Join us for a Law & Economics Workshop organized by Concurrences in partnership with Shearman & Sterling at their New York office. Attendance is by registration only. No on-site registration. Seats are limited. The conference and its speakers will be filmed by Concurrences to be posted online. Photos of the speakers and of the attendees will also be taken. By entering the conference premises, you understand that you may be photographed and you hereby give Concurrences the unqualified right to take pictures and/or recordings of you. In case of over registration, attendance will be limited to one representative per institution, at the discretion of the organizer.
Friday, February 21, 2020
The Automotive Industry under Scrutiny: Competition Law Developments in Europe
present The Automotive Industry under Scrutiny: Competition Law Developments in Europe.
ABSTRACT:
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Cartels in the automotive sector are constantly pursued by the antitrust authorities—although the number and size of proceedings seems to be on the decline.
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In contrast, there has been a rising amount of damages litigation in the sector—in particular, participants of the truck cartel continue to face numerous follow-on damages claims in an unprecedented amount. Likewise, original equipment manufacturers continue pursuing their damages claims against parts suppliers.
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Several big mergers have been cleared and carried out—others have been frustrated. Inter alia, the EC evaluated and cleared the creation of six joint ventures developing and offering mobility services by BMW and Daimler.
February 21, 2020 | Permalink | Comments (0)
Oligopolistic Price Leadership and Mergers: An Empirical Model of the U.S. Beer Industry
| By: | Matthew Weinberg (The Ohio State University, Department of); Gloria Sheu (US Department of Justice, Antitrust Division); Nathan Miller (Georgetown University) |
| Abstract: | We examine an infinitely-repeated game of oligopoly price leadership in which each period one firm, the market leader, proposes a supermarkup over Nash-Bertrand prices. The supermarkup is chosen to maximize the leader's profit subject to all firms' incentive compatibility constraints (ICCs). We provide conditions under which the equilibrium supermarkup can be recovered from aggregate data on price and quantities. We apply the model to the U.S. beer industry over 2005-2011 and estimate that ABI and MillerCoors implemented supermarkups of $\$0.60$ in the wake of the 2008 Miller/Coors merger. Counterfactual simulations demonstrate an ICC binds, as profit is greater with even higher supermarkups. We use the implied equality constraint to jointly identify a discount factor and the antitrust risk, the remaining structural parameters. We then explore the coordinated effects of ABI's acquisition of Grupo Modelo. Without divestitures, the merger would have relaxed ICCs, resulting in substantially higher prices. Finally, we return to the Miller/Coors merger. For many parameter values, no supermarkup satisfies ICCs without the merger. Thus, the merger may have be pivotal in generating the observed price leadership behavior. |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1210&r=com |
February 21, 2020 | Permalink | Comments (0)
Thursday, February 20, 2020
Last Days to Register: New EU Commission, Competition & Industrial Policy - New York, February 27
27 FÉVRIER
THE NEW EUROPEAN COMMISSION AND COMMISSIONER VESTAGER : COMPETITION POLICY VS. INDUSTRIAL POLICY
INSCRIPTIONPROGRAMME
Registration & Refreshments
5:00pmPanel : The New European Commission and Commissioner Vestager : Competition Policy vs. Industrial Policy
6:00pmRainer WESSELY | Responsible for Competition and Justice policy, Delegation of the EU to the US, Washington DC
Peter FATELNIG | Minister-Counsellor for Digital Economy Policy, Delegation of the EU to the US, Washington DC
Martin d’HALLUIN | VP, Associate General Counsel, Antitrust, News Corp, New York
Sara ASHALL | Shearman & Sterling, Brussels
Moderator : David HIGBEE | Global Antitrust Practice Group Leader, Shearman & Sterling, Washington, DC
Cocktail Reception
7:30pmAll workshop attendees will be eligible for complimentary 48-hour Concurrences+ subscription.
