Competition Policy Research Articles

Evaluating public interest considerations in South African merger enforcement: an overview of the last decade

In literature, most studies on mergers focus purely on competition-related aspects; additional conditions that can apply are labelled non-competition goals or public interest considerations (PICs). The imposition of these conditions is garnering more attention from the competition authorities as a means to assist the struggling economy in South Africa. This paper reports the impact that various independent variables can have on the probability of certain public interest considerations being imposed on merger cases in South Africa with the use of a quantitative logit regression model. The study sample consists of 221 mergers between 2010 and 2019, and only includes cases with PICs as conditions to merge, based on all small, intermediate, and large mergers collected from Competition Commission and Tribunal newsletters, case files and company websites, as well as the Institute for Mergers, Acquisitions and Alliances. This research makes use of descriptive statistics and regression analysis from this unique database to analyse the data. The results indicate that for South Africa, the competition authorities focus on employment, supplier development fund programmes and Black economic empowerment conditions when considering which PIC to enforce on merger cases. The article contributes to the literature on competition policy and economics by adding to the minimal research already conducted and enhances our understanding of mergers with non-competition goals and the impact of these considerations in the South African merger framework.

Interrogating the links between dynasties and development in the Philippines

This article nuances the poverty-inducing effect of political dynasties. We argue that local dynasties in the Philippines can pursue different development trajectories based on their ownership of local businesses and their province's initial state capacity. Adapting a framework developed by Bourguignon and Verdier, we develop a typology of political dynasties that acknowledges heterogeneity in their motivations as well as in the political opportunity structures that they work in. This outlines a theory of change that fosters the necessary conditions for political and economic competition over time, even in areas ruled by political dynasties. While the focus is on the Philippines, research on the nexus between political and economic competition provides insight into issues of political dynasties, competition policy, governance, and accountability faced by a broader set of countries.

A Hierarchical Deep Reinforcement Learning Framework for 6-DOF UCAV Air-to-Air Combat

Unmanned combat air vehicle (UCAV) combat is a challenging scenario with high-dimensional continuous state and action space and highly nonlinear dynamics. In this article, we propose a general hierarchical framework to resolve the within-vision-range (WVR) air-to-air combat problem under six dimensions of degree (6-DOF) dynamics. The core idea is to divide the whole decision-making process into two loops and use reinforcement learning (RL) to solve them separately. The outer loop uses a combat policy to decide the macro command according to the current combat situation. Then the inner loop uses a control policy to answer the macro command by calculating the actual input signals for the aircraft. We design the Markov decision-making process for the control policy and the Markov game between two aircraft. We present a two-stage training mechanism. For the control policy, we design an effective reward function to accurately track various macro behaviors. For the combat policy, we present a fictitious self-play mechanism to improve the combat performance by combating against the historical combat policies. Experiment results show that the control policy can achieve better tracking performance than conventional methods. The fictitious self-play mechanism can learn competitive combat policy, which can achieve high winning rates against conventional methods.

Student Competition (Health Services, Economics and Policy Change) ID 1977283

Background/Objective Assistive technologies (AT) span a large range of products from mobility aides such as canes to electronic systems that provide reminders. These technologies are important in facilitating independence, recovery and improved quality of life for individuals with spinal cord injury (SCI). However, clinical and economic outcomes for AT evaluated in the scientific literature is unclear. Thus, the aim of this study is to review the clinical and economic evidence for AT in the SCI population. Design/Methods Scientific literature databases including EMBASE, MEDLINE and CINAHL will be searched using terms identified in collaboration with a Medical Librarian. In the first stage, the titles and abstracts of clinical studies and economic analyses of AT focused in SCI will be screened by two reviewers. This will be followed by a second stage full-text screening for inclusion in the review by the same reviewers. The types of ATs evaluated will be identified along with the outcomes measured. Where applicable, study results will be presented using summary statistics. Results Work is currently underway to identify the citations. Two reviewers will then screen the titles and abstracts. It is anticipated that a large majority of the citations will be screened out with a small number of studies remaining. Most studies are also expected to be for the clinical evaluation of AT with variable outcomes. Conclusions The results of this scoping review will provide valuable insight on the types of AT where clinical and economic evidence is available and identify where the current research gaps are.

