Antitrust Enforcement Research Articles

How antitrust enforcement affects corporate ESG performance? Evidence from merger review cases in China

Chinese unique treatment of unreported merger cases (which should be reported according to antitrust law) in the context of merger review provides a distinctive and robust control group for the Difference-in-Differences (DID) research method. We employ the DID method to investigate the impact of China’s merger review antitrust enforcement on Environment, Social and Governance (ESG) performance. We find that the implementation of merger review antitrust enforcement suppresses corporate ESG performance, especially with significant effects observed on the Environment (E) and Governance (G) components. Mechanism analysis indicates that antitrust enforcement poses an impact on corporate profits by reducing market concentration and safeguarding fair market competition. This leads to the emergence of corporate financial performance protection behaviors, resulting in a decrease in corporate ESG performance. Heterogeneous analysis finds that the use of structural remedy in the enforcement process and stronger antitrust enforcement will further intensify the inhibitory effect of antitrust enforcement against business concentration on ESG.

The Effects of Market Monopolies on Consumer Welfare and Economic Efficiency

Using both theoretical and empirical analysis, this study offers a thorough examination of how market monopolies affect consumer welfare and economic efficiency. The study sheds light on the ways in which monopolistic enterprises sustain their market dominance by analyzing how monopolies function. These tactics include taking advantage of entry hurdles, exercising control over crucial resources, and implementing strategies such as price discrimination. According to the research, because there is no competition, monopolies not only drive up costs but also limit consumer choice, lower the quality of their products, and stifle innovation. Due to these monopolistic actions, there are inefficiencies in the market, especially when it comes to the distribution of resources, which makes businesses less inventive and productive and ultimately contributes to a general stagnation in the economy. The role of legal frameworks like antitrust laws, which are intended to prevent monopolistic behavior, is also evaluated in this research. It criticizes current laws, pointing out that they frequently fail to keep up with changing market circumstances, especially in sectors like technology and telecommunications. In order to remedy these deficiencies, the paper suggests a number of policy measures, such as stepping up antitrust enforcement, lowering obstacles to new businesses entering the market, and liberalizing the market to create an atmosphere that is more competitive. It also promotes updating regulatory frameworks to deal with digital monopolies and quickly evolving global markets in a way that prioritizes consumer welfare and restores economic efficiency. By taking these steps, the study highlights how crucial it is to reduce monopolistic power in order to foster innovation, long-term economic growth, and consumer safety.

Deciphering Algorithmic Collusion: Insights from Bandit Algorithms and Implications for Antitrust Enforcement

Deciphering Algorithmic Collusion: Insights from Bandit Algorithms and Implications for Antitrust Enforcement

The Privacy/Antitrust Curse: Insights from GDPR Application in Competition Law Proceedings

In response to the emergence of large online platforms whose business model revolves around the collection and processing of personal data, it is usually suggested that competition and data protection are synergistic, hence requiring an integrated approach. In this respect, Europe represents the testing ground for evaluating how privacy breaches may inform antitrust investigations. Indeed, the General Data Protection Regulation (GDPR) on the one side and the German Facebook antitrust decision on the other side are considered the benchmarks of this new stance aimed at linking market power and data power. This paper tests the concrete viability of such an approach, analyzing how data protection rules and principles have been applied in antitrust proceedings by the European Commission and national competition authorities. Notably, the paper aims at demonstrating the fallacy of the narrative which describes the relationship between privacy and antitrust in terms of synergy and complementarity. Furthermore, the paper maintains that the principles recently affirmed by the European Court of Justice in Meta do not appear conclusive in addressing the issue. The strategic use of privacy as a business justification to pursue anticompetitive advantages currently addressed in the numerous Apple ATT investigations indeed shows the tension between these areas of law. Therefore, rather than strengthening the antitrust enforcement against gatekeepers and their data strategies, the inclusion of privacy harms in antitrust proceedings turns out to be a potential curse for competition authorities, providing players with an opportunity for regulatory gaming to undermine the antitrust enforcement. JEL Codes: D83, K21, L12, L4

