Friday, November 20, 2020

WOMEN & ANTITRUST VOICES FROM THE FIELD - VOL. II

WOMEN & ANTITRUST

VOICES FROM THE FIELD - VOL. II

Kristina Nordlander (Curation & Foreword)

Leading competition professionals from around the world present reflections and forecasts on topical issues in antitrust and competition law and policy in this second volume of Women & Antitrust. Over a series of candid conversations, enforcers, in-house counsels, lawyers and academics take on questions about an extraordinary year, and discuss:

  • policy priorities during and post the Covid-19 pandemic;
  • sustainability initiatives and the European Green Deal;
  • regulation of Big Tech;
  • Brexit & its expected impact;
  • international cooperation.

Nestled among the exchanges are insights into the professional paths of the women interviewed. Through personal anecdotes, they share perspectives on their chosen roles, if and how gender has informed their career choices, and offer advice to young practitioners interested in joining this field.

This volume has been published in cooperation with Women’s Competition Network (WCN). Another volume was previously in cooperation with W@Competition.

With contributions by: Allen & Overy; Arnold & Porter; Baker Botts; Biontino Europe; California Department of Justice; Catholic University of Portugal; Columbia University; Competition & Markets Authority; Compass Lexecon; Cosmetics Europe; Covington & Burling; Charles River Associates; Cravath, Swaine & Moore; Cruz Vilaça Advogados; Deutsche Telekom; Essilor; European Commission; European Parliament; Fischer Behar Chen Well Orion & Co; Freshfields Bruckhaus Deringer; Federal Trade Commission; German Competition Authority; Grinberg Cordovil Advogados; Hogan Lovells; Intel; Israel Competition Authority; Italian Competition Authority; Johnson & Johnson; Latham & Watkins; Levy & Salomão; Linklaters; Microsoft; Milbank; Morrison & Foerster; NERA Economic Consulting; Noerr; New York University; Pearson; Procter & Gamble; RBB Economics; Sidley Austin; Skadden, Arps, Slate, Meagher & Flom; Tencent; The University of Hong Kong; University of Haifa; University of Oxford; University Paris II Panthéon-Assas; University Paris Nanterre; Uría Menéndez; US Court of Appeals for the Seventh Circuit; Walmart.

Read the Foreword by Kristina Nordlander
Browse the Table of Contents
See the List of Contributors

November 20, 2020 | Permalink | Comments (0)

Industry Concentration and Information Technology

Industry Concentration and Information Technology

Boston University
 
Industry concentration has been rising in the United States since 1980. Does this signal declining competition and the need for a new antitrust policy? Or are other factors causing concentration to increase? This paper explores the role of proprietary information technology (IT), which could increase the productivity of top firms relative to others and raise their market share. Instrumental variable estimates find a strong link between proprietary IT and rising industry concentration, accounting for most of its growth. Moreover, the top four firms in each industry benefit disproportionately. Large investments in proprietary software—$250 billion per year—appear to significantly impact industry structure.

November 20, 2020 | Permalink | Comments (0)

Competitive Harm from Vertical Mergers

Competitive Harm from Vertical Mergers

Herbert Hovenkamp

University of Pennsylvania Law School; University of Pennsylvania - The Wharton School; University College London

Abstract

The 2020 Vertical Merger Guidelines produced by the antitrust enforcement agencies introduce a nontechnical application of bargaining theory into the assessment of competitive effects from vertical acquisitions. The economics of such bargaining is complex and can produce skepticism among judges, who might regard its mathematics as overly technical, its game theory as excessively theoretical or speculative, or its assumptions as unrealistic. However, we have been there before. The introduction of concentration indexes in the Merger Guidelines was initially met with skepticism but gradually they were accepted as judges became more comfortable with them. The same thing very largely happened again when unilateral effects theories of mergers were introduced in the 1990s. The bargaining theory that drives much of vertical merger analysis today has much in common with the theory of unilateral effects. In any event, the value of a particular model depends not on its verisimilitude but rather on its testability.

