Antitrust Authorities Research Articles

Platform Price Parity Clauses and Consumer Obfuscation*

Several antitrust authorities have investigated platform price parity clauses around the world. I analyze the impact of these clauses when platforms design a search environment for sellers and buyers to interact. In a model where platforms choose the unit search cost faced by consumers, I show when platforms can profitably obfuscate consumers through high search costs. Then, I show that price parity clauses, when exogenously given, can increase or reduce obfuscation, prices, and consumer surplus. Finally, when price parity clauses are endogenous, they are only observed in equilibrium if they hurt consumers.

Who are you? Cartel detection using unlabeled data

We propose a data-driven machine learning approach to flag bid-rigging cartels in the Brazilian road maintenance sector. First, we apply a clustering algorithm to group the tenders based on their attributes. Second, we use the labels created by the clustering algorithm as a target variable to predict them using a classifier. We rank the screens according to their relevance to decrease the number of false positive (detecting cartel when it does not exist) and false negative (not detecting cartel when it does exist) predictions. Our results shed light on the need to use a range of screens to recognize the vast profile of strategies practiced by bid-rigging cartels, such as misleading competitive dynamics, bid combination, and cover bidding behavior. Our method can improve cartels’ deterrence in different economic sectors, especially when labeled data are not available. In a controlled environment with a simulated labeled dataset, the overall average accuracy of the algorithm is 99.33%. In a real-world cartel case with a labeled dataset, the overall average accuracy is 80.25%. When applied to the road maintenance unlabeled dataset, our model identified a group containing 273 (31% of the total) suspicious tenders. We conclude by offering a policy prescription discussion for antitrust authorities.

Defining Relevant Markets in the Digital Era: Lessons from Merger Control in Brazil, Chile and Mexico

Abstract Relevant market definition methodology has been a thorny issue over the years for antitrust doctrine and practice. This is especially true when it comes to digital markets, in which prices may not be a significant variable for defining relevant markets. Traditional or static views of competition may result in improper market definitions, which might result in the clearance of mergers in digital markets because antitrust authorities define market shares according to traditional methods of measurement. However, this seems like a chicken-and-egg problem, because it is only by appropriately defining relevant markets that it is possible to establish if market shares are high or low. This article discusses practical implications for antitrust enforcement derived from the relevant market definitions adopted in high-profile digital market mergers in Brazil, Chile and Mexico. Many of these cases have elements of conglomerate or vertical integration that go beyond traditional demand substitution measurement and test the authorities’ ability to foresee future competitive scenarios in which digital competition and brick-and-mortar competition have become increasingly complementary. These cases also show an increasingly large role of data concentration as a driver in the attractiveness of the acquisitions.

M&A advisory and the merger review process

Two firms propose a merger to the antitrust authority. They are uninformed about the efficiencies generated by the merger, but can hire an expert to gather information on their behalf. The authority is also uninformed about the merger’s efficiencies, but can run a costly internal investigation to learn them. We analyze the effect of the disclosure of the expert’s contract on consumer welfare, and show that consumers are not necessarily better off with disclosure. This possibility result hinges on a free-riding problem between expert and authority in the information acquisition game, and is more relevant in highly competitive industries.

Conglomerate Mergers: What to Expect From Antitrust Authorities? If the Future is Digital and Sustainable, in the Antitrust World the Future Will Also Be Conglomerate

Conglomerate Mergers: What to Expect From Antitrust Authorities? If the Future is Digital and Sustainable, in the Antitrust World the Future Will Also Be Conglomerate

What Does Video Game Have to Do with Cade – The Brazilian Antitrust Authority?

What Does Video Game Have to Do with Cade – The Brazilian Antitrust Authority?

Analytical Review of Court Cases Involving the Antitrust Authority

Analysis of the legal positions of arbitration courts in cases of violation of antimonopoly legislation in terms of consideration of issues: control over economic concentration, administrative responsibility, creation of preferential conditions for participation in the competition, imposition of unfavorable conditions of the contract.Purpose: formation of uniform approaches in law enforcement practice in cases of violation of antitrust laws.

Determinants of Interest Spread in Pakistan

Interest spread of Pakistan’s banking industry has been on the rise for the last two years. The increase in interest spread discourages savings and investments, on the one hand, and raises concerns about the effectiveness of the bank-lending channels of monetary policy, on the other. This study examines the determinants of interest spread in Pakistan using panel data of 29 banks. The results show that the share of interest-insensitive deposits in total bank deposits is a key determinant of interest spread, whereas industry concentration has no significant impact on interest spread. Furthermore, the ongoing merger wave in the banking industry will limit the options for the savers, with adverse implications for the interest spread. We argue that to maintain a reasonably competitive environment, merger proposals may be subjected to review by an anti-trust authority.