ORGANISATEURS
SPONSORS
February 20, 2020 | Permalink | Comments (0)
Are U.S. Industries Becoming More Concentrated?
| By: | Gustavo Grullon (Rice University - Jesse H. Jones Graduate School of Business); Yelena Larkin (York University - Schulich School of Business); Roni Michaely (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute) |
| Abstract: | In the last two decades, over 75% of U.S. industries have experienced an increase in concentration levels. We find that firms in industries with the largest increases in product market concentration have enjoyed higher profit margins and more profitable M&A deals. At the same time, we do not find evidence of a significant increase in operational efficiency, which suggests that market power is becoming an important source of value. These findings are robust to the inclusion of private firms, factors that account for foreign competition, as well as to the use of alternative measures of concentration. We also show that the higher profit margins associated with an increase in concentration are reflected in higher returns to shareholders. Overall, our results suggest that the nature of U.S. product markets has undergone a shift that has potentially weakened competition across the majority of industries. |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1941&r=com |
February 20, 2020 | Permalink | Comments (0)
Mergers, Mavericks, and Tacit Collusion
| By: | Darai, D.; Roux, C.; Schneider, F. |
| Abstract: | We study whether firms’ collusive ability influences their incentives to merge: when tacit collusion is unsuccessful, firms may merge to reduce competitive pressure. We run a series of Bertrand oligopoly experiments where the participants decide whether, when, and to whom they send merger bids. Our experimental design allows us to observe (i) when and to whom mergers are proposed, (ii) when and by whom merger offers are accepted, and (iii) the effect on prices when mergers occur in this way. Our findings suggest that firms send more merger offers when prices are closer to marginal costs. Maverick firms that cut prices and thereby fuel competition are the predominant (but reluctant) receivers of these offers. |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1984&r=com |
February 20, 2020 | Permalink | Comments (0)
The Herfindahl-Hirschman Index and the distribution of social surplus
| By: | Spiegel, Yossi |
| Abstract: | I show that in a broad range of oligopoly models where firms have (not necessarily identical) constant marginal cost, HHI is an increasing function of the ratio of producers' surplus and consumers' surplus and therefore reflects the division of surplus between firms' owners and consumers. |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13925&r=com |
February 20, 2020 | Permalink | Comments (0)
Europe, Overrun by Foreign Tech Giants, Wants to Grow Its Own
The NY Times, a general critic of tech companies in the US, does note the industrial policy behind European aggressiveness against US tech in its article (and headline):
No doubt it is very hard for European competition authorities to do their job (economics-based analysis to determine harm via merger or conduct) under such circumstances. Hopefully, they remain steadfast in their mission in the face of such strong political pressures.
February 20, 2020 | Permalink | Comments (0)
Wednesday, February 19, 2020
Deputy Assistant Attorney General Richard A. Powers Delivers Remarks at the 13th International Cartel Workshop
See here for the speech.
February 19, 2020 | Permalink | Comments (0)
Why do R&D-intensive firms participate in standards organizations? The role of patents and product-market position
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By: Justus Baron; Cher Li; Shukhrat Nasirov Abstract: This paper examines the determinants of participation of R&D-intensive firms in standards development. Using data on R&D spending, patent, and trademark activities of the world's largest corporate R&D investors and their membership of standards organizations, we find a highly robust positive association between a firm's R&D spending and its participation in standards development. However, the causal effect of R&D spending on membership of standards organizations is conditional upon the firm's patent and/or product-market position, and varies across different types of standards organizations. More specifically, a strong patent position amplifies the effect of R&D spending on participation in standards-developing organizations, while a strong product-market position strengthens the impact of R&D spending on participation in the organizations that promote established standards. Finally, we also show that policy changes that increase the value of patents, such as variations in the preferential tax treatment of patent-related revenue, induce R&D-intensive firms to intensify their participation in standards organizations. URL: http://d.repec.org/n?u=RePEc:not:notgep:2019-16&r=com
February 19, 2020 | Permalink | Comments (0)
Public interest considerations in European merger control regimes