The theory that relates a concentration index to the risk of competitive harm from horizontal mergers involves as much conjecture as does the bargaining theory that the Nash model for vertical mergers contemplates. The concentration thresholds in the Horizontal Merger Guidelines capture a rough generalization about a large number of collusive or oligopolistic strategies, some of which are not consistent with each other. What they share in common is belief in a link between the number of firms in a market, the increase in concentration that results from the merger, and the extent of higher prices.
Double marginalization as a vertical merger defense occurs when two bargaining firms each have market power but are unable to coordinate their output. Each takes a markup without considering the other, and aggregate markups are too high. Both firms as well as their purchasers would be better off if they could coordinate better. In the AT&T/Time-Warner case the defendants argued that after the merger TW would not coordinate with AT&T but would set its prices as if the merger had not occurred. In that case the merger would not have eliminated double marginalization either.
The debate over the elimination of double marginalization bundles two themes that Ronald Coase developed in his two most well-known articles, The Nature of the Firm and The Problem of Social Cost. The first argued that the boundaries of a firm are determined by the firm’s continuous search to procure inputs in the most cost effective way. The second argued that two traders in a well-functioning market will achieve the joint-maximizing solution.

This dual relationship is too often ignored. Anti-interventionists rely heavily on Coasean arguments that unless high transaction costs get in the way firms will bargain to joint maximizing results. If that is true, then double marginalization will rarely provide a defense to a vertical merger. The law of vertical mergers deals largely with firms that transact with one another routinely, in legally enforceable buy-sell relationships. By contrast, the actors who appear in The Problem of Social Cost do not bargain with each other regularly. In a well functioning vertical market durable double marginalization should be rare.

November 20, 2020 | Permalink | Comments (0)

Thursday, November 19, 2020

Antitrust Regimes in the Pacific Region: Introduction

Antitrust Regimes in the Pacific Region: Introduction

Deborah Healey

University of New South Wales (UNSW) - Faculty of Law

Abstract

Competition laws are economic statutes aimed at promoting and protecting competition in markets. While there is general agreement about the types of conduct deemed to be detrimental to competition, the form and content of competition laws vary. The political economies of individual jurisdictions, and particularly their legal systems and cultures, mean that enforcement of individual provisions is often approached quite differently from jurisdiction to jurisdiction. Even identical statutory provisions may be interpreted quite differently in different countries. What constitutes an appropriate competition law or policy? Various factors influence the competition law and policy choices of individual jurisdictions. These include the size of a jurisdiction, the nature of its markets, and its stage of economic development. Ultimately different jurisdictions choose their laws based on what they perceive to be suitable for their own circumstances. The following articles discuss more fully the competition regimes of Australia, French Polynesia and New Caledonia, which are all Pacific jurisdictions. French Polynesia and New Caledonia are technically overseas territories of France. New Caledonia has moved towards self-government, but it still depends on financial support from France. Australia is a constitutional monarchy theoretically governed by the Queen of England as head of state, although both the monarch and her vice regal representatives act in accordance with the advice of the government of the day. This material considers issues of commonality and divergence between those regimes, drawing conclusions about the approach to competition law and policy in the Pacific region. It asks: is there a uniform approach within the region?

November 19, 2020 | Permalink | Comments (0)

Antitrust Economics and Consumer Protection Economics in Policy and Litigation: Why the Disparity?

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

Abstract

The lag in the use of microeconomics in consumer protection policy and litigation—as compared with the use of microeconomics in antitrust/competition policy and litigation—has at least three causes: a considerably shorter period of intellectual development; the specific historical origins and culture of the U.S. Federal Trade Commission (FTC), where this disparity is especially noticeable; and the splintering of consumer protection responsibilities across a very large number of federal and state agencies. This paper will expand on these themes and discuss their implications—including the opportunities for expanded research in the area of consumer protection economics.

