Antitrust & Competition Policy Blog

Is the Consumer Welfare Obsolete? A European Union Competition Law Perspective

Is the Consumer Welfare Obsolete? A European Union Competition Law Perspective

By:	Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS)
Abstract:	In 2005, the European Commission advocated for a more economic approach for enforcing competition laws. The sole criterion for assessing the lawfulness of a market practice should be the appraisal of its net effects on consumer welfare. The Court of Justice was reluctant to adopt such an approach until its 2017 Intel Judgment. Its endorsement - which is debatable insofar as the judgment may give rise to different interpretations - may appear paradoxical in that it is concomitant with a sharp challenge to the consumer welfare criterion in the United States. The purpose of this article is to retrace the history of this criterion, particularly with regard to its adoption in the context of E.U. competition law. Our aim is to show that the criticisms of the effects-based approach can be addressed not by moving away from the consumer welfare criterion but by integrating it into a broader perspective, that also takes into account the protection of the competition process itself.
URL:	http://d.repec.org/n?u=RePEc:gre:wpaper:2020-13&r=com

Market structure, common ownership and coordinated manager compensation

Market structure, common ownership and coordinated manager compensation

By:	Neus, Werner; Stadler, Manfred; Unsorg, Maximiliane
Abstract:	We study oligopolistic competition in product markets where the firms' quantity decisions are delegated to managers. Some firms are commonly owned by shareholders such as index funds whereas the other firms are owned by independent shareholders. Under such an asymmetric ownership structure, the common owners have an incentive to coordinate when designing the manager compensation schemes. This implicit collusion induces a less aggressive output behavior by the coordinated firms and a more aggressive behavior by the noncoordinated firms. The profits of the noncoordinated firms are increasing in the number of coordinated firms. The profits of the coordinated firms exceed the profits without coordination if at least 80 % of the firms are commonly owned - an astonishing resemblance to the merger literature.
URL:	http://d.repec.org/n?u=RePEc:zbw:tuewef:133&r=com

Collusive Market Allocations

Collusive Market Allocations

By:	Iossa, Elisabetta; Loertscher, Simon; Marx, Leslie; Rey, Patrick
Abstract:	Collusive schemes by suppliers often take the form of allocating customers or markets among cartel members. We analyze incentives for suppliers to initiate and sustain such a collusive schemes in a repeated procurement setting. We show that, contrary to some prevailing beliefs, staggered (versus synchronized) purchasing does not make collusion more difficult to sustain or initiate. Buyer defensive measures include synchronized rather than staggered purchasing, first-price rather than second-price auctions, more aggressive or secrete reserve prices, longer contract lengths, withholding information, and avoiding observable registration procedures. Inefficiency induced by defensive measures is an often unrecognized social cost of collusive conduct.
URL:	http://d.repec.org/n?u=RePEc:tse:wpaper:124177&r=com

Some Examples of How Economics Can Help Inform the Debate on "Algorithmic Bias"

The Boston Digital Leadership Forum  Some Examples of How Economics Can Help Inform the Debate on  "Algorithmic Bias"

Friday, December 11  11AM–12PM EST

Panelists: Catherine Tucker, Sloan Distinguished Professor of Management, Professor, Marketing, Chair MIT Sloan PhD Program Andrei Hagiu, Dean’s Research Scholar, Associate Professor, Information Systems, Associate Director for the Platforms Initiative, Digital Sector, Questrom School of Business Moderated by Peter Howard, Executive Director,  Questrom Digital Business Institute Co-hosted by The Digital Business Institute and the Questrom Information Systems Department.  Register here.

Vertical Contracts and Entry

Vertical Contracts and Entry

Chrysovalantou Milliou

Athens University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Emmanuel Petrakis

University of Crete - Department of Economics

Abstract

We study the implications of different contractual forms in a market with an incumbent upstream monopolist and free downstream entry. We show that traditional conclusions regarding the desirability of linear contracts radically change when entry in the downstream market is endogenous rather than exogenous. By triggering more entry than two-part tariffs, wholesale price contracts can generate higher aggregate output, consumer surplus, and welfare. In light of this, the upstream monopolist may prefer to trade with wholesale price contracts as well as to give up part of its bargaining power when it is high.