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By: Budzinski, Oliver; Stöhr, Annika Abstract: Nowadays, merger control predominantly relies upon a strict analysis of the effects from merger and acquisitions on effective competition. However, there is scope for so-called public interest considerations in several European merger control regimes and recently a number of European politicians have called for more elbowroom for non-competition-oriented interventions into merger control. For instance, they did so in the context of the prohibition of the Siemens-Alstommerger and the upcoming industrial policy discussion about European Champions. Since the social welfare effects of competitive markets present an important public interest in itself, additional public interest considerations justifying an intervention need to be non-market in the sense that these goals stand in conflict with competition. However, a trade-off between effective competition and public interest, i.e. public interests that are better served through market power then through effective competition, is a rare phenomenon. This paper gives an overview of public interest considerations in the merger policy of European Union member states and analyzes four jurisdictions in more detail. We find that the institutional designs how public interests considerations are included in the merger control regimes lack focus on non-market public interest considerations across the analyzed jurisdictions. Furthermore, there are relevant shortcomings regarding transparency and legal certainty. Moreover, our ex-pots analysis shows that the empirical record of past public interest-motivated interventions is questionable with only few interventions yielding the desired effects. Therefore, we suggest revising the public interest regulations in the respective merger control regulations by narrowing their focus to real non-market public interests and by levying decision power on less politically-influenced bodies. URL: http://d.repec.org/n?u=RePEc:zbw:tuiedp:130&r=com
February 19, 2020 | Permalink | Comments (0)
Measuring rail market power in wheat transportation
| By: | Su, Chi; Nolan, James |
| Abstract: | Many previous studies of rail market power in bulk transportation either focus the analysis at a national level or apply methods to analyze railway market behavior that are not always reliable. While railroads often appear competitive over bulk movements when evaluated on a national level, we offer that any exertion of market or duopoly power by a railway—if present—would be most likely to occur in local or regional markets where there is limited to no intramodal or intermodal competition. In addition, much of the prior research on rail market behavior relies on estimated railroad (marginal) costs, which are themselves unreliable and in turn generate questionable assessments of actual railway market power. To help shed light on this issue with respect to U.S. wheat transportation, this research evaluates regional-level market structure changes in two separate, high-volume wheat transportation corridors served by a rail duopoly. These are: (1) wheat moving from North Dakota to Minnesota; and (2) wheat moving from Kansas/Oklahoma to Texas. By assessing the nature of duopoly market power in these particular rail markets, the analysis helps support and inform policies designed to improve transportation markets for more captive wheat and grain shippers. |
| URL: | http://d.repec.org/n?u=RePEc:ags:uskbpm:292343&r=com |
February 19, 2020 | Permalink | Comments (0)
Between Stabilization and Allocation in the MENA Region: Are Competition Laws Helping?
| By: | Jala Youssef (World Bank, Cairo Office); Chahir Zaki (Department of Economics and Director of the French Section, Faculty of Economics and Political Science, Cairo University) |
| Abstract: | In the 1990s, many MENA countries relied on adjustment and stabilization programs offered by international organizations. Surprisingly, these programs implicitly implied an orientation towards a market economy structure without an explicit adoption of competition laws. This in turn raises questions on the extent to which these programs help adjusting structural and allocation issues in the beneficiaries’ economies or rather only focuses on adjusting macroeconomic imbalances. To our knowledge, there is no study assessing the macroeconomic outcomes of competition laws in the latter. Against this backdrop, our main objective is to empirically assess the impact of competition laws in the MENA region on economic growth. Our contribution is threefold: first, we create indices to assess the effectiveness of MENA countries competition laws using Youssef and Zaki (2019) methodology. Second, we disentangle the effect of competition laws on growth by distinguishing between the structural and the cyclical components of GDP growth. Third, we control for the endogeneity of the competition law adoption. Our main findings show that in general, the overall assessment of MENA countries competition legislations seems to be broadly average with the Maltese and the Algerian legislations the best performers among the group while the Iraqi and the Yemeni legislations are the weakest. Advocacy seems to be an area of weakness. As per the effect of competition policy rules on economic growth in MENA countries, competition measures exert a positive and statistically significant effect on the growth of the trend component of GDP, while its effects on the cyclical component is rather insignificant. |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1319&r=com |
February 19, 2020 | Permalink | Comments (0)
Tuesday, February 18, 2020
Production Substitution of Goods Within and Between Firms in a Multiproduct Duopoly
| By: | Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Ryoma Kitamura (Faculty of Economics, Otemon Gakuin University) |
