Tuesday, August 25, 2020

The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy

The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy

Benjamin Leard

Resources for the Future

Virginia McConnell

University of Maryland; Resources for the Future

Yichen Zhou

Clemson University, John E. Walker Department of Economics

Abstract

New vehicle purchases by private companies and government agencies, or ‘fleet’ buyers, represent a significant percentage of overall new vehicle sales in the United States. Yet little is known about fleet demand for new vehicle fuel economy including how it responds to fuel price changes. Using unique disaggregated data on fleet and household registrations of new vehicles from 2009 to 2016, we estimate how fleet demand for new vehicle fuel economy responds to fuel price changes. We find that fleet purchases of low fuel economy vehicles fall relative to high fuel economy vehicles when gasoline prices increase, a finding that is consistent with fleet buyers’ taking into account capitalization of fuel costs in the second‐hand market. Our estimates imply that raising gasoline prices by one dollar would increase fuel economy of new vehicles acquired by fleet buyers by 0.33 miles per gallon. We estimate a similar response for household buyers during the same period. This result justifies basing fuel economy responses to fuel cost changes on household data alone, an assumption widely used in the vehicle demand literature and the fuel economy valuation literature. We also find, however, that the response to fuel price changes varies across the types of fleet buyers: rental companies respond strongly to fuel price changes, whereas commercial and government buyers are insensitive. Our estimates imply that an increase in the federal gasoline tax would modestly increase fuel economy of vehicles bought by households and rental companies but would have little to no impact on fuel economy of vehicles bought by non‐rental companies and governments.

August 25, 2020 | Permalink | Comments (0)

Monday, August 24, 2020

Webinar: FTC v. Qualcomm – What's in it for you? September 03, 2020

FTC v. Qualcomm – What's in it for you?

September 3, 2020
12 PM EDT

This program will focus on the implications of the August 11, 2020 9th Circuit reversal of FTC v. Qualcomm.

Moderator:

  • Suzanne Munck - Davis Polk & Wardwell LLP

Speakers:

  • Jorge Contreras - University of Utah
  • Lisa Kimmel - Crowell & Moring LLP
  • James Kress - BakerBotts LLP
  • Ann O'Brien - BakerHostetler Law

FREE: Antitrust Section Members, Government, Non-Profit Employees, Students, $25 Other Non-Members.

Register here: https://www.americanbar.org/events-cle/mtg/web/403710239/

August 24, 2020 | Permalink | Comments (0)

Budapest Bank: New Light Shed on the Notion of Restriction of Competition ‘By Object’

Budapest Bank: New Light Shed on the Notion of Restriction of Competition ‘By Object’

 
Journal of European Competition Law & Practice, lpaa034, https://doi.org/10.1093/jeclap/lpaa034
 

The Court of Justice clarifies that the same conduct can be held to infringe Article 101(1) TFEU for having both the object and the effect of restricting competition. It concludes that, in the credit card payment system, a multilateral interchange fee does not constitute a restriction ‘by object’ unless its terms, objectives, and context reveal a sufficient degree of harm to competition in the light of experience.

August 24, 2020 | Permalink | Comments (0)

The More Economic Judicature: How the General Court has Recalibrated the Merger Gauge

The More Economic Judicature: How the General Court has Recalibrated the Merger Gauge

Competition Policy International, Forthcoming

Tilman Kuhn

White & Case

Stefan Thomas

University of Tuebingen - Faculty of Law

Abstract

In its judgment of May 28, 2020, CK Telecoms UK Investments Ltd v. Commission, the EU General Court (GC) has made several fundamental observations on the construal of the SIEC-test with regard to horizontal mergers. The GC embraces a more economic approach, while tightening the standard of proof, and demanding stricter and more coherent principles for the concepts of closeness of competition, and of important competitive force. With respect to the analysis of upward pricing pressures (UPP), the judgment calls for a differentiated analysis of efficiencies within the framework of the theory of harm, rather than considering efficiencies solely as a defense. In our article, we conclude that the judgment should be endorsed for identifying weak spots in the current enforcement architecture, and for providing convincing approaches for a recalibration of the SIEC test.

August 24, 2020 | Permalink | Comments (0)

Judgment in Case C-607/18P—NKT v Commission: Procedural Rights … and Wrongs in Cartel Proceedings

Judgment in Case C-607/18P—NKT v Commission: Procedural Rights … and Wrongs in Cartel Proceedings

 
The Court of Justice of the EU, set aside part of the judgment of the General Court, based on inconsistency between the statement of objections and the final decision, failure to prove awareness of conduct of others and infringement of the presumption of innocence.

