Anti-competitive Behaviours Research Articles

The Decriminalization of Cartel Activity in Kuwait: A Regulatory Framework

The Kuwaiti policymaker has never overlooked the protection of market competition. Anticompetitive practices have always been a concern in Kuwait; from the Kuwaiti Constitution 1962, which allows a legal monopoly for a certain time, and the Commercial Law Act 68/1980, to the Competition Protection Acts (CPA) of 2007 and 2020. However, the legislative responses to anticompetitive behaviours in Kuwait have varied, with criminal prohibition being historically dominant. Recently, with the introduction of the CPA 2020, Kuwait has decriminalized cartel activity. Although it may have been expected that the criminal nature of cartel activity should have been maintained, the major shift in Kuwait was contrary to the global trend towards criminalization. Cartel activity is now being dealt with within a regulatory framework, with only administrative sanctions. This paper suggests that the decriminalization in Kuwait weakens the argument that the global trend towards criminalizing cartel activity has always been driven by a top-down process. This paper has three aims: the first is to explore this inadvertently ‘neglected’ research area in Kuwait; the second is to discuss why cartel activity has been decriminalized, with a focus on the problem of ‘moral ambiguity’ as an explanation; and the third is to argue for the re-criminalization of cartel activity. Competition, Cartel Activity, Decriminalization, Moral Ambiguity, Kuwait

Antisuit injunctions in SEP disputes and the recent EU's WTO/TRIPS case against China

AbstractThe existence of standard essential patents (SEPs)—and the associated litigation—has potentially disruptive consequences for the manufacture, marketing and distribution of complex products that incorporate many patented standards, for example, information and communication technology (ICT) products such as smartphones that incorporate a camera, video, web browser, wireless communications, text messaging, and so on, as well as an increasing number of ‘connected’ Internet of Things products such as wearable devices and ‘smart home’ devices. Indeed, SEP owners may use the patent enforcement system to prevent implementers of these technologies from bringing to market competing products that use the same standards. As is known, this raises concerns about competition in the market and the need to maintain interoperability to ensure the development of the ICT industry. One of the legal tools which can be used by implementers to (try to) neutralise SEP holders' anticompetitive behaviours is the ‘antisuit injunction’ (ASI). ASIs are not uncommon in common law jurisdictions while they are foreign to civil law countries within the European Union (EU). ASIs are particularly useful to SEP implementers when patent holders disrespect their commitment to license their patents on a FRAND basis. For example, a judge who is in the process of assessing whether the SEP owner complies with FRAND terms may at the same time grant an ASI to stop the patentee taking patent infringement actions in other jurisdictions until the FRAND litigation has been concluded. In February 2022, the EU filed a complaint at the World Trade Organization (WTO), arguing that China's use of ASIs prevents EU‐based companies from properly protecting their SEPs. Indeed, ASIs have recently been granted in several Chinese disputes, including in Huawei v Conversant and Xiaomi v. InterDigital. More specifically, China's Supreme People's Court held that Chinese courts can use ASIs to prevent SEP owners from filing disputes in any foreign courts to enforce their patents; and that anyone who does not comply with the injunction should be fined €130,000 per day. In the WTO case the EU notes that such a case law jeopardises innovation and growth in Europe, ‘effectively depriving European technology companies of the possibility to exercise and enforce the rights that give them a technological edge’. From a legal perspective, according to the EU, China's conduct is in violation of various Trade‐Related Aspects of Intellectual Property Rights (TRIPS) provisions, including Article 28 which grants exclusive rights to patent owners. The paper focuses on this EU–China WTO/TRIPS dispute and more generally, on the relevance of ASIs within SEP cases.

Interbank market structure, bank conduct, and performance: Evidence from the UK

We examine whether a concentrated interbank market stimulates bank collusion or monopolistic pricing towards enhancing performance. We explore this nexus by incorporating the role of bank conduct into the structure–performance paradigm. The results show that the interbank market structure provides a channel for banks to collude and engage in monopolistic pricing in the market for bank and business loans to consequently increase bank performance. Further, while the interbank market structure is both profit and cost efficient for non-conglomerate banks, it is cost efficient for foreign banks. Hence, collusion and other anti-competitive behaviours in the interbank market may exacerbate incentives for foreign and non-conglomerate bank entry. We also explored the theoretical and policy implications of these findings. Our results are robust to alternative measures of market structure, bank conduct and performance, and the use of a wide range of specifications and econometric models.

