Antitrust & Competition Policy Blog

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

Wednesday, April 28, 2021

Does Market Power Encourage or Discourage Investment? Evidence from the Hospital Market

Does Market Power Encourage or Discourage Investment? Evidence from the Hospital Market

April 28, 2021 | Permalink | Comments (0)

Tuesday, April 27, 2021

A New Era for Antitrust Market Definition

A New Era for Antitrust Market Definition

 

Viktoria H.S.E. Robertson

University of Graz; Vienna University of Economics and Business

Abstract

A new era is dawning for market definition under EU competition law. It is being rung in by five distinct developments that, together, foreshadow the future of the relevant market as a tool of competition law. A plethora of policy reports on digital markets have made recommendations for antitrust market definition, while an increasing body of case law is tackling new issues arising for market definition. The European Commission is updating its Market Definition Notice to make it fit for current market realities, while also treading new paths with its forthcoming market investigation tool. In addition, the academic debate is exploring different avenues for recalibrating market definition. By analyzing these developments, the contribution explores what may lie in store for the relevant market as a fundamental analytical tool of EU competition law.

April 27, 2021 | Permalink | Comments (0)

Competition Law, Climate Change and Sustainability

Competition Law, Climate Change and Sustainability

 

Suzanne Kingston

Sutherland School of Law, University College Dublin

Abstract

Should competition law prohibit competitors from agreeing to produce more energy-efficient goods, where this means higher prices for consumers? Is a dominant undertaking that switches to using only pricier recyclable packaging abusing its dominant position? Can the fact that a merger may lead to lower carbon emissions from production in the long-term be taken into account by competition authorities? Should state aid to coal-fired power plants be permitted?

April 27, 2021 | Permalink | Comments (0)

The Role of Transnational Legal Process in Enforcing WTO Law and Competition Policy

The Role of Transnational Legal Process in Enforcing WTO Law and Competition Policy

 

Weimin Shen

Washington University School of Law

Abstract

This Article creates a paradigm for future studies of the role of Transnational Legal Process in the field of the interface between trade and competition policy to enhance a legal-based trade relationship between countries. It suggests that essential synergies that exist between trade and competition. In examining cartel issues both under WTO treaty obligations and under antitrust laws, Transnational Legal Process will largely prove a positive role in constraining the opportunities for States to play one system (trade) against the other (competition). I explore several recent U.S. antitrust litigations involving Chinese export cartels. I also examine the relationship between trade associations and the government under the hybrid nature of China’s regulatory environment. I argue that the involved U.S. courts and the executive branch’s stance in the above litigations perfectly illustrates a pervasive Transnational Legal Process. The courts and the executive branch as transnational actors stimulate each other to avert gaming by the litigants due to ambiguous factual evidence in cartel cases. In this context, the U.S. not only represents all antitrust nations’ interests when it is anti-cartel. The transnational actors generated interactions that led to WTO law and competition policy interpretations that become internalized, thereby binding under domestic law.

April 27, 2021 | Permalink | Comments (0)

The Faux Pas in Modern Competition Law – Walled Gardens, Data Sharing and Algorithmic Decision Making

The Faux Pas in Modern Competition Law – Walled Gardens, Data Sharing and Algorithmic Decision Making

Cambridge Law Review (De Lege Ferenda), Volume III (Forthcoming)

Kan Jie Marcus Ho

University of Cambridge, Faculty of Law

Date Written: February 13, 2021

Abstract

The milieu of the 21st century has triggered a wave of unprecedented changes across traditional market structures, igniting disruption and necessitating evolution in firms big and small.

A brief survey of the current global climate reveals the digital economy largely requiring some form of intervention – lest market abuse arise to the detriment of the modern consumer. In the United States, the Gordian Knot of walled gardens in the social media industry has triggered antitrust attention; where ‘Google’ and ‘Facebook’, juggernauts of the social media industry, have largely created a confined duopoly system. Indeed, the ability for said companies to access much sought-after consumer data, led to regulation being necessary to prevent market abuse.

