Antitrust & Competition Policy Blog

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

Friday, April 9, 2021

Thirteenth Annual Northwestern Conference on Antitrust Economics and Competition Policy Friday, September 17, 2021

Thirteenth Annual Northwestern Conference on
Antitrust Economics and Competition Policy

 

Virtual Webinar Conference via WebEx

 

Sponsored by Compass Lexecon

 

Call for Papers

 

Friday, September 17, 2021

 

Submission Deadline: May 17, 2021

 

The Northwestern Center on Law, Business, and Economics at Northwestern Pritzker School of Law and the Center for the Study of Industrial Organization at Northwestern are issuing a call for original research papers to be presented at the Thirteenth Annual Conference on Antitrust Economics and Competition Policy to be held virtually via WebEx.  This year’s conference will be a one-day event and will run from approximately 9:00 AM to 2:00 PM (Central) on Friday, September 17, 2021. Due to the short length of the webinar, a limited number of papers will be selected for this year’s event.

 

The Fourteenth Annual Conference on Antitrust Economics and Competition Policy will be held in-person on Friday, September 16 — Saturday, September 17, 2022 at Northwestern Pritzker School of Law in Chicago, IL.

 

We are delighted to announce that Compass Lexecon has agreed to provide the funding to support both this year’s and next year’s conference. As always, conference organizers will be solely responsible for choosing papers and speakers.

 

The goal of this conference is to provide a forum where leading scholars from across the world can gather together with Northwestern’s own distinguished faculty to present and discuss high quality research relevant to antitrust economics and competition policy. Both theoretical and empirical submissions are welcome.  Papers in industrial organization or applied microeconomic theory that address issues relevant to antitrust policy are welcome even if they do not directly focus on particular antitrust policy issues or institutions.  While papers on all topics are welcome, we especially encourage submissions related to the following topic areas: 

 

·                 digital platforms and competition policy

·                 privacy, data security, and competition policy

·                 innovation and competition policy

·                 vertical contracting, vertical integration and competition policy

·                 the effectiveness of behavioral remedies

·                 buyer power and monopsony power

·                 EU platform regulation

 

 

We hope to involve leading thinkers from the government, non-profit, and private sector, as well as leading academics from economics departments, business schools, law schools and public policy schools. While most of the conference will be devoted to presentation and discussion of original academic research, we also expect to schedule a panel and/or keynote address.    

 

If you have questions about the appropriateness of your topic for the conference, or suggestions for panel subjects, please contact Professor William Rogerson, Professor of Economics and CLBE Research Director on Competition, Antitrust and Regulation at wrogerson@northwestern.edu.

 

Papers prepared for the Thirteenth Annual Conference on Antitrust Economics and Competition Policy will be permanently hosted on the Center on Law, Business, and Economics website as part of our Working Papers Series:

http://www.law.northwestern.edu/research-faculty/clbe/workingpapers/.    

 

Authors will be free to publish their work in other venues.

 

 

 

RESEARCH PROPOSALS: SUBMISSION, REVIEW PROCEDURE AND TIMELINE

 

 

Research Proposals should include an abstract (300 words maximum) and c.v.

 

Proposal Submission Deadline: Research Proposals should be submitted to clbe@law.northwestern.edu by close of business on May 17, 2021.

 

Notification Deadline:  Research Proposals will be reviewed by a committee.  Authors will be notified of the committee’s decisions on or around June 1, 2021.

April 9, 2021 | Permalink | Comments (0)

SEPs Licensing Across the Supply Chain: An Antitrust Perspective

SEPs Licensing Across the Supply Chain: An Antitrust Perspective

 

Oscar Borgogno

Bank of Italy; University of Turin, Faculty of Law; University of Oxford, Saïd Business School, Faculty of Law

Giuseppe Colangelo

University of Basilicata, Department of Mathematics, Computer Science and Economics; Stanford Law School; LUISS Guido Carli, Department of Business and Management