November 19, 2020 | Permalink | Comments (0)

Competition Threats and Rival Innovation Responses: Evidence from Breakthrough Therapies

Competition Threats and Rival Innovation Responses: Evidence from Breakthrough Therapies

Jon A. Garfinkel

University of Iowa - Tippie College of Business

Mosab Hammoudeh

University of Iowa - Henry B. Tippie College of Business

Abstract

We study the effect of competition on firm innovation at the product level. We instrument shocks to competition in therapeutic areas with the FDA’s breakthrough designation therapy (BTD) indication. BTDs strongly associate with several indicators of future success, including announcement returns and eventual FDA approval to market the drug. BTD shocks discourage rivals’ innovation in that therapeutic area. The effect varies with the ex-ante competitiveness of the therapeutic area, as well as with the rival’s position (leader vs. follower) in that area, in a manner consistent with the theory by Aghion et al. (2005).

November 19, 2020 | Permalink | Comments (0)

Platform Competition with Cash‐Back Rebates Under No Surcharge Rules

Platform Competition with Cash‐Back Rebates Under No Surcharge Rules

 

Marius Schwartz

Georgetown University

Daniel Vincent

Abstract

We analyze competing strategic platforms setting fees to a local monopolist merchant and cash‐back rebates to end users, when the merchant may not surcharge platforms’ customers, a rule imposed by some credit card networks. Each platform has an incentive to gain transactions by increasing the spread between its merchant fee and user rebate above its rival's spread. This incentive yields non‐existence of a pure strategy equilibrium in many natural environments. In some circumstances, a mixed strategy equilibrium exists where platforms choose fee structures that induce merchants to accept only one platform with equal probability, a form of monopolistic market allocation.

November 19, 2020 | Permalink | Comments (0)

Wednesday, November 18, 2020

Some Facts about Dominant Firms

We measure the evolution of dominant firms in the U.S. economy since 1960, and globally since 1990. Contrary to common wisdom, dominant firms have not become larger, have not become more productive, and their contribution to aggregate productivity growth has fallen by more than one third since 2000.

November 18, 2020 | Permalink | Comments (0)

Don’t Die! How Biosimilar Disparagement Violates Antitrust Law

Don’t Die! How Biosimilar Disparagement Violates Antitrust Law

Michael A. Carrier

Rutgers Law School

Date Written: October 22, 2020

Abstract

Competition is the key to low prices in the pharmaceutical industry. For decades, Americans have benefited from affordable generic versions of brand-name drugs. But now, we stand poised on the wave of a revolution. Biologics, which include lifesaving cancer-treating drugs, can cost hundreds of thousands of dollars per year and are forecast to be the “fastest growing segment of drug spending” in coming years.

The hope, then, is that just like generic drugs, competition from follow-on products known as biosimilars will lower prices. But the fear is that they will not. Why? One main reason is disparagement.

Biosimilars are nearly the same as biologics. In fact, they are required to be “highly similar” to and have “no clinically meaningful differences” from biologics. Despite this, biologic companies have raised ominous warnings that biosimilars are not the same, with differences posing grave safety consequences. Doctors are getting the message loud and clear, refusing to prescribe appropriate — and more affordable — biosimilars. It thus comes as no surprise that the government agencies have serious concerns about the behavior.

This Essay addresses biologics’ disparagement of biosimilars. It sketches the background of the industry and introduces the unique regulatory setting. It then sets forth the caselaw and explains how disparagement can violate antitrust law.

