But they are not legislation. They do not bind courts, other government agencies, or private plaintiffs, particularly not when they conflict with clearly established law.
Monday, February 24, 2020
Xiaowei Mei, Hong Kong Polytechnic University - Department of Management and Marketing, Hsing Kenneth Cheng University of Florida - Warrington College of Business, Shubho Bandyopadhyay University of Florida - Warrington College of Business Administration, Liangfei Qiu University of Florida - Warrington College of Business Administration, and Lai Wei Shanghai Jiao Tong University (SJTU) theorize about Sponsored Data: Smarter Data Pricing with Incomplete Information.
ABSTRACT: As the amount of online content explodes, mobile network operators (MNOs) are investigating new business models that encourage content providers (CPs) to sponsor data for consumers. We analyze this recent phenomenon using an incomplete information game-theoretical model, where the MNO does not observe consumers’ types (personal valuation of mobile data), and provides multiple data plans to consumers. We find that the impact of sponsored data on consumer surplus crucially depends on whether the MNO has complete information over consumer types: Under complete information, sponsored data does not improve consumer surplus. However, under incomplete information, sponsored data increases consumer surplus. Our analysis also shows that under incomplete information, the MNO should allow sponsored data in a wider range of market conditions than those under complete information. Our study finds that prior literature tends to underestimate both the long-run detrimental effect of sponsored data on content diversity and the short-run beneficial effect on consumer surplus. Our findings have important managerial implications for the MNO who is interested in optimizing the data plans and for policymakers who regulate the wireless internet market.
El Hadi Caoui, University of Toronto - Rotman School of Management is Estimating the Costs of Standardization: Evidence from the Movie Industry.
ABSTRACT: This paper studies the decentralized adoption of a technology standard when network effects are present. If the new standard is incompatible with the current installed base, adoption may be inefficiently delayed. I quantify the magnitude of "excess inertia" in the switch of the movie distribution and exhibition industries from 35mm film to digital. I specify and estimate a dynamic game of digital hardware adoption by theaters and digital movies supply by distributors. Counterfactual simulations establish that excess inertia reduces surplus by 19% relative to the first-best adoption path; network externalities explain 29% of the surplus loss.
Merger decisions are still rarely subject to appeal; successful appeals are even more elusive.
That said, it would appear that in cases that are appealed, both courts apply increasing scrutiny and that the Commission’s margin of appreciation is shrinking.
Of the four grounds for annulment, the allegation of an infringement of the Treaties or of a rule of law relating to their application has been the most successful so far.
There have been no applications for failure to act, and only very few applications for damages, preliminary rulings and interim measures.
Friday, February 21, 2020
|By:||Stiebale, Joel; Szücs, Florian|
|Abstract:||This paper analyzes the effects of mergers and acquisitions on the markups of non-merging rival firms across a broad set of industries. We exploit expert market definitions from the European Commission's merger decisions to identify relevant competitors in narrowly defined product markets. Applying recent methodological advances in the estimation of production functions, we estimate markups as a measure of market power. Our results indicate that rivals significantly increase their markups after mergers relative to a matched control group. Consistent with increases in market power, the effects are particularly pronounced in markets with few players, high initial markups and concentration. We also provide evidence that merger rivals reduce their employment, sales and investment, while their profits increase around the time of a merger.|