Abstract

The rise of the Internet of Things (IoT) and the development of 5G are set to add a new layer of complexity to the current practice of standard essential patents (SEPs) licensing. While, until recently, the debate has centred on the nature of fair, reasonable and non-discriminatory (FRAND) commitments and the mechanisms to avoid hold-up and reverse hold-up problems between licensors and licensees, a new hotly-debated issue has now emerged. At its core is the question of whether SEP holders should be required to grant a FRAND licence to any implementer seeking a licence, including component makers (so-called ‘licence-to-all’ approach), or if they should be allowed freely to target the supply chain level at which the licence is to be granted (so-called ‘access-for-all’ approach). After providing an up-to-date overview of the current legal and economic debate, the paper focuses on the most recent antitrust case law dealing with the matter on both sides of the Atlantic and argues that no sound economic and legal bases which favour licence-to-all solutions can be identified.

April 9, 2021 | Permalink | Comments (0)

Monopoly and Monopsony: Antitrust Standing, Injury, and Damages

Monopoly and Monopsony: Antitrust Standing, Injury, and Damages

30 Pages Posted: 8 Mar 2021

Tirza Angerhofer

University of Florida, College of Liberal Arts & Sciences, Department of Political Science, Students

Roger D. Blair

University of Florida

Abstract

This article examines the economic consequences of collusion in both the output market and one of the input markets. It examines the results of sequential collusion, which leads to complications and inconsistencies in measuring antitrust damages. It also examines simultaneous collusion in both the input and output markets. Ultimately, the profit maximizing equilibrium is identical but there are complications along the way to the final collusive equilibrium. The article explores the private plaintiff problems involving antitrust standing, proving antitrust injury, and estimating antitrust damages.

April 9, 2021 | Permalink | Comments (0)

Antitrust Policy Toward Patent Licensing: Why Negotiation Matters

Antitrust Policy Toward Patent Licensing: Why Negotiation Matters

Dan Spulber, Northwestern

Major technological changes driving the Fourth Industrial Revolution combine complementary inventions to form complex innovations. These include the Internet of Things (IoT), 5G mobile communications, artificial intelligence (AI), cloud computing, data analytics, autonomous vehicles, additive manufacturing, and augmented/virtual reality. This article shows that negotiation of patent license contracts fully eliminates many influential antitrust concerns about complementary inventions, including “royalty stacking,” “SEP hold-up,” “patent thickets,” “blocking patents,” the “Tragedy of the Anti-Commons,” and “regulatory patent pools.” Negotiation of patent license contracts implies that total royalties will be less than those charged by a bundling monopoly. Negotiation of patent license contracts in a competitive market avoids distortions from royalties per unit of output and eliminates the multiple-marginalization problem. Negotiation generates contract provisions consistent with contingent royalty arrangements. Negotiation also has important implications for antitrust policy toward patent pools. The analysis shows that patent pools serve to mitigate transaction costs rather than to regulate total royalties. This article suggests that antitrust policy makers should continue to be neutral between negotiation of patent license contracts and patent pools. This article supports the view that negotiation is pro-competitive as expressed by the 2017 United States Department of Justice and the Federal Trade Commission Antitrust Guidelines for the Licensing of Intellectual Property. Property.

 

April 9, 2021 | Permalink | Comments (0)

Thursday, April 8, 2021

On the Phenomenon of International Cooperation – From Networks of Authorities to Networks of People

On the Phenomenon of International Cooperation – From Networks of Authorities to Networks of People

 

Mateusz Błachucki

Polish Academy of Sciences (INP PAN) - Institute of Law Studies

Abstract

International cooperation between national competition authorities (NCAs) has developed leaps and bounds in recent decades. It takes various forms, depending on the needs and the goals of the participating authorities. It began with bilateral cooperation and often transformed into much more complex structures. The significant propagation of fora devoted to the development of competition law cooperation at an international level – such as the International Competition Network (ICN), OECD or UNCTAD, and at a regional level – such as the European Competition Network (ECN), Merger Working Group (MWG UE), European Competition Authorities (ECA) or Nordic Co-operation, is currently an undeniable fact.