A Million Unlicensed Pieces Nondiscrimination Commitments in the Supply Chain

A Million Unlicensed Pieces Nondiscrimination Commitments in the Supply Chain

Eli Greenbaum | Yigal Arnon & Co.

Rarely must patent infringers demand their right to pay royalties. But several multinational manufacturers have gone to court to insist that they – and not other participants in the supply chain – make payment of any patent royalties. From a contractual perspective, judicial analysis of such claims has focused on the non-discrimination prong of the fair, reasonable, and non-discriminatory (“FRAND”) patent licensing commitment. In other words, some manufacturers have argued, and some courts and administrative agencies have agreed, that a patentee’s refusal to provide FRAND licenses at all levels of the supply chain constitutes discrimination and, as such, violates the patentee’s contractual obligation to license their patents in a nondiscriminatory manner. This Essay argues that such claims are misplaced – the principle of nondiscrimination provides no easy framework for analyzing such selective licensing of the supply chain. Rather, such questions must be examined through the more complex empirical, legal, and economic factors in specific circumstances.

Pablo Ibanez Colomo on the changing role of economics

Pablo has a very insightful essay where he points to a changing reality in European competition law and the role of economic analysis.  He notes:

Ultimately, the shift in the role of economic analysis signals a broader shift in the sources of legitimacy. Achieving certain outcomes is now deemed more important than following the right framework, irrespective of where it leads. By the same token, the framework is deemed legitimate so long as it supports the desired results. Times of change indeed.

For those who want a political based competition law, let me remind people how quickly politics and policy can change - compare Obama and Trump (and Biden) environmental approaches.  If you prefer a system with pre-determined outcomes built in, then you should not complain when political winds change.  Competition law did better by focusing on specific facts and economic analysis of these facts rather than on pre-set outcomes.  Pre-set outcomes also make a mockery of due process.  Hopefully this is a lesson that can be learned on both sides of the Atlantic.

Merger Control in Latin America - A Jurisdictional Guide”

Merger Control in Latin America - A Jurisdictional Guide

Following significant reforms over the last 20 years, merger control regimes in Latin America now constitute around 20% of merger regimes worldwide. In regard to global transactions that may trigger the notification thresholds in many of these jurisdictions, it became necessary that an up-to-date book analyzing current legislation and case law be available for practitioners. This book compiles for the first time the applicable law governing merger control in Latin America. More than 30 distinguished authors, from both private and enforcement backgrounds, cover 17 jurisdictions and the Caribbean Community (CARICOM). For each jurisdiction, the reader will find: 

• a presentation of the merger control system; 
• a description of the applicable procedures and; 
• an analysis of the most relevant case law on the subject.

In addition, the editors, Paulo Burnier da Silveira and Pamela Sittenfeld, provide an overview of the merger regimes in Latin America, as well as a synthesis of the particularities of the regimes addressed in the book.

Desayuno Virtual ForoCompetencia - 25/11/2020 Cani Fernandez

 

 

Diego Maradona 1960-2020

He wasn't a competition lawyer, economist or academic but was he a great competitor.  I will never forget the 1986 World Cup.  He was the best player I ever watched play.  Like so many stars in sports and entertainment, he succumbed to temptation and addiction but in his prime he was more than just human.  Other than watching Michael Jordan in his prime (and I never watched hockey so I cannot say the same about Gretzky but I am told that he was much the same), I have never seen someone so dominate their sport.

Towards a Higher Standard of Proof and a More Interventionist Judicial Review in Antitrust Cases Involving Complex (Economic) Assessments Following CK Telecoms?

 

Towards a Higher Standard of Proof and a More Interventionist Judicial Review in Antitrust Cases Involving Complex (Economic) Assessments Following CK Telecoms?

Kyriakos Fountoukakos, Camille Puech-Baron

 

• Standard of proof and standard of review are hot topics again in the EU competition law sphere.