August 24, 2020 | Permalink | Comments (0)

Colluding Against A (Patent) Monopoly

Colluding Against A (Patent) Monopoly

Gregory Day

University of Georgia - C. Herman and Mary Virginia Terry College of Business

W. Michael Schuster

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Abstract

The patent system fosters innovation by granting the right to exclude. Since a rightsholder can legally suppress competition and charge monopoly prices, a patent provides antitrust immunity. Even when firms allegedly abuse their exclusive rights through means such as furthering patent thickets, meritless infringement litigation, or breaching FRAND commitments, courts and federal agencies have often concluded that antitrust is ill-equipped to discipline patent practices. Without antitrust remedies, firms have banded together against rightsholders to negotiate for better terms. Their strategies have included boycotting abusive patentees as well as collectively negotiating against them. By using self-help remedies, they seek to pay fair rates for only the patents needed for their technology. This type of cooperation may ideally foster competition and innovation where patent abuses undermine both goals

The problem is, ironically, that combining against a monopolist is likely anticompetitive. Antitrust condemns collusion to drive down prices—here, licensing rates—even when done against a monopolist. This renders a troubling outcome where “Big Pharma,” “Big Tech,” and others can insulate their monopoly power using the very laws meant to condemn monopolies. While debate has emerged about patent abuses, an equally salient issue involves whether antitrust should condemn firms who collude against patent holders and monopolists.

Using empirical analysis and historical evidence, this Article argues that antitrust should allow firms to defend an antitrust claim by citing their rival’s market power. Our models show that powerful rightsholders do in fact harm competition and innovation in ways not meant to protect original technology. We then find that the benefits of collusion among smaller firms were advanced by the Sherman Act’s drafters whose comments are critical to shaping and understanding modern antitrust. Support even comes from the labor arena: Congress excluded workers from antitrust law — as labor unions were once considered a form of collusion — so that workers, with their own market power, could counterbalance their employers’ dominance with their own market power. As such, given the practical and theoretical difficulties of remedying anticompetitive abuses of patent rights under the antitrust laws, we assert that taking antitrust out of patent law would allow competition to flourish in dynamic markets while enhancing the patent system’s incentives to innovate.

August 24, 2020 | Permalink | Comments (0)

Friday, August 21, 2020

Quantitative Methods for Evaluating the Unilateral Effects of Mergers

Quantitative Methods for Evaluating the Unilateral Effects of Mergers

 

Nathan Miller

Georgetown University - Robert Emmett McDonough School of Business

Gloria Sheu

Board of Governors of the Federal Reserve System

Abstract

We describe the quantitative modeling techniques that are used in horizontal merger review for the evaluation of unilateral effects, and discuss how the 2010 Horizontal Merger Guidelines helped legitimize these methods and motivate scholarly research. We cover markets that feature differentiated-products pricing, auctions and negotiations, and homogeneous products, in turn. We also develop connections between quantitative modeling and market concentration screens based on the Herfindahl-Hirschman Index (HHI).

August 21, 2020 | Permalink | Comments (0)

The 16th Anniversary of the SIEC Test Under the EU Merger Regulation – Where Do We Stand?

The 16th Anniversary of the SIEC Test Under the EU Merger Regulation – Where Do We Stand?

Journal for Competition Law (Zeitschrift für Wettbewerbsrecht, ZWeR) "The 15th Anniversary of the SIEC Test under the EU Merger Regulation – Where Do We Stand? Part 1" (ZWeR 2020, p. 1–51) and 'Part 2' (ZWeR 2020, p. 153–214)

Tilman Kuhn, White & Case

Abstract

On May 1, 2020, the significant impediment to effective competition (“SIEC”) test pursuant to Article 2(2) and (3) of the EU Merger Regulation (Regulation No. 139/2004; “EUMR”) , celebrated its 16th anniversary. The Commission has taken more than 5,000 decisions in merger cases under this new standard in the last decade and a half. Therefore, it seems opportune to pause and take stock. Has the introduction of the SIEC test achieved the desired results? Has it been applied according to the legislator’s plans? Does its application need to change going forward?

After a short recap of the test’s history and genesis (I.) and a reminder of the burden and standard of proof (II.), this article reviews the Commission’s decisional practice (and the limited practice of the EU Courts) systematically, and intends to summarize the various theories of harm covered by the SIEC test’s application in practice (III.). Second, it analyzes the decisional practice and draws conclusions as to whether the test’s application in practice is predictable, persuasive, and in line with the legislator’s intent (IV.). Third and last, after some practical and procedural observations (V.), it concludes with a few proposals for improvement (VI.).

August 21, 2020 | Permalink | Comments (0)

Devolution of competition policy under the Scotland Act 2016 after Brexit: straining at the edges of the current settlement?

