Friday, May 22, 2020

Major League Baseball’s Antitrust Exemption and Pay

Louis-Daniel Pape, CREST - Institut Polytechnique de Paris addresses Major League Baseball’s Antitrust Exemption and Pay.

ABSTRACT: The U.S. Supreme Court exempted Major League Baseball from the Sherman Antitrust Act. As a result, debuting players are still precluded from switching teams, rendering owners de facto monopsonies. By how much does this lower wages? Using a quasi-random discontinuity in the rule determining eligibility for Arbitration, by which a third party determines the player’s wage to a level commensurate with his market value, this exemption is found to have lowered wages by at least 30%.

May 22, 2020 | Permalink | Comments (0)

Challenging Consummated Mergers Under Section 2

Douglas H. Ginsburg, U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty Koren Wong-Ervin, Axinn, Veltrop, & Harkrider LLP investigate Challenging Consummated Mergers Under Section 2.

ABSTRACT: In the last year, officials at the U.S. Antitrust Agencies have taken a number of troubling positions with respect to what is required to challenge consummated mergers under Section 2 of the Sherman Act. These include: (1) the contention that Section 2 presents a “lower bar” than Section 7 of the Clayton Act in that Section 2 requires mere proof that the merger was “reasonably capable of” contributing significantly to the acquisition or maintenance of monopoly power; (2) suggestions that evidence of intent may be used as a proxy for probable harm; and (3) the idea that Section 2 can be used to challenge a series of acquisitions no one of which by itself was problematic but which together form an anticompetitive course of conduct. In this article we explain why these contentions are unfounded.

May 22, 2020 | Permalink | Comments (0)

Thursday, May 21, 2020

Respectful Consideration, but Not Deference: Chinese Sovereign Amici in the US Supreme Court Vitamin C Judgment

Qingxiu Bu identifies Respectful Consideration, but Not Deference: Chinese Sovereign Amici in the US Supreme Court Vitamin C Judgment.

ABSTRACT: The legality of resale price agreements has been heavily discussed in the EU and the USA.

It is now time to examine the position adopted by courts and authorities in other jurisdictions.

In China, courts are progressively developing their approach and authorities are doing the same—not necessarily in the same direction.

May 21, 2020 | Permalink | Comments (0)

Old abuses in new markets? Dealing with excessive pricing by a two-sided platform

Zeynep Ayata asks Old abuses in new markets? Dealing with excessive pricing by a two-sided platform.

ABSTRACT: Exploitative abuses, especially excessive pricing, have been one of the most debated forms of abuse of dominant position. Unlike exclusionary abuses, they have been prohibited only under certain jurisdictions and on rather rare occasions. In Europe there have been few recent decisions and investigations that have reiterated existing approaches and tests for establishing excessive pricing. The Turkish Competition Authority’s Sahibinden.com decision has come at such a time where the discussion on excessive pricing has been somewhat revived. However, this decision stands out as it is the first one where a competition authority has found prices to be excessive and therefore abusive in the context of a two-sided platform. Competition in platform markets display unique dynamics that may be very different from what may be observed in traditional markets especially in terms of pricing strategies. This article aims to demonstrate, through the Turkish Competition Authority’s recent decision, the difficulties in applying existing tests and criteria on excessive pricing to a two-sided platform. A thorough analysis of this decision demonstrates that competition enforcement in what may be called ‘new’ platform markets necessitates new approaches or adjustments of existing ones.

May 21, 2020 | Permalink | Comments (0)

Competition Policy and the Profitability of Corporate Acquisitions

Gishan Dissanaike, Wolfgang Drobetz, and Paul P.Momtaz discuss Competition Policy and the Profitability of Corporate Acquisitions

ABSTRACT: Merger control exists to help safeguard effective competition. However, findings from a natural experiment suggest that regulatory merger control reduces the profitability of corporate acquisitions. Uncertainty about merger control decisions reduces takeover threats from foreign and very large acquirers, therefore facilitating agency-motivated deals. Valuation effects are more pronounced in countries with stronger law enforcement and in more concentrated industries. Our results suggest that competition policy may impede the efficiency of the M&A market.