Output Delegation, Collusion Sustainability, and Mergers with Quantity-Setting Firms

We develop a quantity competition model where a subset of firms belongs to a holding firm that can delegate or centralize the output decisions while the other (decentralized) firms make decisions independently. We show that output centralization may have a procompetitive effect because it reduces firms’ incentives to collude among those firms whose decision is made independently. Furthermore, we find that the merger of decentralized firms may also reduce the incentives to collude. Therefore, in our setup, one can interpret that the antitrust authorities should be wary regarding the restrictions imposed on merging firms concerning the decision-making structure because, under some circumstances, centralization might prevent the market as a whole to collude.

Remedies as a key legal instrument for effective antitrust regulation

The article includes study of antitrust authorities’ prescription legal consistence including comparison with other legal enforcement mechanisms, especially with legal lability. Author presents the results of FAS practice analysis, the ways which were used by the regulator to indicate violations connected with abuse of dominance and during antimonopoly control of economic concentration. The author substantiates that the mechanism of administrative penalty itself is the mechanism of punishment but legal enforcement to change the behavior of the economic entity to provide competition can only be achieved by the effective remedies included in prescription. In this way the author believes Competition authority prescriptions is the key mechanism in antitrust regulation and shares his views regarding the development of such mechanism.

Effects of restricting social media usage on wellbeing and performance: A randomized control trial among students.

Recent research has shown that social media services create large consumer surplus. Despite their positive impact on economic welfare, concerns are raised about the negative association between social media usage and well-being or performance. However, causal empirical evidence is still scarce. To address this research gap, we conduct a randomized controlled trial among students in which we track participants' daily digital activities over the course of three quarters of an academic year. In the experiment, we randomly allocate half of the sample to a treatment condition in which social media usage (Facebook, Instagram, and Snapchat) is restricted to a maximum of 10 minutes per day. We find that participants in the treatment group substitute social media for instant messaging and do not decrease their total time spent on digital devices. Contrary to findings from previous correlational studies, we do not find any significant impact of social media usage as it was defined in our study on well-being and academic success. Our results also suggest that antitrust authorities should consider instant messaging and social media services as direct competitors before approving acquisitions.

Wirkung der Energiesteuersenkung auf Kraftstoff preise

AbstractThe German federal government intended to alleviate the burden of increasing fuel prices by introducing a temporary reduction of energy taxes on gasoline and diesel. In order to evaluate the impact of this measure on consumer prices at the filling stations the development of procurement costs for crude oil as well as the downstream development of refinery and distribution margins have to be taken into account. It turns out that about 80 % of the tax reduction has been passed on to end consumers on and around the effective date of the tax relief. However, within the first month the impact of the tax reduction has been wiped out for diesel completely as the gross margin of the mineral oil groups have substantially improved since then. On the other hand, for gasoline (E10) at least part of the impact can still be observed as the initial margin improvement has come down in the meantime. For a detailed analysis the German antitrust authority should look into the pricing algorithms of all 14,000 filling stations in Germany.

Behavioral economics as a tool for adapting antitrust legislation to the digital transformation of society

Digitalization and the rapid development of society determine the need to adapt legislation and law enforcement practice to the requirements of the digital age. Antitrust policy is also changing and developing tools that allow timely response to the challenges of the digital economy. One such tool is behavioral economics, which is becoming increasingly important in today’s digital environment, and allows regulators to be flexible and contribute to the achievement of the main goals of competition law — to maintain a competitive state of the market and avoid the concentration of excessive power in the hands of one economic entity. The practice of applying behavioral economics by antitrust authorities is becoming more extensive, as there is a large pool of data in the digital environment, including information about consumers, which can be used by companies to influence users, as well as lead to unfair competition. Thus, the paper will study the issue of using behavioral economics in terms of consumer choice by antitrust authorities in order to identify possible behavioral insights of consumers that affect the correct establishment of product markets and the identification of competition law violations by companies. Applying the legal doctrinal approach, the descriptive method, and the comparative law method makes it possible to establish the issue’s relevance in different countries and the prospects and trajectories of the usage of behavioral economics in antitrust practice. As a result of the study, a global trend has been established in the application of behavioral economics by antitrust authorities both in determining the boundaries of commodity markets and in detecting violations of antitrust laws. It is concluded that the use of such a tool will continue, as it contributes to the timely adaptation of existing antitrust laws to the challenges of the digital age, contributes to the achievement of competition law goals, and creates a thriving competitive environment.

Break the Cycle of Collusion: Simulation to Influence Mechanism of Cognitive Bias on To-Collude Decision Making

Collusion is an all-pervading illegal market behavior that can undermine the sustainable development of the construction industry. It is acknowledged that collusive bidding decision making is influenced by conspirators’ cognitive bias. Nevertheless, the understanding of such an influence mechanism remains vague in the literature. This study aims to examine the mechanism of conspirators’ to-collude decision making by establishing a system dynamic model. The model development is based on the theories of cognitive biases, collusive bidding, and complex adaptive system. Multiple scenarios were simulated in the context of the Chinese construction industry. Three most influential cognitive bias are overconfidence, the illusion of control, and cognitive dissonance. The simulation results reveal conspirators’ intrinsic mechanisms to decide whether they deserve to participate in collusive bidding. The evolution of to-collude decision making is characterized by nonlinearity, multiplier, and stimulus enhancement effects. Collusion motivation and enterprise network relationships expand conspirators’ to-collude decision making. The increase of government regulation intensity and enterprise performance inhibit conspirators’ to-collude decision making. This study provides an insight into the cycle of collusion emergence from a complex system perspective and implies that antitrust authorities can launch carrot-and-stick measures for better regulation.

