Antitrust & Competition Policy Blog

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

Monday, August 31, 2020

It’s Anti-Suit Injunctions All The Way Down – The Strange New Realities of International Litigation Over Standards-Essential Patents

It’s Anti-Suit Injunctions All The Way Down – The Strange New Realities of International Litigation Over Standards-Essential Patents

 

Jorge L. Contreras

University of Utah - S.J. Quinney College of Law

Abstract

Today’s markets for technology products — from smartphones to home appliances to automobiles — are inherently global. This is especially true of products that embody technical standards — protocols like 5G, Wi-Fi, Bluetooth and USB that are covered by hundreds, thousands, or tens of thousands of patents (so-called “standards-essential patents” or “SEPs”). Given the global scope and size of these markets, it is not surprising that patent litigation over standardized products is often conducted on a global scale. This article looks at an increasingly important aspect of these global standards wars: the ability of a court in one jurisdiction to prevent a party from pursuing litigation in another jurisdiction using a procedural mechanism called the anti-suit injunction (ASI). To complicate matters further, a litigant may also petition a court in one jurisdiction to prevent a party from seeking an ASI in another jurisdiction — the so-called anti-anti-suit injunction (AASI). And, curiouser still, litigants have recently re-invigorated the anti-anti-anti-suit injunction (AAASI), a procedural move that seeks to prevent a litigant from obtaining an AASI to block another litigant from requesting an ASI. If there is no theoretical limit to the procedural machinations to which parties can go in such disputes, it may, indeed, be injunctions “all the way down”.

August 31, 2020 | Permalink | Comments (0)

Platform Competition, Vertical Differentiation and Price Coherence

Platform Competition, Vertical Differentiation and Price Coherence

Heiko A. Gerlach

University of Queensland - School of Economics

Junqian Li

The University of Queensland

Platform Competition, Vertical Differentiation and Price Coherence.

ABSTRACT: This paper analyzes downstream merchant price coherence when upstream platforms are vertically differentiated.

When merchants are unable to charge different prices to consumers who purchase their product using different platforms, fee competition among platforms becomes more intense. We show that with price dispersion, platforms compete for market share while, with price coherence, they compete for the market.

As a consequence, price coherence can increase consumer surplus and total welfare when the quality difference and its cost are intermediate.

We also compare private and social incentives of a high-quality platform and a merchant to impose price coherence and we explore the effects of price dispersion on investment incentives.

August 31, 2020 | Permalink | Comments (0)

Friday, August 28, 2020

The Economics of Class Action Waivers

The Economics of Class Action Waivers

 

Albert H. Choi

University of Michigan Law School

Kathryn E. Spier

Harvard University - Law School - Faculty; National Bureau of Economic Research (NBER)

Abstract

Many firms require consumers, employees, and suppliers to sign class action waivers as a condition of doing business with the firm, and three recent US Supreme Court cases, Concepcion, Italian Colors, and Epic Systems, have endorsed companies’ ability to block class actions through mandatory individual arbitration clauses. Are class action waivers serving the interests of society or are they facilitating socially harmful business practices? This paper synthesizes and extends the existing law and economics literature by analyzing the firms’ incentive to impose class action waivers. While in many settings the firms’ incentive to block class actions may be aligned with maximizing social welfare, in many other settings it is not. We examine conditions in which class action waivers can compromise product safety, facilitate anticompetitive conduct, and support harmful employment practices. Our analysis delivers a more nuanced, policy-based critique of the recent US Supreme Court cases, highlights several new unresolved issues, and identifies future challenges for legal scholarship.

August 28, 2020 | Permalink | Comments (0)

Unifying Antitrust Enforcement for the Digital Age

Unifying Antitrust Enforcement for the Digital Age

 

John O. McGinnis

Abstract

As the digital revolution continues to transform competition among businesses, U.S. antitrust enforcement has struggled to remain effective. The U.S. has long depended on a system of dual antitrust enforcement through both the Federal Trade Commission (FTC) and the Department of Justice (DOJ). Modern technology has greatly exacerbated existing structural deficiencies of the two-headed approach, at times resulting in deadlock. The two agencies approach new antitrust issues generated by computational technologies differently and fight over who should lead key investigations, leading to economic uncertainty in the most important business sectors. These enforcement disagreements can also hobble the government’s response to significant national security issues emerging from the interplay of technological competition among private companies and among nation states. Further, dual enforcement hinders government action in the newly critical area of data privacy: The agency responsible, the FTC, suffers a mission overload of enforcing both antitrust and privacy, which can work against each other.

