Antitrust & Competition Policy Blog

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

Tuesday, March 31, 2020

Competition Law’s Innovation Factor

Competition Law’s Innovation Factor

The Relevant Market in Dynamic Contexts in the EU and the US

Viktoria H S E Robertson

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.

Viktoria H S E Robertson is Associate Professor at the University of Graz.

March 31, 2020 | Permalink | Comments (0)

The EU Rules on Jurisdiction for and the Law Applicable to, Follow-on, and Stand-alone Damages Following Competition Infringement

FRAND Licensing Levels under EU Law

Jean-Sébastien Borghetti, Université Paris 2 Panthéon Assas, Igor Nikolic, University College London, and Nicolas Petit, European University Institute - Department of Law (LAW) identify FRAND Licensing Levels under EU Law.

ABSTRACT: This paper investigates whether EU or national law provide legal authority to impose a direct or indirect obligation on Standard Essential Patent (“SEP”) holders to license at all levels of the value chain, including at component level (“license to all”, hereafter LTA). Extensive analysis of EU text and case-law (general principles of EU law, patent, contract and competition laws) suggests that there are only very limited doctrinal grounds to impose an LTA obligation on SEP holders that made a FRAND commitment. Similarly, French contract law – which applies to FRAND-committed SEP before the European standard setting organisation ETSI – does not give rise to a legal basis for the introduction of a ‘license to all’ regime. In the rare cases where licensing obligations might be imposed on SEP holders, these would effectively be akin to compulsory licensing, where public policy calls for restraint.

March 31, 2020 | Permalink | Comments (0)

Economic Resilience, Globalization and Market Governance: Facing the Covid-19 Test

Frederic Jenny (ESSEC, OECD) has written on Economic Resilience, Globalization and Market Governance: Facing the Covid-19 Test. Download FJ Economic Resilience CoVid

March 31, 2020 | Permalink | Comments (0)

Technology Promotion in WTO Law: The Discrepancy between Trade, IP Protection, and Competition Law? – The Case with EU’s Antidumping Policies

Henrik Andersen, Copenhagen Business School - CBS Law has written on Technology Promotion in WTO Law: The Discrepancy between Trade, IP Protection, and Competition Law? – The Case with EU’s Antidumping Policies.

ABSTRACT: World Trade Organization law has only little to offer in the discussion on finding a right balance and design of and between IP and competition law. However, the WTO provides a trade dimension that should not be ignored in that discussion. The paper discusses antidumping law and its relation to IP and competition law, and it demonstrates that the trade dimension has close links to both IP and competition and should be taken into account in the discussion of finding a proper design for regulating the market of new technologies. More specifically, the paper focuses on 1) the WTO law affecting IP and competition in a trading context, and it 2) uses EU’s antidumping policies towards China as example. That includes discussions about the newest EU distorted economy approach in antidumping cases, which have implications for producers of technology.

March 31, 2020 | Permalink | Comments (0)

Monday, March 30, 2020

How Much is Privacy Worth Around the World and Across Platforms?

Jeffrey Prince, Indiana University - Kelley School of Business - Department of Business Economics & Public Policy and Scott Wallsten, Technology Policy Institute ask How Much is Privacy Worth Around the World and Across Platforms? Worth reading!

ABSTRACT: Data privacy has become a controversial policy issue around the world. The EU passed strict privacy rules, the state of California has rules coming into effect in 2020, and the U.S. FTC and Congress are pursuing privacy agendas. However, limited empirical evidence illuminates how much consumers value privacy or how their valuations vary across or within countries and contexts. In this paper, we measure individuals’ valuation of online privacy across a wide range of countries and data types. The online information we consider includes personal information on finances, biometrics, location, networks, communications, and web browsing. The countries we analyze include the United States, Mexico, Brazil, Colombia, Argentina, and Germany. We conduct these measures using carefully designed, internationally distributed, discrete choice surveys. These surveys allow us to measure tradeoffs across these aspects of online privacy, and importantly, allow us to make relative comparisons of these tradeoffs across many countries.

