Antitrust & Competition Policy Blog

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

Friday, October 11, 2019

Global merger control—where to now?

Nicholas Levy, Alexander Waksman, and Lanto Sheridan ask Global merger control—where to now?

ABSTRACT: Considerable progress has been made over the past 30 years in ensuring that US and EU merger control norms are broadly understood and respected; that decisions are taken by independent agencies unfettered by political influence; and that agencies cooperate with each other to avoid divergent outcomes. Notwithstanding these achievements, important challenges remain. In particular, the broad consensus around the objectives and architecture of merger control is increasingly being questioned. This article identifies the principal strengths of global merger control, describes its major challenges, and considers ways to modernize and strengthen the existing system.

October 11, 2019 | Permalink | Comments (0)

Horizontal Directors

Yaron Nili, University of Wisconsin Law School addresses Horizontal Directors.

ABSTRACT: Directors wield increasing influence in corporate America, making pivotal decisions regarding a corporation's affairs and management. A robust literature recognizes directors' important role and examines their incentives and performance. In particular, scholars have worried that "busy directors" "those who serve on multiple corporate boards" may face time constraints that affect their performance. Little attention, however, has been directed to a much more alarming issue: numerous directors sit on the boards of multiple companies in the same industry. This Article terms them "Horizontal Directors" and spotlights, for the first time, the legal and policy issues surrounding them. The "horizontal" feature of directorships, a term often used in the antitrust context, could stifle competition and effectively consolidate industries, all while being overlooked by scholars, practitioners, and regulators alike.

This Article makes two contributions to the literature. First, it is the first to empirically identify the phenomenon of Horizontal Directors. It does so through an original data set that reveals the staggering number of directors who serve on two or more companies operating in the same industry. Second, the Article uses the context of Horizontal Directors to illuminate the push and pull between the priorities of corporate governance and antitrust law. Horizontal directorships simultaneously raise antitrust concerns regarding collusion and coordination, which could stifle competition, while also serving the goals of corporate governance by maximizing shareholder value. This Article thus bridges the corporate governance and antitrust literatures, offering a set of potential reforms to address horizontal directorships.

October 11, 2019 | Permalink | Comments (0)

The Impact of EU Cartel Policy Reforms on the Timing of Settlements in Private Follow-On Damages Disputes: An Empirical Assessment of Cases from 2001 to 2015

Hans Wolfgang Friederiszick, E.CA Economics; ESMT European School of Management and Technology, Linda Gratz, E.CA Economics; Ludwig Maximilian University of Munich (LMU) - Munich Graduate School of Economics (MGSE), and Michael Rauber, E.CA Economics analyze The Impact of EU Cartel Policy Reforms on the Timing of Settlements in Private Follow-On Damages Disputes: An Empirical Assessment of Cases from 2001 to 2015.

ABSTRACT: Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This paper explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded, but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, i.e. the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.

 

October 11, 2019 | Permalink | Comments (0)

Thursday, October 10, 2019

The 2019 Milton Handler Lecture: Horizontal Shareholding Monday, December 9, 2019 | 6:00 p.m. - 8:00 p.m.

The 2019 Milton Handler Lecture: Horizontal Shareholding
Monday, December 9, 2019 | 6:00 p.m. - 8:00 p.m.
The event will conclude with a cocktail reception.

Program Fee:
There is no fee for this event.

Speaker:
Professor Einer Elhauge | Carroll and Milton Petrie Professor of Law, Harvard Law School 


Description:
Institutional investors now cast 93% of shareholder votes at S&P 500 firms and are increasingly diversified in ways that give them shareholdings in horizontal competitors.  Horizontal shareholding levels have risen so much that by 2017 the average weight that an S&P 500 firm put on the profits of other firms in their industry was 75%.  In this talk, Professor Elhauge will review the proofs and numerous empirical studies showing that such horizontal shareholding in concentrated product markets lowers competition, and will detail the causal mechanisms.  He will also explain how such anticompetitive effects help explain longstanding economics puzzles, including executive compensation methods that inefficiently reward executives for industry performance, the sharp rise in the gap between corporate profits and investment, and the growing increase in economic inequality.  Finally, he explains why horizontal shareholding can be directly remedied under antitrust law and why it requires changes in traditional merger analysis.

