Antitrust & Competition Policy Blog

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

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Thursday, September 18, 2014

GCR Live 6th Annual Brussels: The conference about the bigger picture

GCR Live 6th Annual Brussels: The conference about the bigger picture

Day one - Wednesday, 12 November

13.30: Welcome coffee and registration

14.00: Chairs’ welcome

John Davies, Freshfields Bruckhaus Deringer Derek Ridyard, RBB Economics

14.15: Keynote speaker

  • A review of the enforcement of merger control during 2013/14 and expected priorities under the new Commission
  • The proposals on regulation of non-controlling minority shareholdings
  • The rise of national protectionism
  • Procedural issues: internal document review, use of economic models, use of upfront buyer solutions in divestiture remedies

Carles Esteva Mosso, Acting Deputy Director General for Policy and Strategy, DG Competition, European Commission

15.15: EU merger control and the national public interest

  • The rise of protectionism at Member State level
  • Intervention by governments including by France, Germany and the UK
  • The application of Article 21(4) EUMR to mergers of community dimension
  • The implications of the rules on free movement of capital to mergers without community dimension
  • Case law on golden shares

Moderator: Marc Pittie, Bredin Prat

Commentator: Carles Esteva Mosso, Acting Deputy Director General for Policy and Strategy, DG Competition, European Commission

Panel: Natalie Yeung, Slaughter and May John Davies, Freshfields Bruckhaus Deringer Patrick Smith, RBB Economics

16.30: Coffee break

16.45: Developments on private antitrust actions in EU competition law

  • “Creative solutions” developed by judges in the UK and the Netherlands on: - Access to documents - Attribution of liability - Passing-on
  • Uncertain future for claims vehicles in Germany following the rejection of CDCs claims in the cement case
  • Quantification of damages under the new directive – can presumptions help?
  • The influence of the new directive on settlements
  • Collective claims - lessons to be learned from the US and other jurisdictions

Moderator: Jolling de Pree, De Brauw Blackstone Westbroek

Panel: Helen Jenkins, Oxera Consulting James Webber, Shearman & Sterling Daniel Beard QC, Monckton Chambers Christoph Stadler, Hengeler Mueller

18.00: Conclusion of day one

19.30 onwards: All delegates are invited to attend a drinks reception and conference dinner at the Hotel Amigo kindly hosted by Shearman & Sterling

Dinner speaker: Brad Staples, President, International and Chair of Global Development, APCOWorldwide Inc.

Day two - Thursday, 13 November

8.30: Welcome coffee and registration

9.00: Chairs’ welcome

9.05: Morning speaker – Richard Whish’s year in review

Richard Whish QC, King’s College London

10.35: Coffee break

11.00: Object infringements – recent developments and key practical issues

  • “Classic” object infringements and recent developments (GSK Spain, Pierre Fabre, Murphy, Allianz Hungary, Lundbeck etc.)
  • Analysis and proof in object infringements cases
  • Object infringements and Article 101(3) TFEU

Moderator: Francisco Enrique González-Díaz, Cleary Gottlieb Steen & Hamilton

Panel: Richard Whish QC, King's College London Alexander Rinne, Milbank, Tweed, Hadley & McCloy Matthew Bennett, Charles River Associates Nigel Parr, Ashurst

12.00: Networking lunch

13.20: Key issues in state aid – a master class for general competition lawyers

State aid is an ever more important area of competition enforcement. This panel will provide updates on all major developments general competition practitioners should be aware of:

  • Fields of economic activity that are being shaped by state aid enforcement – where do we go from here? - Financial services - Energy - Corporate taxation - Privatisations
  • The role of economic assessment in state aid cases
  • Where are we on state aid modernisation (SAM)? new priorities, new tools?

Moderator: Andreas von Bonin, Freshfields Bruckhaus Deringer

Panel: Conor Quigley QC, Serle Court Lorenzo Coppi, Compass Lexecon Gert Jan Koopman, Deputy Director-General for State Aids, DG Competition, European Commission

14.30: Coffee break

14.45: Sifting the wreckage of the intel general court judgment

  • Where does the judgment leave: - The debate between effects-based and form-based enforcement? - The as-efficient competitor principle? - The scope for an efficiency defence/exemption under A102? - The A102 enforcement guidelines?
  • Are the ground rules different between high tech and other industry sectors?
  • Could the ECJ come to the rescue?