We find that people in Germany place the highest value on privacy compared to the U.S. and Latin American countries. Across countries, people place the highest value on keeping financial and biometric information private — balance and fingerprint data in particular. Germany’s status as the country with highest value for privacy is driven largely by extremely strong preferences for keeping financial data private. German respondents were willing to share bank balance information in exchange for monthly payments of $15.43 and cash withdrawal information for $13.42/month. People had to be paid the least for permission to receive ads, meaning people are much less concerned about ads than any of the other types of data we explored. Indeed, in Argentina, Colombia, and Mexico, the average respondent was willing to pay small amounts to receive ads, suggesting that people in those countries like receiving ads. Location privacy also turned out to be among the least valuable to people in every country.

We also find that women value privacy more than men do across platforms, data types, and countries and older people value privacy more than younger people. We find no real differences across income in privacy preferences.

These results are largely robust to a randomly controlled treatment, where a group of survey respondents received a written statement about the value of data collection by these entities. Preferences for privacy are generally unaffected by such a prompt, suggesting that their values of only privacy are reasonably stable and not easily influenced.

March 30, 2020 | Permalink | Comments (0)

Optimizing Public Enforcement in the Digital Single Market Through Cross-Institutional Collaboration

Agustin Reyna, BEUC, The European Consumer Organisation advocates Optimizing Public Enforcement in the Digital Single Market Through Cross-Institutional Collaboration.

ABSTRACT: The digital economy has brought new challenges to the enforcement of competition, consumer and data protection laws. The same company behaviour can fall within the competence of different authorities. Likewise, the effectiveness of remedies in digital markets often requires the input of different authorities, especially regarding consumer-facing remedies and remedies involving the sharing of consumers’ personal information. This paper discusses different proposals about how to optimise public enforcement in digital markets by enhancing the co-operation between competition agencies, data protection and consumer bodies in the EU.

March 30, 2020 | Permalink | Comments (0)

The ‘Custom And Practice’ Of Wall Street Banks Keeping “Proprietary” Fees Charged To Public Corporations Off Of The SEC “Edgar” Site And Otherwise Confidential: Impact On Price? Unlawful Conspiracy?

Thomas Wilcox has a paper on The ‘Custom And Practice’ Of Wall Street Banks Keeping “Proprietary” Fees Charged To Public Corporations Off Of The SEC “Edgar” Site And Otherwise Confidential: Impact On Price? Unlawful Conspiracy?.

Download 20_03_08_Antitrut and SEC combined

March 30, 2020 | Permalink | Comments (0)

Rebating Antitrust Fines to Encourage Private Damages Actions

Winand Emons, University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR) and Severin Lehnhard, University of Bern are Rebating Antitrust Fines to Encourage Private Damages Actions.

ABSTRACT: To encourage private actions for damages in antitrust cases some jurisdictions subtract a fraction of the redress from the fine. We analyze the effectiveness of this policy. Such a rebate does not encourage settlement negotiations that would otherwise not occur. If, however, the parties settle without the rebate, the introduction of the reduction increases the settlement amount, yet at the price of reduced deterrence for those wrongdoers who are actually fined. Under a leniency program the rebate has no effect on the leniency applicant: she doesn't pay a fine that can be reduced. The overall effect of a fine reduction on deterrence is, therefore, negative.

March 30, 2020 | Permalink | Comments (0)

Artificial Intelligence Platforms – A New Research Agenda for Digital Platform Economy

Tomasz Mucha, Aalto University, Department of Industrial Engineering and Management and Timo Seppala, The Research Institute of the Finnish Economy; Aalto University offer Artificial Intelligence Platforms – A New Research Agenda for Digital Platform Economy.