The success of the cooperation, regardless of whether it is bilateral cooperation or through a network, is determined by the human factor. Mutual respect, trust and openness are among the basic conditions for effective cooperation between authorities and institutions, and are crucial for the success of a given network. Although this may seem like a truism, without well-developed relations between the officers of NCAs involved in international cooperation, the latter could not develop so well. International cooperation between NCAs is largely deformalised, as networks often operate without a physical dimension, not to mention a secretariat or other permanent structure. Without commitment based on the mutual respect and trust of those responsible for this cooperation in NCAs, neither bilateral cooperation nor transnational networks of NCAs would certainly have developed so much.

April 8, 2021 | Permalink | Comments (0)

No-Hire Provisions in McDonald's Franchise Agreements, an Antitrust Violations or Evidence of Joint Employer?

No-Hire Provisions in McDonald's Franchise Agreements, an Antitrust Violations or Evidence of Joint Employer?

 

Andrele Brutus St. Val

University of Pittsburgh - School of Law

Abstract

As the archetypical franchisor and industry leader, McDonald’s has come under much public and legal scrutiny in recent years for its business practices and its effects on low-wage and unskilled employees. Its no hire provision—which is a term included in its franchise agreements with franchisees that bars franchisees from hiring each others employees—has been found by economist to suppress wages and stagnate growth. This provision is being challenged under antitrust law while its employment practices are being disputed under labor law. McDonald’s is defending its business practices by presenting two seemingly contradictory defenses. This article explores how McDonald’s position in antitrust litigation over the use of no-hire agreements is inconsistent and arguably antithetical to its position in labor cases concerning joint-employer liability for the conduct of its franchisees thus allowing it to have its proverbial cake (or fries) and eat it too.

Viewing McDonald’s position in both cases through one lens, it is apparent that it is using its franchise agreements to set forth and control franchisee employment practices—and in the antitrust case it is advocating that it has the absolute right to do so as an intrabrand-franchise system with its franchisees —while disavowing any liability as a joint-employer for labor and employment violations. As a result of this dual and conflicting position, McDonald’s is able to reap the benefits of exercising control while avoiding the liability that results when its franchisees comply with the parameters it sets forth. This Article posits that in determining liability as a joint-employer, courts should also factor in McDonald’s intrabrand argument, which entails a concession that it exercises control over the franchisee’s employment and personnel matters—mainly hiring. This Article asserts that it is vital that courts analyze the terms of McDonald’s franchise agreements with the understanding that it desires to engage in coordination. After all, no one—not even fast food giant McDonald’s—should have their cake (or fries or Big Mac?) and eat it too.

April 8, 2021 | Permalink | Comments (0)

Competition Laws and Earnings Management: International Evidence

Competition Laws and Earnings Management: International Evidence

 

Tao Chen

Nanyang Technological University (NTU) - Division of Banking & Finance

Jimmy Chengyuan Qu

Nanyang Technological University (NTU) - Nanyang Business School

Abstract

Based on a comprehensive dataset on competition laws around the world, we examine the impact of competition laws on firms’ earnings management. In a cross-country examination using data from 58 countries, we find that firms tend to inflate their earnings when their countries adopt stricter competition laws, which supports the pressure effect of product market competition. This impact of competition laws is weaker for firms with a lower level of financial constraint, more investment opportunities, higher institutional ownership, or cross-listing, and stronger for firms in countries without IFRS adoption, with higher political uncertainty, or with less investor protection. Evidence from accounting figures further confirms the positive impact of competition laws on earnings management. Overall, our results shed light on the real effect of competition laws on firms’ earnings management decisions.

April 8, 2021 | Permalink | Comments (0)

5th Antitrust in the Financial Sector Conference - Webinar #2: Current International Issues - 13 April 11:00 EDT

ANTITRUST IN THE FINANCIAL SECTOR - 5TH ANNUAL CONFERENCE

PROGRAMME
6 Apr.