ABSTRACT

The purpose of this article is to examine the challenges that Brexit brings for the devolution of certain aspects of competition policy to Scotland. According to section 63 of the Scotland Act 2016, Scottish Ministers can ask the Competition and Markets Authority (CMA) to carry out a phase 2 market investigation after having sought the agreement of their Westminster counterparts. This article will explore the consequences of Brexit for competition policy in the UK by placing the discussion against the broader background of the relationship existing between the central and devolved governments in the UK, with a particular emphasis on Scotland. After discussing, the nature and scope of the powers that have been devolved to the Scottish Government the article will examine the impact of Brexit on competition policy both in general and for these devolved aspects. It will be argued that the current system for the management of the inter-governmental relations between Westminster and Edinburgh may not be able to withstand the challenges brought by Brexit and affecting the role of the CMA and of the UK Government, respectively, in the fields of antitrust, state aid, and merger control.

The article will conclude that Brexit has exposed how the current framework for intergovernmental relations may not be suitable to the demands of new forms of devolution that are not predicated upon the distinction between reserved and devolved matters, but depend on the joint decision-making between the UK and the Scottish governments. Thus, unless section 63 of the Scotland Act 2016 is to remain ineffective, it may become necessary to rethink the current ways in which Scottish and UK minister interact in areas where devolution means co-decision as opposed to one government ‘giving way’ to the other.

August 21, 2020 | Permalink | Comments (0)

Libra: A Concentrate of 'Blockchain Antitrust'

Libra: A Concentrate of 'Blockchain Antitrust'

 

Thibault Schrepel

Harvard University (Berkman Center); Utrecht University School of Law; University Paris 1 Panthéon-Sorbonne; Sciences Po

Abstract

Mark Zuckerberg introduced Libra to the world in June 2019 with the goal of “enabl[ing] a simple global currency and financial infrastructure that empowers billions of people.” Two months after, and without waiting for the project to be launched, the European Commission sent a questionnaire to various parties connected to Libra in order to investigate “potential anti-competitive behaviors.” The U.S. House of Representatives also conducted a series of hearings at the end of October 2019 questioning the intentions behind Libra.

Against this background, Part I of this Essay analyzes the type of governance that Libra is aiming for, as it indicates the nature and frequency of certain anti-competitive risks. Part II offers an assessment of the anti-competitive collusion and monopolization that Libra governance might yield. The discussion concludes by assessing the desirability of the adversarial approach adopted by antitrust agencies and governments thus far.

August 21, 2020 | Permalink | Comments (0)

Thursday, August 20, 2020

Assistant Attorney General Makan Delrahim Announces Re-Organization of the Antitrust Division's Civil Enforcement Program

See here.

August 20, 2020 | Permalink | Comments (0)

Rewarding Competition Compliance – Its Societal Value and How Policy Alignment Can Help

Rewarding Competition Compliance – Its Societal Value and How Policy Alignment Can Help

 

Michael Ristaniemi

University of Turku, Faculty of Law

Abstract

The current approach in competition law towards deterrence of anticompetitive conduct is through ex post sanctions, including related enforcement, and is insufficient. There is inherent societal value in better encouraging competition law compliance by firms. Added focus should be placed on creative complementary measures that do so, including rewarding desired conduct using positive incentives. Firms should be seen not only as potential infringers, but also as valuable partners in ensuring competitive markets. Compliance tools used in relation to competition policy focus less on preventive measures than some other areas of regulatory compliance, such as environmental protection, anti-bribery, and corporate sustainability, which provide useful points of learning. Improved self-enforcement by firms could moreover help improve the state of international antitrust by narrowing the enormous disparity between various national competition authorities’ resources and capacity.

August 20, 2020 | Permalink | Comments (0)

Collusion and Information Exchange

Collusion and Information Exchange

 

Yu Awaya

University of Rochester

Abstract

Antitrust authorities view that exchange of individual firms’ sales data is more anti‐competitive than that of aggregate sales data. In this paper, I survey antitrust implications of such inter‐firm information exchange. I argue that both types of information exchange are anti‐competitive under some circumstances. More precisely, I compare profits when each type of information exchange is allowed to that when firms can only observe their own sales (Stigler’s secret price‐cutting model), and the former is bigger than the latter. I also provide a general method to bound the equilibrium profits without such information exchange.