ABSTRACT: Three out of nine of S&P500 digital platform companies stand out as building own artificial intelligence (AI) platforms. There is overwhelming empirical evidence of AI technologies are being central to running a digital platform business. However, the current research agenda is not directing researchers to study AI technologies in the context of digital platforms. We have divided the proposed AI platforms research agenda as follows: The first set of questions we propose relates to an overall conceptualization of AI platforms. Thereafter, we recognize specific aspects of AI platforms, which need to be investigated in detail to gain understanding that is more complete. The second set of questions we propose relates to understanding the dynamics between AI platforms and the broader socio-economic context. This topic might be particularly relevant to economies of countries without indigenous AI platforms. Our paper builds on the proposition that AI is a general-purpose technology, which by itself carries properties of a digital platform.

March 30, 2020 | Permalink | Comments (0)

Friday, March 27, 2020

Can Mergers and Acquisitions Internalize Positive Externalities in Funding Innovation?

Thomas J. Chemmanur, Boston College - Carroll School of Management, Ang Li, University of Kentucky, Mark H. Liu, University of Kentucky - Gatton College of Business and Economics ask Can Mergers and Acquisitions Internalize Positive Externalities in Funding Innovation?

ABSTRACT: Fundamental innovation usually involves huge upfront costs, but the benefits are spread across various sectors of the economy. Given the large costs and limited appropriability of the benefits associated with fundamental innovations, individual firms underinvest in these innovations relative to the socially optimal level. We find that mergers and acquisitions (M&As) can internalize the positive externalities by merging firms from both the user industries and the producer industries of an innovation. Using the US patent citation dataset, we define the user and producer relationship between each pair of industries and between each pair of industry and technological class. We then show that after a merger between an innovation user and an innovation producer, the quantity of innovation output increases, and the increase is driven by targeted technological classes.

March 27, 2020 | Permalink | Comments (0)

Mere Common Ownership and the Antitrust Laws

Thom Lambert, Missouri offers thoughts on Mere Common Ownership and the Antitrust Laws.

ABSTRACT: Common ownership (also called horizontal shareholding) refers to a stock investor’s owner-ship of minority stakes in multiple competing firms. Recent empirical studies have purported to show that institutional investors’ common ownership reduces competition among commonly owned competitors. This Article considers the legality of “mere” common ownership—horizontal shareholding that is not accompanied by any sort of illicit agreement (e.g., a hub-and-spoke conspiracy) or the holding of control-conferring shares—under the U.S. antitrust laws. Prominent antitrust scholars and the leading treatise have concluded that mere common ownership that has the incidental effect of lessening market competition may violate both Clayton Act Section 7 and Sherman Act Section 1. This Article demonstrates otherwise. Competition-lessening instances of mere common ownership do not violate Section 7 because they fall within the provision’s “solely for investment” exemption, which the scholars calling for condemnation have misinterpreted. Mere common ownership does not run afoul of Section 1 because it lacks the sort of agreement (contract, combination, or conspiracy) required for liability under that provision. From a social welfare standpoint, these legal outcomes are desirable. Condemning mere common ownership under the antitrust laws would likely entail significant marginal costs, while the marginal benefits such condemnation would secure are speculative. Accordingly, courts and enforcers should not, on the current empirical record, stretch the antitrust laws to condemn mere common ownership.

March 27, 2020 | Permalink | Comments (0)

Thursday, March 26, 2020

Common ownership: an EU perspective

Alec J Burnside and Adam Kidane discuss Common ownership: an EU perspective.

ABSTRACT: Recent antitrust scholarship has claimed that parallel investments by institutional investors in competing firms may harm competition. Proponents of this theory, dubbed ‘common ownership’, posit that harm may arise even with small shareholdings, particularly in oligopolistic markets.  Although the debate has been focused on the U.S., the European Commission recently invoked common ownership as an ‘element of context’ in two merger decisions. This article examines common ownership through a European lens. A threshold issue will be whether levels of common ownership in Europe are comparable to those in the U.S.; the available evidence suggests they are not.  We note a number of misconceptions about the asset management industry, putting in doubt core elements of the common ownership hypothesis. We review the academic debate in which the theory has been vigorously contested on both methodological and theoretical grounds. We review the battle between empirical studies claiming to demonstrate and to disprove common ownership effects. The article considers whether the theory is sufficiently robust to provide a basis for enforcement, and (if so) whether current European Union competition law tools could be used to that end. The European Commission’s invocation of common ownership is subjected to critical evaluation. We conclude that it is premature to draw any conclusions as to the reality of alleged common ownership concerns or to base enforcement efforts on them. Until a better understanding of the underlying facts and a broad academic consensus emerge, reform prescriptions that have been advanced are a solution in search of a problem—to say nothing of the conflicts that would arise with other rules governing asset management.