Post Doc Competition (Health Services, Economics and Policy Change) ID 1985179

Background/Objectives The COVID-19 pandemic has significantly impacted healthcare utilization; however, research has not investigated the impact in the spinal cord injury/dysfunction (SCI/D) population in Canada. To examine healthcare utilization and delivery during the COVID-19 pandemic in individuals with SCI/D. Methods/Overview A repeated-cross sectional retrospective longitudinal cohort study design was conducted using health administrative database in Ontario, Canada. In 5,754 individuals with SCI/D, healthcare utilization and delivery (in-person, and virtual) were determined at the 1) pre-pandemic (March 2015 to February 2020), 2) initial pandemic onset (March 2020-May 2020), and 3) pandemic (June 2020 to March 2022) phases. Autoregressive integrated moving average (ARIMA) modelling were conducted to determine pandemic impact on monthly healthcare utilization and delivery. Results The initial pandemic onset period had a significant reduction of 24% in physician (p=0.0081), 35% in specialist (p<0.0001), and 30% in urologist (p<0.0001) visits, compared to pre-pandemic levels, with a partial recovery as the pandemic progressed. In April 2020, compared to the pre-pandemic period, a significant increase (p<0.0001) for virtual visits for physician, specialist, urologist, and primary care was found. The initial pandemic onset period had a 46% decrease in ED visits (p=0.0764) and 58% decrease in hospital admissions (p=0.0011), compared to the pre-pandemic period. Conclusion Healthcare utilization dropped in the initial pandemic onset period as physician, specialist, urologist, and ED visits, as well as hospitalization decreased significantly (p<0.05) versus pre-pandemic levels. Virtual visit increases compensated for in-person visit decreases as the pandemic progressed to allow for total visits to partially recover.

Corporate market power and monetary policy transmission in Asia

This paper empirically examines the effect of corporate market power on monetary policy transmission in Asia. Using panel local projections based on a firm-level dataset for 11 advanced and emerging Asian economies, we find that after a monetary policy tightening, the real sales of firms with low market power significantly decline, while real sales of firms with high market power respond little. Moreover, we find that the average responses of firms’ real sales to monetary policy shocks are driven by firms with low markups. Our findings indicate that rising market power impairs the effective transmission of monetary policy. We discuss the implications in terms of balancing the need for industrial policies that promote innovation-led productivity against effective competition policy to compress heterogeneity in market power dynamics and enhance the monetary policy transmission mechanism.

Downstream Profit Effects of Horizontal Mergers: Horn & Wolinsky and von Ungern-Sternberg Revisited

Abstract Mergers between previously contending firms are a permanent challenge for policymaking as they potentially harm competition. The core incentive to merge is the prospect of higher joint profits of the previously independent firms after the merger. We discuss and compare the core assumptions of Horn and Wolinsky (1988) and von Ungern-Sternberg (1996) that lead to contrary results regarding the attractiveness of horizontal mergers of downstream firms in a 1:2 setting leading to a monopolized 1:1 setting. While the latter finds a merger beneficial for the downstream firms, it harms their joint profit, according to Horn & Wolinsky. We theoretically apply both models to the two settings. We also present extensive sample calculations that quantitatively confirm the two papers’ core insights. Discussing and contextualizing the results, we provide a comprehensive overview of horizontal mergers in the downstream part of vertical structures with bargaining over linear input prices. Due to continuing relevance of horizontal mergers for competition policy and, in particular, in light of the consolidation phase in tech start-ups, the topic is of enduring relevance in policymaking.

On the sociology of cartels

We analyze 15 German cartels, focusing on the personal characteristics of the individual participants, the methods and frequency of communication as well as the internal organizational structures within the cartels and their eventual breakup. Our results indicate that cartel members are highly homogeneous and often rely on existing networks within the industry, such as trade associations. Most impressively, only two of the 158 individuals involved in these 15 cartels were female, suggesting that gender plays a role for cartel formation. We further identify various forms of communication and divisions of responsibilities and show that leniency programs are a powerful tool in breaking up cartels. Based on these results we discuss implications for competition policy and further research.

Rethinking Antitrust for the Cloud Era

This article asks how antitrust can foster innovation by examining the development of infrastructure for data processing in the cloud. We contrast Amazon Web Services' centralized model with Google Cloud Platform's more decentralized, participatory ecosystem. We argue that rather than trying to reduce the power imbalance between platforms and independent database companies, antitrust should seek to channel platforms from the centralized model toward the decentralized ecosystem by (1) making partnership more attractive than mergers and (2) enlisting open-source foundations to help manage interoperability in the cloud. This requires breaking down the silos between competition, technology, and industrial policy.