November 18, 2020 | Permalink | Comments (0)

From (Horizontal and Sectoral) Data Access Solutions Towards Data Governance Systems

From (Horizontal and Sectoral) Data Access Solutions Towards Data Governance Systems

Wolfgang Kerber

University of Marburg - School of Business & Economics

Abstract

Starting with the assumption that under certain conditions also mandatory solutions for access to privately held data can be necessary, this paper analyses the legal and regulatory instruments for the implementation of such data access solutions. After an analysis of advantages and problems of horizontal versus sectoral access solutions, the main thesis of this paper is that focusing only on data access solutions is often not enough for achieving the desired positive effects on competition and innovation. An analysis of the two examples access to bank account data (PSD2: Second Payment Service Directive) and access to data of the connected car shows that successful data access solutions might require an entire package of additional complementary regulatory solutions (e.g. regarding interoperability, standardisation, and safety and security), and therefore the analysis and regulatory design of entire data governance systems (based upon an economic market failure analysis). In the last part important instruments that can be used within data governance systems are discussed, like, e.g. data trustee solutions.

November 18, 2020 | Permalink | Comments (0)

ABA Antitrust Section Consumer Protection Committee 2021 Law Student Essay Contest

Calling all second-year and third-year law students with an interest in antitrust and consumer protection law!  The American Bar Association ("ABA") Antitrust Law Section ("Section") Consumer Protection Committee ("Committee") is hosting a student essay writing contest ("Contest") for 2020-2021. Each contestant must follow the Official Rules and Additional Rules of the competition detailed herein.

Official Rules

Who:  Eligible contestants include second-year and third-year students. Eligibility to participate in this Contest or to win prizes is limited to an individual who at the time of entry:

  • at least 21 years of age;
  • a legal resident of the United States; and
  • a student who is enrolled in a law school that is ABA-accredited, in each case, at the time of submission.
  • Contestant need not be a member of the ABA or the Section.
  • Limit 1 entry and prize per contestant.
  • Employees, officers, directors, contractors, agents and representatives of the ABA and their immediate families and household members are ineligible to enter the Contest.
  • The ABA's determination of eligibility, in its sole discretion, is final.

What:  Participants are required to submit an essay exploring a relevant and timely consumer protection issue.

  • Entry form and essay should be submitted to Tiffany Goldston, Program Specialist, American Bar Association, Antitrust Law Section, via email at tiffany.goldston@americanbar.org.
  •  Entry form can be found here.
  • The ABA is not responsible for errors or for lost, late, or misdirected email, or telecommunication or hardware or software failures, including by reason of any bug or computer virus or other failure.   
  • Essays must be:
    • the original work of the entrant;
    • in the English language;
    • written during 2020 or the current academic year;
    • submitted in electronic format (Word or PDF);
    • a minimum of 10 pages in length,double-spaced, include footnotes, with 12-point font and 1-inch margins; and
    • specifically written for this Contest; a law school class, seminar, or independent study; or a law review or journal note, comment, or article.
  • All entries are final. No revisions are accepted.
  • Please note: Entries that do not meet these requirements will be disqualified.

When:  The ABA will accept entries via email through midnight (CST) January 22, 2021 and will not consider any entry received after the due date and time. The winning essays—chosen by the Committee leadership—will be announced February 19, 2021

The leadership of the Committee will judge all essays.  The decision of the judges is final.

The winner(s) will be notified by email by 11:59 PM (CST) February 19, 2021. The winner(s) must acknowledge and confirm agreement to the terms and conditions of winning the Contest no later than February 26, 2021. If a prize winner: (i) cannot be located (e.g., an email notification or prize is returned as undeliverable, or does not respond to an award email notification by February 26, 2021); (ii) is found to be ineligible (as determined solely by the ABA); or (iii) fails to execute an affidavit or other documentation as required by the ABA, the ABA may consider such prize winner to have forfeited the prize, and may, at its sole option, award the prize to another contestant.

The ABA reserves the right not to award any prize(s) if, in the ABA's sole judgment (based upon the Committee's recommendation), the quality of submitted entries does not merit award(s) or publication.

Why: The Committee will select three winners. First place will receive a cash scholarship of $5,000, plus free registration (and travel expenses) to the ABA Antitrust Law’s 69th Spring Meeting in Washington, DC.  If the Spring Meeting moves to a virtual format the winner will be invited to attend virtually, but no transportation costs will be awarded.  If the Spring Meeting remains an in-person meeting, the winner will receive an amount, determined by the Committee, to defray transportation and accommodation cost. If the winner resides within the Washington, DC area, the ABA will defray local transportation costs.  Second place will receive a cash scholarship of $3,000 and Third place will receive a cash scholarship of $2,000. In addition, the top essay, along with a biography of the winning student, will be published in an ABA publication.  

