Anticompetitive Actions Research Articles

WAYS TO INCREASE COMPETITIVENESS OF RAILWAY TRANSPORT IN MODERN CONDITIONS

Purpose. In this paper it is necessary to analyze the types of competition in the transport market in order to find ways to improve the competitiveness of railway transport and to determine the ensuring equal conditions for all market participants by eliminating discrimination in competition. Methodology. Analysis of recent research and publications on the subject was held by the authors. The question of the development of competition, increased competitiveness in railway transport was investigated. Attention is drawn to the fact that due to the decline in traffic volumes on all modes of transport competition may significantly change the usual sphere the effective use of different modes of transport. Every mode of transport occupies a particular segment of the transport market, taking into account its technical and economic features, weakly competing, and in some cases do not compete with each other (except the road transport). However, it is entirely possible competition inside these segments.Findings. The problems of management of competitiveness, including the transport market, which required extensive analysis and serious scientific study, were identified. Originality. As a result of this work the features of transport and production of transport in modern conditions were structured. The dependences of passenger turnover and freight turnover by mode of transport over the past decade were shown. The question of additional profits by providing the cargo owners a range of service was examined. The optimal combination of cost and quality of such services at each transportation company promotes increasing its competitive status. Practical value. Competition between enterprises of the industry put the aim of improving the competitiveness of not only railway subsystems directly involved in technology movement of cargoes and the movement of passengers, but also the organization of infrastructure in the first place – subsystems to expand services and improve service for passengers and cargo owners. Ensuring of equal conditions for all market participants is achieved through a ban of three key anti-competitive actions: the adoption of agreements restricting competition; abuse of a dominant (monopolistic) position and mergers, which result in a dominant market position to restrict competition.

INFERRING ANTICOMPETITIVE PRICE EFFECTS FROM DIFFERENCE-IN-DIFFERENCE ANALYSIS: A CAVEAT

Difference-in-differences, or “D-in-D,” is perhaps the most broadly applied econometric technique in retrospective analyses of competition matters. We discuss a possible pitfall regarding this procedure. We argue that a positive and significant event variable coefficient is not a sufficient condition for concluding that there have been anticompetitive price effects. We use simulations to demonstrate that even in cases where the alleged anticompetitive activity had no anticompetitive effect, the D-in-D procedure can still produce positive and significant event variables. This article does not take issue with D-in-D in principle but rather as it is often practiced. Our results imply that while D-in-D is an important tool, the researcher must conduct additional analyses to put the D-in-D result into context before concluding a significant event variable is indicative of anticompetitive effects. We suggest a specific approach. We note that our results may have important implications for the current state of the academic literature regarding retrospectives in antitrust as well as for practitioners.

Reviewing Arbitration Awards for Competition Law Violations

This article discusses the risk that international arbitration awards violating national competition laws will be enforced without having received reasonable scrutiny either during arbitration or in the national courts.The risk that competition law violations may be authorized under the guise of enforceable arbitration awards is real, and it is a major policy problem. It is quite easy, for example, to use the international arbitration framework to enforce agreements that authorize anticompetitive activity among competitors in jurisdictions unrelated to the arbitral award (i.e., without power to review it). The problem is that competition law violations in jurisdictions unrelated to the award are unlikely to raise red flags. This is true from the perspective of both international arbitrators and national courts. Arbitrators generally will not raise issues ex officio unless they bear on enforceability of the award. For their part, national courts have thus far not interpreted violations of the competition laws in foreign jurisdictions as potential bars to enforcement.The key to solving this policy problem is getting international arbitrators to identify at least the most serious types of competition law violations – which are the most likely to be deliberately omitted from the issues presented in the arbitration – on their own initiative.To solve this problem, this article recommends that national courts implementing the New York Convention begin to recognize a narrow category of hard-core cartel activities (e.g., price fixing, bid rigging, agreed-upon output restraints, and territorial market allocation, which are universally condemned under national competition laws) as “international public policy.” Doing so will give international arbitrators the incentive to look for and resolve at least the most severe types of competition law issues in order to ensure that they are rendering an enforceable award.That recommendation, while ambitious, does not imply a heightened standard for judicial review or a departure from the prompt enforcement procedures that courts ought to use under the New York Convention. This article maintains that national courts cannot and must not re-decide issues of fact and law already decided by international arbitrators. But it suggests that national courts should consider it a prerequisite to recognition and enforcement that international arbitrators have taken note of and decided at least the most severe types of competition law issues if they are alleged in court during annulment or enforcement proceedings. If national courts do this, they can create an environment in which universally-recognized principles of competition law are upheld in international arbitration. If they do not, there is a serious risk that international cartel activities may trample competition law enforcement around the world and make global markets less efficient.