 

Where

New York City Bar Association 42 West 44th St New York, NY 10036

https://services.nycbar.org/EventDetail?EventKey=ATR120919&WebsiteKey=f71e12f3-524e-4f8c-a5f7-0d16ce7b3314

 

October 10, 2019 | Permalink | Comments (0)

The Contributory Effect of GE/Honeywell on the European Commission’s Approach to Non-Horizontal Mergers

Uboho Inyang, University of Dundee discusses The Contributory Effect of GE/Honeywell on the European Commission’s Approach to Non-Horizontal Mergers.

ABSTRACT: In recent times, there has been considerable development in the assessment of non-horizontal merger in the European Union (EU). This has led to the attainment of some level of consistency in the approach adopted by the EU Commission (the Commission) to weed out mergers with anti-competitive potentialities. This development can be credited substantially to courts’ jurisprudence built over time, i.e., decisions of the General Courts (European Court of First Instance ‘CFI’ and the European Court of Justice ‘ECJ’). Whilst several of the courts’ decisions can be credited directly or indirectly as contributing to the development, one case that seems to have generated and earned much of public attention is the GE/Honeywell case which climaxed in the decision of the CFI delivered on December 14, 2005. Whilst the CFI made some profound pronouncements in their decision, the jury is still out on the impact GE/Honeywell has had generally on the development of the EU approach on non-horizontal mergers. This research paper investigates the importance of the GE/Honeywell, particularly with respect to the decision of the CFI. It concludes that, as much as GE/Honeywell is not to be solely credited with the growth witnessed today, it has however contributed greatly in its own way, to the evolution of the process to what it is today, particularly with respect to foreclosure analysis.

October 10, 2019 | Permalink | Comments (0)

Transaction versus Non-Transaction Platforms: A False Dichotomy in Two-Sided Market Definition

Gunnar Niels, Oxford Economic Research Associates (OXERA) Consulting Ltd. suggests Transaction versus Non-Transaction Platforms: A False Dichotomy in Two-Sided Market Definition.

ABSTRACT: When it comes to market definition in two-sided markets, an idea that has gained traction — among academics, competition authorities and even the US Supreme Court — is the distinction between transaction and non-transaction platforms. However, this distinction has no theoretical underpinning in the context of the hypothetical monopolist test (HMT). The hypothetical monopolist sets profit-maximising prices on both sides, as a function of own-price elasticities and externalities between the sides, regardless of whether the platform is transaction or non-transaction. I address the various theoretical and practical arguments put forward in support of the distinction between transaction and non-transaction, and explain why none of these justify a different approach to market definition. I also discuss why some of the policy suggestions made by proponents of the distinction — e.g. that a single market should be defined for transaction platforms but separate markets for non-transaction platforms — reflect some confusion about how the HMT works.

October 10, 2019 | Permalink | Comments (0)

Digital Economy, Big Data and Competition Law

Roberto Augusto Castellanos Pfeiffer, Faculty of Law of University of São Paulo (USP) explores Digital Economy, Big Data and Competition Law.

ABSTRACT: Big data has a very important role in the digital economy, because firms have accurate tools to collect, store, analyse, treat, monetise and disseminate voluminous amounts of data. Companies have been improving their revenues with information about the behaviour, preferences, needs, expectations, desires and evaluations of their consumers. In this sense, data could be considered as a productive input.

The article focuses on the current discussion regarding the possible use of competition law and policy to address privacy concerns related to big data companies. The most traditional and powerful tool to deal with privacy concerns is personal data protection law. Notwithstanding, the article examines whether competition law should play an important role in data-driven markets where privacy is a key factor.

The article suggests a new approach to the following antitrust concepts in cases related to big data platforms: assessment of market power, merger notification thresholds, measurement of merger effects on consumer privacy, and investigation of abuse of dominant position.

In this context, the article analyses decisions of competition agencies which reviewed mergers in big data-driven markets, such as Google/DoubleClick, Facebook/WhatsApp and Microsoft/LinkedIn.

It also reviews investigations of alleged abuse of dominant position associated with big data, in particular the proceeding opened by the Bundeskartellamt against Facebook, in which the German antitrust authority prohibited the data processing policy imposed by Facebook on its users.