• While the Commission is required to prove antitrust infringements `to the requisite legal standard', uncertainty remains as to what this standard exactly is.

• In the wake of the recent CK Telecoms judgment, which has clarified and tightened the standard of proof borne by the Commission in merger cases and testifies to the GeneralCourt's willingness to increase its scrutiny of Commission merger decisions (at least in relation to so-called `gap' cases), this article advocates for more clarity and a higher standard of proof and standard of review in antitrust, and in particular Article 102, cases.

Antitrust and Competition Laws

Antitrust and Competition Laws

Barry Hawk 

Antitrust and Competition Laws offers a comparative history and analysis of competition laws, from the current global proliferation of laws back to the pre-modern world before 1880, including classical Athens, India, Rome, imperial China, the Islamic world and post-Roman Europe. The book is intended for members of the global antitrust community — lawyers, economists, scholars and policymakers — as well as readers interested in economic and legal history.

Competition law has reflected changes in economic conditions, developments in economic theory and reconfigurations of political interests. Antitrust and Competition Laws examines recurring issues that continue to the present. History provides not only a broader context to examine those issues but also offers ideas on how they might be resolved today. For example, calls for (re)introduction of social or political policies into U.S. antitrust law — such as protection of small business units, democratic processes or wealth inequalities — raise the important issue how they can be integrated into a legal analysis that essentially rests on economic principles.  

Price Negotiation with Merchant Heterogeneity in the Payment Card Industry

Price Negotiation with Merchant Heterogeneity in the Payment Card Industry

Chun-Yu Ho

State University of New York (SUNY) - Department of Economics

Li Xu

Shanghai Jiao Tong University (SJTU)

Daiqiang Zhang

University at Albany (SUNY)

Abstract

We examine price negotiation in the payment card industry by exploiting a unique merchant-, industry-, and city-level dataset. Motivated by the substantial variation in acquirer fees paid by merchants to the acquirer and the heterogeneous merchant card transactions, we use Nash bargaining to model the negotiation over the acquirer fee between an acquirer and a merchant.

The empirical results show that the average bargaining power is weaker for the acquirer than for the merchants, which results in a larger incremental surplus secured by the merchants than the surplus secured by the acquirer on average. Our counterfactuals show that merchants might face upward pressure on acquirer fees as the card penetration rate rises over time and that policies that weaken the acquirer's bargaining power could relieve the upward fee pressure.

Post-Merger Product Repositioning: An Empirical Analysis

Post-Merger Product Repositioning: An Empirical Analysis

Enghin Atalay

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Alan Sorensen

Wanjia Zhu

Christopher Sullivan

University of Wisconsin - Madison - Department of Economics

ABSTRACT

This paper investigates firms’ post-merger product repositioning. We compile information on conglomerate firms’ additions and removals of products for a sample of 61 mergers and acquisitions across a wide variety of consumer packaged goods markets. We find that mergers lead to a net reduction in the number of products offered by the merging firms, and the products that are dropped tend to be particularly dissimilar to the firms’ existing products. These results are consistent with theories of the firm that emphasize core competencies linked to particular segments of the product market.

Pometon v Commission: Reviving Staggered Hybrid Settlements?

Pometon v Commission: Reviving Staggered Hybrid Settlements?

Matteo Giangaspero

ABSTRACT: Judgement of 28 March 2019, Pometon v Commission, T-433/16, EU:T:2019:201

In staggered hybrid settlement cases, references made to non-settling parties in settlement decisions do not always breach the right to good administration and the presumption of innocence.

 

Competition Law and Fundamental Rights

Competition Law and Fundamental Rights

Jérémie Jourdan, Fanny Abouzeid

 

Key points

• This survey covers key developments regarding competition law and fundamental rights, such as the right to privacy, the rights of defence, the right to be heard, the right to an impartial decision maker, and the right to an effective judicial remedy, over the period July 2018–July 2020.

• Over the past 2 years, European Union and national courts have rendered important judgments in relation to dawn raids for example in the Power Cables cases. In relation to dawn raids, a tension continues to exist between the case law of the European Court of Human Rights (and national courts) and that of the Court of Justice, as regards the availability of an immediate judicial remedy against measures taken during the raids.