The best solution is for the DOJ to become the sole antitrust enforcement agency. First, antitrust decisions, especially in the technology arena, directly affect geopolitical competition and international relations, a province constitutionally assigned to the President. It therefore makes more sense for the DOJ, which, unlike the FTC, is controlled by the President, to direct antitrust enforcement as one piece of a larger foreign policy. Second, consolidating enforcement in the DOJ would also allow the FTC to concentrate on enforcing privacy law, free from its sometimes-conflicting antitrust mandate. Dual enforcement of antitrust law should yield to single agency enforcement, with the FTC enforcing privacy and the DOJ enforcing antitrust.

August 28, 2020 | Permalink | Comments (0)

International Jurisdiction over Standard-Essential Patents

International Jurisdiction over Standard-Essential Patents

Henrik Horn

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR); Bruegel

Abstract

Standards often require the use of patented technologies. Holders of standard-essential patents (SEPs) typically commit to make their patents available on "fair, reasonable and non-discriminatory" (FRAND) terms. National competition authorities increasingly intervene against perceived FRAND violations. But which competition authority should regulate SEPs that affect more than one country? The paper uses a very simple economic framework to assess the impact of three main legal bases for allocating jurisdiction: territoriality, nationality, and cross-border effects. The findings are negative: neither base will implement a jointly efficient outcome, and the relative performance of the bases depends on the particular circumstances at hand.

August 28, 2020 | Permalink | Comments (0)

Thursday, August 27, 2020

Strengthening Canada’s economy through pro‑competitive policies

Which Role for State Aid and Merger Control During and After the Covid Crisis?

 

The Covid crisis has not only deeply affected our economies and disrupted markets, but also led to unprecedented state intervention. The role of competition policy at this juncture has been put into question. In particular, some commentators have called for a relaxation of competition rules, especially with respect to merger control. There also voices which increasingly argue in favour of a bigger role for government intervention in the economy; and state aid has become an important support measure for many firms and sectors to weather the crisis.

August 27, 2020 | Permalink | Comments (0)

Breaking up Big Tech will not help the US innovate or compete with China

Mark Jamison (University of Florida) has written on Breaking up Big Tech will not help the US innovate or compete with China.

August 27, 2020 | Permalink | Comments (0)

Algorithmic Antitrust

Algorithmic Antitrust

Cento Veljanovski

Case Associates; Institute of Economic Affairs

Abstract

This paper provides an overview of recent developments in algorithmic antitrust, and the economics and legal issues raised in the areas of abuse of dominance, algorithmic pricing and collusion, and mergers and acquisition. The general theme is that while much has been made of the possible anticompetitive effects of the large digital platforms there is little hard evidence to support the core premises of the current ‘tech lash’.

August 27, 2020 | Permalink | Comments (0)

ABA 2020 Fall Forum Student Writing Competition

The ABA Antitrust Law Section has just kicked off a new student writing competition, in conjunction with the ABA Antitrust Section Fall Forum.  https://www.americanbar.org/events-cle/mtg/inperson/400752480/  We are seeking original student submissions answering this question:  Do antitrust, consumer protection or privacy laws need to be modernized for the 21st Century?  Submission deadline is Tuesday, Sept. 29 for a 5-10 page paper.  Please see more details here: https://www.americanbar.org/groups/antitrust_law/awards_fellowships/2020-fallforum-wc/.  

August 27, 2020 | Permalink | Comments (0)

Remedies for algorithmic tacit collusion 

There is growing evidence that tacit collusion can be autonomously achieved by machine learning technology, at least in some real-life examples identified in the literature and experimental settings. Although more work needs to be done to assess the competitive risks of widespread adoption of autonomous pricing agents, this is still an appropriate time to examine which possible remedies can be used in case competition law shifts towards the prohibition of tacit collusion. This is because outlawing such conduct is pointless unless there are suitable remedies that can be used to address the social harm. This article explores how fines and structural and behavioural remedies can serve to discourage collusive results while preserving the incentives to use efficiency-enhancing algorithms. We find that this could be achieved if fines and remedies can target structural conditions that facilitate collusion. In addition, the problem of unfeasibility of injunctions to remedy traditional price coordination changes with the use of pricing software, which in theory can be programmed to avoid collusive outcomes. Finally, machine-learning methods can be used by the authorities themselves as a tool to test the effects of any given combination of remedies and to estimate a more accurate competitive benchmark for the calculation of the appropriate fine.