August 20, 2020 | Permalink | Comments (0)

How to Win with Machine Learning

How to Win with Machine Learning

Ajay Agrawal, Joshua Gans, and Avi Goldfarb (all University of Toronto)

August 20, 2020 | Permalink | Comments (1)

Identifying Dynamic Competition in Online Marketplaces Through Consumers’ Clickstream Data

Identifying Dynamic Competition in Online Marketplaces Through Consumers’ Clickstream Data

Meihua Zuo

Guangdong University of Technology

Spyros Angelopoulos

Tilburg University

Carol Xiaojuan Ou

Tilburg University

Hongwei Liu

Guangdong University of Technology

Zhouyang Liang

Guangdong University of Technology

Abstract

Brands in online marketplaces are constantly faced with the challenge of identifying market structure and analyzing competitiveness. To address that lacuna, we model brands’ competition through consumers’ consideration sets. We draw on a dataset of 6,549,484 records over a period of 10 weeks from one of the biggest online marketplaces in China and employ network analysis to predict sales. We explore the relationship between products’ network position and brands’ sales volume through the local and global centrality and closure, and we depict the redistribution of market-share of related products after brands adjust production line length. Our analysis suggest that the span of structural holes of a brand negatively influences sales volume, while betweenness and degree centrality have a positive impact. Our findings show that the relationship among products of a brand has a significantly greater impact on sales volume compared to the relationships among brands, and the intra-brand product relationship is the main reason for sales volume fluctuations. We contribute to understandings of brand dynamic competition in online marketplaces and discuss the significance of our findings for brand competition in online marketplaces, while we draw an agenda for future research on the topic.

August 20, 2020 | Permalink | Comments (0)

The 2010 HMGs Ten Years Later: Where Do We Go From Here?

The 2010 HMGs Ten Years Later: Where Do We Go From Here?

Steven C. Salop

Georgetown University Law Center

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Abstract

In this short article, which is part of a RIO Symposium on the Tenth Anniversary of the 2010 Merger Guidelines, we suggest a number of improvements that should be considered in the next revision of the Guidelines. Our analysis is based on the observation that horizontal merger policy has suffered from under-enforcement. We provide evidence that the enforcement agencies face significant resource constraints which require a triage process that inevitably leads to under-enforcement. In light of merger law placing greater weight on avoiding false negatives and under-deterrence than false positive and over-deterrence, the article suggests a number of ways in which the under-enforcement bias might be corrected, including (among others) rolling back the increase in the HHI “red zone” thresholds; mandating anticompetitive presumptions for mergers with high GUPPIs, acquisitions of mavericks, and acquisitions by dominant firms; closer analysis of common ownership by financial funds; and expanded analysis of potential competition mergers.

August 20, 2020 | Permalink | Comments (0)

Wednesday, August 19, 2020

Endorsement of the ‘Crossed’ Test for Alleged Margin Squeeze as an Abuse of Collective Dominance (Spain)

On 9 October 2018, the Spanish Supreme Court (Tribunal Supremo)1 upheld the Spanish High Court (Audiencia Nacional) ruling2 which dismissed the judicial appeal of British Telecommunication, PLC and BT España Compañía de Servicios Globales de Telecomunicaciones S.A.U. (both BT) against the decision3 of the Spanish Competition Authority (CNMC) in the Mobile Calls (Llamadas Móviles) case.

August 19, 2020 | Permalink | Comments (0)

The Anticompetitiveness of Sharing Prices

The Anticompetitiveness of Sharing Prices

Joseph E. Harrington Jr

Wharton

Abstract

Competitors privately sharing price intentions is universally prohibited under antitrust/competition law. In contrast, there is no common well-accepted treatment of competitors privately sharing prices. This paper shows that firms sharing prices leads to higher prices. Based on this theory of harm, it is argued that there should be a per se prohibition on sharing prices.

August 19, 2020 | Permalink | Comments (0)

A Tuna Tale: Starkist, Bumble Bee, Chicken of the Sea, and the Sinking of Seafood Empires: Mafia-style dinners, tears on the witness stand, jail time. It’s not what you think of when you think of canned fish.

Thrilling Tales of Modern Capitalism

A Tuna Tale: Starkist, Bumble Bee, Chicken of the Sea, and the Sinking of Seafood Empires

Mafia-style dinners, tears on the witness stand, jail time. It’s not what you think of when you think of canned fish.

Listen here.

August 19, 2020 | Permalink | Comments (0)

Vertical Integration and Disruptive Cross‐Market R&D

Vertical Integration and Disruptive Cross‐Market R&D

 

Ping Lin

Lingnan University - Department of Economics

Tianle Zhang

Lingnan University

Wen Zhou

The University of Hong Kong - School of Business

Abstract

We study how vertical market structure affects the incentives of suppliers and customers to develop a new input that will enable the innovator to replace the incumbent supplier. In a vertical setting with an incumbent monopoly upstream supplier and two downstream firms, we show that vertical integration reduces the R&D incentives of the integrated parties, but increases that of the nonintegrated downstream rival. Strategic vertical integration may occur whereby the upstream incumbent integrates with a downstream firm to discourage or even preempt downstream disruptive R&D. Depending on the R&D costs, vertical integration may lower the social rate of innovation.

August 19, 2020 | Permalink | Comments (0)