Accountable Care Organizations and Antitrust Enforcement: Promoting Competition and Innovation.

The antitrust laws stand to protect consumers of health care services from conduct that would raise prices, lower quality, and decrease innovation by lessening competition. Importantly, though, vigorous antitrust enforcement does not impede accountable care organizations (ACOs) and similar collaborations that advance these same goals of better and more efficient care; in fact, by fostering competitive markets, the antitrust laws encourage such initiatives. This article summarizes the legal framework that the federal antitrust agencies - the Federal Trade Commission and the Antitrust Division of the US Department of Justice - use to analyze ACOs and other collaborations among health care providers. It outlines the guidance provided by the federal antitrust agencies concerning when ACOs and other provider collaborations likely would harm competition and consumers. In addition, it reviews common antitrust issues that can arise with ACOs and provides examples of enforcement actions that have prevented health care providers from taking or continuing anticompetitive actions.

Private antitrust enforcement and the role of harmed parties in public enforcement

It is commonly believed that the possibility to sue privately for antitrust damages increases the probability that anticompetitive actions are prosecuted at the cost of an increased probability that procompetitive actions are prosecuted. We extend the analysis by taking into account that private parties often submit evidence during public investigation. Such parties consider private suit as a partial substitute for public prosecution. The trial option might induce these parties to be less willing to contribute evidence to public cases. Private trials crowd out public prosecution. In effect, the probability of prosecution of anticompetitive actions might decrease, while the earlier result that the probability of prosecuted actions being prosecuted is confirmed. In general, while the attractiveness of trials weakly decreases by considering a reporting possibility, they can remain an enforcement efficacy increasing institution.

EU Competition Law Developments in the Aviation Sector: July to December 2014

The second half of 2014 has seen a dramatic increase in competition law activity in all areas, from mergers, to State aid as well as private enforcement. The European Commission ('Commission'), in particular, wrapped up no less than eighteen aviation related State aid investigations, perhaps reflecting the desire of the outgoing Commissioner's desire to clear the backlog of cases, but also probably relating to the Commission's adoption of the new Aviation Guidelines published in February this year and supplemented with new guidelines for rescue and restructuring aid to non-financial undertakings. Only four of the eighteen cases related solely to State aid granted to airlines and fourteen cases related to aid granted to airports with some cases also considering the potential State aid grated to one or more carriers operating at the airport. With an increase in the number of follow-on damages actions (taken by those affected by allegedly anti-competitive activity) there has also been an increase in the number of judgments handed down and still awaited clarifying specific points of law, particularly at the moment surrounding the complainant's access to the Commission's decision and documents on its file. The Commission's airfreight decision is notable insofar as there are now follow-on damages actions being taken in Germany, The Netherlands, Norway and the UK, as well as in the US. In the context of mergers, the Commission was notified of at least nine aviation related mergers, of which two related to airlines (Alitalia and CSA Czech Airways), two related to airports (in Croatia and the UK), four related to ancillary services (fuel, IT, pilot training and aircraft leasing) and final merger related to space launchers, satellite subsystems and missile propulsion.

How Big is Big? A Caveat Regarding Difference-in-Differences Analysis

Difference-in-differences, or “D-in-D,” is perhaps the most broadly applied econometric technique in retrospective analyses of competition matters. We discuss a possible pitfall regarding this procedure. We argue that a positive and significant event variable coefficient is not a sufficient condition for concluding there have been anticompetitive price effects. We use simulations to demonstrate that even in cases where the alleged anticompetitive activity had no anticompetitive effect, the D-in-D procedure can still produce positive and significant event variables. This paper does not take issue with D-in-D in principle but rather as it is often practiced. Our results imply that while D-in-D is an important tool, the researcher must conduct additional analyses to put the D-in-D result into context before concluding a significant event variable is indicative of anticompetitive effects. We suggest a specific approach. We note that our results may have important implications for the current state of the academic literature regarding retrospectives in antitrust as well as for practitioners.