Anticompetitive Behaviours in Public Contracts between Entities within the Public Sector (In-House Contracts)

Anticompetitive Behaviours in Public Contracts between Entities within the Public Sector (In-House Contracts)

Enhancements of ’Competition Culture’ in Pharmaceutical Sector: Anti-Competitive Infringements and Consumer Welfare

Indeed, it is the economic regulation that shaped present ‘competitive market structure’ in Malaysia. This market structure hence generated the ‘competition culture’ in many industries. The structural changes contributed to transition of a regulated market-based to open market- based economy. The transition saw competitive market structure illustrated by the involvement of private and public enterprise as market players in the main and sub sectors. The first sectors were telecommunication and energy. These sectors have shown stable and robust competitiveness in the market whereby private entities and independents telecommunication companies compete in the Malaysian tele-communication market. The competitive culture saw a liberalised and deregulated market based that brought about efficiencies in services, prices and innovations. Secure and continuous pharmaceutical supplies are structural responsibilities shared by all stakeholders in the market. Pharmaceutical industry generated and garnered extensive intellectual rights in terms of drugs, services and medical supplies. Manufacturers in pharmaceutical sectors invests massive funding to develop new creations, this is evident by the COVID-19 vaccines, patent and trademarks rights are thus awarded to the creators of the innovation.The ‘competition culture’ illustrated through stable and extensive electricity, internet coverage, lower prices, choices of products and services for customers. Amidst the post pandemic crisis, pharmaceutical supply chain has become one of the important sector that require attention in sustainability and accessibility. Documentary examination shows, to date, present pharmaceutical market structure divided between levels 1, 2 and 3 represent monopolistic and oligopolistic structural framework. Summative assessments revealed there are ant –competitive behaviour’s concerns in the sector. Instituting ‘competition culture’ and enhance competition regulatory measures are pivotal in advocating a level playing fields in all three levels. Comparative method examination from other jurisdiction experiences and lessons are the parameters of this article. This studies hope to examine and discuss existing constraints in structural framework and competitive culture in pharmaceutical drugs market.The structure of this Article is the following. In Part 1, explain the relationship of patents rights and competition policy and law, industry market structure, market players and relationship between intellectual property patent laws and competition laws. Part 2, explain anti-competitive behaviours from patent holders and challenges and implications on the violations of competition law. Part 3 recapitulates the constraints, issues and structural suggestions for workable ‘competitive culture’ in the pharmaceutical market. We hope this studies will provide further research gap for future research.

Are anticompetitive behaviours rampant in global retail energy markets? A study of price elasticity, asymmetric price adjustment and rent-seeking

This study investigated the role of price elasticity in the asymmetric adjustment of global retail energy prices and in the rent-seeking behavior of retail energy firms. Overall, 58 nonlinear ARDL models were estimated for the period 2004:M12 – 2016M8 using data for gasoline, automotive diesel, domestic heating oil, industrial fuel oil and crude oil markets. The results indicate that global retail energy markets are still pervasively fraught with the problems of rockets and feathers effect and the likelihood of retailers manipulating the tax system to hide rent-seeking behaviors. The results also indicate that there is more likelihood of rent-seeking activities in the markets for road fuels whose demand is relatively more price-inelastic than in the markets for non-road fuels whose demand is relatively more price-elastic, thereby suggesting that differences in market structure could offer a possible explanation for rent-seeking and asymmetric price adjustment in global retail energy markets. These results have far-reaching antitrust and consumer welfare implications, which require regulators and policy makers to interminably monitor the global retail energy markets, especially during periods of economic crisis like the ongoing COVID-19 pandemic, in order to safeguard the overall social welfare.