October 10, 2019 | Permalink | Comments (0)

Public Interest Considerations in European Merger Control Regimes

Oliver Budzinski, Ilmenau University of Technology and Annika Stöhr Ilmenau University of Technology explore Public Interest Considerations in European Merger Control Regimes.

ABSTRACT: Nowadays, merger control predominantly relies upon a strict analysis of the effects from merger and acquisitions on effective competition. However, there is scope for so-called public interest considerations in several European merger control regimes and recently a number of European politicians have called for more elbowroom for non-competition-oriented interventions into merger control. For instance, they did so in the context of the prohibition of the Siemens-Alstom-merger and the upcoming industrial policy discussion about European Champions. Since the social welfare effects of competitive markets present an important public interest in itself, additional public interest considerations justifying an intervention need to be non-market in the sense that these goals stand in conflict with competition. However, a trade-off between effective competition and public interest, i.e. public interests that are better served through market power then through effective competition, is a rare phenomenon. This paper gives an overview of public interest considerations in the merger policy of European Union member states and analyzes four jurisdictions in more detail. We find that the institutional designs how public interests considerations are included in the merger control regimes lack focus on non-market public interest considerations across the analyzed jurisdictions. Furthermore, there are relevant shortcomings regarding transparency and legal certainty. Moreover, our ex-post analysis shows that the empirical record of past public interest-motivated interventions is questionable with only few interventions yielding the desired effects. Therefore, we suggest revising the public interest regulations in the respective merger control regulations by narrowing their focus to real non-market public interests and by levying decision power on less politically-influenced bodies.

October 10, 2019 | Permalink | Comments (0)

Private Law Liability of the Undertaking Pursuant to Art. 101 TFEU

Christian Kersting Heinrich Heine University Düsseldorf - Faculty of Law explains Private Law Liability of the Undertaking Pursuant to Art. 101 TFEU.

ABSTRACT: In its Skanska decision the ECJ bases an undertaking’s private law liability for cartel damages directly on Art. 101 TFEU and holds its judicature regarding both liability within the economic unit and the principle of economic continuity to be applicable in private law. The article considers the private law action for damages nevertheless to be an action under national law, finds the undertaking to be a legal entity in itself, discusses joint and several liability of all constituent parts of an economic unit and deals with the question whether the undertaking itself can be a cartel victim and entitled to damages. The article considers the judgement to have no impact on national laws on the imposition of fines.

October 10, 2019 | Permalink | Comments (0)

‘Agency Insight’—a perspective on antitrust enforcement, ‘reflecting on recent enforcement actions, the state of competition, and any other noteworthy domestic or international developments’

Rod Sims, ACCC offers ‘Agency Insight’—a perspective on antitrust enforcement, ‘reflecting on recent enforcement actions, the state of competition, and any other noteworthy domestic or international developments’.

ABSTRACT: In this article, I propose to focus on three competition law areas and topics that go to the heart of competition policy: namely cartels, the application of ‘lessening of competition’ thresholds, and our approach to market studies.

October 10, 2019 | Permalink | Comments (0)

A Prospective Competitive Effects Analysis of the AT&T/Time Warner Merger

Paul R. Zimmerman U.S. Federal Trade Commission - Bureau of Economics, George Chang Grand Valley State University - Department of Finance, and Shawn W. Ulrick U.S. Federal Trade Commission (FTC) offer A Prospective Competitive Effects Analysis of the AT&T/Time Warner Merger. Worth reading!

ABSTRACT: The vertical merger of AT&T and Time Warner combined one of the largest downstream multiple video program distributors (MVPDs) with one of the largest upstream providers of pay-TV programming. The U.S. Department of Justice sued to block the merger, arguing that the combined entity would have the ability and incentive to partially foreclose Time Warner programming to unaffiliated MVPDs that compete downstream against AT&T. The government’s decision to sue was inherently controversial because vertical transactions — due to their presumptive efficiency effects — are rarely litigated. This study evaluates the potential competitive effects stemming from the merger based on the stock market reactions of upstream and downstream competitors to the merging parties when news of their intent to merger was made public. While event studies of proposed vertical transactions cannot ordinarily distinguish between efficiency and foreclosure effects on the stock price reactions of (downstream) rivals, by considering specific industries (such as pay-TV) in which certain efficiencies are likely to be small or absent, it may be possible to draw sharper inferences from the event study approach. We find that the announcement of AT&T’s proposed acquisition of Time Warner exerted a negative impact on the expected future profitability of rival MVPDs and a positive effect on rival content providers. The results do not support the hypothesis that, post merger, AT&T would compete more effectively against incumbent online advertising platforms such as Facebook and Google; nor do they suggest that the proposed merger was likely to result in anticompetitive effects in video content production/distribution via customer foreclosure or collusion. Rather, the results support the government’s central theory of harm: namely, that the combination would unilaterally and credibly increase the bargaining leverage of the merged entity and thereby allow it to partially foreclose rival MVPDs by increasing their affiliate fees.