Entertainment Made in Spain: Competition in the Bullfighting Industry

Controversial for many reasons, bullfighting is probably one of the most typical entertainment activities in Spain. Bullfights are an idiosyncratic spectacle belonging to the Spanish cultural tradition, but which has also a meaningful economic significance. This paper will look at the role of market forces and competition in the bullfighting industry, describing the peculiarities of its organization and looking at the many anticompetitive features that characterize it. Spanish local authorities are strongly involved in the organization of bullfights and strict and detailed public rules govern the intervening actors and the performance during the shows. Thus, the institutional framework of bullfighting heavily constrains competition conditions in the industry, setting the scenario for a limited role of market forces. Furthermore, history shows that the collective organization of different players involved (promoters, breeders, bullfighters and subordinates) in order to exert their market power has occasionally lead to anticompetitive actions and reactions. Thus, unsurprisingly, the Spanish Competition authorities have dealt with some anticompetitive behaviour by some of the players participating in the bullfighting industry.

Competitive Effects Analyses of Hospital Mergers: Are We Keeping Pace with Dynamic Healthcare Markets?

The healthcare industry is undergoing significant realignment driven by economic, policy, demographic, and other factors. Merging parties and enforcement agencies desire frameworks that capture full merger effects including quality, benefits, and efficiencies and provide reliable competitive effects predictions grounded in market realities. Market structure measures alone have proven poor predictors of anticompetitive effects or enforcement activity. Competitive effects analysis must (and the current models do not) reflect the incentives, ability, and impact of insurers' responses to post-merger pricing with adjustments to incentives and network structure that can control provider market power without diminishing efficiencies. It is imperative to alter current models for these insurer incentives and the differentiated hospital reimbursement bids that result in lower costs of care delivery. More comprehensive analysis of merger benefits and impact of patient steering toward high value and cost effective care will enrich economic analysis of mergers and improve reliability of competitive effects predictions.

Private Antitrust Litigation: Procompetitive or Anticompetitive?

The antitrust laws are intended to permit procompetitive actions by firms and deter anticompetitive actions. We consider firms' incentives to use the antitrust lawsuits for strategic purposes, in particular to prevent procompetitive efficiency-improvement by rival firms. Our main result is that, ceteris paribus, smaller firms in more fragmented industries are more likely to use the antitrust laws strategically than larger firms in concentrated industries.