May 21, 2020 | Permalink | Comments (0)

Future-Mapping the Three Dimensions of EU Competition Law: Modernisation Now and After COVID-19

Francisco Costa-Cabral, Tilburg Law and Economics Center (TILEC) identifies Future-Mapping the Three Dimensions of EU Competition Law: Modernisation Now and After COVID-19.

ABSTRACT: EU competition law is traditionally understood in two-dimensions: judicial control and enforcement. This paper considers a third dimension: its normative concerns in the context of EU law. In mapping the future of these dimensions, the paper asks if the understanding behind the modernisation of the Commission’s enforcement is still tenable. In relation to judicial control, the effects-based approach of modernisation has either been incorporated by the case law at the cost of its coherence or ignored. Regarding enforcement, modernisation has resulted in the Commission having to step outside its guidance and in multiple proposals to adjust competition rules. As for the normative dimension, modernisation’s emphasis on consumer welfare has not prevented openness to broader concerns and setting this priority aside in reaction to COVID-19. The direction of modernisation will thus continue to raise judicial difficulties and, should it hamper enforcement, possibly lead to legislation that marginalises competition law. A better alternative would be, as was done for COVID-19, to reinforce the normative connection with the rest of EU law.

May 21, 2020 | Permalink | Comments (0)

Wednesday, May 20, 2020

Antitrust Antitextualism

Daniel A. Crane, University of Michigan Law School has written on Antitrust Antitextualism.

ABSTRACT: Judges and scholars frequently describe antitrust as a common law system predicated on open-textured statutes, but that description fails to capture a historically persistent phenomenon; judicial disregard of the plain meaning of the statutory texts and manifest purposes of Congress. This pattern of judicial nullification is not evenly distributed: When the courts have deviated from the plain meaning or Congressional purpose, they have uniformly done so to limit the reach of antitrust liability or curtail the labor exemption to the benefit of industrial interests. This phenomenon cannot be explained solely or even primarily as a tug-of-war between a progressive Congress and conservative courts. The judges responsible for these decisions were far from uniformly conservative, Congress has not mobilized to overturn the judicial precedents, nor, despite opportunities to do so, have the courts constitutionalized their holdings to prevent Congressional overriding. Antitrust antitextualism is best understood as an implicit political arrangement in which Congress writes broad statutes expressing anti-bigness republican idealism, and then the courts read down the statutes pragmatically to accommodate competing demands for efficiency and industrial progress.

May 20, 2020 | Permalink | Comments (0)

Old abuses in new markets? Dealing with excessive pricing by a two-sided platform

Zeynep Ayata asks Old abuses in new markets? Dealing with excessive pricing by a two-sided platform.

ABSTRACT: Exploitative abuses, especially excessive pricing, have been one of the most debated forms of abuse of dominant position. Unlike exclusionary abuses, they have been prohibited only under certain jurisdictions and on rather rare occasions. In Europe there have been few recent decisions and investigations that have reiterated existing approaches and tests for establishing excessive pricing. The Turkish Competition Authority’s Sahibinden.com decision has come at such a time where the discussion on excessive pricing has been somewhat revived. However, this decision stands out as it is the first one where a competition authority has found prices to be excessive and therefore abusive in the context of a two-sided platform. Competition in platform markets display unique dynamics that may be very different from what may be observed in traditional markets especially in terms of pricing strategies. This article aims to demonstrate, through the Turkish Competition Authority’s recent decision, the difficulties in applying existing tests and criteria on excessive pricing to a two-sided platform. A thorough analysis of this decision demonstrates that competition enforcement in what may be called ‘new’ platform markets necessitates new approaches or adjustments of existing ones.

May 20, 2020 | Permalink | Comments (0)

FTC Hot Topics with Commissioner Christine Wilson: Regulatory Reform, Privacy, Antitrust, & Beyond

Svetlana Gans interviewed Christine Wilson for FedSoc.