Social Media and Deceptive Patterns: A Way Forward for Antitrust Enforcement

Abstract The digital public sphere's significance, amplified by the COVID-19 pandemic, highlighted concerns on how the concentration of market power can shape social interactions. Antitrust, in particular, has faced calls for reform to better serve democratic goals in this context. However, experts disagree on whether antitrust should be geared towards achieving these objectives. This paper discusses antitrust’s potential in fostering a healthier digital public sphere, particularly through the analysis of deceptive patterns deployed by social media platforms and their competition impact. It first discusses how the concept of deceptive patterns should be conceived—as there is no clear definition universally adopted in either academia or enforcement circles. It then moves on to explore ways to align traditional consumer-welfare antitrust analysis with this topic, by reviewing existing deceptive patterns’ literature, looking at existing taxonomies and how they can help clarify effects on consumers, markets, and society, with a narrowed focus on social media. Lastly, it attempts to offer a framework for the assessment of deceptive patterns in social media by antitrust authorities.

Tackling Labour Monopsony by Gig Platforms: The Anti-Monopoly Law as an Alternative Legal Approach to the Labour Law System in China

Abstract In the gig economy, workers could be subject to exploitative and coercive practices by platforms and their stringent labour algorithms. Since gig workers are not defined as typical employees, the Chinese labour law system fails to adequately protect gig workers. Furthermore, the limited scope of labour law protection is also another reason for the ineffectiveness of the Chinese labour law system. Even if gig workers can be identified as employees, the regulation of labour algorithms is uncovered by the existing labour laws. Additionally, collective bargaining rights of gig workers may help but as explained in Section 4, they are still immature and collective barging practices are likely to violate the Chinese Anti-Monopoly Law. This article claims that the enforcement of the Anti-Monopoly Law can be an alternative approach to protecting gig workers as the gig platforms may constitute a labour monopsony. Therefore, anti-trust enforcement can step in and punish exploitative and coercive practices harming gig workers. However, there are limitations of the Anti-Monopoly Law in dealing with these practices and thereby the advantages of the Chinese labour law system regarding the protection of gig workers should still be taken seriously.

Antitrust Laws and the Future of Market Competition

Purpose: The general objective of the study was to investigate antitrust laws and the future of market competition. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to antitrust laws and the future of market competition. Preliminary empirical review revealed that while existing antitrust frameworks had been instrumental in promoting competition and preventing monopolistic practices, they faced significant challenges in the digital age. The rapid evolution of technology and the rise of digital platforms had created new competitive dynamics that traditional antitrust laws struggled to address. The dominance of a few tech giants led to market concentration, reducing the scope for competition and innovation. The study highlighted the inadequacies of current antitrust enforcement in dealing with digital platforms, data control, and network effects. Additionally, it emphasized the need for international cooperation and a balanced approach to antitrust enforcement that considered both competition and innovation to ensure that the benefits of the digital economy were widely shared. Unique Contribution to Theory, Practice and Policy: The Structure-Conduct-Performance (SCP) Paradigm, Contestable Market Theory and Innovation and Monopolistic Competition Theory may be used to anchor future studies on antitrust laws and the future of market competition. The study recommended updating theoretical frameworks to include factors like data control and network effects, and adopting more flexible and adaptive approaches in antitrust enforcement. It advocated for the creation of specialized regulatory units focused on digital markets, equipped with the necessary resources and expertise. The study also highlighted the importance of international cooperation in antitrust enforcement to address cross-border anti-competitive practices effectively. Furthermore, it suggested continuous dialogue with industry stakeholders to develop more informed policies and emphasized the role of consumer education in promoting competitive markets. These recommendations aimed to enhance antitrust laws and ensure robust market competition in the digital age.