Osvrt na povrede konkurencije u japanskom pravu

Author in this paper analyses competition violations under the Antimonopoly Act in Japan. Legal definition of competition violations is presented in the first chapter of paper as follows: private monopolization, unreasonable restraint of trade, and unfair trade practices. The second part of the paper focuses on the procedural course of identifying competition violations and the role played by the Japanese Fair Trade Commission in this process. Finally, the importance of the leniency program is emphasized as one of the most effective means of preventing anticompetitive behaviours of market participants. Throughout the paper, the author points out that there are some differences between competition legal framework in Japan and the European Union. The inspiration for writing this paper is the author's desire to share his own experiences and knowledge, gained during a three-week study visit to Japan in direct work with employees of the JFTC and professors in the field of competition law, in order to acquaint the expert public in the Republic of Serbia with Japanese competition law. During the research, the author used sources from the official site of the JFTC, as well as other relevant articles on the Internet.

Can Machines Learn Whether Machines Are Learning to Collude?

Economic interactions – especially online – generate data that stimulates strategic artificial intelligence (AI), machine learning (ML) and deep learning (DL) use: by businesses for predictive analytics, process optimisation and market power; by consumers for search, decision-making and (again) market power; and by governments for detecting criminal or harmful behaviour, gathering evidence and regulation. Not all uses increase competition and efficiency. One recent concern is algorithmic collusion (AC); whether revenue management algorithms can signal and implement tacitly collusive behaviour. This paper summarises theoretical and empirical evidence, considers how specific business machine learning methods may affect AC and whether consumer and regulator algorithms can detect or solve the resulting problems. It examines the links between Internet regulation and competition/consumer protection policy. Much early ML literature concentrated programmes ‘learning’ about their environments. A simple version would predict tomorrow’s prices from historical data to set profit-maximising prices. This could involve estimating prices or costs (assuming their behavioural rules), trying to identify behavioural rules or trying to influence rivals’ learning. Here, AI includes anything from fixed rules mapping data to prices to deep neural nets, ML is AI machines that program themselves to optimise specific objectives (thus having at least one ‘hidden layer’) and DL is ML with many hidden layers. Increased depth and thus computation makes behaviour an intricate convolution of data and programme history that is less visible those who programmed the system, let alone explainable to ‘outsiders.’ If many firms use ML, learning seeks a ‘moving target’ and may fail to converge or lead to unintended consequences. Conventional AC models use simple algorithms to demonstrate behaviour consistent with collusion in models of repeated interaction. It is not inevitable or classically collusive especially without good communications. More sophisticated approaches, however, suggest that populations of even simple AI agents can learn to adopt sophisticated reward/punishment strategies that sustain profitable outcomes. This paper considers further variations taking into account e.g. the influence of size and targeting of price deviations, finite-memory or dominance elimination strategies and the difference product characteristics (durability, quality uncertainty, purchase frequency) and search services can make. Simulation results illustrate a range of classic market inefficiencies (overshoot, convergence to prices between monopoly and oligopoly, cyclic behaviour and endogenous market-sharing collusion). From the regulatory perspective, it is not clear what is illegal and what could or should be banned. This raises questions of detecting AC (e.g. by DL) and limiting its spread or consequences. We consider: i) restrictions on information available to firms; ii) constraints on the speed or size of pricing changes; iii) Coding standards e.g. to incorporate regulatory compliance in ML objectives; and iv) algorithmic detection of specified anticompetitive behaviours. For iii), we show that populations using (e.g.) likelihood-ratio policy gradient reinforcement learning are more likely to converge to collusive behaviours (tit-for-tat) when they take other firms’ learning into account and more able to shape others’ learning depending on the prevalence of AI and the topology of information.

Legitimacy Test for Criminal Sanction: Antitrust Law Perspective

The issue of imprisonment as a means to deter competition law offences is widely debated in doctrine. The purpose of this article is not to expound the ideas already mentioned in the legal literature on the advantages/disadvantages of such a sentence. This paper will focus on the question of whether imprisonment is a legitimate punishment to deter anti-competitive behaviours, regarding the theoretical, legal and/or practical difficulties encountered for a successful policy of European antitrust criminalization. To answer this question, the prison sentence issue against managers involved in cartel practices requires the application of a legitimacy test. Regarding this test, three conditions must be examined to legitimize the imprisonment of individuals responsible for an anticompetitive practice: the seriousness of the practice, the risk of type 1 error, and the social consensus on the seriousness of market violations.