Moderator: Derek Ridyard, RBB Economics

Panel: Riccardo Celli, O'Melveny & Myers Simon Baxter, Skadden, Arps, Slate, Meagher & Flom Massimo Motta, Chief Competition Economist, DG Competition, European Commission (invited) Frank Maier-Rigaud, NERA Economics Consulting

16.00: Closing remarks by chairs

16.15: Close of conference

 

September 18, 2014 | Permalink | Comments (0) | TrackBack (0)

A RETROSPECTIVE MERGER ANALYSIS IN THE U.K. VIDEOGAME MARKET

Luca Aguzzoni, LEAR Elena Argentesi, University of Bologna Paolo Buccirossi, LEAR, Lorenzo Ciari, European Bank for Reconstruction and Development, Tomaso Duso, DICE, Massimo Tognoni, U.K. Competition Commission and Cristiana Vitale, OECD, offer A RETROSPECTIVE MERGER ANALYSIS IN THE U.K. VIDEOGAME MARKET.

ABSTRACT: We study the effect of a merger in a dynamic high-technology industry—the videogame market—which is characterized by the frequent introduction of new products. To assess the impact of the merger between two large specialist retailers in the United Kingdom—Game Group PLC and Games Station Limited—we perform a difference-in-differences analysis comparing the price evolution of the merging parties with that of their 7 major competitors on an original sample of 196 videogames belonging to 6 different consoles. The results of our econometric analyses suggest that there has been a reduction in the general level of prices of both new and pre-owned games after the merger. This decline has been more marked for the merging parties, which suggests that the merger between Game Group PLC and Games Station Limited did not lead to a substantial lessening of competition; rather, it is consistent with the existence of efficiency gains.

September 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Reflections on the Past Year At the Antitrust Division

Optimal bid disclosure in license auctions with downstream interaction

Cuihong Fan, Shanghai University, Byoung Heon Jun, Korea University and Elmar G. Wolfstetter, Humboldt-University and Korea University explain Optimal bid disclosure in license auctions with downstream interaction.

ABSTRACT: The literature on license auctions for process innovations in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to signal strength through their bids, to the benefit of the innovator. In the present paper we examine whether revealing the winning bid is optimal. We consider three disclosure rules: full, partial, and no disclosure of bids, which correspond to standard auctions. We show that more information disclosure increases the total surplus divided between firms and the innovator as well as social surplus. More disclosure also increases bidders’ payoff. However, no disclosure maximizes the innovator’s expected revenue.

September 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 17, 2014

Increasing the Efficiency of Spectrum Allocation

Gregory Rosston (Stanford University) describes Increasing the Efficiency of Spectrum Allocation.

ABSTRACT: Over the past 80 years, the Federal Communications Commission has been responsible for the allocation of non-governmental use of the radio frequency spectrum. Over that time, here have been significant changes in spectrum use that have been driven by changes in demand and technology. The technical, regulatory, and business obstacles in past reallocations shed light on some of the FCC’s implementation decisions for its upcoming two-sided auction.

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Supplier Innovation in the Presence of Buyer Power

Zhiqi Chen (Department of Economics, Carleton University) explores Supplier Innovation in the Presence of Buyer Power.

ABSTRACT: A theoretical framework is constructed to derive general conditions under which increased buyer power weakens or strengthens a supplier’s incentive to innovate. These conditions are then applied to two sets of specific models: one on product innovation and the other on process innovation. The analysis shows that the effects of buyer power depend on the type of innovation, the source of buyer power, and the channel through which buyer power manifests itself. It identifies circumstances under which an increase in buyer power has a negative, positive or zero impact on innovation. The welfare consequences of buyer power are also investigated.

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Latest news from AAI: opportunities for young lawyers, Comcast-Time Warner Cable Merger — Further Concerns About Exclusionary Gatekeeping and the Emergent Access Problem, and AAI Urges Reject Conduct Remedy for Hospital Merger

09-16-2014 - AAI Offers Young Lawyers Special Session at Private Enforcement Conference

On Tuesday, December 2, 2014, the American Antitrust Institute will host its 8th Annual Private Antitrust Enforcement Conference at the National Press Club in Washington D.C.  This year, the day kicks off early with a Young Lawyers Breakfast.

In a letter to the U.S. Department of Justice, AAI furthered the case against the proposed Comcast-Time Warner Cable merger.