WEBINAR #1
Tuesday, 6 April 2021 - 11:00 EDT / 17:00 CEST

FIRESIDE CHAT

Speaker TBC
Chair : Richard TAFFET Partner, Morgan Lewis, New York [bio]

TO REGISTER, CLICK HERE

13 Apr.

WEBINAR #2
Tuesday, 13 April 2021 - 11:00 EDT / 17:00 CEST

CURRENT INTERNATIONAL ISSUES IN THE FINANCIAL SECTOR :
PAYMENTS COMPETITION, MASS ACTIONS, ENFORCEMENT PRIORITIES

Dennis DAVIS | Former President, Competition Appeal Court of South Africa, Pretoria [bio]
Maria VELENTZA | Director Financial Services, DG Competition, European Commission, Brussels [bio]
Graciela MIRALLES | Senior Economist - Markets and Competition Global Team, The World Bank, Washington D.C. [bio]
Vivek MANI | Principal, Cornerstone Research, London [bio]
Ademir Antonio PEREIRA JUNIOR | Partner, Advocacia José Del Chiaro, Sao Paulo [bio]
Moderator : Linda CENEDELLA Partner, Morgan Lewis, New York [bio]

TO REGISTER, CLICK HERE

20 Apr.

WEBINAR #3
Tuesday, 20 April 2021 - 11:00 EDT / 17:00 CEST

FINANCIAL SECTOR CONSORTIA AND COLLABORATIONS

Irene DE ANGELIS | Head of Antitrust Affairs, Intesa Sanpaolo, Milan [bio]
Mark GIDLEY | Partner, White & Case, Washington D.C.*
Moderator : Jon ROELLKE Partner, Morgan Lewis, Washington D.C. [bio]

TO REGISTER, CLICK HERE

April 8, 2021 | Permalink | Comments (0)

Wednesday, April 7, 2021

Herfindahl Revisited

Herfindahl Revisited

Tatenda Pasipanodya

Washington University in St. Louis - John M. Olin Business School

Anne Marie Knott

Washington University in St. Louis - John M. Olin Business School

Abstract

The Herfindahl-Hirschman Index (HHI) is one of the more commonly used measures in the Strategy and Economics literatures. While its principal uses are measuring market concentration or firm diversification, it has been extended beyond that. One concern with the measure is that an infinite set of distributions can have the same HHI. We assess whether that affects inferences. To do so, we replicate a prior study which employs HHI to test the impact of geographic diversification on firm value. We find that results with HHI are not robust across samples. We further find that decomposing HHI into its count and shape components reveals greater insights. In particular, we find that firm value increases in the number of units, and the similarity across them.

April 7, 2021 | Permalink | Comments (0)

Impact of Social Interactions on Duopoly Competition with Quality Considerations

Impact of Social Interactions on Duopoly Competition with Quality Considerations

 

Xin Geng

University of Miami - Department of Management

Xiaomeng Guo

Hong Kong Polytechnic University - Department of Logistics and Maritime Studies

Guang Xiao

Hong Kong Polytechnic University - Department of Logistics and Maritime Studies

Date Written: January 7, 2021

Abstract

We study the impacts of social interactions on competing firms' quality differentiation, pricing decisions, and profit performance. Two forms of social interactions are identified and analyzed: 1) market expansion effect (MEE) -- the total market expands as a result of both firms' sales; and 2) value enhancement effect (VEE) -- a consumer gains additional utility of purchasing from one firm based on this firm's previous and/or current sales volume. We consider a two-stage duopoly competition framework, in which both firms select quality levels in the first stage simultaneously and engage in a two-period price competition in the second stage. In the main model, we assume that each firm sets a single price and commits to it across two selling periods. We find that both forms of social interactions tend to lower prices and intensify price competition for given quality levels. However, MEE weakens the product quality differentiation and is benign to both high-quality and low-quality firms. It also benefits consumers and improves social welfare. By contrast, VEE enlarges the quality differentiation and only benefits high-quality firm, but is particularly malignant to the low-quality firm. It further reduces the consumers' monetary surplus. Such impact is consistent regardless of whether the VEE interactions involve previous or current consumers. We further discuss several model extensions including dynamic pricing, combined social effects, and various cost structures, and verify that the aforementioned impacts of MEE and VEE are qualitatively robust to those extensions. Our results provide important managerial insights for firms in competitive markets and suggest that they need to not only be aware of the consumers' social interactions, but also, more importantly, distinguish the predominant form of the interactions so as to apply proper marketing strategies.