 

 

 

May 20, 2020 | Permalink | Comments (0)

A Model of Data and Data Exchange in Competitive Markets

António M. Osório C., Universitat Rovira i Virgili offers A Model of Data and Data Exchange in Competitive Markets.

ABSTRACT: Companies are increasingly using data to predict behavior, automate and improve the relation with their customers. In this context, data exchange rises important concerns regarding competition, concentration and welfare. This paper presents a novel linear demand model that capture data and information effects in competitive markets, which are summarized in a precision parameter. Subsequently, this modelling approach is applied to study the firms incentives to exchange data and the implications in terms of market variables, welfare and concentration measures. We found that incentives to data exchange between competitor firms emerge providing that the information gains are relatively stronger than the competitor information gains, and the associated strategic correlation effect is not too strong. The results also suggest that market concentration tends to increase after data exchange, but both consumers and producers benefit from it. The reason is that better data allows firms to delivering varieties closer to consumers' needs.

May 20, 2020 | Permalink | Comments (0)

GDPR and the Importance of Data to AI Startups

James E. Bessen, Technology & Policy Research Initiative, BU School of Law, Stephen Michael Impink New York University (NYU) - Leonard N. Stern School of Business, Lydia Reichensperger, Technology & Policy Research Initiative, BU School of Law, Robert Seamans, New York University (NYU) - Leonard N. Stern School of Business identify GDPR and the Importance of Data to AI Startups.

ABSTRACT: What is the impact of the European Union’s General Data Protection Regime (“GDPR”) and data regulation on AI startups? How important is data to AI product development? We study these questions using unique survey data of commercial AI startups. AI startups rely on data for their product development. Given the scale and scope of their business models, these startups are particularly susceptible to policy changes impacting data collection, storage and use. We find that training data and frequent model refreshes are particularly important for AI startups that rely on neural nets and ensemble learning algorithms. We also find that firms with customers in Europe are significantly more likely to create a new position to handle GDPR-related issues or to reallocate firm resources due to GDPR.

May 20, 2020 | Permalink | Comments (0)

Tuesday, May 19, 2020

Strategic Complementarity and Asymmetric Price Setting Among Firms

Maiko Koga, Bank of Japan Koichi Yoshino, Bank of Japan Tomoya Sakata, Bank of Japan address Strategic Complementarity and Asymmetric Price Setting Among Firms.

ABSTRACT: Using a large panel of firm survey data from Japan (Tankan survey), we provide micro evidence of strategic complementarity in firms’ price setting. We find that a firm’s price adjustment is affected by its competitors’ pricing behaviour and that this adjustment is larger when the firm is lowering its price, which accords with the theoretical predictions of quasi-kinked demand. Our results also indicate that firms with greater pricing power tend to be less sensitive to their competitors’ behaviour. Finally, we observe that heightened demand uncertainty mitigates the effect of shifts in demand conditions on the likelihood of price adjustment.

May 19, 2020 | Permalink | Comments (0)

Collaboration and Competition Policy in a Market-Based Hospital System: A Case Study from the Netherlands

Wouter van der Schors, Ron Kemp, Marco Varkevisser  investigate Collaboration and Competition Policy in a Market-Based Hospital System: A Case Study from the Netherlands.

ABSTRACT: In the Dutch healthcare system, provider competition is used as a tool to improve efficiency. From a competition policy perspective, little is known about how collaboration among healthcare providers contributes to overall patient welfare, and how a balance is achieved between scale benefits and preventing anti-competitive collusion. This paper examines the ex-post effects of a Dutch case study in which three competing hospitals have collaborated to provide high-complexity low-volume cancer surgery, an arrangement that tests the limits of permissibility under the Dutch cartel prohibition. Our preliminary empirical research demonstrated only a modest increase in price and travel time for some of the tumour surgeries. Volume analysis showed that the intended centralization of surgical procedures has not been fully realized. Our findings highlight the importance of a comprehensive self-assessment by the collaborating hospitals to ex-ante assess (potential) efficiencies and antitrust risks. Such self-assessments could benefit from research focused on which collaborations are most appropriate to achieve quality gains. For the ex-post assessment by competition authorities following the cartel prohibition, a more thorough insight into the (long-term) changes in hospital prices, profitability, and quality after collaboration is needed.