Anti-Competitive Behaviours and the Remedies Available for Redress

In this chapter, core doctrines of competition law generally applied by national authorities are reviewed. Most competition laws examine anti-competitive behavior in relation to agreements between enterprises, on the one hand, and monopolization or abuse of dominant position, on the other. Anti-competitive activity is further viewed as either ‘horizontal’ or ‘vertical’. Horizontal anti-competitive activity refers to conduct among independent enterprises that are suppliers of competitive (or potentially competitive) goods or services. Vertical anti-competitive activity refers to the supply chain controlled by a producer, beginning with inputs to production, into production, intermediate distribution and, ultimately, the retail sale of goods or services.Some types of agreement between enterprises are so inherently anti-competitive that proof of the existence of the agreement is sufficient to establish a violation. Such agreements are referred to either as per se anti-competitive or hard-core competition law violations. Other types of conduct that may seem anti-competitive on their face may also have a pro-competitive justification, such that competition authorities assess the balance. This balancing is often referred to as assessment under the “rule of reason”. For a competition law violation to be found, the anti-competitive aspect of the arrangement should outweigh potential pro-competitive benefits.Examples of horizontal anti-competitive behavior that are per se illegal in most jurisdictions include price-fixing among competitors, output restraints and allocation of geographic territories. Examples of vertical restraints that are per se illegal in many, but not all, jurisdictions are resale price maintenance (or fixing the minimum price at which retailers may sell) and “exclusive grantback” requirements in patent licenses.There are some significant risks of anti-competitive conduct in pharmaceuticals markets that are fairly widespread and deserve close attention from competition authorities. These include bid manipulation in procurement of health technologies, whereby a group of potential competitors may agree not to submit bids below a set price and to allocate the ‘lowest set price’ bid to a particular firm. Such activity may also involve inappropriate payments to government officials who might otherwise report the anti-competitive practice. Anti-competitive conduct by patent-owning enterprises may include requiring a distributor or retailer of health technologies to purchase a complete line of products as a condition of purchasing a particular product or products (i.e. a tying arrangement). Perhaps the most widely discussed form of anti-competitive conduct involving patent owners involves ‘buying out’ generic challenges to patents that might otherwise result in generic products entering the market at an early date. Such buyouts upset the balance legislators strive to achieve between granting patents and authorizing their challenge to foster competition. Mergers and acquisitions may adversely affect product markets by, for example, allowing combined companies to raise prices for therapies previously in competition with each other.Anti-competitive conduct affects markets for innovation, such as when a patent is illegitimately used to prevent the development of new products not within the scope of the patent, or when patent-owning companies combine to control markets. Mergers and acquisitions can affect markets for innovation by reducing potential RD it may unilaterally dictate terms. One objective surrounding the control of mergers and acquisitions is to prevent an enterprise from combining with others precisely to take a dominant position in the market.This chapter concludes with a discussion of the types of remedies that are available to national authorities and private parties as redress for anti-competitive conduct. It is not uncommon for the government to enter into some form of settlement agreement with an accused enterprise pursuant to which that enterprise agrees to cease its anti-competitive activities and may also make a payment either as damages or as a penalty. Such settlements may be approved and/or supervised by courts.In some jurisdictions, particularly the United States, a good deal of competition enforcement is undertaken by private actors suing for damages. Anti-competitive conduct may also be subject to criminal penalties including substantial fines, and imprisonment for individuals. Specific types of remedies may be used to address anti-competitive conduct that is undertaken to block the introduction of generic products. This may include requiring pharmaceutical patent owners to compensate public procurement authorities, generic producers and others for damages occasioned by the unwarranted invocation of patents. Strong consideration should be given to prohibiting patent owners from “buying out” generic producers’ challenges to patent validity or assertions of non-infringement. Other types of specific remedies may be considered.

A Nash equilibrium simulation model for the competitiveness evaluation of the auction based day ahead electricity market

This paper presents a simulation model based on the Nash equilibrium notion for the auction based day ahead electricity generation market. The presented model enhances a previous formalism proposed in the related literature by employing empirical data distributions of the market clearing price as registered by the market authority (e.g. the Independent System Operator). The model is effective when power suppliers with different generation capacities are considered, differently from the starting model that unrealistically assumes equal capacities. The proposed approach aims at evaluating the electricity market competitiveness with regard to the bidder strategies in order to prevent their anticompetitive actions. The framework is applied to a real data set regarding the Italian electricity market to enlighten its effectiveness in different scenarios, varying the number and capacity of participating bidders. The model can be employed as a basis for a decision support tool both for market participants (to define their optimal bidding strategy) and regulators (to avoid collusive strategies).

Advertising, programme choice, and competition concerns in a mixed duopoly television broadcast industry

The data reveals pervasive state ownership of the television media as well as a large share of television audiences for state broadcasters the world over. The mixed economy literature in one-sided markets recognises the possibility that anti-competitive actions of state owned enterprises may lower social welfare as well as private competitor profit. We analyse the advertising intensity choices of broadcasters as well as the programme choice of viewers in a mixed duopoly television industry. We find that social welfare is higher, and contrary to their complaints, private broadcaster profits may be higher under mixed duopoly than under private duopoly.

Which Technologies are Included in Patent Pools? How Market and Social Factors Impact Selection

Patent pools are a unique form of research and development (R&D) consortium in which licensor firms (technology sellers) bundle together essential patents for licensing out to each other and to third-party licensee firms (technology buyers). Over the last hundred years, governments rarely approved patent pools because of concerns about excessive or inappropriate knowledge sharing among participating firms and the possibility of anti-competitive activity. However, in recent years, regulatory authorities in the United States and Europe enacted policy changes and sanctioned the formation of patent pools in a variety of industries that are economically and technologically important. In this study, we utilize the formation of patent pools as a natural experiment for testing a much debated proposition in organizational research ––– market-based versus network- based explanations for technology selection by firms. For the patents which technology sellers seek to license out to technology buyers, we posit that bo...