In Comments filed with the Massachusetts Attorney General’s Office, the American Antitrust Institute (AAI) urged the state superior court to reject a proposed settlement which would allow the dominant hospital system in Eastern Massachusetts to acquire

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Relative profit maximization in asymmetric oligopoly

Atsuhiro Satoh, Doshisha University and Yasuhito Tanaka, Doshisha University discuss Relative profit maximization in asymmetric oligopoly.

ABSTRACT: We analyze Bertrand and Cournot equilibria in an asymmetric oligopoly in which the firms produce differentiated substitutable goods and seek to maximize their relative profits instead of their absolute profits. Assuming linear demand functions and constant marginal costs we show the following results. If the marginal cost of a firm is lower (higher) than the average marginal cost over the industry, its output at the Bertrand equilibrium is larger (smaller) than that at the Cournot equilibrium, and the price of its good at the Bertrand equilibrium is lower (higher) than that at the Cournot equilibrium.

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Maureen Ohlhausen speech at 2nd GCR Live New York on Chinese AML Enforcement

For those who missed the 2nd GCR Live New York conference yesterday (including me who was supposed to have moderated the panel but had to deal with family health issues), FTC Commissioner Maureen Ohlhausen gave a very thoughful and important speech on Chinese AML enforcement.  See here.

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Trust, Leniency and Deterrence

Maria Bigoni, University of Bologna - Department of Economics, Sven-Olof Fridolfsson, Research Institute of Industrial Economics (IFN), Chloe Le Coq, SITE-Stockholm School of Economics and Giancarlo Spagnolo, Stockholm School of Economics (SITE) have an interesting paper on Trust, Leniency and Deterrence. Highly recommended!

ABSTRACT: This paper presents results from a laboratory experiment on the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears then mainly driven by 'distrust,' the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other crimes sharing cartels' strategic features, including corruption and financial fraud.

September 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 16, 2014

Standard Setting, Intellectual Property Rights, and the Role of Antitrust in Regulating Incomplete Contracts

Joanna Tsai, Federal Trade Commission and Joshua D. Wright, Federal Trade Commission; George Mason University School of Law discuss Standard Setting, Intellectual Property Rights, and the Role of Antitrust in Regulating Incomplete Contracts.

ABSTRACT: A large and growing number of regulators and academics, while recognizing the benefits of standardization, view skeptically the role standard setting organizations (SSOs) play in facilitating standardization and commercialization of intellectual property rights (IPRs). Competition agencies and commentators suggest specific changes to current SSO IPR policies to reduce incompleteness and favor an expanded role for antitrust law in deterring patent holdup. These criticisms and policy proposals are based upon the premise that the incompleteness of SSO contracts is inefficient and the result of market failure rather than an efficient outcome reflecting the costs and benefits of adding greater specificity to SSO contracts and emerging from a competitive contracting environment. We explore conceptually and empirically that presumption. We also document and analyze changes to eleven SSO IPR policies over time. We find that SSOs and their IPR policies appear to be responsive to changes in perceived patent holdup risks and other factors. We find the SSOs’ responses to these changes are varied across SSOs, and that contractual incompleteness and ambiguity for certain terms persist both across SSOs and over time, despite many revisions and improvements to IPR policies. We interpret this evidence as consistent with a competitive contracting process. We conclude by exploring the implications of these findings for identifying the appropriate role of antitrust law in governing ex post opportunism in the SSO setting.

September 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Variety, Mergers, and Consumer Well-Being: Towards a Capability Approach to Merger Law

Jennifer E. Sturiale, Georgetown University Law Center discusses Variety, Mergers, and Consumer Well-Being: Towards a Capability Approach to Merger Law.

ABSTRACT: Revisions incorporated into the Horizontal Merger Guidelines in 2010 claim that the DOJ and FTC consider anticompetitive effects to “variety” when evaluating mergers. The Guidelines do not, however, explain the methodology or tools that can and should be used to evaluate such effects. At the same time, there is an ongoing normative debate over antitrust’s consumer welfare standard, one strain of which is a disagreement over the meaning of the word “welfare.” This Article considers how variety effects could be evaluated — first, under normative welfare economics, and then under an alternative to welfare economics, the Capability Approach. The Capability Approach is a normative framework for evaluating individual well-being that stands in contrast to welfare economics. Rather than assess individual well-being in terms of an individual’s utility as determined from the individual’s subjective perspective, as welfare economics attempts to do, the Capability Approach evaluates individual well-being in terms of an individual’s capability to achieve the kind of life that the individual has reason to value. Ultimately, this is an assessment of what an individual is able to be and to do.