| Abstract: | We consider the product line strategies of duopolistic firms, each of which can supply two vertically-differentiated products under nonnegative output constraints and expectations of their rival's product line reaction. Considering a game of firms with heterogeneous (homogeneous) unit costs for high- (low-) quality products, we derive the equilibria for the game and conduct comparative statics of the equilibria outcomes on the relative superiority of the high-quality product and relative cost efficiency. In two of the equilibria, we find that where the cost-inefficient firm supplies a high-quality good, social welfare can worsen as its unit cost decreases. We also characterize the result using the production substitution of differentiated goods within a firm and the high-quality good between firms. Further, by comparing social welfare in the first-best equilibria with those in the Cournot duopoly equilibria, we find that the social welfare of the market worsens in the multiproduct Cournot duopoly equilibria as the relative superiority of the high-quality good increases. |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:197&r=com |
February 18, 2020 | Permalink | Comments (0)
Explaining the Interplay Between Merchant Acceptance and Consumer Adoption in Two-Sided Markets for Payment Methods
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By: Kim Huynh; Gradon Nicholls; Oleksandr Shcherbakov Abstract: Recent consumer and merchant surveys show a decrease in the use of cash at point-of-sale (POS). Increasingly, consumers and merchants have access to a growing array of payment innovations as substitutes for cash. The market for payments is two-sided, meaning that a method of payment can be used only if both consumers and merchants adopt/accept it. This paper develops a model to assess how innovations affect consumers’ adoption and merchants’ acceptance of various payment instruments, and their usage patterns at the POS. We model this interdependence in two stages. First, consumers and merchants decide on which methods of payment to adopt and accept, respectively. Second, consumers and merchants meet at the POS, and the consumer chooses their preferred method of payment given what the merchant accepts. Estimates from our model suggest that both sides of the market can benefit from accepting all means of payment. Further, our model predicts that merchants are much more sensitive to an increase in their payment costs than consumers. We use our model to predict what would happen under three scenarios. First, increasing merchants’ cost of using credit cards would significantly reduce merchant acceptance of this payment instrument in favour of debit. Second, the cost of using cash would have to increase substantially on both sides of the market for cash usage to fall below 1 percent of transaction volume. Finally, even if all consumers/merchants adopted/accepted all methods of payment, cash would fall but would remain at 20 percent of transaction volume. These findings suggest a completely cashless society is unlikely in the foreseeable future. URL: http://d.repec.org/n?u=RePEc:bca:bocawp:19-32&r=com
February 18, 2020 | Permalink | Comments (0)
Multiple Applications, Competing Mechanisms, and Market Power
| By: | Albrecht, James; Cai, Xiaoming; Gautier, Pieter A.; Vroman, Susan |
| Abstract: | We consider a labor market with search frictions in which workers make multiple applications and firms can post and commit to general mechanisms that may be conditioned both on the number of applications received and on the number of offers received by its candidate. When the contract space includes application fees, there exists a continuum of equilibria of which only one is socially efficient. In the inefficient equilibria, firms have market power that arises from the fact that the value of a worker's application portfolio depends on what other firms offer, which allows individual firms to free ride and offer workers less than their marginal contribution. Finally, by allowing for general mechanisms, we are able to examine the sources of inefficiency in the multiple applications literature. |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13912&r=com |
February 18, 2020 | Permalink | Comments (0)
Monday, February 17, 2020
47th Annual Conference on International Antitrust Law and Policy + Antitrust Economics Workshop October 7-9, 2020
47th Annual Conference on International Antitrust Law
and Policy and Antitrust Economics Workshop
Antitrust Economics Workshop
Wednesday, October 7, 2020
8:45 a.m. – 4:25 p.m.
The workshop features economic experts and leading antitrust practitioners speaking on key topics and include a networking luncheon.
Conference
Thursday – Friday, October 8-9, 2020
Day 1 | 8:45 a.m. – 4:40 p.m., reception immediately following
Day 2 | 8:30 a.m. – 1:50 p.m.
Join antitrust agency heads, senior officials from antitrust authorities, leading attorneys from law firms and in-house legal departments, academics, and students of competition law from around the globe for one of the premier international conferences in antitrust law and policy. This year's panel discussions will address antitrust and populism, merger enforcement around the globe, emerging issues in competition law and health care, vertical restraints, and managing multijurisdictional risks and issues. A networking luncheon and reception take place on Thursday.
February 17, 2020 | Permalink | Comments (0)
GCR Awards 2020: voting now open
You can vote here.