April 7, 2021 | Permalink | Comments (0)

A Test of the Monopoly Pricing Hypothesis of Patents

A Test of the Monopoly Pricing Hypothesis of Patents

Gaétan de Rassenfosse

Ecole Polytechnique Fédérale de Lausanne

Ling Zhou

Ecole Polytechnique Fédérale de Lausanne

Abstract

The patent system is a central tool in innovation policy. The prospect of monopolistic pricing conferred by patent protection supposedly encourages firms to innovate. However, there is scant empirical evidence supporting the existence of higher markups for patent-protected products. Using an original dataset that links a broad range of consumer products to the patents that protect them, we study the impact of patent protection on product prices. The empirical strategy exploits exogenous variations in patent status, namely the fall of the patent in the public domain after the statutory 20-year term limit is reached. We find that a loss of patent protection leads to a 7–8 percent drop in product prices. The price drop, which starts about one year before patent expiry, is larger for more important patents and is more pronounced in more competitive product markets.

April 7, 2021 | Permalink | Comments (0)

Same Rule, Different Result: How the Narrowing of Product Markets Has Altered Substantive Antitrust Rules

Same Rule, Different Result: How the Narrowing of Product Markets Has Altered Substantive Antitrust Rules

Christine Wilson

Government of the United States of America - Federal Trade Commission

Keith Klovers

Wilson Sonsini Goodrich & Rosati

Abstract

Market definition remains a critical part of most antitrust cases, despite attempts to obviate it. While many commentators have argued that a particular policy change may theoretically broaden or narrow antitrust markets, and thereby affect substantive antitrust enforcement, none has empirically tested the hypothesis. This article does so—albeit crudely—for one class of antitrust cases, mergers. It finds that, in practice and on average, product markets in Clayton Act cases have narrowed since the 1960s and 1970s. This narrowing is not necessarily desirable or undesirable, but it is real. Causes and implications of this narrowing are then explored, including its effect on legal rules like the structural presumption and the rule against out-of-market efficiencies. Two examples from the banking industry illustrate how narrowing can affect substantive antitrust outcomes, with the Department of Justice’s narrower market definition finding greater competitive harm, counting fewer efficiencies, and requiring more divestitures than the Federal Reserve Bank’s broader markets. This divergence suggests that Clayton Act rules are applied in a systematically different way today. As a result, it may be more appropriate to apply these rules—especially the rule against out-of-market efficiencies—to product markets akin in size to those in Philadelphia National Bank and other foundational cases.

April 7, 2021 | Permalink | Comments (0)

Tuesday, April 6, 2021

When Vertical is Horizontal: How Vertical Mergers Lead to Increases in 'Effective Concentration'

When Vertical is Horizontal: How Vertical Mergers Lead to Increases in 'Effective Concentration'

Serge Moresi

Charles River Associates (CRA)

Steven C. Salop

Georgetown University Law Center

Abstract

This article explains the inherent loss of an indirect competitor and reduction in competition when a vertical merger raises input foreclosure concerns. We then calculate a measure of the effective increase in the HHI measure of concentration for the downstream market, and we refer to this “proxy” measure as the “dHHI.” We derive the dHHI measure by comparing the pricing incentives and associated upward pricing pressure (“UPP”) involved in two alternative types of acquisitions: (i) vertical mergers that raise unilateral input foreclosure concerns (and the associated vertical GUPPI measures), and (ii) horizontal acquisitions of partial ownership interests among competitors that raise unilateral effects concerns (and the associated modified GUPPI and modified HHI measures). This dHHI measure can be a useful tool for vertical merger analysis.