Economic Analysis Methodologies Applied in Merger Investigations in the EU and China: Comparative Case Studies

Abstract Understanding the application of economic analysis methods in merger reviews across various jurisdictions can benefit antitrust authorities when reviewing cases and aid the legal and economic teams that work with merging parties in better anticipating concerns and outcomes. The comparative studies on economic analysis methods applied in merger cases have mainly been focused on China/the US and the EU/US. The objective of this study is to explore how the EU and China apply economic analysis methods to merger control enforcement for the same concentrations, by means of a comparative case study. Two research questions are addressed: (i) What are the economic analysis methods employed by Chinese antitrust authorities when investigating merger cases and how are they used? (ii) What similarities and differences exist between the antitrust authorities in the EU and China in applying economic analysis methods during merger case reviews?

Price Effects Of Vertical Integration And Joint Contracting Between Physicians And Hospitals In Massachusetts.

Vertical integration in health care has recently garnered scrutiny by antitrust authorities and state regulators. We examined trends, geographic variation, and price effects of vertical integration and joint contracting between physicians and hospitals, using physician affiliations and all-payer claims data from Massachusetts from the period 2013-17. Vertical integration and joint contracting with small and medium health systems rose from 19.5percent in 2013 to 32.8percent in 2017 for primary care physicians and from 26.1percent to 37.8percent for specialists. Vertical integration and joint contracting with large health systems slightly declined, whereas geographic variation in these physician affiliations rose. We found that vertical integration and joint contracting led to price increases from 2013 to 2017, from 2.1percent to 12.0percent for primary care physicians and from 0.7percent to 6.0percent for specialists, with the greatest increases seen in large health systems. These findings can inform policy makers seeking to limit growth in health care prices.

The strategic interaction between cartels and anti-trust authorities

We present a model of the interaction between firms agreeing on a degree of collusion and a competition authority that simultaneously determines the allocation of resources to enforcement of anti-trust legislation. An increase in demand is associated with tougher enforcement and a lower degree of collusion. A stronger competitive pressure first decreases the degree of collusion and increases the level of enforcement, then increases both the degree of collusion and the level of enforcement, and eventually increases the degree of collusion and decreases the level of enforcement. Simulation results indicate that a move from the EU penalty regime to the tougher US standard with treble damages would mainly impact on the enforcement intensity and to a much lesser extent affect the degree of collusion.

Anti-trust violation proceedings: legal basis and ways of its interpretation for making it consistent with international standards and best foreign experience

It is noted that the anti-trust procedure provided by the legislation of Ukraine for the investigation and consideration of cases of violation of competition law is largely consistent with the best international standards. However, the author substantiates the conclusion that in order to ensure proper observance by antitrust authorities of procedural rights of business entities and strengthen the capacity of antitrust authorities to effectively enforce and make a fair decision on the merits, there are reasons to recommend that they interpret the right of business entities to get aquainted with the case file and to submit evidence and explanations as requiring the antitrust authorities to set out
 in the order of initiation of anti-trust proceedings, in particular, the facts indicating the commission of an anti-competitive violation; legal qualification of the relevant anti-competitive violation, a preliminary version of the decision on the merits, which the competition authority has reason to consider lawful and reasonable if the facts of the case are consistent with the assumptions of the anti-trust authority as well as make there a notice of the date, time and place of the hearing for consideration of the case. The author further asserts that is it also crucial to provide the persons involved in the case with a reasonable amount of time, taking into account the volume of the case file and the complexity of the issues, and to provide them with sufficient opportunities to form and express their opinions to the competent anti-trust authority for it to take due notice of these opinions while it considers and substantiates the final decision in the case.

Antitrust by Algorithm

Technological innovation is changing private markets around the world. New advances in digital technology have created new opportunities for subtle and evasive forms of anticompetitive behavior by private firms. But some of these same technological advances could also help antitrust regulators improve their performance. We foresee that the growing digital complexity of the marketplace will necessitate that antitrust authorities increasingly rely on machine-learning algorithms to oversee market behavior. In making this transition, authorities will need to meet several key institutional challenges—building organizational capacity, avoiding legal pitfalls, and establishing public trust—to ensure successful implementation of antitrust by algorithm.

Anti-Competitive Practices in Digital Markets: Experience of Foreign Countries

The article analyzes the tools used by business entities when carrying out entrepreneurial activities in order to compete in digital markets. The purpose of the study was to identify the applied practices recognized by the antitrust authorities of various countries as a violation of the antitrust legislation, to identify the applied approaches to assessing the actions of participants in digital markets, and their qualifications. The author also analyzed the features of the approaches of administrative and judicial authorities to defining the boundaries of the market in the considered examples of cases, compared foreign and Russian practices, highlighted practical mechanisms that are useful for researching digital markets.