There are lots of worthy contenders across many categories. I do want to focus on one category - the academic and advocacy category. Among the nominees is Jon Baker (American University), largely for his excellent book The Antitrust Paradigm: Restoring a Competitive Economy. Jon and I don't always see eye to eye on issues but I always find his work to be very nuanced and informed. Where we disagree, he has done what every good academic does - challenge my assumptions and make me rethink my own positions. Sometimes I have been moved to change my positions based on his writing. As some of you may recall, I had a blog symposium on the book. I thought it would be useful to collect all of the reviews of the book so that readers can get a range of views:
- Antonio Bavasso, Antitrust & Public Policies (2019 n.0)
http://a-p-p-review.com/article/download/12886/11669
- Richard N. Cooper, Foreign Affairs (November/December 2019) (capsule review)
- Diane Coyle, The Enlighted Economist (May 31, 2019)
- Jason Furman, Antitrust & Competition Policy Blog (May 15, 2019)
- Shubha Ghosh, Antitrust & Competition Policy Blog (May 3, 2019)
- Norbert Häring, Handelsblatt (Nov. 28, 2019)
- LawProfBlawg, Above the Law (May 21, 2019)
https://abovethelaw.com/2019/05/the-antitrust-paradigm-shift-without-a-clutch/
- Barak Orbach, Antitrust Source (vol. 19, no. 3, Dec. 2019)
- Fiona Scott Morton, Antitrust & Competition Policy Blog (May 3, 2019)
- Mike Swift, FTCWatch (MLex) (May 10, 2019)
- Zephyr Teachout, Democracy Journal (Summer 2019)
https://democracyjournal.org/magazine/53/antitrust-deficit/
- Spencer Waller, Antitrust & Competition Policy Blog (May 3, 2019)
- Clifford Winston, Journal of Economic Literature (forthcoming 2020)
https://www.aeaweb.org/content/file?id=11316
February 17, 2020 | Permalink | Comments (1)
Market concentration and bank M&As: Evidence from the European sovereign debt crisis
| By: | Leledakis, George N.; Pyrgiotakis, Emmanouil G. |
| Abstract: | Using a sample of 312 bank M&As announced between 1998 and 2016 in the EU-27 countries, this paper investigates the impact of market concentration and the European sovereign debt crisis on the way investors react to these corporate events. In Western European countries, we find results which contrast the conventional wisdom that acquiring banks lose around the merger announcement date. In fact, since 2009, acquiring banks shareholders gain approximately $34 million around the announcement, a $56 million improvement compared to the pre-crisis period. These documented shareholder gains are also accompanied by significant improvements in post-merger profitability. Markedly, we link this superior performance of the post-2008 acquirers with the degree of market concentration in the Western European region. Finally, results for the Eastern European countries indicate that the crisis did not have a significant impact on the quality of bank M&As in the region. |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95739&r=com |
February 17, 2020 | Permalink | Comments (0)
The Effects of Competition in Consumer Credit Market
| By: | Stefan Gissler; Rodney Ramcharan; Edison Yu |
| Abstract: | This paper finds that banks and non-banks respond differently to increased competition in consumer credit markets. Increased competition and the greater threat of failure induces banks to specialize more in relationship business lending, and surviving banks are more profitable. However, non-banks change their credit policy when faced with more competition and expand credit to riskier borrowers at the extensive margin, resulting in higher default rates. These results show how the effects of competition depend on the form of intermediation. They also suggest that increased competition can cause credit risk to migrate outside the traditional supervisory umbrella. |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26183&r=com |
February 17, 2020 | Permalink | Comments (0)
Farmers, Traders, and Processors: Estimating the Welfare Loss from Double Marginalization for the Indonesian Rubber Sector
| By: | Kopp, Thomas; Sexton, Richard J. |
| Abstract: | Reducing buyer market power over agricultural suppliers is a key strategy to improve rural livelihoods in emerging economies. This paper focuses on implications of failure of a supply chain to coordinate vertically for farm incomes, with specific application to the Indonesian rubber industry. In the Jambi province production is mainly in the hands of smallholder farmers, who sell via spot transactions to a network of traders who in turn sell in spot exchanges to rubber processors. Processing is highly concentrated, and, whereas there are large numbers of rubber traders, evidence indicates that both traders and processors exercise oligopsony power, a classic problem of double marginalization. We estimate the extent of buyer market power in farmer-trader and trader-processor interactions and derive the welfare loss from double marginalization. We then explore the nature of this market failure and quantify the extent of welfare loss and redistribution away from farmers. We conclude by asking why the market has not addressed this failure through improved vertical coordination in the supply chain and discussing policy innovations to facilitate better coordination. |
| URL: | http://d.repec.org/n?u=RePEc:ags:gewi19:292318&r=com |
February 17, 2020 | Permalink | Comments (0)