The African Continental Free Trade Area and informal cross border trade: implications on socio-economic development in Africa

ABSTRACTThe setting up by the African Union of the African Continental Free Trade Area (AfCFTA), which should govern matters relating to, inter alia, trade in goods and services, investment, trade facilitation, intellectual property rights, and competition policy is a step in the right direction. However, this paper argues that the limited inclusion of informal economy actors such as informal cross border traders (ICBTs) appears to undermine the potential of the AfCFTA as the architecture for inclusive socio-economic development in Africa. The paper advances the need for African countries to craft policies which are sensitive to and respond to the circumstances of ordinary people on the ground and not a wholesale application of policies such as neoclassical integration theory, the outcome of which deserts ordinary people. Such policies must be transcendental to the extent of being informed by views from the ground, which does not appear to be the case with the AfCFTA on the score of ICBTs.

Thinking Inertia and Path Dependence in Indo-Pacific Strategy of the United States

With the profound adjustment of the international pattern, the Indo-Pacific region has increasingly become one of the most active regions on the international stage and the focus of American foreign strategy has shifted from Europe to the Indo-Pacific region. By observing its policy documents and diplomatic practice on Indo-Pacific regions, we can find that the US Indo-Pacific strategy presents the thinking inertia, which is manifested by its hard power supremacy, the superiority of values, and the presupposition of imaginary enemies. Meanwhile, the United States emphasizes military means, establishes value alliances, and implements competitive blockade policies, showing its path dependence. The deployment and implementation of the US Indo-Pacific strategy are menacing and pose a long-term challenge and threat to China’s development. Based on these tensions, China may summarize and refine the foreign strategic thinking and path of the United States, so as to clarify its intentions and trends before making preventive responses.

Backward Partial Vertical Integration Through Private Placement

We analyze the market impact of a partial vertical integration whereby a subset of retail firms acquire, through a private placement operation, a non-controlling stake in the capital of an upstream firm, which supplies an essential input. In addition, we assume that this upstream firm can price discriminate between the retail firms which (now) own a stake in its capital and all of their retail rivals. We find that price discrimination is optimal and, compared to a vertical separation scenario, there is input foreclosure, a higher retail price, and lower social welfare, which suggests that, from a competition policy viewpoint, such partial vertical integrations should be analyzed with particular concern. On the other hand, incentives are such that conducting a private placement operation of the upstream firm’s capital yields gains from trade, and we are able to identify the optimal characteristics of such an operation.

Sustainability and Competition Policy in Europe: Recent Developments

Sustainability and Competition Policy in Europe: Recent Developments

Reasons for merging and collaborating in healthcare: Marriage or living apart together?

Across OECD countries, integration between healthcare organisations has become an indispensable part of contemporary healthcare provision. In recent years, inter-organisational collaboration has increasingly been encouraged in health and competition policy at the expense of mergers. Yet, understanding of whether healthcare organisations make an active choice between merging and collaborating is lacking. Hence, this study systematically examines (i) healthcare executives' motives for integration, (ii) their potential trade-offs between collaborating or merging, and (iii) the barriers to collaborating perceived by them. Early 2019, an online questionnaire was conducted among a nationwide panel of 714 healthcare executives in the Netherlands. Because of their strategic position within healthcare organisations as end-responsible managers, healthcare executives are especially suited to provide broad and in-depth knowledge on the internal and external processes and decisions. Three hundred thirty-seven Dutch healthcare executives completed the questionnaire (response rate 47%). This study sample was representative of the largest healthcare sectors in the Netherlands. In total, 137 mergers and 235 inter-organisational collaborations were reported. Both closed questions and open-ended questions were systematically analysed. Improving or broadening healthcare provision is the foremost motive for mergers as well as inter-organisational collaborations. When considering both types, reducing governance complexity is one of the decisive reasons to opt for a merger, whereas aversion towards a full merger and lack of support base within the own organisation convinced healthcare executives to choose for a collaboration. When comparing specific healthcare sectors, the overlap in pursued motives and sub-motives indicates that inter-organisational collaborations and mergers are used for comparable objectives. Only a small minority of the responding executives switched between both types of integration. Institutional barriers, such as laws, regulations and financing regimes, appear to be the most restricting for healthcare executives to engage in inter-organisational collaborations. Our integral approach and systematic comparison across sectors could serve policymakers, regulators and healthcare providers in aligning organisational objectives and societal objectives in decision-making on collaborations and mergers. Future research is recommended to study multiple collaboration and merger cases qualitatively for a detailed examination of decision-making by healthcare executives, and develop an integral assessment framework for balancing collaborations and mergers based on their effects in the medium to long term.