Property, Natural Monopoly, and the Uneasy Legacy of INS v. AP

International News Service v. Associated Press held that a wire service had the right to prevent rivals from copying its bulletin. It established the doctrine of misappropriation and justified it on the ground that someone that invests in gathering and disseminating information is entitled to the fruits of its labor. The Supreme Court, however, missed the strong anti-competitive undercurrents in the case. INS and AP were not conventional rivals. The most important AP member (and the person who stood to gain the most from AP's anticompetitive activities) - also owned INS. Far from being about first principles, the case illustrates how common-law reasoning quickly loses its moorings in the absence of a bona fide dispute. The long-recognized failing of the case - that it sets out a principle with no obvious boundaries - was deeply embedded in the facts and illustrates, even in this iconic environment, that the domains of intellectual property and antitrust cannot be easily separated. Portions of this paper are adapted from a chapter to be published in JANE C. GINSBURG AND ROCHELLE C. DREYFUSS, INTELLECTUAL PROPERTY STORIES (forthcoming, Foundation Press, 2005).

Breaching the EC Competition Law and Private Action for Damages – Race to the Bottom or Improvement of the Efficiency of Enforcement?

The EU Competition Law and its central and so uniform enforcement by the EU Commission and the ECJ have taken the important part in the expansion of the number of companies, business, economic growth, and in the effective functioning of the other EU policies, including the formation of the European Internal Market. With changes of the EC Competition policy and so giving the greater importance to the economic efficiency in assessing the potential breach of the EC Competition Law and, at the same time, the decision of the EU Commission to focus primarily on the hard-core cartels have lead to the, so called, modernization of the EC Competition Law. By enabling national competition authorities and national courts to judge upon actions preventing, restricting or distorting the EC Competition Law, without at the same time considering that the EC Competition policy is not merely a policy of promoting competitiveness and consumer welfare, without considering that the Member States have different attitudes towards which policies should be preserved in the greater extent, without considering that the law regulating the enforcement procedure in the Member States varies, that there is not established the fully cooperation between national courts and national competition authorities in this matter, and that there is not preserved the uniform level of legal certainty and protection of those being injured by anticompetitive practices, the questions that rise up are the following. Where, i.e. in which country, the party injured could sue for damages? Is there possible to bring the tort action on the basis of the principle of the most convenient forum? Is it possible to avoid the situation in which the injuring undertaking could be the party in the proceedings going on in more than one Member State at the same time? How the party claiming damages could efficiently prove the anticompetitive action if the part of it is taking place within another jurisdiction or the evidence of anticompetitive effect is located within the territory of the other Member State(s)? How to solve the situation in which the outcome of the case could differ depending on the country where the proceeding is taking place? How to enforce the final decision in the case where injuring undertaking is performing anticompetitive actions outside the jurisdiction of adjudicative authority causing anticompetitive effects within it? How to enforce the final decision if undertaking’s assets are located within the other Member States’ jurisdiction or even outside the EU? Without analyzing these issues it is hard to predict if the modernization of the EC Competition Law, in the way proposed by the EU Commission, is such that would contribute to the greater efficiency of its enforcement or would it cause that injuring undertakings would be tempted to move their activities to the jurisdiction with less strict competition policy and its laws not guaranteeing fully efficient private enforcement.

Has the conduct-based approach to competition law in South Africa led to consistent interpretations of harm to competition?

The Competition Act and certain recent decisions by the competition authorities are examined here to assess the extent to which South Africa’s conduct-based approach to competition law has led to consistent outcomes in the assessment of effects on competition. This has not been the case in the assessment of anti-competitive effects among customers or resellers when a supplier accused of an anti-competitive action does not compete with its customers. An anti-competitive effect among customers or resellers is treated as anti-competitive when it arises from some form of conduct, such as price discrimination. However, it is not seen as anti-competitive when it arises from a refusal to supply, for example. Possible reasons for South Africa’s conduct-based approach and this inconsistent outcome in the assessment of competition among customers and resellers, including the economic foundations of the relevant approaches and their relationship with competition law in other jurisdictions, are assessed.

Competition policy in the telecommunications industry

Many of the benefits that come from the firm implementation of competition policy are felt by producers. Measures like elimination of anti-competitive actions and prevention of monopolies and cartels benefit firms whose business suffers from abuse. Consumers also benefit from the competition in the market that allows lower prices and better and more diversified products. There is a third benefit – the deterrence effects of CP even when it is not actually implicated.