May 19, 2020 | Permalink | Comments (0)

Huawei v ZTE Five Years After—Luxembourg Locuta Causa Finita?

Stephan Waldheim Bird asks Huawei v ZTE Five Years After—Luxembourg Locuta Causa Finita?

ABSTRACT: Very few judgements from the EU level have reshaped daily court practice like Huawei vs. ZTE1 did for standard-essential patent (‘SEP’) litigation2. Five years after, the national courts have had ample opportunity to adjust and to advance their view on how to transpose the Court of Justice of the European Union’s (‘CJEU’) landmark decision. Questions dealt with include most notably:

  • Does every SEP necessarily confer dominance to its holder?

  • How detailed does an infringement notice need to be, particularly if a portfolio license is sought after?

  • When can the patent owner safely conclude that the user is an unwilling licensee and the seeking of an injunction thus justified?

  • And, most importantly, how to determine a fair, reasonable, and non-discriminatory (‘FRAND’) license offer.

This paper gives an overview of the current state of play and of the questions that (appear to) remain open todate.

May 19, 2020 | Permalink | Comments (0)

Monday, May 18, 2020

Dominance and Market Definition in the Pharmaceutical Industry Following the ECJ Paroxetine Judgment

Damien Neven and Georges Siotis discuss Dominance and Market Definition in the Pharmaceutical Industry Following the ECJ Paroxetine Judgment.

ABSTRACT:

  • This paper discusses alternative ways in which unilateral conduct to foreclose the entry of generics can be framed.

  • We argue that defining dominance in relation to the actual competitive constraints faced by the originators at the time of the abuse (as the Paroxetine and Servier decisions) is likely to lead to under-enforcement.

  • The suggestion by the CAT, supported by the ECJ, to consider the competitive constraint exercised by the generics when entry is imminent does not help in addressing this under-enforcement.

  • By contrast, an assessment of competitive constraints that is contingent on the abuse does not suffer from this shortcoming.

May 18, 2020 | Permalink | Comments (0)

Which Retail Outlets Generate the Most Physical Interactions?

Avi Goldfarb and Catherine Tucker ask Which Retail Outlets Generate the Most Physical Interactions?

ABSTRACT: This paper seeks to answer the simple question of what category of retail outlets generates the most physical interactions in the regular course of life. In this way, we aim to bring a marketing perspective to discussions about which businesses may be most risky from the standpoint of spreading contagious disease. We use detailed data from people's mobile devices prior to the implementation of social distancing measures in the United States. With this data, we examine a number of potential indicators of risk of contagion: The absolute number of visits and visitors, how many of the visits are generated by the same people, the median average distance traveled by the visitor to the retailer, and the number of customers from Canada and Mexico. We find that retailers with a single outlet tend to attract relatively few visitors, fewer one-off visitors, and have fewer international customers. For retailers that have multiple stores the patterns are non-linear. Retailers that have such a large number of stores that they are ubiquitous, tend to exhibit fewer visits and visitors and attract customers from a smaller distance. However, retailers that have a large enough footprint to be well known, but not large enough to be ubiquitous tend to attract a large number of visitors who make one-off visits, travel a long distance, and are disproportionately international.

May 18, 2020 | Permalink | Comments (0)

Reconsidering Judicial Supremacy in Antitrust

Sanjukta Paul, Wayne State University Law School is Reconsidering Judicial Supremacy in Antitrust.