April 6, 2021 | Permalink | Comments (0)

The Twin Transition to a Digital and Green Economy: Doctrinal Challenges for EU Competition Law

The Twin Transition to a Digital and Green Economy: Doctrinal Challenges for EU Competition Law

Klaudia Majcher

Vienna University of Economics and Business, Competition Law and Digitalization Group; Vrije Universiteit Brussel, Institute for European Studies

Viktoria H.S.E. Robertson

University of Graz; Vienna University of Economics and Business

Abstract

The European Union intends to transition to a digital and green economy, an ambitious endeavour which must be supported by all of its policies and actions. This includes competition law as a central pillar of the European economic constitution. While ‘digital competition law’ and ‘green competition law’ do not share many traits at first sight, upon closer inspection it becomes clear that their insistence on ‘non-economic’ goals defies some of the more established logic of EU competition law and requires a new outlook that reconciles their individual paths. Starting from the constitutional standing of the (quasi-)foundational values of data protection and environmental sustainability, the paper analyses how – on a more theoretical and on a more practical level – EU competition law could include these values into its assessments.

April 6, 2021 | Permalink | Comments (0)

The Effects Doctrine As a Basis for Extraterritorial Application of the Israeli Competition Law

The Effects Doctrine As a Basis for Extraterritorial Application of the Israeli Competition Law

 

Tamar Indig

University of Haifa

Michal Gal

University of Haifa - Faculty of Law

Abstract

The Effects Doctrine creates an important basis for extra-territorial application of local law. The Doctrine, which is part of international public law, broadens the application of local laws under some conditions to actions and individuals outside its territory, which have affected it. The Doctrine reflects the understanding that in our day and age acts performed in one jurisdiction can significantly affect another jurisdiction. Being part of public international law, the doctrine is automatically adopted into Israeli law, absent a clashing and clear legal prohibition. The application of the doctrine in competition law, and the conditions for its application are analyzed in this article. To do so, the article analyzes four types of conditions adopted around the world for its application, while emphasizing the vast changes that have occurred in its application in the last decade. The conditions chosen will affect the ability of Israeli citizens to be compensated for anti-competitive conduct that affects them, although it took place elsewhere. We suggest that its application be conditioned, in line with its current application in many jurisdictions, on significant potential effects, which is objectively foreseeable.

April 6, 2021 | Permalink | Comments (0)

The Prohibition of Excessive Pricing: Inherent Difficulties, Potential Mistakes, and Conditions for Application Michal Gal

The Prohibition of Excessive Pricing: Inherent Difficulties, Potential Mistakes, and Conditions for Application

Michal Gal

University of Haifa - Faculty of Law

Yossi Spiegel

Tel Aviv University, Coller School of Management; Centre for Economic Policy Research (CEPR); ZEW – Leibniz Centre for European Economic Research

Abstract

The excessive pricing prohibition is recognized in many jurisdictions. In this article we use theoretical and practical considerations as well as experience from the implementation of the prohibition to shed light on its inherent difficulties, potential mistakes, and conditions for application. We begin by discussing five foundational principles that should affect the enforcement of the prohibition: (i) consumer welfare does not depend solely on price; (ii) incentives of firms to invest and innovate are crucial for consumer welfare; (iii) the prohibition increases the amount of uncertainty that firms face and impedes the efficient operation of markets; (iv) the competitive price is a valid benchmark only when perfect competition can exist; (v) currently the prohibition can be applied even if the monopolist gained its position by engaging in competition on the merit. We then apply these foundational principles to the prohibition. We also explore the fairness perceptions of consumers and the lessons learned from other types of price regulation. In the third part of the paper we analyze the inherent practical difficulties in applying the prohibition. We conclude with suggestions on the conditions under which the prohibition should be applied to ensure that its application enhances welfare. We also briefly summarize all EU and British excessive pricing cases to date. 

April 6, 2021 | Permalink | Comments (0)

Monday, April 5, 2021

Big Data at the Crossroads of Antitrust and Consumer Protection

Big Data at the Crossroads of Antitrust and Consumer Protection

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Liad Wagman

Illinois Institute of Technology - Stuart School of Business, IIT

Abstract

The rise of big data in the global economy has led to concerns about antitrust and consumer protection, but policy makers often treat the two areas separately. The separate treatment is justified in classical markets because antitrust tends to focus on firm-to-firm interactions, while consumer protection deals with firm-to-consumer interfaces. The two areas may also be subject to different laws, and any crossovers between the two have tended to be small. However, big data blurs the distinction between the two, causing them to intertwine, complement or even conflict with each other. This paper uses examples to illustrate why that is the case and identifies areas that would benefit from more economic research.