Virtual Competition:

The progressive demise of bricks-and-mortar and the rise of the online merchant are not to be ostracized per se, as the virtual nature of potential anticompetitive behaviours will not change the substance of the antitrust enforcement. The fil rouge of the present contribution is to be found in the pivotal role of human liability as the logical premise for whatsoever theory of harm. All those challenges coming from the interaction between Big Data and Artificial Intelligence are thus to be welcomed as the future of competition law goes hand in hand with the technological progress of innovative markets.

Addressing Competition Bottlenecks in Digital Financial Ecosystems

Despite some early success, the mobile money sector’s future remains unclear. In some markets, few dominant players have managed to grow significantly. Their dominant position often reduces incentives to lower prices or even hampers the ability of other players to compete. This paper offers a framework to help policy makers, regulators and the financial inclusion community to think about anti-competitive behaviours in digital financial ecosystems, and ways to address these bottlenecks without stifling market growth.

Addressing competition bottlenecks in digital financial ecosystems

Despite some early success, the mobile money sector’s future remains unclear. In some markets, few dominant players have managed to grow significantly. Their dominant position often reduces incentives to lower prices or even hampers the ability of other players to compete. This paper offers a framework to help policy makers, regulators and the financial inclusion community to think about anti-competitive behaviours in digital financial ecosystems, and ways to address these bottlenecks without stifling market growth.

Contracting Authorities Inability to Fight Bid Rigging in Public Procurement: Reasons and Remedies

On a functional basis, contracting authorities possess a twofold public-private nature. As State prominent parts, mostly Administrations, they are public bodies, holding prerogatives and acting as Regulators to ensure that the contracting activity complies with public contracting laws and procedures. But by appealing to the market to purchase goods and services, those authorities are also economic operators and act as any firm. It is in this very concept of clients or customers of an economic activity that they are bound up to fulfill the Competition law requirements.The overlapping of Regulation and Antitrust law over a particular market usually poses the problem of choosing one or the other to tackle anticompetitive behaviours. This is a race for hooking the prey. Both are entitled to intervene, since they have got among their objectives the protection of competition on sectorial markets, but operate at different levels (ex ante/ex post).This paper aims at proposing feasible means for the contracting authority to tackle collusion alongside the tender process. These means should contribute to avoid bid rigging or, if failed, help the Competition agency to prove the anti competitive behaviour. A breakthrough in this way is the Directive on Public Procurement, since it entitles the awarding powers to expel those candidates with sound evidences of rigging before or during the contracting procedure. This formula seems to bring the solution back to Public Procurement, but favours errors Type I and Type II (false positives and negatives).

Enjoy your online music carefully: collective management of music copyrights in the USA

Collective management organisations (CMOs) are essential to the online provision of music. They can achieve an economy of scale and greatly facilitate the commodification of music works. However, due to the excessive market power held by these organisations, it is also possible for CMOs to harm both copyright holders and their licensees. Consequently, consent decrees between ASCAP, BMI and the US Department of Justice (DOJ) aim to deter CMOs from abusing their market power. Additionally, individuals are also entitled to take private actions against CMOs' anticompetitive behaviours. Further, faced with the fragmented online music copyrights, challenged by the common use of digital equipment, the collective management of copyrights in the USA calls for substantial reforms.

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 Self-Crippled Regulator Unable to Protect Competition: The Contracting Authorities in the Spanish Public Procurement System