ABSTRACT: This paper reconsiders the foundations of judicial supremacy in antitrust, which rests ultimately upon the claim that the Sherman Act is a "common law statute." The common law statute thesis is that Congress delegated to judges the power to invent the criteria by which the law will allocate economic coordination rights under antitrust law. But Congress intended no such fundamental delegation of law-making power to the judiciary, as a reconsideration of the legislative history — informed by an examination of the concepts invoked in key legislative deliberations — shows. Notably, the massive influence of Chicago School law and economics in the domain of antitrust law has been underwritten by this judicial self-empowerment.

May 18, 2020 | Permalink | Comments (0)

Return Strategy and Pricing in a Dual-Channel Supply Chain

Guo Li, University of Texas at Dallas; Beijing Institute of Technology, Suresh Sethi, University of Texas at Dallas - Naveen Jindal School of Management, Lin Li, Beijing Institute of Technology, and Xu (Gavin) Guan, School of Management, Huazhong University of Science and Technology offer Return Strategy and Pricing in a Dual-Channel Supply Chain.

ABSTRACT: This study investigates the strategic effect of return policies in a dual-channel supply chain, in which a manufacturer can sell products directly to end customers and indirectly via an independent retailer. The manufacturer decides whether to implement a return policy in either the direct or indirect channel, or in both channels. When the return policy is provided, the cost of returned products has to be covered by the corresponding channel. We consider four possible strategies, including full refund in the direct channel only, full refund in the indirect channel only, full refund in both channels, and no refund in both channels. Given the equilibrium pricing strategies of firms, the preferences of firms over different strategies are determined by comparisons between the anticipated return rate of customers and their perceived value of the return policy. The manufacturer prefers the full-refund policy in both channels when the return rate of the customer is low. Otherwise, the dominant strategy for the manufacturer is the no-refund policy in both channels. The retailer benefits more from the full-refund policy in the indirect channel alone when the return rate is low; otherwise, the retailer prefers the full-refund policy in the direct channel only.

May 18, 2020 | Permalink | Comments (0)

Friday, May 15, 2020

Competition, Effects and Predictability Rule of Law and the Economic Approach to Competition

Bruce Wardhaugh discusses Competition, Effects and Predictability Rule of Law and the Economic Approach to Competition.

ABSTRACT:  In the US and EU, legal analysis in competition cases is conducted on a case-by-case approach. This approach assesses each particular practice for both its legality and its welfare effects. While this analytic method has the merits of 'getting the result right' by, inter alia, reducing error costs in antitrust adjudication, it comes at a cost of certainty, predictability and clarity in the legal principles which govern antitrust law. This is a rule of law concern.

This is the first book to explore this tension between Europe's 'More Economic Approach', the US's Rule of Reason, and the Rule of Law. The tension manifests itself in the assumptions in and choice of analytic method; the institutional agents driving this effects based approach and their competency to use and assess the results of the methodology they demand; and, the nature and stability of the legal principles used in modern effects-based competition analysis. The book forcefully argues that this approach to competition law represents a threat to the rule of law.

May 15, 2020 | Permalink | Comments (0)

Fighting Cross-Border Cartels The Perspective of the Young and Small Competition Authorities

Pierre Horna has a new book on Fighting Cross-Border Cartels The Perspective of the Young and Small Competition Authorities.

BOOK ABSTRACT: This book is the first detailed treatment of the approaches taken to enforce competition laws against cross-border cartels (CBCs) from the perspective of young and small competition authorities (more than 70% of the total number of authorities worldwide). No other legal or inter-disciplinary scholarship exists in the market that deals with the issue of a taxonomy of CBCs combined with young/small competition authorities' problems.

The book looks at the extent of the harms caused by CBCs and issues associated with tackling them at a transnational level. It explains why past solutions to problems with cooperation have failed and proposes novel ideas on how to improve cooperation and coordination in certain types of CBC investigations (transnational and regional CBCs). The proposals are based on primary-source information and observations made by the author as part of his work in the UN, and interviews with leading enforcers from young, small, old and large jurisdictions.

May 15, 2020 | Permalink | Comments (0)