Antitrust & Competition Policy Blog

On the Measurement of Market Power in the Banking Industry

Posted by D. Daniel Sokol

Manthos Delis (University of Ioannina Department of Economics), Christos Staikouras (Athens Universtiy of Economics and Business, Greece) and Panagiotis Varlagas provide their thoughts On the Measurement of Market Power in the Banking Industry.

ABSTRACT: This paper compares the estimates of the two most widely used non-structural models for market power measurement in banking, namely the conduct parameter method and the revenue test, as applied to a panel of Greek banks over the period 1993-2004. We also propose a dynamic reformulation of these models within a panel data context, in order to address possible statistical problems associated with the dynamic nature of bank-level data. The results suggest that both static methods provide lower estimates of market power relative to their dynamic counterparts. Therefore, the inclusion of some dynamics in the models, even though it increased estimation complexity, helped to reveal some collusive behavior of banks.

Patents in Motion: The Troubling Implications of the N-Data Settlement

Posted by D. Daniel Sokol

Anne Layne-Farrar (LECG) suggests all is not well with the FTC in Patents in Motion: The Troubling Implications of the N-Data Settlement.

ABSTRACT: A little over a year ago, in January 2008, the Federal Trade Commission (“FTC”) announced a settlement with Negotiated Data Solutions (“N-Data”) regarding the firm’s patent licensing practices in relation to the Ethernet standard for computer networking. That announcement has prompted a number of responses, both positive and negative, not so much because of the specifics of the case but rather because of the broader questions it raised. I highlight a few of these questions below, along with their broader policy implications.

The Effects of Retail Regulations on Prices: Evidence from the Loi Galland

Posted by D. Daniel Sokol

Pierre Biscourp (ENSAE), Xavier Boutin (INSEE and CREST-LEI), and Thibaud Verge (CREST-LEI) describe  The Effects of Retail Regulations on Prices: Evidence from the Loi Galland.

ABSTRACT: In 1997, a new legislation banning below-invoice retail prices came into force in France. Individually negotiated discounts could no longer be passed on to consumers, which is equivalent to allowing industry-wide price floors. The anti-competitive effects of such practices are well-known. The elimination of intra-brand competition is expected to lead to a sharp increase in the retail prices. Using CPI raw data, we find evidence supporting this claim. The modification or revocation of the existing legislation (as it has been done in Ireland in December 2005) would then be expected to reduce retail prices.

Anti-Competitive Effects of Resale-Below-Cost Laws

Posted by D. Daniel Sokol

Marie-Laure Allain (Department of Economics, Ecole Polytechnique) and Claire Chambolle (Department of Economics, Ecole Polytechnique) describe the Anti-Competitive Effects of Resale-Below-Cost Laws.

ABSTRACT: We show that resale-below-cost laws enable producers to impose industry-wide price-floors to retailers. This mechanism suppresses downstream competition but also and more surprisingly dampens upstream competition, leading to higher prices and lower welfare. Price-floor may be more profitable for producers than resale price maintenance contracts and, when a resale price maintenance restraint may have ambiguous effect on welfare, price-floors are always welfare damaging. Retailers' buyer power appears as a key for a price-floor to work out.

Abuse of dominant position case in China

posted by Shubha Ghosh

From Paul Jones, prominent Toronto attorney:

The refusal of the Coca-Cola merger with Huiyuan juice two weeks ago has been extensively covered in the news inside and outside China.

 Less well covered has the development of private actions, in part because none of them of made it to the stage of being heard on the merits. But they are developing. According to a story today in Caijing the Beijing Dongcheng District People’s Court (the area just east of the Forbidden City) accepted a suit brought against China Mobile Group and China Mobile Communications Corporation for abuse of dominant market position with respect to their various packages for mobile telephones:

(Article in Chinese) http://www.caijing.com.cn/2009-03-31/110130848.html

 It appears from the article that the plaintiff, an existing customer of one of the defendants, is complaining that he is being charged more than new customers for the service. He says this violates Articles 17(5)and (6) of the AML. Article 17(5) prohibits tie-in sales and other unreasonable transactions and Article 17(6) prohibits price discrimination. Both require that the conduct be without justification or that the defendant not be competing on the merits (没有正当理由). When the plaintiff signed up he was charged a monthly service fee of 50 yuan ($7.32 USD at today’s rate) which he continues to pay. Since then China Mobile has launched other service plans without the monthly fee.

 The defendants are said to have more than 70% of the market for mobile services.

 This case is similar to a suit launched against China Netcom, an internet service provider, for discriminatory pricing based on the type of residence permits (户口- Hukou) that people carry. That suit sounds like it may have a better a chance of success than this one. That case was accepted by the court last September (see http://news.xinhuanet.com/fortune/2008-09/20/content_10082021.htm in Chinese).