Apple Inc. Business Policy v. Competition Law

Competition policy rules consist of a mechanism providing to consumers production, which they want to acquire in the best and cheapest available way. This mechanism ensures that the undertakings seek the innovation of their production and push the prices down . In the official European Commission’s Competitive Law webpage it is clearly stated, that: “In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others”. It is already clear, that free commercial market is very sensitive to any distortions from any destructive sources. Markets are especially being distorted in the most possible way when monopolies (derived from Greek monos, alone or single and polein, to sell) are being established. Abuse of dominant position is also a very complicated matter and significantly distorts competition while decreasing general welfare of consumers.This Article dedicated to quite specific and complicated issue. Apple Inc., a company that worldwide known for its achievements in technological innovations, is holding dominant position in the area of portable music players, digital online music distribution and is gaining dominant position in the mobile phones market area . Nicolas Petit , an associate in Howrey's Brussels office, where his practice focuses on EC competition and French competition law, prepared several articles where he talks about the abusive of dominant position of Apple Inc. in musical industry. In his presentation “Apple’s refusal to license its DRM - Fair-Play competition” Nicolas Petit argues, that Apple Inc. is abusing and violating the Fair-Play rules of commercial market in several ways . European Commission is also suspecting Apple Inc. of violating Competition Law because of the restriction of consumers’ choice, e.g. songs from the iTunes online store (owned by Apple Inc.) are not freely available to download across Europe, and that the prices vary between countries. Could it be concluded, that Apple Inc. uses its leading position in innovation, design and popularity of production in order to act abusively in the commercial market? On the other hand, maybe there are some strong arguments for the defence on the Apple Inc. side?Apple Inc. usually by lawyers, consumers, rival competitors considered as the second most visible actor in the role of abusive behaviour of a dominant position. Another legal entity - Microsoft Corporation is well known worldwide for its software production and unfavourable license terms. Microsoft Corporation stood against the European Commission in the case T-201/04 Microsoft v. Commission . In this case Microsoft Corporation was fined of EUR 497.000.000 because of tying one product into another (Windows Media Player 9 was included into the Microsoft Windows operational system). Can it be said, that Apple Inc. is starting to act similarly as Microsoft Corporation or other worldwide giant companies? Does Apple Inc. abuses its dominant position (in what ways) and what is the dominant position in particular? These are the main goals of the Article. However, any defending arguments for Apple Inc. position is highly welcome and to be considered. In addition, in this way of analyzing the particular situation of the dominant position (Apple Inc.) it is necessary to analyze the European Competition Law itself.While writing this topic, it is necessary to use various internet sources, because many internet (including official ones of the European Commission etc.) webpage covers useful and official information in this matter. In addition, several literature books, treaties and other valuable sources listed.The structure of the Article is as following (note that each section is written in the context of the Apple. Inc anticompetitive activities): firstly, legal basis of dominant position and abuse of dominant position is required. This chapter due to its scope is limited to European competition law. Secondly, profound legal overview shall be provided from the Competition Law position of the Apple Inc. production (iTunes, iPods, and iPhones) and business activities with it. In these 2 chapters shall be put all the efforts to fully uncover the situation - whether Apple Inc. really abuses its dominant position (it is already clear that Apple Inc. holds dominant position in the media market) , in what ways and what can be listed down for the defence of Apple Inc. itself? Is Apple Inc. really limiting the choice of consumers and their general welfare? These are questionable objects of discussion and analysis. Quick summary of conclusions is covered in the third chapter of Conclusions.

Supremacy and Diplomacy: The International Law of the U.S. Supreme Court

In 2003-2004, a Presidential campaign year dominated by debates about international affairs and international law, the U.S. Supreme Court took an unusual number of cases of international import. The Court considered the Alien Tort Claims Act and the future of human rights suits in U.S. courts, the applicability of the Foreign Sovereign Immunity Act to claims involving Nazi-stolen artwork, the applicability of American antitrust law to foreign anticompetitive activity, and the legality of the Guantanamo detentions. A great deal of ink has been spilled analyzing the individual impacts of each of these cases. What has been less considered is how these cases fit together and what, together, these cases can tell us about the Supreme Court’s nascent theories of international law.