August 27, 2020 | Permalink | Comments (0)

Pricing Algorithms as Collusive Devices

Pricing Algorithms as Collusive Devices

Cento Veljanovski

Case Associates; Institute of Economic Affairs

Abstract

This paper undertakes a critical review of the prospect that self-learning pricing algorithms will lead to widespread collusion independently of the intervention and participation of humans. There is no concrete evidence, no example yet, and no antitrust case that self-learning pricing algorithms have colluded let alone increased the prospect of collusion across the economy.

August 27, 2020 | Permalink | Comments (0)

Wednesday, August 26, 2020

The Evolution of Merger Enforcement Intensity: What Do the Data Show?

The Evolution of Merger Enforcement Intensity: What Do the Data Show?

 

John W. Mayo

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy

Jeffrey Macher

Georgetown University - Center for Business and Public Policy

Abstract

A growing narrative in the popular press and among some academics has been that antitrust regulators have systematically relaxed existing antitrust law enforcement. This narrative has led to calls for reinvigorated enforcement and even the passage of new tougher antitrust legislation. The merits of this narrative and the corollary calls for antitrust reforms depend in part on whether the claim that antitrust regulators have become more relaxed in their enforcement efforts over time is correct. In this paper, we employ data from the United States antitrust agencies to examine one element of this claim. Specifically, we investigate whether antitrust regulators have become less likely to challenge proposed mergers over time. Our results indicate that, contrary to the popular narrative, the Agencies have become more likely to challenge proposed mergers over 1979-2017. Controlling for the number of merger proposals submitted to the antitrust agencies, we find that the likelihood of a merger challenge has more than doubled over this period. We explore reasons behind this increase, and find that increases in antitrust agencies’ budgets have led to enhanced merger enforcement intensity.

August 26, 2020 | Permalink | Comments (0)

The Role of Antitrust in Preventing Patent Holdup

The Role of Antitrust in Preventing Patent Holdup

 

Carl Shapiro

University of California, Berkeley - Haas School of Business

Mark A. Lemley

Stanford Law School

Abstract

Patent holdup has proven one of the most controversial topics in innovation policy, in part because companies with a vested interest in denying its existence have spent tens of millions of dollars trying to debunk it. Notwithstanding a barrage of political and academic attacks, both the general theory of holdup and its practical application in patent law remain valid and pose significant concerns for patent policy. Patent and antitrust law have made significant strides in the past fifteen years in limiting the problem of patent holdup. But those advances are currently under threat from the Antitrust Division of the Department of Justice, which has reversed prior policies and broken with the Federal Trade Commission to downplay the significance of patent holdup while undermining private efforts to prevent it. Ironically, the effect of the Antitrust Division’s actions is to create a greater role for antitrust law in stopping patent holdup. We offer some suggestions for moving in the right direction.

August 26, 2020 | Permalink | Comments (0)

The Allocation of Decision Authority to Human and Artificial Intelligence

The Allocation of Decision Authority to Human and Artificial Intelligence

Susan AtheyKevin A. BryanJoshua S. Gans
 

The allocation of decision authority by a principal to either a human agent or an artificial intelligence is examined. The principal trades off an AI’s more aligned choice with the need to motivate the human agent to expend effort in learning choice payoffs. When agent effort is desired, it is shown that the principal is more likely to give that agent decision authority, reduce investment in AI reliability, and adopt an AI that may be biased. Organizational design considerations are likely to have an impact on how AIs are trained.

August 26, 2020 | Permalink | Comments (0)

The Dichotomous Treatment of Efficiencies in Horizontal Mergers: Too Much? Too Little? Getting it Right

The Dichotomous Treatment of Efficiencies in Horizontal Mergers: Too Much? Too Little? Getting it Right

 

Nancy L. Rose

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Jonathan Sallet

Benton Institute for Broadband & Society

Abstract

Abstract: The extent to which horizontal mergers deliver competitive benefits that offset any potential for competitive harm is a critical issue of antitrust enforcement. This Article evaluates economic analyses of merger efficiencies and concludes that a substantial body of work casts doubt on their presumptive existence and magnitude. That has two significant implications. First, the current methods used by the federal antitrust agencies to determine whether to investigate a horizontal merger likely rests on an overly-optimistic view of the likely existence of cognizable efficiencies, which we label a “standard efficiency credit” that influences market concentration analysis. Second, criticisms of the current treatment of efficiencies as too demanding – for example, that antitrust agencies and reviewing courts require too much of merging parties in demonstrating the existence of efficiencies – are misplaced, in part because they fail to recognize that full-blown merger investigations and subsequent litigation are focused on the mergers that are most likely to cause harm.

