Antitrust & Competition Policy Blog

A Record 110 Countries and 115 Jurisdictions Now Regulate Mergers Through Antitrust Laws

Posted by D. Daniel Sokol

From the White & Case press release:

A record 115 jurisdictions worldwide now regulate mergers and acquisitions, according to a new survey by global law firm White & Case LLP. Since 1996, White & Case has surveyed worldwide antitrust merger notification requirements.  The 2009 White & Case survey, Worldwide Merger Notification Requirements, covers 217 jurisdictions around the world and has just been published by Aspen Publishers/Wolters Kluwer. The 115 jurisdictions include a record 110 separate countries with merger control laws, as well as regional merger control regimes such as the EC and COMESA. This is a substantial increase over the 68 jurisdictions identified in the 2004 White & Case survey.  Furthermore, the 2009 survey notes that Hong Kong, Kyrgyzstan, and Paraguay are expected in the near future to adopt new competition regulations. “We have witnessed an explosion in merger regulation across the globe over the past 15 years,” said J. Mark Gidley, head of White & Case’s global Antitrust Practice Group and co-editor of the survey said.  “This mega-trend has been fueled by globalization, the rise of the so-called BRIC countries, outreach efforts by US and EU enforcement officials, and a desire by more and more governments to adopt antitrust laws as a means of regulating commerce.” “The growth and modernization of merger control regimes continues to place pressure on global corporations and their antitrust advisors,” noted George L. Paul, a White & Case partner and co-editor of the survey.  “China and India are two notable additions to the roster of active jurisdictions that will have a major impact on many international transactions, and the enlargement of the European Union shows that even the established competition regimes remain dynamic.”

The Impact of a Corporate Leniency Program on Antitrust Enforcement and Cartelization

Posted by D. Daniel Sokol

Myong-Hun Chang (Cleveland State - Economics) and Joseph E. Harrington, Jr. (Johns Hopkins - Economics) have an interesting new paper on The Impact of a Corporate Leniency Program on Antitrust Enforcement and Cartelization.

ABSTRACT: To explore the efficacy of a corporate leniency program, a Markov process is constructed which models the stochastic formation and demise of cartels. Cartels are born when given the opportunity and market conditions are right, while cartels die because of internal collapse or they are caught and convicted by the antitrust authority. The likelihood that a cartel, once identified, is convicted depends inversely on the caseload of the antitrust authority due to an implicit resource constraint. The authority also chooses an enforcement policy in terms of the fraction of non-leniency cases that it prosecutes. Using numerical analysis, the impact of a leniency program on the steady-state cartel rate is investigated. Holding the enforcement policy of the antitrust authority fixed, a leniency program lowers the frequency of cartels. However, the additional caseload provided by the leniency program induces the antitrust authority to prosecute a smaller fraction of cartel cases identified outside of the program. Because of this less aggressive enforcement policy, it is possible that the cartel rate is higher when there is a leniency program.

Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law

Posted by D. Daniel Sokol

Christopher Stothers (University College London Law and Milbank Tweed) is the author of Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law.

ABSTRACT: Are parallel importers the key to free trade, breaking down long-established national barriers for the benefit of all? Or do they instead just operate in a dubious 'grey market' for their own profit, free-loading on the investment of innovators and brand owners to the ultimate detriment of everyone? Parallel trade is in turn lionised and demonised, both in legal commentary and in the mainstream press. As one might expect, the truth lies somewhere between these extremes.

Once goods have been manufactured they are put onto the market in one country by the manufacturer. Parallel trade occurs when the goods are subsequently transferred to a second country by another party (the parallel trader, who may be the end consumer). The distinguishing feature of parallel trade is that the manufacturer did not intend those particular goods to end up in the second country. The goods are normally described in that country as 'parallel imports' or 'grey market goods'. The latter term is generally used to suggest that the trade, while not exactly 'black market', is not entirely lawful either.

Understanding how European Community law operates to permit or restrict parallel trade involves exploring a complex matrix of rules from the fields of free movement, intellectual property, competition and regulatory law, including both private and public enforcement regimes. Where goods are parallel imported from outside the Community these rules change and new considerations come into play, such as obligations arising from the European Economic Area, the World Trade Organization and bilateral free trade agreements. The experience of Europe, which has grappled with the issues on a regional basis for more than four decades, provides a fertile source for examination of parallel trade in other jurisdictions.

BCS may violate antitrust laws

Posted by D. Daniel Sokol

Sports antitrust has always been a hot topic.  As someone whose school is playing in the BCS championship game (go Gators!), I read with great interest that according to the Utah AG, the BCS may violate antitrust laws.