September 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Nonlinear Pricing and Exclusion: I. Buyer Opportunism

Philippe Chone, National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) and Laurent Linnemer, National Institute of Statistics and Economic Studies (INSEE) - Laboratory of Industrial Economics; CESifo (Center for Economic Studies and Ifo Institute) address Nonlinear Pricing and Exclusion: I. Buyer Opportunism.

ABSTRACT: We study the exclusionary properties of nonlinear price-quantity schedules in an Aghion-Bolton style model with elastic demand and product differentiation. We distinguish three regimes depending on whether and how the price of the incumbent good is linked to the quantity purchased from the rival firm. We find that the supply of rival good is distorted downwards. Moreover, given the quantity supplied from the rival, the buyer may opportunistically purchase inefficiently many units from the incumbent to pocket quantity rebates. We show that the possibility for the buyer to dispose of unconsumed units attenuates the opportunism problem and limits the exclusionary effects of nonlinear pricing.

September 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Xu Kunlin of NDRC profiled in Reuters story

See here for the article.

September 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Arbitration and Competition Law: The Potential Role of Ireland in the Privatisation of Competition Law

Conor C. Talbot,

European University Institute - Department of Law (LAW); Trinity College (Dublin) - Department of Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)has written on Arbitration and Competition Law: The Potential Role of Ireland in the Privatisation of Competition Law.

ABSTRACT: This article examines the use of arbitration in competition law from Irish perspective, with a focus on the challenges faced by arbitrators operating in a jurisdiction where infringements of the competition rules can carry the weight of the criminal law and potentially lead to custodial sentences.

September 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, September 15, 2014

Market concentration and competition in Vietnamese banking sector

Trung H. Le, Banking Faculty - Banking Academy of Vietnam discusses Market concentration and competition in Vietnamese banking sector.

ABSTRACT: Vietnamese banking system has been playing a vital role in the development and economic growth since the economic renewal campaign namely “Doi Moi” in 1986. However, since the global financial crisis, financial and banking system has been under stress, exposing much weaknesses, severely affecting the whole economy. Additionally, the wave of financial liberalization raise questions about the competitiveness of Vietnamese commercial banks in the competition with the foreigners. The main purpose of this paper is to measure the market concentration using Hirschman-Herfindahl index (HHI) and test for the market competition in Vietnamese banking sector under Panzar – Rossse approach by an unbalanced panel data of 33 commercial banks for the period from 2004 to 2013. Vietnamese banking sector is found to be high-concentration although it is experiencing a decreasing trend. The test for market competition indicate a monopo! listic behavior of Vietnamese commercial banks. No surprising, the state-owned commercial banks and foreign banks are found to be superior in the competition with joint-stock commercial banks and domestic banks respectively. In addition, the foreign investment in banks seem to increase competitiveness of a commercial bank.

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union

Nicole Nulsch, Halle Institute for Economic Research (IWH) asks Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union.

ABSTRACT:  Even though state aid in order to rescue or restructure ailing companies is regularly granted by European governments, it is often controversially discussed. The aims for rescuing companies are manifold and vary from social, industrial and even political considerations. Well-known examples are Austrian Airlines (Austria) or MG Rover (Great Britain). Yet, this study aims to answer the question whether state aid is used effectively and whether the initial aim why aid has been paid has been reached, i.e. the survival of the company. By using data on rescued companies in the EU and applying a survival analysis, this paper investigates the survival rates of these companies up to 15 years after the aid has been paid. In addition, the results are compared to the survival rates of non-rescued companies which have also been in difficulties. The results suggest that despite the financial support, business failure is often only post-poned; best survival rates have firms with long-term restructuring, enterprises in Eastern Europe, smaller firms and mature companies. However, non-funded companies have an even higher ratio to go bankrupt.

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Treasury's Lew warned China on antitrust probes of foreign firms

Political antitrust has become more heated as the Treasury Department has sent a letter to the Chinese government regarding what it considers political antitrust enforcement.  See here.