Winging this issue to the United Kingdom and the European Union, technological developments have led to a necessary change in regulations – to facilitate innovation, while at the same time to ensure adequate consumer protection. This paper will adopt a two-pronged approach – in the first part, an economics-focused view will be adopted to examine the present digital economy; and in the second - the current regime in the UK will be analysed from a legal perspective, focusing on how Art 101 TFEU and Chapter I of the UK Competition Act affects firms from a top-down level. The final scope of this argument contrasts the Bundeskartellamt’s investigation into Facebook with AGCM’s investigation in Italy, fully fleshing out the regulatory dilemmas encountered by competition authorities of the region. In the final analysis, this paper argues that more governmental intervention is required in three sub-areas; namely in (i) data sharing, (ii) self-learning algorithms and finally, (iii) marketplace(s) with walled gardens.

April 27, 2021 | Permalink | Comments (0)

Auditor Says DG COMP Should ‘scale up’ Its Enforcement—How? 

Auditor Says DG COMP Should ‘scale up’ Its Enforcement—How? 

 

The European Court of Auditors’ (‘ECA’) report The Commission’s EU merger control and antitrust proceedings: A need to scale up market oversight published in late 2020 is its first audit of DG Competition’s (‘DG COMP’) enforcement activities. It found that the ‘commission made good use of its enforcement powers’ within its ‘limited budget’, but as the report’s subtitle suggests, ‘it needed to scale up its market oversight’. It recommends more proactive enforcement, monitoring, prioritising, and ex post evaluations, better coordination with national competition authorities, and increased resources devoted to ‘own initiated’ detection.

I will show that although many of the ECA’s recommendations are welcome, its key recommendation that DG COMP increases its ‘own initiated detection activities are unsupported and may well decrease the effectiveness of DG COMP’. Here I focus on the antitrust sections of the report.

April 27, 2021 | Permalink | Comments (0)

Monday, April 26, 2021

Vertical restraints under Indian Competition Law: whither law and economics 

Vertical restraints under Indian Competition Law: whither law and economics 

 
ABSTRACT
 
The correct welfare assessment of vertical agreements in competition law is a difficult craft. The more mature jurisdictions such as the EU and the US have struggled to develop the optimal framework. This article scrutinizes vertical agreements cases of the Competition Commission of India (CCI) that is now 11 years old. The objective is to assist the CCI in strengthening its legal and economic framework vis-à-vis vertical agreements in its formative stage. The scrutiny of some leading cases revealed three types of infirmities in CCI’s cases. First, there are some legal ambiguities in the interpretation of the legislation. Secondly, the economic analysis is largely incoherent and truncated. Thirdly, there is a visible overreliance on the EU jurisprudence that does not conform to the legislative scheme of the Indian Competition Act, 2002. The article draws out some lessons towards the end.

April 26, 2021 | Permalink | Comments (0)

The Impact of Privacy Measures on Online Advertising Markets

The Impact of Privacy Measures on Online Advertising Markets

Miguel Alcobendas

Yahoo! Research

Shunto Kobayashi

California Institute of Technology

Matthew Shum

California Institute of Technology

Abstract

Privacy regulations in online markets have ramped up in recent years, as typified by government regulation, such as the California Consumer Privacy Act (CCPA) of 2020, which allowed internet users in California to “opt-out” of behavioral tracking; as well as firm-level initiatives such as the banning of third-party cookies by major internet browsers, including Apple’s Safari and (in 2022) Google’s Chrome. Using fine-grained data from Yahoo, we estimate a structural model of bidding among Demand-Side Plat- forms (DSPs) for different types of users. Using the estimates, we simulate the counterfactual effects of expanding privacy regulations, in particular banning third-party cookies by browsers. While, as expected, such a ban would reduce publisher revenue substantially, by around 30%, it also shifts business to larger DSPs. In addition, we also consider the scenario where, in the aforementioned ban, there exists an advantaged DSP which possesses proprietary first-party information on users.