On a functional basis, contracting authorities possess a twofold public-private nature. As State prominent parts, mostly Administrations, they are public bodies, holding prerogatives and acting as Regulators to ensure that the contracting activity complies with public contracting laws and procedures. But by appealing to the market to purchase goods and services, those authorities are also economic operators and act as any firm. It is in this very concept of clients or customers of an economic activity that they are bound up to fulfil Competition law requirements.The overlap of Regulation and Antitrust Law over a particular market usually poses the problem of choosing one or the other to tackle anticompetitive behaviours. This is a race for hooking the prey. Both are entitled to intervene, since they have among their objectives the protection of competition on the sectorial market, but operate at different levels (ex ante/ex post).The current Spanish Public Procurement law forsakes the contracting authorities to fight bid rigging and wipe colluders out of the procedure. This task is legally assigned to national and regional competition watchdogs.This paper aims at proposing feasible means for the contracting authority to tackle collusion alongside the tender process. These means should contribute to avoid bid rigging or, if failed, help the Competition agency to prove the anti competitive behaviour. A breakthrough in this way is the 2012 Proposal of Directive on Public Procurement, since it entitles the public body to expel those candidates with sound evidences of rigging before or during the contracting procedure. This formula seems to bring the solution back to Public Procurement, but favours errors Type I and Type II (false positives and negatives).Draft as of 09/June/2013 to be presented at the Conference PUBLIC PROCUREMENT: GLOBAL REVOLUTION VI, University of Nottingham-UK, 24-25/June/2013.Please do not quote without authors’ permissionComments welcome at antominho@hotmail.com; pvalcarcel@uvigo.es

Standardization agreements, intellectual property rights and anti-competitive concerns

The relationship between standardization processes, intellectual property rights and competition rules has increasingly become of interest in the recent years. Recent investigations of the European Commission confirm that standardization processes and in particular ownership of IPRs that cover standardized technology might in certain circumstances infringe competition rules. The article first explores the meaning and different forms of standardization. It then analyses selected parts of the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, in particular those parts that cover standardization agreements. The Guidelines have been adopted by the Commission in December 2010 with a view to addressing the anti-competitive concerns stemming from inter alia standardization agreements (eg they encourage IPRs holders to disclose their exclusive rights before the adoption of the standard, as well as to give an irrevocable commitment to offer to license the IPR to all parties interested on a fair, reasonable and non-discriminatory terms: the so-called FRAND commitment). The author will then present and comment on different points of view on whether the ownership of IPRs which cover standardized technologies really create market dominance capable of triggering anti-competitive behaviours. Finally, a set of additional solutions proposed by various legal scholars will be highlighted and commented on.

Structural Remedies in EU Antitrust and Merger Control

In both antitrust and merger cases, remedies serve the same purpose, namely to stop the infringement of competition and restore competition. However, the practice of remedy policy in these two areas is varied, for example, structural remedies are preferred in merger cases but strictly limited in antitrust. This article analyses the extremely different positions of structural remedies in antitrust and merger control. It also reviews the facts and remedies of the E.ON Electricity case, the first antitrust decision with structural remedies adopted or imposed by the European Commission. It argues that EU competition law is not a coherent system for while antitrust enforcement is too weak, merger control is too strong. Furthermore, this article argues that the deterrent power of Article 102 should be reinforced to increase its weight in fighting unilateral anticompetitive behaviours, but merger control should show more tolerance to the efficiency-enhanced mergers.

Australian Free Trade Agreement/Anti-dumping Clauses: Fair Trade or Anti-competitive Provision

The anti-dumping clause on free trade agreement is originated as the remedy for protecting fair and competitive international trade. However, the clause can also be deviated to be the instrument of trade protection and the impediment of market competition. This article attempts to focus on the anti-dumping clause for Australian free trade agreement in this regard. It examines how anti-dumping may lead to anti-competitive behaviours, international cartels, and negative effect for consumer interests. It then discusses the conflict between the anti-dumping and competition law. The article proposes the possible solutions on short-and long-term basis to resolve the conflict

Auction procedures and competition in public services: The case of urban public transport in France and London

In many countries, governments are pushing for the introduction of competition in the organization of public services and more broadly in public procurement. The development of public–private partnerships throughout the world is a good illustration of this trend. In order to foster competition, competitive tendering through the use of auctions is now common. Nevertheless, competition for the field must be organized. Depending on the rules of the game chosen, introducing competition for the field may or may not be successful. In this paper we investigate two alternative models for organizing local public services, namely the French and the London models of urban public transport. Few competitors and collusive behaviours, with increasing costs, characterize the French model, while the London model, as far as we have seen, exhibits better results, by using the transparency of auction procedures and the discretionary power of the regulator as two complementary instruments to foster competition and prevent anti-competitive behaviours.