Economics and antitrust enforcement at the EU: an update

Abstract We extend the dataset, revise, and improve the methodology applied in empirically measuring the role of economics in antitrust enforcement by European Commission’s DG for Competition (EC’s DGCOMP), first examined in Katsoulacos and Makri (2021, this journal). Infringement decisions from 1992 to 2021 are now examined, including a number of important digital and hi-tech market decisions from 2018 to 2021. The revised methodology significantly clarifies the role of potential assessment screens in identifying eight (rather than five) potential Legal Standards, also taking into account the Quick Look standards. Additionally, we now distinguish evidence presented depending on the burden of proof. Thus, we capture the role of economic analysis and evidence applied by DGCOMP, in proving that conduct is anti-competitive, through the new Cumulative Economic Analysis Indicator, as distinguished from the role of efficiency analysis presented by defendants and then assessed by DGCOMP, which is now independently measured; combined, these define a new indicator of the Total Economic Evidence presented during assessment. The quality of enforcement by DGCOMP, measured by the closeness of the weighted average Cumulative Economic Analysis Indicator empirically identified for different conduct types to its theoretically optimal (decision error minimizing) level, is captured and its evolution is considered and compared to other Competition Authorities.

China's Digital Economy: Examining Its Impact on Inequality Through the Lens of Employment, Income Disparity, Innovation, and Competition

This paper examines the impact of Chinas digital economy on inequality, focusing on employment, income inequality, innovation, and competition. Overall, the digital economy creates inequality in individuals and firms. It exacerbates the income disparity between high-skilled and low-skilled workers, and/or across different regions. It also creates an oligopolistic structure in the digital markets and new industries, where big firms use network effects and incumbency advantage to reduce competition. Therefore, challenges arise for antitrust enforcement due to the dynamic nature of the digital economy and attention platforms. Nevertheless, the digital economy optimizes employment structure, having a net effect of greater creation effect than substitution effect. It also increases innovation efficiency and opportunities for smaller players in the traditional sectors. Therefore, the digital economy has positive implications for economic growth. Overall, it is crucial to encourage equality and stimulate economic growth by implementing certain policies, including measures to enhance labor quality, reduce regional disparities, and strengthen antitrust regulations.

Potential Competition and the 2023 Merger Guidelines

The 2023 Merger Guidelines devote a section to mergers that eliminate potential competition. This is an important contribution because agency guidelines have not discussed the subject in detail for almost 50 years. The new Guidelines follow the traditional distinction that has been upheld in the courts between a merger’s effects on incumbent responses to perceived potential competition and the potential effects of actual entry. Antitrust enforcement should assess both possible aspects of potential competition in an integrated fashion because harm from a merger occurs not infrequently from the elimination of actual potential competition; and when the elimination of perceived potential competition has an effect, it often occurs along with and as a consequence of the elimination of actual potential competition. Economic studies suggest that the benefits of perceived potential competition are less than some courts have assumed and that the benefits of actual potential competition are greater. Rather than focusing solely on the probability of harm from the elimination of a potential entrant, antitrust enforcement should adopt a sliding scale that takes into account the magnitude of the benefits for consumers or suppliers if entry is successful. Mergers with potential and nascent competitors can be harmful even if the probability of actual entry absent the merger is small.

From Intel & Qualcomm to the new Art. 102 TFEU-Guidelines – Streamlining the Form- & Effects Based Approach

Abstract Rapid digital innovation has promoted a broad range of welfare aspects and created a myriad of new business models. While these benefits are uncontentious, the special characteristics of digital markets, such as strong network effects, have led to a substantial concentration of power among a few corporate actors. The increasing complexity of these market dynamics has rendered antitrust enforcement more challenging, particularly with regard to assessing the abuse of market dominance (Art. 102 TFEU). Particularly the European Commission has been confronted with criticism relating to its previously propagated “more economic approach”, which has led to a lack of timely and effective antitrust enforcement. While there is a consensus that a new approach to ascertaining the abuse of dominance is pertinent – which the Commission endorses – the underlying assessment parameters are still contentious. This article argues for a standard of dominance to notably reflect the digital transformation and include a comprehensive framework. While the predominant intervention aim must be based on sufficient innovation, a notion of economic fairness and sustainability considerations gain momentum in antitrust enforcement.