October 10, 2019 | Permalink | Comments (0)

Wednesday, October 9, 2019

Modernizing Bank Merger Review

Jeremy C. Kress, University of Michigan, Stephen M. Ross School of Business advocates Modernizing Bank Merger Review.

ABSTRACT: Sixty years ago, Congress established a federal pre-approval regime for bank mergers to protect consumers from then-unprecedented consolidation in the banking sector. This process worked well for several decades, but it has since atrophied, producing numerous “too big to fail” banks.

This Article contends that regulators’ current approach to evaluating bank merger proposals is poorly suited for modern financial markets. Policymakers and scholars have traditionally focused on a single issue: whether a bank merger would reduce competition. Over the past two decades, however, changes in bank regulation and market structure — including the repeal of interstate banking restrictions and the emergence of nonbank financial service providers — have rendered bank antitrust analysis largely obsolete. As a result, regulators have rubber stamped recent bank mergers, despite evidence that such deals could harm consumers and destabilize financial markets.

This Article asserts that contemporary bank merger analysis should instead emphasize statutory factors that regulators have long neglected: whether a proposed merger would increase systemic risks, enhance the public welfare, and strengthen the relevant institutions. This Article urges regulators to modernize their approach, and it proposes a novel framework to ensure that bank merger oversight safeguards the financial system. The proposals contained herein have far-reaching implications not only for bank regulation but also for the ongoing debate over merger policy in technology, agriculture, and other industries.

October 9, 2019 | Permalink | Comments (0)

American Antitrust Institute 2019 Antitrust Enforcement Awards

AAI 2019 Antitrust Enforcement Awards Honorees Announced

The American Antitrust Institute (AAI) has announced its selection of leading legal practitioners and economists to be recognized at the AAI 2019 Antitrust Enforcement Awards. The Honorees will be featured at a gala awards dinner on Tuesday, November 12, following the AAI’s Annual Private Antitrust Enforcement Conference. Registration and program information for the conference and the awards dinner is available here.

OUTSTANDING ANTITRUST LITIGATION ACHIEVEMENT IN PRIVATE LAW PRACTICE

King Drug Co. of Florence, Inc. v. Cephalon, Inc. (Provigil)
Berger Montague PC
Garwin Gerstein & Fisher LLP
Heim Payne & Chorush, LLP
Odom & Des Roches, LLC
Smith Segura Raphael & Leger, LLP
Team members included: Berger Montague PC’s David F. Sorensen, Daniel C. Simons, and Nicholas Urban; Garwin Gerstein & Fisher LLP’s Bruce E. Gerstein, Joseph Opper, and Kimberly Hennings; Odom & Des Roches, LLC’s Stuart E. Des Roches and Chris Letter; Heim Payne & Chorush, LLP’s Russ Chorush; Smith Segura Raphael & Leger, LLP’s Susan C. Segura and David Raphael; and Miranda Jones.

In re Automotive Parts Antitrust Litigation
Cotchett, Pitre, & McCarthy, LLP
Robins Kaplan LLP
Susman Godfrey L.L.P.
Team members included: Robins Kaplan LLP’s Hollis Salzman, William Reiss, and Noelle Feigenbaum; Susman Godfrey L.L.P.’s Marc M. Seltzer, Floyd Short, Chanler Langham, Jenna Farleigh, Steven M. Shepard, Terrell W. Oxford, and Steven G. Sklaver; and Cotchett, Pitre, & McCarthy, LLP’s Adam Zapala, Elizabeth Tran Castillo and Alexander E. Barnett.