August 26, 2020 | Permalink | Comments (0)

Tuesday, August 25, 2020

Competition Law in Laos: Evaluating its Potential for Effective Enforcement

Competition Law in Laos: Evaluating its Potential for Effective Enforcement

 

Steven Van Uytsel

Kyushu University - Graduate School of Law

Hongvichit Somsack

Abstract

The Lao People’s Democratic Republic (Laos) has adopted a Law on Competition (No.60/NA) (Lao Competition Law or LCL) on 14 July 2014. The LCL is not the first attempt of the Lao government to implement a competition law. The Lao government already enacted a Decree on Trade Competition (Competition Decree) in 2004. The Competition Decree, though, remained a dead letter. The institutions necessary to implement the law were never established. Yet, it is still to be seen whether the LCL will become an effective instrument.

Various elements will contribute to the potential for effective enforcement. Leaving aside the political will of the Lao government to provide the necessary support for establishing the enforcement agency, the economic environment and the conceptualization of the competition law may be two determinant factors influencing the potential for an effective LCL. Whereas the first requires an insight into the conceptualization of the market, the latter needs a theoretical framework against which the different provisions of the LCL can be judged. This framework will be drawn from the literature on the adoption of competition law in developing countries, provided by a growing number of scholars are backing up these countries in their effort to design a suitable competition law regime.

August 25, 2020 | Permalink | Comments (0)

Some Economics of the Movie Industry

Some Economics of the Movie Industry

 

Luís Cabral

New York University (NYU)

Abstract

A progress report is provided on a long‐term research project, joint with Gabriel Natividad, on the economics and strategy of the movie industry. Specifically, a series of empirical papers dealing with demand estimation, pricing and movie‐release strategies is surveyed.

August 25, 2020 | Permalink | Comments (0)

The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy

The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy

Benjamin Leard

Resources for the Future

Virginia McConnell

University of Maryland; Resources for the Future

Yichen Zhou

Clemson University, John E. Walker Department of Economics

Abstract

New vehicle purchases by private companies and government agencies, or ‘fleet’ buyers, represent a significant percentage of overall new vehicle sales in the United States. Yet little is known about fleet demand for new vehicle fuel economy including how it responds to fuel price changes. Using unique disaggregated data on fleet and household registrations of new vehicles from 2009 to 2016, we estimate how fleet demand for new vehicle fuel economy responds to fuel price changes. We find that fleet purchases of low fuel economy vehicles fall relative to high fuel economy vehicles when gasoline prices increase, a finding that is consistent with fleet buyers’ taking into account capitalization of fuel costs in the second‐hand market. Our estimates imply that raising gasoline prices by one dollar would increase fuel economy of new vehicles acquired by fleet buyers by 0.33 miles per gallon. We estimate a similar response for household buyers during the same period. This result justifies basing fuel economy responses to fuel cost changes on household data alone, an assumption widely used in the vehicle demand literature and the fuel economy valuation literature. We also find, however, that the response to fuel price changes varies across the types of fleet buyers: rental companies respond strongly to fuel price changes, whereas commercial and government buyers are insensitive. Our estimates imply that an increase in the federal gasoline tax would modestly increase fuel economy of vehicles bought by households and rental companies but would have little to no impact on fuel economy of vehicles bought by non‐rental companies and governments.

August 25, 2020 | Permalink | Comments (0)

Monday, August 24, 2020

Webinar: FTC v. Qualcomm – What's in it for you? September 03, 2020

FTC v. Qualcomm – What's in it for you?

September 3, 2020
12 PM EDT

This program will focus on the implications of the August 11, 2020 9th Circuit reversal of FTC v. Qualcomm.

Moderator:

  • Suzanne Munck - Davis Polk & Wardwell LLP

Speakers:

  • Jorge Contreras - University of Utah
  • Lisa Kimmel - Crowell & Moring LLP
  • James Kress - BakerBotts LLP
  • Ann O'Brien - BakerHostetler Law

FREE: Antitrust Section Members, Government, Non-Profit Employees, Students, $25 Other Non-Members.

Register here: https://www.americanbar.org/events-cle/mtg/web/403710239/

August 24, 2020 | Permalink | Comments (0)