Mexico’s battle with monopolies: reputation-based autonomy and self-undermining effects in antitrust enforcement

Mexico’s battle with monopolies: reputation-based autonomy and self-undermining effects in antitrust enforcement

The 2023 Merger Guidelines and The Role of Economics

Relying heavily on legal analysis, the 2023 Merger Guidelines argue for a fundamental shift in antitrust enforcement that places more emphasis on protecting competitors and less on protecting the beneficiaries of competition. It is up to courts, not economists, to ascertain whether this interpretation of antitrust law is correct. But economists can and should analyze the likely economic effects. Evidence that antitrust enforcement has permitted some markets to be overly concentrated justifies the tightening of horizontal merger enforcement that is signaled by these guidelines. Evaluating the elimination of double marginalization from vertical mergers as a part of an efficiency defense rather than as a primary economic effect reflects a fundamental misunderstanding of the economics of vertical mergers. At a minimum, these guidelines will further damage the reputation of the DOJ and FTC among competition policy enforcers in other countries. A potentially more serious cost will be if foreign competition authorities use these guidelines to justify enforcing their own laws to protect inefficient domestic firms against foreign competition.

Antitrust Law in the BRICS Countries: A Review and Critique

A growing trend shows that global economic power is shifting away from the United States and Europe and towards the BRICS nations. The BRICS nations are predicted to hold the dominant position in the world by 2050. The rapid development of these economies and their markets is also raising a serious concern for the national antitrust enforcement authorities of the BRICS countries in their respective jurisdictions. This study attempts to examine the effectiveness of antitrust law, with a special focus on new developing trends in each of the BRICS jurisdictions. In addition, the study examines the proposed changes and limitations of the Indian Competition (Amendment) Bill 2022. The study reveals that the national antitrust laws and their enforcement processes are not fully developed and in need of considerable changes. Furthermore, the study indicates that while the proposed Amendment Bill 2022 is a progressive step in the right direction, it fails to cover certain key areas of the digital era, requiring further modifications to anticipate future impacts of economic development. In conclusion, the author recommends some points for effective policymaking, along with their future implications.

Evolution of the Merger Guidelines: Is This Fox Too Clever by Half?

The 2023 Merger Guidelines make some notable improvements over the 2010 Horizontal Merger Guidelines. They give greater emphasis to the idea that predicting the competitive effects of a proposed merger is inherently difficult and that to block a merger the government need only show a risk that the merger may substantially lessen competition – not that it will do so. They also give greater emphasis to dynamic competition and innovation – especially with regard to acquisitions of potential entrants – and they add useful material on multi-sided platforms. However, the treatment of market definition in the 2023 Merger Guidelines may weaken horizontal merger enforcement by demoting the role of the “hypothetical monopolist test,” which is used to define markets for the purpose of measuring market shares, and by removing extensive material from prior guidelines that explained why market shares measured in narrower markets tend to be more informative than market shares measured in broader markets. The 2023 Merger Guidelines lower the market concentration thresholds that trigger a presumption by the antitrust enforcement agencies that a merger may substantially lessen competition, but the enforcement data suggest that change will have little effect in practice. The 2023 Merger Guidelines also may lead to less effective deterrence of harmful mergers because they are not well targeted at the mergers that are most likely to substantially lessen competition. One cannot prioritize everything.