March 26, 2020 | Permalink | Comments (0)

A Knowledge Theory of Tacit Agreement

Wentong Zheng, University of Floirda offers A Knowledge Theory of Tacit Agreement.

ABSTRACT: A persistent puzzle in antitrust law is whether and when an unlawful agreement could arise from conduct or verbalized communications that fall short of an explicit agreement. While courts have found such tacit agreements to exist in idiosyncratic scenarios, they have failed to articulate a clear and consistent logic for such findings. This Article attempts to fill this gap by proposing a unified theory of tacit agreement. It defines a tacit agreement as an agreement formed by non-explicit communications that enable the alleged coconspirators to have constructive knowledge of one another's conspiratory intent. This approach to tacit agreement is more faithful to the conceptual integrity and the statutory meaning of the agreement requirement under the Sherman Act. More importantly, it provides a flexible yet consistent formula for determining tacit agreements. This formula could be applied to any factual scenarios, including conscious parallelism, parallel conduct preceded by suggestive communications, hub-and-spoke conspiracy, and facilitating practices.

March 26, 2020 | Permalink | Comments (0)

Merger Efficiency Gains: Evidence from a Large Transport Merger in France

Ariane Charpin, Deloitte France and Joanna Piechuka, German Institute for Economic Research (DIW Berlin) address Merger Efficiency Gains: Evidence from a Large Transport Merger in France.

ABSTRACT: Many industries are seeing an increase in concentration, leading to a discussion on the effectiveness of horizontal merger enforcement. The policy debate shows that one of the key arguments put forward when supporting potential mergers is the possibility of realization of merger efficiency gains, specifically in the transport industry. Yet, there exists little empirical evidence on the actual effects of realized mergers on cost efficiencies. We exploit a large and highly debated merger that took place in the French transport industry to evaluate whether a merger between two major transport groups may give rise to merger efficiency gains. We exploit the industry setting to employ a difference-in-differences methodology evaluating the effect of the merger on operating costs of merging transport groups. Our results show that the merger did not lead to any merger specific efficiency gains for the merging parties. Our study relies on the use of several control groups and is robust to a great number of robustness checks as well as to the introduction of heterogeneous treatment effects, depending on the identity of the merging party, the contract type in place, as well as the closeness of competition of local operators. Overall, our study contributes to a growing number of case studies undertaken by economists that can help determine whether horizontal merger policy is being properly enforced.

March 26, 2020 | Permalink | Comments (0)

Wednesday, March 25, 2020

Working from Home Under Social Isolation: Online Content Contributions During the Coronavirus Shock


https://www.hbs.edu/faculty/Publication%20Files/20-096_aa5821fd-bf72-41ff-905f-d21f5ce9182a.pdf

 
Working from Home Under Social Isolation: Online Content Contributions During the Coronavirus Shock

Prithwiraj Choudhury, Wesley W. Koo, Xina Li

The coronavirus outbreak of 2020 has precipitated a shock where millions of workers around the globe have been forced to work from home under conditions of social isolation. In this paper, we exploit the coronavirus shock in China to estimate differences in content contributions to online communities by workers who work from home (WFH) relative to workers who cannot work from home (CWFH). Our pre-period comprises the time frame of the Chinese New Year holidays when most workers were on vacation in their hometowns. In the post-period, all workers were under mandatory lockdown facing conditions of social isolation. However, while workers in certain industries such as the internet industry, software industry, etc. were asked to WFH, other workers in industries such as airlines, computer hardware, and manufacturing could not work from home. We estimate a difference-in-differences specification comparing open content contributions by WFH workers to contributions by CWFH workers in the post-period. Using data from a popular question-and-answer platform, we find that WFH workers posted 19% fewer answers than CWFH workers. Moreover, relative to CWFH workers, WFH workers answered less popular questions. We also provide suggestive evidence (using natural language processing tools) for a plausible mechanism: psychic costs related to working from home without adequate supporting arrangements. Finally, we present correlational findings regarding how online contributions are higher under conditions of both WFH and CWFH compared to physical work in the office in a prior period. Our findings contribute to literatures on working from home and online content contributions by workers and have managerial implications for managing WFH under conditions of social isolation. 