  • The Sponsors may substitute a prize of equal or greater value in its sole discretion. Prizes are non-transferable and cannot be substituted by the winner. Cash equivalent for prizes is not available. The ABA makes no warranties with regard to the prizes.
  •  Winners will be solely responsible for reporting and payment of all taxes (federal, state, local or other) on prizes, which will include the value of any accommodations and airfare. Winners will be required to complete an IRS Form W-9, affidavit of eligibility, tax acknowledgment, publicity release (except where prohibited) and liability waiver. All forms must be completed and returned to the Section within 5 business days of receipt and prior to the delivery of any prize, or prizes will be considered forfeited and another winner may be named. 

Take advantage of this contest to get some cash in your pocket, network with members in the Antitrust Bar, and get your work published in a major ABA publication!  For more information, including how to apply, please review the additional rules below. Best of luck!

Applicants should send questions to Tiffany Goldston, Program Specialist, American Bar Association, Antitrust Law Section, via email at tiffany.goldston@americanbar.org.

ADDITIONAL RULES

Odds of Winning: Chances of winning may vary depending on the number of entries. However, Sponsor reserves the right not to award any prize if the judges determine that no entries are of sufficient quality to merit selection that year.

After the Section has notified the prize winner, it will post the name of the winner on its website.

License/Grant of Rights:

·         By entering, the winning entrant consents to the publication of her/his entry by the ABA, understands that such publication is not guaranteed and is at the sole discretion of the ABA, and grants the ABA the following rights: (i) the exclusive worldwide right of first publication of their entry in any and all ABA media or form of communication; (ii) the non-exclusive worldwide right, in ABA's sole discretion, to use, transcribe, publish, reproduce, distribute, sell (as part of an ABA publication) or display the entry, alone or in conjunction with other materials;  (iii) the right to edit the essay to conform to the publication's standards of style, technological requirements, language, grammar and punctuation, provided the meaning of the essay is not materially altered; and (iv) the non-exclusive worldwide right to use the winner's name and likeness in connection with the essay or this Contest, in each case, without further compensation.

  • The winning entrant must execute a separate publication agreement giving the ABA the publication rights enumerated above and the right to use the article for any other purpose related to the ABA mission.
  • If the winner fails to sign the agreement within 5 days of receipt, the prize will be considered forfeited and another winner may be named.
  •  By entering this Contest, contestant represents that his/her essay is original content and does not infringe upon the intellectual property rights of others.


Conditions of Participation
: By participating, each entrant agrees to these Official Rules and the decisions of the Sponsor and releases and discharges the Sponsor, including but not limited to the ABA, the Section, any subsidiary and affiliated entities, and each of their respective officers, directors, members, employees, independent contractors, agents, representatives, successors and assigns (collectively "Released Parties) from any and all liability whatsoever in connection with this Contest, including, without limitation, legal claims, costs, injuries, losses or damages, demands or actions of any kind (including, without limitation, personal injuries, death, damage to, loss or destruction of property, rights of publicity or privacy, defamation, or portrayal in a false light) (collectively "Claims). Except where prohibited, acceptance of a prize constitutes a release by any winner of the Released Parties of any and all Claims in connection with the administration of this Contest and the use, misuse or possession of any prize. All entries submitted to the ABA become the property of the ABA and will not be returned; however, entrants who do not win may submit their entries for publication elsewhere.  All expenses involved in preparing and submitting an entry are the sole responsibility of the entrant. Sponsor is not responsible for errors or for lost, late, or misdirected mail or email, or telecommunication or hardware or software failures, including by reason of any bug or computer virus or other failure. Sponsor may cancel, modify or terminate the Contest if it is not capable of completion as planned, including by reason of infection by computer virus, tampering, unauthorized intervention, force majeure or technical difficulties of any kind.