April 26, 2021 | Permalink | Comments (0)

The Humira Patent Thicket and the Noerr-Pennington Doctrine

The Humira Patent Thicket and the Noerr-Pennington Doctrine

Ryan Knox

Yale Law School

Gregory Curfman

American Medical Association

Abstract

Humira (adalimumab) is among the best-selling drugs in the United States and around the world. Even though the core patent for Humira expired in 2016, the manufacturer, AbbVie, has continued to increase the price to consumers year-after-year, so that the 2019 average yearly retail price was $84,454. Another 7.5% price increase is expected in the near future. AbbVie’s conduct to promote the rising price of Humira was recently challenged in In Re: Humira® (Adalimumab) Antitrust Litigation, No. 19-cv-1873. In March 2019, a group of indirect payers for Humira (labor unions and health and welfare funds) filed a novel lawsuit in the U.S. District Court for the Northern District of Illinois alleging antitrust activity on the part of AbbVie in violation of Sections 1 and 2 of the Sherman Antitrust Act. The antitrust challenge, which was dismissed by the District Court on the basis of the Noerr-Pennington doctrine, is predicated on AbbVie’s patent thicket that surrounds Humira and on legal settlements it has reached with six biosimilar companies to keep them out of the market until 2023. This article examines In Re Humira and provides a legal rationale for the conclusion that the District Court’s dismissal of the case should be overturned on appeal to the United States Court of Appeals for the Seventh Circuit. The case will be heard on February 25, 2021.

April 26, 2021 | Permalink | Comments (0)

Artificial Intelligence and Market Manipulations: Ex-ante Evaluation in the Regulator's Arsenal

Artificial Intelligence and Market Manipulations: Ex-ante Evaluation in the Regulator's Arsenal

 

Nathalie de Marcellis-Warin

Center for Interuniversity Research and Analysis on Organization (CIRANO)

Frédéric M. Marty

Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG) / Université Nice Sophia Antipolis; OFCE; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Eva Thelisson

Thierry Warin

HEC Montreal; CIRANO

Abstract

The digital economy's development poses questions unprecedented in their magnitude in potential market manipulations and manipulations of consumer choices. Deceptive and unfair strategies in consumer law may coexist and mutually reinforce each other with infringements in the field of competition, whether it be algorithmic collusion or abuse of a dominant position. Faced with the difficulty of detecting and sanctioning these practices ex-post, questions are raised about the sanction's dissuasive effect and its capacity to prevent possibly irreversible damage. To this end, this article considers the available supervision tools for the authorities in charge of market surveillance, the consumers or the stakeholders of the companies concerned.

April 26, 2021 | Permalink | Comments (0)

Friday, April 23, 2021

Market Power Parasites: Abusing the Power of Digital Intermediaries to Harm Competition

Market Power Parasites: Abusing the Power of Digital Intermediaries to Harm Competition

 

Noga Blickstein Shchory

University of Haifa, Faculty of Law

Michal Gal

University of Haifa - Faculty of Law

Abstract

Some digital information intermediaries, such as Google and Facebook, enjoy significant and durable market power. Concerns regarding the anti-competitive effects of such power have largely focused on conduct engaged in by the infomediaries themselves, and have led to several recent, well-publicized regulatory actions in the US and elsewhere. This article adds a new dimension to these concerns: the abuse of such power by other market players, which lack market power themselves, in a way which significantly harms the competitive process and undermines the integrity of the relevant in-formation market. We call such abusers “market power parasites.”

We provide three examples of parasitic conduct in online information markets: (1) black hat search engine optimization, (2) click fraud, and (3) fraudulent ratings and reviews. In each of these examples the manipulating parasite utilizes the infomediary’s market power to potentially turn an otherwise limited fraud into a manipulation of market dynamics, with significant anti-competitive effects.

This separation between power and conduct in the case of market power parasites creates an unwarranted lacuna which is not addressed by existing laws aimed at preventing abuses of market power. Anti-trust law does not capture such parasites because it only prohibits unilateral anti-competitive conduct if such conduct is engaged in by a monopolist. At the same time, fraud torts require proof of specific reliance and are therefore limited to a particular wrong, disregarding the broader competitive concerns resulting from parasitic conduct.