April 5, 2021 | Permalink | Comments (0)

Whistle-Blowing on the Lawyers Cartel: An Analysis of Anti-Competitive Trade Practices in the Malawian Legal Profession

Whistle-Blowing on the Lawyers Cartel: An Analysis of Anti-Competitive Trade Practices in the Malawian Legal Profession

Lusungu Mtonga

University of Cape Town

Abstract

Competition Law is mainly concerned with promoting consumer welfare. Competition Law aims at encouraging competition by prohibiting anti-competitive trade practices. The Competition and Fair-Trading Act prohibits certain horizontal practices i.e., certain arrangements or agreements between firms that are in actual or potential competition. Among other things, the Competition and Fair-Trading Act prohibits price fixing and other arrangements that have a substantial negative impact on competition. This paper argues that there are a number of trade practices in the Malawian Legal Profession which violate provisions of the Competition and Fair-Trading Act. More specifically, the paper argues that The Scale and Minimum Charges Rules are anti-competitive because they prescribe the fee or minimum fee that Legal Practitioners can charge for certain specified services. The paper argues that this is a form of price fixing that affects consumer welfare; therefore, contravenes the Competition and Fair-Trading Act. The paper further argues that the complete prohibition of advertisement and touting in the Malawian Legal Profession is anti-competitive and violates provisions of the Competition and Fair-Trading Act.

April 5, 2021 | Permalink | Comments (0)

A Retrospective Study of State Aid Control in the German Broadband Market

A Retrospective Study of State Aid Control in the German Broadband Market

 

Tomaso Duso

German Institute for Economic Research (DIW Berlin); TU Berlin- Faculty of Economics and Management - Empirical Industrial Organization

Mattia Nardotto

KU Leuven

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB); German Institute for Economic Research (DIW Berlin)

Abstract

We provide an evaluation of the impact of public subsidy schemes that aimed to support the development of basic broadband infrastructure in rural areas of Germany. Such subsidies are subject to state aid control by the European Commission (EC). While the EC increasingly recognises the role of economic analysis in controlling public aid to companies, there are to date no full retrospective studies performed on state aid control, especially assessing the so-called balancing test. In this study, we do not only analyse whether the aid was effective in solving a market failure – low broadband coverage in rural areas – but also study its impact on competitive outcomes, on both rival firms and consumers. We adopt a difference-in-differences framework after using a matching procedure to account for selection on observables. We find that the aid significantly increased broadband coverage. More importantly, we find that the number of internet providers has significantly increased in the municipalities receiving aid. This additional entry decreased average prices. Therefore, the subsidies complied with EU state aid rules, both in terms of effectiveness and competition.

April 5, 2021 | Permalink | Comments (0)

Natural Oligopoly Responses, Repeated Games, and Coordinated Effects in Merger Analysis: A Perspective and Research Agenda

Natural Oligopoly Responses, Repeated Games, and Coordinated Effects in Merger Analysis: A Perspective and Research Agenda

Jonathan B. Baker

American University - Washington College of Law

Joseph Farrell

University of California, Berkeley - Department of Economics

Abstract

When the 1968 Merger Guidelines were drafted, both the economics and antitrust literatures addressed how competition could be softened when oligopolists anticipated the natural and predictable responses of their rivals to their competitive moves, such as price cuts or output expansion. But when economists developed new models of oligopoly behavior, and of coordinated effects in particular, the older ideas were dropped—until the 2010 Guidelines, when the older ideas were reincorporated along with the newer ones. Our article points out limitations of the workhorse repeated game model of oligopoly conduct for analyzing coordinated effects of mergers, and suggests ways to make that model more realistic. We also identify important research questions that are raised when attempting to account for oligopolists’ natural and predictable responses in evaluating the consequences of mergers, and suggest studying Stackelberg reactions as a way to make progress in doing so.

April 5, 2021 | Permalink | Comments (0)