Laws and Regulations: This Contest is governed by U.S. law and all relevant federal, state, and local laws and regulations apply. By entering, all participants agree that the Contest shall be governed by the laws of the State of Illinois, that the courts of Illinois shall have exclusive jurisdiction, and that Cook County, Illinois shall be the venue for any dispute or litigation relating to or arising from the Contest. Void where prohibited by law.

Opt-Out Option: Any individual may elect to opt out of receiving future Contest mailings from the ABA by calling the ABA Service Center at 800-285-2221.

Privacy Policy/Data Collection: Information provided by entrants in connection with this Contest is subject to the ABA's privacy policy available at http://www.americanbar.org/utility/privacy.html

Sponsor: The Contest is sponsored by the American Bar Association through its Antitrust Law Section.

American Bar Association
Antitrust Law Section
321 N. Clark Street
Chicago, IL  60654-7598

2021 Consumer Protection Committee Law Student Essay Entry Form

Past Contest Winners

November 18, 2020 | Permalink | Comments (0)

Publication of Antitrust Decisions of the European Commission

Publication of Antitrust Decisions of the European Commission

Wouter P. J. Wils

King's College London - The Dickson Poon School of Law; European Union - European Commission

Abstract

This paper deals with the publication by the European Commission of its decisions adopted in the enforcement of the competition rules laid down in Articles 101 and 102 TFEU (antitrust decisions). The paper examines the legal basis of such publication and the interests justifying publication; what content of the decision must be published, may be published and cannot be published; the procedure and timing of the publication; and the relationship with public access to documents.

November 18, 2020 | Permalink | Comments (0)

Tuesday, November 17, 2020

Vertical Agreements and User Access

Germain Gaudin

University of Freiburg - College of Economics and Behavioral Sciences; Télécom Paris

Alexander White

Tsinghua University - School of Economics & Management

Abstract

Platforms acting as sales channels for producers often charge users for access, via a subscription fee or a markup on hardware. We compare two common forms of vertical pricing agreement that platforms use with sellers: per-unit and proportional fees. In particular, we analyze the critical role that user access plays on prices, profits, and welfare under both forms of agreement. We characterize this role and show how it potentially overturns standard results saying that proportional fees lead to lower prices and higher profits.

November 17, 2020 | Permalink | Comments (0)

The Price Effects of Shaming Oligopolists: A Study of the COVID-19 Oil Price Shock

The Price Effects of Shaming Oligopolists: A Study of the COVID-19 Oil Price Shock

Aaron Barkley

University of Melbourne

David P. Byrne

University of Melbourne

Xiaosong (Andy) Wu

University of Melbourne

Abstract

Governments often make public announcements that call into question oligopolistic behavior. Yet little is known about how firms respond to them. We study gasoline retailers' price responses to antitrust announcements shaming them for price gouging during the COVID-19 pandemic. Price effects are identified through a high-frequency event-study that leverages unique real-time station level price data and well-identified, discrete antitrust announcements. We find evidence of announcement effects that depend on firms' pre-announcement margins and hence exposure to being publicly shamed. Our results provide evidence against a "cheap talk" interpretation of government antitrust announcements.

November 17, 2020 | Permalink | Comments (0)

Law and Economics of Article 102 TFEU

Law and Economics of Article 102 TFEU
Robert O'Donoghue QC, Jorge Padilla

Table Of Contents

Summary of Contents

1. Introduction, Scope of Application, and Basic Framework
2. History, Development, and Reform
3. Market Definition
4. Dominance
5. The General Concept of An Abuse
6. Predatory Pricing
7. Margin Squeeze
8. Exclusive Dealing and Related Practices
9. Loyalty Rebates and Related Practices
10. Refusal to Deal
11. Tying and Bundling
12. Exclusionary Non-Price Abuses
13. Abusive Conduct and Standards
14. Excessive Pricing
15. Abusive Discrimination
16. Other Exploitative Abuses
17. Abuses in Digital Platform Markets
18. Effect on Trade
19. REMEDIES