Of note, the article meantioned that

After July talks on the U.S.-China Strategic and Economic Dialogue, Treasury said China "recognized that the objective of competition policy is to promote consumer welfare and economic efficiency, rather than to promote individual competitors or industries, and that enforcement of its competition law should be fair, objective, transparent, and non-discriminatory."

A number of industry association reports (US Chamber of Commerce, USCBC, European Union Chamber of Commerce in China) have been critical of AML enforcement.

AML enforcement is very tricky.  There is a combination of a relatively new law, three enforcement agencies (each with capacity constraints in terms of too few case handlers), a law that recognizes not merely consumer welfare and total welfare concerns but also industrial policy concerns, and a host of other issues.  All the more reason for people to attend tomorrow's GCR Live 2nd Annual New York conference that will discuss "Antitrust Enforcement in China - what's next?" that includes a stellar group of panelists.  I am moderating the panel. 

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Multi-Sided Platforms: Business, Economics & Competition Policy

Multi-Sided Platforms: Business, Economics & Competition Policy

a half-day CPD course organised by UCL's Centre for Law, Economics & Society

 

Thursday 29 October 2014 from 1 - 7.30pm

 

About this course:

Multi-sided platforms are businesses that act as intermediaries between several interdependent groups of customers.  They are central many industries including payment systems, financial exchanges, advertising-supported media, much of online, and various kinds of marketplaces including shopping malls.  Some of the largest IPOs in recent years have involved multisided platforms such as Facebook and, soon, Alibaba. They are also often at the center of debates concerning competition policy and sectoral regulation. Google and Uber are two that are making headlines in the European Union.

This course will cover the unique business models followed by multi-sided businesses; the economics of multi-sided platforms and the industries they anchor; the applications of competition policy to multi-sided platforms; a survey of key competition policy and regulator matters involving these platforms; and tools and techniques for competition policy analysis.

The course will include presentations from several executives of platform startups including Will Page, Chief Economist at Spotify, and Alain Falys, Founder and CEO, of Yoyo.

The course will consist of three segments:

  1. The Business and Economics of Multi-sided Platforms.
  2. Market Definition, Market Power, and Merger Analysis for Multi-sided Platforms
  3. Abuse of Dominance and Coordinated Practices for Multi-sided Platforms

The course will draw extensively on examples of multi-sided platform cases involving online businesses and payments.

About the teacher Professor David S. Evans has taught antitrust law and economics at the University of Chicago Law School (2006-present) where he is a Lecturer; University College London Faculty of Laws (2004-present) where he is Executive Director of the Jevons Institute for Competition Law and Economics and Visiting Professor; and Fordham Law School (1985-1995) where he was a Professor. He has BA, MA, and PhD degrees, all in economics, from the University of Chicago. He has written extensively on industrial organization including more than 150 articles and 8 books. His 2006 book, Invisible Engines, co-authored with Andrei Hagiu and Richard Schmalensee, was the Winner of the Business, Management & Accounting category in the 2006 Professional/Scholarly Publishing Annual Awards Competition presented by the Association of American Publishers, Inc. Many of his publications concern antitrust law and economics. Dr. Evans was one of the early contributors to the economics of multi-sided platforms. His work on that topic includes Catalyst Code published by Harvard Business School Press in 2007. His recent published work in multi-sided platforms involves platform governance, online attention markets, ignition strategies, and vertical restraints.He has served as an expert economist in a number of high profile antitrust and regulatory matters in the United States, European Union, and China. Dr. Evans is the Chairman of Global Economics Group, where he provides expert help on litigation and regulation matters, and Founder of Market Platform Dynamics, where he provides business and strategic advice.

 

DOWNLOAD THE COURSE BROCHURE

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Is Collusion Proof Auction Expensive? Estimates from Highway Procurements

Gaurab Aryal, University of Chicago and Maria F. Gabrielli, CONCIET and Universidad Nacional de Cuyo ask Is Collusion Proof Auction Expensive? Estimates from Highway Procurements.

ABSTRACT: Collusion in auctions affects both revenue and efficiency and are prevalent. Yet, sellers do not use collusion-proof auctions as often as they should. Why is that? We find that one reason for this could be the cost of implementing efficient collusion-proof auctions. We use California highway procurements data, to estimate the cost of implementing collusion-proof auction. Our estimates show that cost must increase by at least 10.8% to ensure efficient outcome. The cost can sometimes be as high as 48.8% (depending on the size of bidding-ring in the data).

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)