To bridge this gap, we suggest a fraud-on-the-online-information-markets rule, akin to the fraud-on-the-market rule in securities law. We propose to eliminate the rigid fraud tort requirement to prove reliance, and replace it with a presumption of reliance that will apply once the plaintiff proves harm to the integrity of an online infomediary. Our proposal strengthens competitors’ cause of action, releasing them from the arguably ill-fitting need to prove specific reliance, thereby increasing enforcement against the anti-competitive acts of market power parasites which harm the integrity of information in digital markets.

April 23, 2021 | Permalink | Comments (0)

Kill Zones? Measuring the Impact of Big Tech Start-up Acquisitions on Venture Capital Activity

Kill Zones? Measuring the Impact of Big Tech Start-up Acquisitions on Venture Capital Activity

Tiago S. Prado

Quello Center at Michigan State University

Abstract

This paper investigates the influence of the five largest U.S. digital platforms on venture capital activity worldwide. In the last 20 years, the big techs have been intensive in acquiring promising start-ups in their early stages of development, a strategy to defend their established markets that may quench innovation. Some authors have suggested the existence of “kill zones for innovation”, that are industry segments in which the presence and strategic interests of digital platforms discourage investments from venture capitalists. Our analysis does not support such a claim. We use an event-study empirical design with heterogenous treatment timing to identify the impact of big tech’s main acquisitions on the number of venture deals, as well as on the amount of venture investments driven towards start-ups of more than 170 industry sectors. Using a rich dataset of more than twenty-five thousand venture capital deals reported worldwide from 2010 to 2019, we found a persistent positive impact of the big tech start-up acquisitions on the appetite of venture capitalists to also invest in start-ups of similar industry segments. Moreover, the results suggest that this effect on venture capital activity is greater outside the U.S. than inside, what may be explained by the more dynamic and intense venture capital activity in the U.S. when compared to other countries. This empirical analysis may contribute to the debate on whether platforms significatively harm innovation, and how such processes may vary across countries of different geographic regions and with different levels of economic development.

April 23, 2021 | Permalink | Comments (0)

From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period

From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period

 

Thierry Kirat

Université Paris Dauphine

Frédéric M. Marty

Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG) / Université Nice Sophia Antipolis; OFCE; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Abstract

The experience of the war economy during the First World War in the United States reinforced the influence of arguments in favour of managed competition. By extending the principles of scientific management to the economy as a whole, this approach aimed to coordinate firms through the exchange of information, which was seen as a necessity both in terms of economic efficiency and response to cyclical fluctuations. Such a stance greatly reduced the application of competition rules. Nevertheless, the proposals that emerged during the 1929 crisis – leading to the reproduction of the war-economy experience in peacetime at the risk of steering the US economy towards the formation of cartels under the supervision of the federal government – were rejected by President Herbert Hoover, despite his defence of a model for regulated competition in the 1920s. The paradox was President Franklin D. Roosevelt’s resumption of these projects within the framework of the First New Deal. This paper deals with the arguments that were put forward to evade competition rules and explains why the Democratic administration ultimately decided to return to a resolute enforcement of the Sherman Act.

April 23, 2021 | Permalink | Comments (0)

Thursday, April 22, 2021

The Role of Regulation and Competition in Information Production and Credit Allocation: Evidence from Small Business Lending

The Role of Regulation and Competition in Information Production and Credit Allocation: Evidence from Small Business Lending

Panagiotis Avramidis

Alba Graduate Business School, The American College of Greece

Konstantinos Serfes

Drexel University

Kejia Wu

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Abstract

Do policies that promote credit access have an impact on targeted borrowers? To address this question we develop a theoretical model of information production, regulation and bank competition and test empirically its predictions by examining the impact of the Community Reinvestment Act's (CRA) lending program on small businesses. Our analysis reveals that, on average, the CRA eligibility-induced surge of loans leads to an improvement in the credit score of small businesses. However, we observe no improvement in the credit score of small businesses in markets with high bank competition intensity. We suggest that high competition erodes bank's incentives for information production. Therefore, blanket interventions that stimulate credit access to targeted borrowers may not uniformly improve credit allocation across all local markets. We recommend that government interventions aiming to increase credit access should also enact policies that lower information acquisition costs, especially in high bank competition markets.