• Also noteworthy are the cases relating to staggered hybrid settlement cases, namely Pometon and HSBC, in which the General Court rejected the claims of breach of the presumption of innocence and duty of impartiality, albeit in different ways.

The Use of Artificial Intelligence in the Future of Competition Law Enforcement

The Use of Artificial Intelligence in the Future of Competition Law Enforcement

Andreas von Bonin, Sharon Malhi

ABSTRACT: In a future in which the evidential underpinnings for initiating competition law investigations could begin to shift towards a reliance upon the use of artificial intelligence, this paper outlines some of the key opportunities and risks for businesses and regulators.

Positive EC Guidance Needed under Regulation 2

Positive EC Guidance Needed under Regulation 2

Romina Polley

 

ABSTRACT

Since the entry into force of Regulation 1/2003, which brought about a fundamental change from a notification system for potentially anti-competitive agreements and an exemption monopoly for the European Commission (‘EC’) to direct applicability of Article 101 (3) Treaty on the Functioning of the European Union (‘TFEU') and self-assessment of potential infringements by the companies concerned, the EC’s enforcement priority have been, hardcore cartel cases¹ and abuse of dominance cases. EC cases on borderline conduct, like co-operations between competitors—where it is without detailed assessment not clear whether an agreement or concerted practice infringes Article 101 (1) TFEU at all, falls under a block exemption regulation (‘BER’) or merits individual exemption under Article 101 (3) TFEU—are largely missing, whereas under the old notification system such precedent existed in the form of negative clearance⁴ or exemption decisions.

Antitrust, Intellectual Property, and Dynamic Efficiency: An Essay in Honor of Herbert Hovenkamp

Antitrust, Intellectual Property, and Dynamic Efficiency: An Essay in Honor of Herbert Hovenkamp

Thomas F. Cotter

Abstract

This essay argues that, while intellectual property (IP) and antitrust often operate as complementary bodies of law, in some residuum of cases there will be widespread disagreement among forecasters about whether antitrust constraints on the exercise of IP rights are likely to inhibit or promote innovation. Among the most contentious of these at present are cases involving the assertion of FRAND-committed standard-essential patents (SEPs) and, relatedly, joint conduct on the part of firms that belong to standard development organizations (SDOs). To assist policymakers in coming to principled decisions in matters such as these, I propose and defend three guiding principles: (1) do not assume that stronger IP rights/weaker antitrust enforcement necessarily promotes innovation; (2) do consider whether other bodies of law are up to the task of addressing the potential severity of the harm alleged; and (3) filter out ideology and self-interest as much as possible. Although these recommendations will not reconcile all conflicting views, and may not provide definitive answers regarding whether or how to proceed, I argue that the quality of the ongoing debate would improve if enforcers made an effort honestly to engage them.

Peeling Apple: Antitrust Standing and Intermediary Defendants

Peeling Apple: Antitrust Standing and Intermediary Defendants

John E. Lopatka

Abstract

When market intermediaries unlawfully acquire market power, vertically related market participants may sue under the antitrust laws to recover damages. Their ability to recover depends upon an intricate set of doctrines that define private standing, including the indirect-purchaser rules set down by the Supreme Court most notably in Illinois Brick. In Apple Inc. v. Pepper, the Court decided the application of the indirect-purchaser rules to a particular kind of intermediary, a platform in a two-sided market. The Article explores private antitrust standing doctrines as they apply to market intermediaries, using Apple to frame the exposition. The Court there held that iPhone owners are not barred by Illinois Brick from recovering damages from Apple for monopolizing the distribution of iPhone apps. The Article argues that the Court may have reached the right result, but not for the right reason. The dissent and Apple reached the wrong result, or at least did not offer the right reason. Apple imposed an ad valorem charge for using its platform in a two-sided transaction market, and in these circumstances, whether iPhone users had a right to sue for damages depends on whether the marginal costs of distribution were positive, a condition that was not addressed.