November 17, 2020 | Permalink | Comments (0)

Monday, November 16, 2020

The Dickson Poon School of Law Global Competition Law Series (Online)  Competition Law and Policy in the US, Christine S Wilson, 19 November 2020 18.00-20.00 GMT

Centre of European Law

The Dickson Poon School of Law

Global Competition Law Series (Online)

 Competition Law and Policy in the US by the Honorable Christine S Wilson, Commissioner, Federal Trade Commission

19 November 2020 18.00-20.00 GMT

Please note this event will be hosted virtually via Zoom. To register for your place please click here.

The lecture will focus on proposals for competition law and policy

About the speaker

Christine S. Wilson was sworn in on September 26, 2018 as a Commissioner of the Federal Trade Commission. President Donald J. Trump named Wilson to a term that expires on Sept. 25, 2025.  Wilson previously served at the FTC as Chairman Tim Muris’ Chief of Staff during the George W. Bush Administration, and as a law clerk in the Bureau of Competition while attending Georgetown University Law Center.

In between her periods of service at the FTC, Wilson has practiced competition and consumer protection law both at law firms and as in-house counsel.  When nominated, Wilson was serving as Senior Vice President — Legal, Regulatory & International for Delta Air Lines. Prior to joining Delta, Wilson was a member of the Washington DC antitrust practice groups of Kirkland & Ellis LLP and O’Melveny & Myers LLP.  Early in her career, Wilson worked with former Assistant Attorney General James F. Rill at Collier Shannon Rill & Scott on a variety of competition law and policy initiatives, including the final report of the International Competition Policy Advisory Committee commissioned by Attorney General Janet Reno.

Wilson graduated cum laude from Georgetown University Law Center and she graduated Phi Beta Kappa from the University of Florida

About the chair

Professor Renato Nazzini joined King's College London as Professor of Law in 2012. Previously, he was Professor of Competition Law and Arbitration at the University of Southampton, which he joined from the Office of Fair Trading, then the UK competition authority (now the Competition and Markets Authority), where he was Deputy Director of the Legal and Policy Department and led or advised on major areas of enforcement and policy. His work included the review of the policy on abuse of dominance under Article 102 TFEU, which led to the adoption of the Commission Guidance Paper on Article 102 TFEU, and on the formulation of the policy on actions for damages for competition infringements, which led to major reforms in the UK and in the EU. Professor Nazzini is currently a non-governmental adviser to the International Competition Network (ICN), where he has been particularly active on the Unilateral Conduct Working Group and on the Merger Working Group
 

November 16, 2020 | Permalink | Comments (0)

Price-Discrimination Driven Algorithmic Collusion: Platforms for Durable Cartels

Price-Discrimination Driven Algorithmic Collusion: Platforms for Durable Cartels

Salil K. Mehra

Temple University - James E. Beasley School of Law

Abstract

Algorithmic competition has arrived. With it has come the specter of algorithmic collusion – rapid detection of co-conspirators’ defection via technologically enhanced price monitoring and setting capability can encourage anticompetitive collusion. Strikingly, the ability to track consumers’ willingness-to-pay and price discriminate among them may synergize with algorithmic collusion into something antitrust scholars had previously thought impossible: stable cartels.