April 22, 2021 | Permalink | Comments (0)

The Contradictions of Platform Regulation

The Contradictions of Platform Regulation

Mark A. Lemley

Stanford Law School

Abstract

Everyone wants to regulate the big tech companies. The desire to regulate the private actors that control so much of our lives is understandable, and some ideas for regulation make sense. But the political consensus around regulating the tech industry is illusory. While everyone wants to regulate big tech, it turns out that they want to do so in very different, indeed contradictory, ways.

These contradictions of platform regulation mean that it will be very hard to turn anti-tech popular sentiment into actual regulation, because the actual regulations some people want are anathema to others. They suggest caution in imposing regulation and an awareness of the difficult tradeoffs that are involved. But they also suggest a way forward: introducing competition to reduce the influence the tech giants have over our lives.

April 22, 2021 | Permalink | Comments (0)

The role of economics and the type of legal standards in antitrust enforcement by DGCOMP: an empirical investigation

Common Ownership in the US Pharmaceutical Industry: A Network Analysis

 

Albert Banal-Estañol

Melissa Newham

KU Leuven; German Institute for Economic Research (DIW Berlin)

Jo Seldeslachts

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

Abstract

We investigate patterns in common ownership networks between firms that are active in the US pharmaceutical industry for the period 2004-2014. Our main findings are that “brand firms” — i.e. firms that have R&D capabilities and launch new drugs — exhibit relatively dense common ownership networks with each other that further increase significantly in density over time, whereas the network of “generic firms” — i.e. firms that primarily specialize in developing and launching generic drugs — is much sparser and stays that way over the span of our sample. Finally, when considering the common ownership links between brands firms, on the one hand, and generic firms, on the other, we find that brand firms have become more connected to generic firms over time. We discuss the potential antitrust implications of these findings.

April 22, 2021 | Permalink | Comments (0)

At the Mercy of the Gatekeeper: The Theory and Practice of Undertakings’ Fundamental Rights in the EU Cartel Settlement Procedure

At the Mercy of the Gatekeeper: The Theory and Practice of Undertakings’ Fundamental Rights in the EU Cartel Settlement Procedure

Ştefan Ciubotaru 

  • This paper analyses remaining questions regarding the protection of undertakings’ fundamental rights by reference to the broader institutional context.

  • Noteworthy for the theoretical protection of fundamental rights is considering a bargaining approach to settlements and by taking into account that the Commission’s fines carry a communicative function.

  • In practice, the settlement procedure still suffers from institutional faults; prosecutorial bias and curial deference both in scrutiny of substantive elements of the offence and fining.

  • Particularly, hybrid cartels have shown a constant fundamental rights challenge; the impact of cases such as HSBC in practice and their overall use should be questioned.

April 22, 2021 | Permalink | Comments (0)

Wednesday, April 21, 2021

Need to Revise or Apply the Concept of Market Definition with a View to ‘Zero-Price’ and Overarching Markets

Need to Revise or Apply the Concept of Market Definition with a View to ‘Zero-Price’ and Overarching Markets

 
Key Points
  • Increased scrutiny of online platforms exposes the limits of existing competition law concepts.

  • The particularities of online platforms raise a myriad of questions in respect of the market definition.

  • This article analyses recent precedents of competition enforcers addressing selected challenges posed by online platforms when defining ‘zero-price’ and overarching markets.

April 21, 2021 | Permalink | Comments (0)

The Contradictions of Platform Regulation

The Contradictions of Platform Regulation

Mark A. Lemley

Stanford Law School

Abstract

Everyone wants to regulate the big tech companies. The desire to regulate the private actors that control so much of our lives is understandable, and some ideas for regulation make sense. But the political consensus around regulating the tech industry is illusory. While everyone wants to regulate big tech, it turns out that they want to do so in very different, indeed contradictory, ways.

These contradictions of platform regulation mean that it will be very hard to turn anti-tech popular sentiment into actual regulation, because the actual regulations some people want are anathema to others. They suggest caution in imposing regulation and an awareness of the difficult tradeoffs that are involved. But they also suggest a way forward: introducing competition to reduce the influence the tech giants have over our lives.

April 21, 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 21, 2021 | Permalink | Comments (0)