In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation
Hagens Berman
Pearson, Simon & Warshaw, LLP
Winston & Strawn LLP
Team members included: Hagens Berman’s Steve W. Berman, Jeff D. Friedman, Emilee N. Sisco, and Craig R. Spiegel; Pearson, Simon & Warshaw, LLP’s Bruce L. Simon, Benjamin E. Shiftan, Matthew A. Pearson, and Alexander L. Simon; and Winston & Strawn LLP’s Jeffrey L. Kessler, David Greenspan, David G. Feher, Sean Meenan, and Jennifer Parsigian.

Seaman v. Duke University, et al.
Lieff, Cabraser, Heimann & Bernstin, LLP
Elliot, Morgan & Parsonage, P.A.
Team members included: Lieff, Cabraser, Heimann & Bernstein, LLP’s Dean Harvey, Kelly Dermody, Brendan Glackin, Anne Shaver, and Yaman Salahi; and Elliot, Morgan & Parsonage, P.A.’s Robert (Hoppy) Elliot and Daniel C. Lyon.

OUTSTANDING ANTITRUST LITIGATION ACHIEVEMENT IN ECONOMICS

In re Transpacific Passenger Air Transportation Antitrust Litigation
Russell W. Mangum III, Nathan Associates

Federal Trade Commission v. Wilhelmsen et al.
Aviv Nevo, University of Pennsylvania and Cornerstone Research

Federal Trade Commission v. Qualcomm Incorporated
Carl Shapiro, UC Berkeley

OUTSTANDING ANTITRUST LITIGATION ACHIEVEMENT BY A YOUNG LAWYER

In re Libor-based Financial Instruments Antitrust Litigation
Geng Chen, Susman Godfrey L.L.P.
Michael Kelso, Susman Godfrey L.L.P.

In re Dental Supplies Antitrust Litigation
Ian M. Gore, Susman Godfrey L.L.P.
Joshua T. Ripley, Berger Montague PC
Jessica Weiner, Cohen Milstein Sellers & Toll PLLC

 
2019 Judging Committee
  • Chair: Eric B. Fastiff, Lieff, Cabraser, Heimann & Bernstein, LLP
  • Harry First, New York University School of Law
  • Kathleen E. Foote, California Department of Justice Antitrust Section
  • Warren Grimes, Southwestern Law School
  • Thomas Horton, South Dakota School of Law
  • Ellen Meriwether, Cafferty Clobes Meriwether & Sprengel LLP
  • Nisha Mody, OSKR, LLC
  • Philip Nelson, Economists Incorporated
  • Roger Noll, Stanford University
  • Victoria Sims, Cuneo, Gilbert & LaDuca
  • Jennifer Scullion, Seeger Weiss
  • Sona R. Shah, Zwerling, Schachter & Zwerling, LLP
  • Heidi Silton, Lockridge Grindal Nauen P.L.L.P.
  • Cathy Smith, Gustafson Gluek PLLC
About the American Antitrust Institute

The American Antitrust Institute is an independent, nonprofit organization devoted to promoting competition that protects consumers, businesses, and society. We serve the public through research, education, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.

The American Antitrust Institute is a 501(c)(3) not-for-profit organization (Tax ID #52-2093834). All donations are tax deductible.

October 9, 2019 | Permalink | Comments (0)

Join us for a lecture on Giovanna Massarotto's new book titled "Antitrust settlements: How a Simple Agreement Can Drive the Economy”

Join us for a lecture on Giovanna Massarotto's new book titled "Antitrust settlements: How a Simple Agreement Can Drive the Economy”

About this Event

Join us for a lecture on Giovanna Massarotto's new book titled "Antitrust settlements: How a Simple Agreement Can Drive the Economy” followed by networking drinks.

Abstract/Presentation:

As a PhD in law, what first struck me was how a simple agreement (which in my mind was a contract) could regulate markets and drive our economy by changing the dynamics of markets. In 1956 an antitrust settlement set the tone for the creation of the Internet. Today antitrust settlements along with unlocking the complexity of blockchain technology and smart contracts can be the key to govern present and future data-driven markets. Antitrust settlement is not a mere tool to enforce antitrust law, and this book is not merely a book on antitrust settlements. This book is a springboard to further investigate how a simple antitrust enforcement tool can drive our economy leading both the antitrust and regulatory intervention in today’s global data economy.