Paul Jones   钟 保 禄   Пол  Джоунс

Barrister , Solicitor & Trade-mark Agent

 Jones & Co.

365 Bay Street, 2nd Floor

Toronto, Ontario

Canada M5H 2V1

E-mail : pjones@jonesco-law.ca

NEW Web Site: www.jonesco-law.ca

OECD Job Opening in the Competition Division – Deadline for applications is 4 April, 2009

Posted by D. Daniel Sokol

The OECD is looking for a young lawyer or an economist with expertise in competition law enforcement and policy. S/he will be supporting senior lawyers and economists of the OECD Competition Division in the organisation of discussions between senior officials on cutting edge issues of competition law and policy, helping with the research and drafting of analytical reports and editing and supervising the production of related publications. S/he will also support the capacity building activities of the OECD Competition Division throughout the world. S/he will assist with the organisation of meetings and other events relating to competition policy in OECD member and non-member countries. The person will work under the supervision of the senior lawyers and economists responsible for the work of OECD Competition Committee and its Working Parties.

Fore more details, please check HERE (reference number 3067).

Bocconi University in Milan is Looking to hire a junior professor in Antitrust/Competition Law

Posted by D. Daniel Sokol

BOCCONI UNIVERSITY
Milan, Italy Angelo Sraffa Department of Law
Assistant Professor Positions

The Angelo Sraffa Department of Law of Bocconi University, Milan (Italy) - http://www.unibocconi.eu - invites applications for two positions at the junior faculty level in the area of Business Law. This year there will be a special emphasis in the areas of Italian and European Corporate law Antitrust law, and Financial law. JOB

DESCRIPTION: Contracts will be running for up to six years (subject to renewal after 3 years). Excellent performance in research and teaching may lead to a tenured position of Associate Professor at the end of that period. Knowledge of Italian is required. Responsibilities include teaching, both in English and in Italian and, most importantly, productivity in research. The appointed persons are expected to conduct major research projects and publish in international journals.

JOB QUALIFICATIONS: Applicants should have a Ph.D. (in Law preferred) and/or an LLM and should have demonstrated strong potential in research and some significant experience in teaching. Compensation and teaching load will be competitive with other European Law Schools. The annual teaching load is 105 hours. Direct individual research funding is granted every year. Furthermore, Bocconi University has recently introduced new criteria to reward faculty members who publish in top international journals. APPLICATION

PROCEDURE: Application packages (full CV; samples of research; two letters of reference; teaching evaluation results, if available) should be sent via e-mail with attachments (Word and PDF preferred) to: Email: MAILTO:recruiting@unibocconi.it Applications should be received by April 30, 2009 (preferably earlier).

Ecuador's New Competition Regime

Posted by D. Daniel Sokol

Ecuador has a new competition regime, utilizing the Andean Community's competition policy Decision 608.

Download DECRETO EJECUTIVO 1614-APLICACIÓN DECISIÓN 608-COMPETENCIA

The Intersection of Antitrust, Patents, and FDA Law: The TriCor Litigation

Posted by D. Daniel Sokol

Richard Epstein of the University of Chicago Law School describes The Intersection of Antitrust, Patents, and FDA Law: The TriCor Litigation.

ABSTRACT: The purpose of this brief essay is to address the interconnections among three important areas of law: antitrust, patents, and FDA regulation. Each of these presents formidable difficulties in its own right. The integration of any two areas of law is always vexed. The interconnections among three different bodies of law of vital relevance to the pharmaceutical industry present a still more formidable challenge. The easiest approach starts with an outline of the antitrust, into which I shall first integrate the patent law, thereafter turning to the rules governing FDA approved drugs.

In order to focus the inquiry I will talk about the TriCor litigation in which Abbott Labs was sued on three fronts: by downstream retailers, generic competitors, and state attorneys general. The three cases raise much the same substantive issues, even though each group has its own distinctive damage claim. The litigation has clear importance because TriCor generates over a billion dollars in sales each year. The stakes are high. It is worth noting that the retailer piece of the litigation was recently settled for $184 million.

Competition Law, Cartel Enforcement & Leniency Program

Posted by D. Daniel Sokol

Danilo Sama (LUISS "Guido Carli" University of Rome) provides insights into Competition Law, Cartel Enforcement & Leniency Program.

ABSTRACT: The present assessment focuses the attention on the antitrust action in detecting and fighting oligopolistic collusion, analyzing the development of the innovative and modern leniency policy. Following the examination of the main conditions and reasons for cartel stability and sustainability, our attempt is to comprehend under which circumstances leniency program represents a functional and successful tool for preventing the formation of anti-competitive agreements. The problem statement that follows is therefore: how can Law&Economics approach help competition authorities to achieve and realize this form of enforcement?