March 25, 2020 | Permalink | Comments (0)

Coordinated Capacity Reductions and Public Communication in the Airline Industry

Gaurab Aryal, University of Virginia - Department of Economics, Federico Ciliberto, University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR), and Benjamin T. Leyden, Cornell University - Dyson School of Applied Economics and Management study Coordinated Capacity Reductions and Public Communication in the Airline Industry.

ABSTRACT: We investigate whether legacy U.S. airlines communicated via earnings calls to coordinate with other legacy airlines in offering fewer seats on competitive routes. To this end, we first use text analytics to build a novel dataset on communication among airlines about their capacity choices. Estimates from our preferred specification show that when all legacy airlines in a market discuss the concept of "capacity discipline," they reduce offered seats by 1.79%. We verify that this reduction materializes only when airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral intentions to reduce capacity, and then following through on those announcements. Additional results from conditional-exogeneity tests and control function estimates confirm our interpretation.

March 25, 2020 | Permalink | Comments (0)

Rebating Antitrust Fines to Encourage Private Damages Actions

Winand Emons, University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR) and Severin Lehnhard, University of Bern analyze Rebating Antitrust Fines to Encourage Private Damages Actions.

ABSTRACT: To encourage private actions for damages in antitrust cases some jurisdictions subtract a fraction of the redress from the fine. We analyze the effectiveness of this policy. Such a rebate does not encourage settlement negotiations that would otherwise not occur. If, however, the parties settle without the rebate, the introduction of the reduction increases the settlement amount, yet at the price of reduced deterrence for those wrongdoers who are actually fined. Under a leniency program the rebate has no effect on the leniency applicant: she doesn't pay a fine that can be reduced. The overall effect of a fine reduction on deterrence is, therefore, negative.

March 25, 2020 | Permalink | Comments (0)

Monopsony in Spatial Equilibrium

By: Matthew E. KahnJoseph Tracy
Abstract: An emerging labor economics literature studies the consequences of firms exercising market power in local labor markets. These monopsony models have implications for trends in earnings inequality. The extent of this market power is likely to vary across local labor markets. In choosing what market to live and work in, workers tradeoff wages, rents and local amenities. Building on the Rosen/Roback spatial equilibrium model, we investigate how the existence of local monopsony power affects the cross-sectional spatial distribution of wages and rents across cities. We find an employment-weighted elasticity of land prices to concentration of –0.034—similar to Rinz (2018) reported elasticity of compensation to concentration. This finding has implications for who bears the economic incidence of labor market power. We present two extensions of the model focusing on the role of migration costs and worker skill heterogeneity.
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:26295&r=com

March 25, 2020 | Permalink | Comments (0)

Tuesday, March 24, 2020

Looking Back to the Future—Selective SEP Licensing Through a Competition Law Lens?

Evelina Kurgonaitė, Pat Treacy, Edwin Bond ask Looking Back to the Future—Selective SEP Licensing Through a Competition Law Lens?

ABSTRACT:

At first glance, there may appear to be an inherent conflict between competition law and intellectual property (IP) law. Closer inspection may suggest that the two areas of law seek to achieve similar policy aims in subtly different ways:

In practice, there have been major disagreements about how the relationship between competition law and IP law should be balanced, including when the implementation of important technical standards requires the use of technology to which IP rights apply.

This article first summarises the impact of competition law in this field to date, before exploring whether competition law may have a role to play in resolving some current controversies relating to IP licensing.

March 24, 2020 | Permalink | Comments (0)