Bio

Dr. Massarotto is an international expert on antitrust law and economic regulation in the field of information technology. She is affiliate of the UCL Centre for Blockchain Technologies (UCL CBT) and serves as an Adjunct Professor at the University of Iowa, in addition to teaching Law & IT at H-FARM.

Dr. Massarotto has presented at several international conferences at Harvard Law School, Fordham University of New York, the Italian Antitrust Authority (AGCM), the University of Münster (Germany) and the University of Liege (Belgium). Dr. Massarotto spent two years in the United States as a visiting research fellow for her PhD at Fordham University in New York and Washington D.C.. She was an Academic Visitor at the University of Oxford, has taught Competition Law as Adjunct Professor at Bocconi University, worked at the Italian Antitrust Authority (AGCM) and for various international law firms in Milan. After securing her degree with honours in Law, Dr. Massarotto attained a PhD in Law at Bocconi University in May 2014.”

Event Logistics

18:30 - Doors open

18:45-19:45 - Lecture

19:45-21:00 - Networking Drinks

This event will take place at the Sir Ambrose Fleming LT, G06, Roberts Building, Gower Street, London, WC1E 6BT. A map to the location is available at https://www.ucl.ac.uk/maps/sir-ambrose-fleming-lt.

October 9, 2019 | Permalink | Comments (0)

Apple v. Pepper: The Unintended Fallout in Europe

Konstantinos Stylianou, University of Leeds - School of Law offers Apple v. Pepper: The Unintended Fallout in Europe.

ABSTRACT: In Apple v. Pepper, the US Supreme Court held that iPhone users were direct purchasers of apps from Apple, which, according to precedent set by Illinois Brick v. Illinois, made them the proper plaintiffs to sue Apple for antitrust damages. The damages were the result of Apple’s alleged monopolization of the app distribution aftermarket through imposing a supra-competitive 30 percent commission fee to the price of each downloaded app.

The case was closely watched because the Court’s decision controlled whether plaintiffs could proceed with the substantive issues in their complaint, namely whether Apple is a monopolist and whether it has monopolized the app distribution market. The decision was positively received by the public, for it gave standing to consumers against big tech, but scholarly commentary has been more reserved and even critical.

This note adds to the ongoing debate on the case by showing how the Court’s decision, whose effects are seemingly confined in US antitrust law, can have an impact on EU competition law and its enforcement. The two ways by which the case can have an unanticipated fallout in Europe relate to the Court’s implicit rejection of indirect purchasers’ right to claim damages, and the Court’s implicit designation of Apple as an intermediary instead of an agent of app developers.

October 9, 2019 | Permalink | Comments (0)

Is it Consensus or is it Collusion? Does it Matter for Cryptocurrencies?

Peder Østbye, Norges Bank asks Is it Consensus or is it Collusion? Does it Matter for Cryptocurrencies?

ABSTRACT: Cryptocurrencies are based on cryptography-based asset disposals broadcast peer-to-peer to be validated according to consensus mechanisms in compliance with consented protocols. Consensus is essential in all aspects of a cryptocurrency. But how is consensus distinguished from collusion? While consensus is supposed to serve the interests of cryptocurrency participants as a group, collusion is associated with secret agreements to deceive the group to the benefit of a few. This paper shows that it is not straightforward to distinguish consensus from collusion. Better understanding of how to distinguish consensus and collusion can improve market discipline as well as legal responsibilities regarding constructively influencing a cryptocurrency.

October 9, 2019 | Permalink | Comments (0)

Collusive Algorithms as Mere Tools, Super-tools or Legal Persons

Guan Zheng and Hong Wu discuss Collusive Algorithms as Mere Tools, Super-tools or Legal Persons.