Exclusionary Vertical Contracts with Multiple Entrants

Posted by D. Daniel Sokol

Hiroshi Kitamura (PhD student - Economics, Osaka University) undertakes an analysis of Exclusionary Vertical Contracts with Multiple Entrants.

ABSTRACT: This paper constructs a model of anticompetitive exclusive dealing in the presence of multiple entrants. Unlike a single-entrant model in the extant literature, an entrant competes not only with the incumbent to deal with buyers but also with other entrants. The competition among entrants then plays the role of commitment such that low wholesale prices are offered to buyers when they deviate from exclusive contracts. We argue that this commitment effect becomes a barrier to exclusive dealing and that the results differ drastically from the predictions of the single-entrant framework.

Collusion via Resale

Posted by D. Daniel Sokol

Thomas Tröger (University of Bonn - Economics), Rodney Garratt (UC Santa Barbara - Economics), and Charles Zheng discuss Collusion via Resale.

ABSTRACT: The English auction is susceptible to tacit collusion when post-auction inter-bidder resale is allowed. We show this by constructing equilibria where, with positive probability, one bidder wins the auction without any competition and divides the spoils by optimally reselling the good to the other bidders. These equilibria interim Pareto dominate (among bidders) the standard value-bidding equilibrium, without requiring the bidders to make any commitment on bidding behavior or post-bidding spoil-division.

Intellectual Property Law and EU Competition Law

Posted by D. Daniel Sokol

Jonathan Turner is the author of the forthcoming Intellectual Property Law and EU Competition Law.

BOOM ABSTRACT: The interface between intellectual property rights and competition policy is one of the most important and difficult areas of EU commercial law. The exploitation of exclusive rights can conflict with competition law, which aims to preserve competition as the driving force in efficient markets. These conflicts have to be resolved against the background of a complicated relationship between EU law, national laws and international treaties relating to intellectual property. There have been major developments recently in this area, including the new Technology Transfer Block Exemption, the Commission's Guidelines on Technology Transfer, and cases such as IMS   and Microsoft concerning the circumstances in which exploitation of intellectual property rights is an abuse of a dominant position.

This book contains a detailed explanation of the application of EU competition law to all types of intellectual property, including recent developments, and the resulting regulatory framework for the exploitation and licensing of intellectual property rights. It has practical analysis of such issues as technology transfer and pools, research and development, and franchising and merchandising.

The Future of Monopolization Under an Obama Administration

Posted by D. Daniel Sokol

I had a heated discussion on this topic with some friends this weekend.  For the record, I am sticking with my prediction (see my forthcoming short essay Change and Continuity in International Antitrust Under an Obama Administration) about the DOJ Section 2 Report:

I suspect that under the Obama administration the DOJ Report on Unilateral Conduct will be consigned to some large room, like the one that houses the Ark of the Covenant in the end credits of Raiders of the Lost Ark.

FTC GC Blumenthal to Clifford Chance

Posted by D. Daniel Sokol

FTC General Counsel Bill Blumenthal is leaving the agency to join international powerhouse Clifford Chance as the head of its US antitrust practice.  Bill has played an important role in international efforts (including in China) and so this is a great fit for him and his expertise. 

Global Competition Law, Markets and Globalization

Posted by D. Daniel Sokol

David Gerber of Chicago Kent Law has a written a forthcoming book titled Global Competition Law, Markets and Globalization.

BOOK ABSTRACT: Global competition now shapes economies and societies in ways unimaginable only a few years ago, and laws shape and maintain global competition, determining how effective global markets are and how they distribute benefits and harms. Competition (or nullantitrustnull) law plays a central role in this framework of law. These laws are intended to protect the competitive process from distortion and restraint, and in the domestic context, they embody and reflect the relationships between markets, their participants and those affected by them.

On the global level, however, competition law is provided by those players that have sufficient power to apply their laws transnationally. In practice, this means that the US and the EU generally provide the competition law principles for global competition. This book examines this important and controversial aspect of globalization.

Part I examines the evolution of the current system of competition law for global markets, the factors that have shaped it, and how it operates today. There was once a widespread belief that harm to global competition was an international problem that should be addressed through international coordination, but the Cold War submerged this ideal and led to the current system. Since the 1990s efforts have been made to develop transnational cooperation in this area, but the basic system remains in place. The evolution and operation of this system cannot be understood without understanding the factors in national experience that have shaped them.

The second part of the book focuses on these national experiences and the roles they have played in the evolution of the global system. It examines US and European experience as well as the experience of the newer players such as China that will necessarily play major roles in the future.

Finally, the book examines the potential for creating a system that functions more effectively and provides more support for global economic and political development. Drawing on parts I and II and on social science as well as legal literature, it identifies the factors that will play a role in moving towards a more effective legal framework for global competition and suggests a pathway for needed reforms.