In particular, consumer-facing digital platforms increasingly can determine consumers’ individual willingness to pay. Doing this allows them to deploy sophisticated forms of price discrimination, and thereby effect large welfare transfers from consumers to producers. This Article is the first to describe and analyze the potential interaction between price discrimination and algorithmic collusion. Algorithm-driven platforms now knit together large numbers of previously-independent firms and agents; some platforms set the price these participating firms and agents will charge. Crucially, if the gains to producers from collusive price discrimination are big enough, a qualitative change may take place: participants may find that they are no longer are in a Prisoner’s Dilemma tempting them to undercut each other on price, but rather in a coordination game with a single, rational choice: keep their collusion going. This Article sets forth how this dynamic can produce agreements by competitors, facilitated by price-discriminating, price-setting platforms that transfer wealth from consumers to producers – arguably a violation of Section 1 of the Sherman Act. Indeed, in contrast to the traditional view that firms need to first obtain Section 2 monopoly power, and only then can implement price discrimination, the model presented here shows the causation can run the other way: The ability to price discriminate effectively can drive the joint maintenance of monopoly power by colluding competitors. This dynamic takes on new urgency as more and more commerce shifts to the Internet and smartphone apps, a trend that has been accelerated by the COVID-19 pandemic and its associated acceleration of the shift to e-commerce.

Potential solutions to this problem will be complicated by antitrust law’s current relegation of price discrimination to the dead letter office – no Federal Trade Commission complaint under the Robinson-Patman Act, the main relevant statute, has been brought this century. Indeed, during the past decade, the most recent edition of the leading antitrust casebook in the U.S. deleted its section on price discrimination and the Act. This Article proposes three actions: (i) revive some enforcement against price discrimination, (ii) prioritize action against price discriminating platforms that inhibit switching by participants, including scrutinizing mergers between firms whose Big Data-based ability to gauge willingness-to-pay may, if combined, have negative ramifications for consumers, and (iii) factor price discrimination-driven algorithmic collusion into the current reevaluation of vertical restraints.

November 16, 2020 | Permalink | Comments (0)

Estimating Market Power Using a Composed Error Model

Estimating Market Power Using a Composed Error Model

Mustafa Karakaplan

Georgetown University - Department of Economics

Levent Kutlu

Georgia Institute of Technology

Abstract

We present a maximum likelihood based composed error model to estimate market powers of firms. In our model, the stochastic part of the supply relation includes two random components: the conventional two‐sided error term and a random term, which is capturing firm‐specific conducts. Moreover, we provide a generalization of scaled Stevenson stochastic frontier model in the context of doubly truncated normal distributions. We estimate the market powers of Chicago based airlines as an empirical example that is showing the applicability of our estimation procedure.

November 16, 2020 | Permalink | Comments (0)

Competitive Neutrality in Australia: Opportunity for Policy Development

Competitive Neutrality in Australia: Opportunity for Policy Development

 

Deborah Healey

University of New South Wales (UNSW) - Faculty of Law

Rhonda L. Smith

University of Melbourne - Department of Economics

Abstract

For competition to be effective in markets where government businesses compete with privately owned businesses, there must be a level playing field. A policy of competitive neutrality aims to ensure this. The article begins by briefly discussing the approach to competitive neutrality in the United States and the European Union to provide context for, and as a contrast to, the Australian approach. Then the origins and implementation of Australia’s competitive neutrality arrangements and the experience to date are explained and discussed. Using a real-life example, the utility of the current policy is considered, raising several issues of concern, and suggestions are made to address these. Finally, some conclusions are drawn about the current state of competitive neutrality policy in Australia.

November 16, 2020 | Permalink | Comments (0)

Article 102 TFEU and Efficiency Pleas: a 'Fact-Check'

Article 102 TFEU and Efficiency Pleas: a 'Fact-Check'

Massimiliano Kadar

European Commission - Directorate General for Competition; King's College London

Abstract

This paper provides a reasoned “fact-check” on some of the recurring criticisms concerning the European Commission’s handling of efficiency claims under Article 102 TFEU, which are brought forward in practitioner and academic circles, formally and informally, for instance in the context of blog posts, conferences and seminars. It supports the conclusion that, in the course of its enforcement action, the Commission takes seriously efficiency arguments advanced by dominant undertakings and that its approach is fully in line with the case law on Article 102 TFEU.

November 16, 2020 | Permalink | Comments (0)