ABSTRACT: The widespread use of algorithmic technologies makes rules on tacit collusion, which are already controversial in antitrust law, more complicated. These rules have obvious limitations in effectively regulating algorithmic collusion. Although some scholars and practitioners within antitrust circles in the United States, Europe and beyond have taken notice of this problem, they have failed to a large extent to make clear its specific manifestations, root causes, and effective legal solutions. In this article, the authors make a strong argument that it is no longer appropriate to regard algorithms as mere tools of firms, and that the distinct features of machine learning algorithms as super-tools and as legal persons may inevitably bring about two new cracks in antitrust law. This article clarifies the root causes why these rules are inapplicable to a large extent to algorithmic collusion particularly in the case of machine learning algorithms, classifies the new legal cracks, and provides sound legal criteria for the courts and competition authorities to assess the legality of algorithmic collusion much more accurately. More importantly, this article proposes an efficacious solution to revive the market pricing mechanism for the purposes of resolving the two new cracks identified in antitrust law.

October 9, 2019 | Permalink | Comments (0)

Tuesday, October 8, 2019

Pricing Better

Sourav Ray, McMaster University - DeGroote School of Business, Li Wang, CHEPA, McMaster University, Daniel Levy, Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis, and Mark Bergen, University of Minnesota - Minneapolis - Carlson School of Management analyze Pricing Better.

ABSTRACT: Electronic shelf label (ESL) is an emerging price display technology around the world. While these new technologies require non-trivial investments by the retailer, they also promise significant operational efficiencies in the form of savings in material, labor and managerial costs. The presumed benefits of ESL, for example, tend to be focused around lower price adjustment costs (PAC), also known as menu costs. However, ESL not only can save PAC but may also enable the retailer to price “better,” generating greater value for the transacting parties. Thus, ESL’s strategic impact for retailers occurs between claiming these presumed efficiencies and realizing the value generating potential. Using transactions data from a longitudinal field experiment, we assess such impact of ESL by studying how it shapes retail pricing practices and outcomes. Our general finding is that ESL plays an enabling role to the retailer’s strategy – thereby enhancing the retailer’s sales and revenues. The price adjustment efficiencies of ESL allows retailers to do better waste management, price discovery, as well as leveraging value in information for consumers. However, ESL’s impact on prices is nuanced, based on the retail strategy (EDLP, HI-LO) being used. Papers quantifying emerging technologies’ impact on retail outcomes are sparse, even fewer investigating their role in pricing. To the best of our knowledge, ours is the first study to explore and quantify how ESL interacts with retail strategy to affect retail pricing practices and retail outcomes.

October 8, 2019 | Permalink | Comments (0)

"Yogurt Cartel" of Private Label Providers in France: impact on prices and welfare

By: Bonnet, CélineBouamra-Mechemache, Zohra
Abstract: During the period 2006 to 2012, French competition authorities pressed charges against the country’s top 11 firms for engaging in a price-fixing cartel in the fresh dairy store brand segment. Using an empirical vertical bargaining model, this paper studies the effects of the "yogurt cartel" on the price of store brand and national brand products, on the profit sharing between dairy dessert companies and retailers, and consumer welfare. We find that data supports collusive behavior in the dairy dessert market. The cartel leads to price effects for store brands varying from 7.3% for other dairy desserts to 11.3% for yogurts, and those price effects would even be stronger if the cartel also affects the ability of retailers to negotiate with manufacturers. We also show that in a hypothetical situation without the collusion of private label providers, the prices of national brands would have been higher and manufacturers’ profits for the sales of their national brand products would have been lower. The cartel thus benefits manufacturers both in the national brand and private label markets. We show that the national brand dairy dessert market should be taken into account when evaluating the damages to the private label dairy dessert market, which the French competition authorities failed to do.
URL: http://d.repec.org/n?u=RePEc:tse:wpaper:122945&r=com

October 8, 2019 | Permalink | Comments (0)

Diffusion and Pricing Over the Product Life Cycle

By: Nair, Harikesh S. (Stanford Graduate School of Business)
Abstract: This chapter presents a selective review of a literature in marketing that analyzes diffusion and pricing over the product life-cycle. I primarily focus on empirical work, and on papers that deal with the dynamics of pricing over time. I discuss how recent empirical work has linked outcomes to microfoundations and accommodated a role for forward-looking consumers and firms. I emphasize a more nuanced perspective of the product life-cycle that has emerged in the literature, as an endogenous outcome arising from the interaction of preferences, expectations, costs and competition in the market, rather than as an exogenously specified process against which marketing strategies should be optimized.
URL: http://d.repec.org/n?u=RePEc:ecl:stabus:3780&r=com

October 8, 2019 | Permalink | Comments (0)