『탄소제로 보험동맹(NZIA)』가입 사업자의 미국 반독점법 위반 문제

ESG management is becoming a mainstream trend in corporate management in all industries. In the environmental sector of ESG, there is a global consensus on the need to reduce carbon emissions to fight the climate crisis, and a wide variety of initiatives have been proposed. The Glasgow Financial Alliance for Net Zero (GFANZ) of the United Nations Environment Programme (UNEP) is one such initiative that has formed sector-specific organizations across the financial industry and set out guidelines for action to achieve collective goals. In the insurance sector, the Net-Zero Insurance Alliance (NZIA) was launched. The NZIA started in July 2021 with eight large insurance companies as members. At one point, the number of members reached 30 as more and more insurers realized that ESG management was an essential requirement for corporate sustainability. However, in May 2023, 23 U.S. states warned NZIA member insurers that they would likely violate U.S. antitrust laws if they conducted business under NZIA guidelines. As of February 10, 2024, only 11 companies remained in the alliance. Korean insurers Samsung Fire and Maritime and Shinhan Life have already withdrawn, leaving K.B. Insurance as the only remaining member of the NZIA. This situation involves several complex issues and is more than just a matter of the number of NZIA member companies rising and falling. For example, if an insured seeks fire insurance, can member insurers refuse to underwrite the risk because the insured is a carbon-emitting company? Would an insurance company be sanctioned as a boycott or business entity of illegal cartel conduct under U.S. antitrust law? Will antitrust enforcement extend beyond insurance to banking and asset managers? Is this a political move by the U.S. Republican Party in the run-up to the presidential election or a solid legal judgment? Is it part of a U.S. context that has seen repeated withdrawals from and accessions to the Paris Agreement on Climate Change and anti-ESG legislation on a state-by-state basis?
 There are so many complex factors in these questions that it’s difficult to determine a definitive answer. However, leading global insurance companies see the potential for antitrust violations as a severe legal risk. This article examines the rise and fall of the NZIA, ESG trends and backlash, and the potential for antitrust violations in the insurance business, which is the only financial industry exempt from federal antitrust laws. This is an issue of extraterritorial application of antitrust law, but it also introduces the position of E.U. Competition Law and the TFEU, which are critical of the attitude of the 23 U.S. states. Art.125 Mutual Agreement in the Korean Insurance Business Act and Art.3 Application to Acts Conducted Overseas, Art.56 International Cooperation of the Fair Trade Commission, Art.116 Legitimate Acts under Statutes or Regulations in Korean Monopoly Regulation and Fair Trade Act do not solve the problem.
 The question of whether NZIA members would violate U.S. antitrust laws is currently unanswered. And significant variables such as the outcome of the U.S. presidential election, the policies of the Republican Party, the global trend of pro-ESG, and the possibility of sudden litigation risk should be noted. Whether you win or lose on the merits, antitrust litigation in the U.S. is an arduous process that no business entities wants to go through.

Why do countries with criminal antitrust sanctions fail to incarcerate price fixers?

Abstract A good many jurisdictions have criminalized cartel conduct and authorized custodial sentences for offenders in efforts to enhance antitrust enforcement. The authors explore why so few of those jurisdictions have imposed prison sentences on cartelists. Although data problems lead to understating the number of incarcerations, the record is not robust. The authors find that the reasons are varied. Statutory impediments and poor case selection are important factors. Others include poor case management, separation of investigation and prosecutorial responsibilities and judicial reluctance to impose sentences on ‘white collar’ criminals. In addition, lack of public support and cultural differences in sentencing in general also probably play roles.

Motivating collusion

We examine how executive compensation can be designed to facilitate product market collusion. We look at the 2013 decision to close several regional offices of the U.S. Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue this made collusion more appealing to shareholders, and find that these firms increased the sensitivity of executive pay to local rivals' performance, consistent with rewarding the managers for colluding with them. The affected CEOs were also granted longer vesting periods, which provides long-term incentives that could foster collusive arrangements.

Article: The Great Saga of Collective Redress in EU Competition Law: All Cry and No Wool?

The paper presents the evolution of attempts at regulating antitrust collective redress in Europe, and the omission of listing competition law infringements in the annex to Directive 2020/1828 on consumer collective actions and thus from its scope of application. It attempts to understand why the non-availability of antitrust collective actions is the result of the long-lasting drafting processes on the EU level that typically covered competition law, taking into account that the collective redress mechanism is the only real option for consumer private enforcement of antitrust. It calls for the European Commission, the European legislator and the Member States to finally regulate collective actions in the field of competition law as otherwise access to justice for victims of antitrust breaches is not guaranteed. consumer collective redress, collective actions, antitrust collective actions, Directive 2020/1828, Directive 2014/104, follow-on, scope of application, antitrust, competition law

Passive cross‐holdings, horizontal differentiation, and welfare

AbstractWe study how passive cross‐holdings affect product differentiation and welfare in a Cournot duopoly. We show that increasing unilateral ownership stimulates total investments, and therefore improves social welfare. Such cross‐holdings should not be controlled in view of social welfare. However, we identify an inverted‐U (a negative) relationship between consumer surplus and ownership when the demand is small (large). Then a government might apply intervention thresholds for passive ownership if it uses consumer surplus as the appropriate standard for antitrust enforcement. We further consider symmetric bilateral cross‐holdings and show that our results are in general robust, but increasing ownership will generate more serious competition harms than unilateral cross‐holdings. Thus, special concerns need to be given to bilateral cross‐holdings.