Verbraucherschutz aus institutionen- und verhaltensökonomischer Sicht

Abstract From an economic point of view, there is a consensus that sufficient consumer protection cannot be achieved solely through effective competition policy aimed at limiting the abuse of market power to the detriment of consumers. However, the economic justification for an explicit policy of consumer protection is far less uniform. In the past, the standard approach to explain consumer behavior and to justify government consumer protection derived from information economics. However, the fact that consumer protection based solely on information economics has been repeatedly criticized in recent years points to the need for a broader theoretical foundation of consumer protection policy. Against this background, the article aims at broadening the perspective of an economically based consumer policy by resorting to institutional economic as well as behavioral economic considerations, which will be contrasted with each other in their respective insights.

Policy paradigm modes: explaining USA antitrust law changes in the 1970s

Abstract This article advances the theory of policy paradigms by investigating when paradigms are rigid, constraining alternative perspectives and policy options, and when instead they are more flexible, allowing actors to overcome paradigmatic restrictions and differences. Departing from the existing theories on policy paradigms, I conceptualize paradigm rigidity and flexibility as characteristics that develop endogenously within the policy-making process, shaped by the types of policy changes that are proposed and discussed and by the types of framing strategies policy actors employ to support their proposals. Policy paradigms can therefore have both rigid and flexible modes within the same policy area and in the same period. Conceiving paradigms in modes helps us better understand how policies change when there are competing paradigms and exogenous crises. I illustrate this empirically with an analysis of the debates surrounding four antitrust (competition) policy change proposals in the USA during the 1970s.

Dynamics in the automotive industry in Germany, Brazil and India – changes triggered by the COVID-19 pandemic

This article compares modes of response to the COVID-19 pandemic in three national automotive sectors. Our analyses of the automotive sector in Germany clearly demonstrate that trade unions were included and their interests considered at the national, industrial, and company level, and in the negotiations on how EU funds were to be used for technological upgrading. In Brazil and India, on the other hand, large parts of the risks were shifted onto the workforce, thereby further weakening their negotiating positions and without making any progress in catching up with the Global North. Thus, we argue that industrial relations, power and competitive advantages, state assets, and policies at the national level remain the key resource for crisis responses.

Appraisal of existing evidences of competition law and policy: Bilateral legislative developments of Sino-Pak

Developing nations use contemporary competition laws based on international models for reasons ranging from achieving international legitimacy to achieving domestic economic objectives. Although passing such laws gives these nations competition regimes more legitimacy, doing so does not guarantee that their economic goals will be met unless the laws are also effectively implemented. Comparative legal scholarship suggests that effective enforcement requires, among other things, a positive link between the passed laws and the nation's pre-existing legal systems in light of development economics. The globalization of national competition laws, particularly the application of international soft law, is responsible for the existence of modern competition law. Secondly, the competition regimes in Pakistan and China face a number of long-term difficulties, many of which are the product of globalization, which must be addressed as soon as possible. In order to examine the aims and objectives, this study employs qualitative data analysis. The results of this research suggest that for both nations to successfully implement competition law, innovation and unconventionality are required. Although the goal of competition law is to prevent anti-competitive activities and practices by promoting fair and open market competition, this goal is achieved through protecting consumers from businesses' use of unfair business practices. Because of this, the act encourages the formation of agreements that limit and restrict market dominance. In addition, the law specifies how investigations, acquisitions, mergers, penalties, leniency, and other aspects of law enforcement should be handled. As a result, this law can be seen as extremely important for regulating firms while maintaining consumer and producer welfare. It eventually supports economic growth and social justice. As a result, Voluntary adherence to competition law, rules, and regulations is essential since doing so would significantly lower the societal costs of enforcing the law.

Research on procurement management of engineering projects in state-owned machinery manufacturing enterprises

The aim of this study is to explore the key issues and best practices of procurement management for engineering projects in state-owned machinery manufacturing enterprises. Through a comprehensive analysis of existing research progress and practical experiences, we found that procurement strategy, supplier selection, negotiation skills and risk management are the key factors affecting the effectiveness of procurement management. Best practices include good cooperative relationships with suppliers, market intelligence collection and analysis, and the application of information technology. However, state-owned machinery manufacturers still face challenges in procurement management such as supply chain disruptions, market competition and changes in regulations and policies. Future research should focus on how to address these challenges and improve the efficiency and quality of procurement management.

The renaissance of ordoliberalism in the 1970s and 1980s*

AbstractThe economic tradition of ordoliberalism, understood as the theoretical and policy ideas of the Freiburg School, emerged in 1930s and 1940s Germany. In the years thereafter, it was quickly superseded by Keynesianism and other theories imported from the English-speaking world. The crisis in Keynesian economics in the mid-1970s led to what has been described as a “renaissance of ordoliberal reasoning” (Gebhard Kirchgässner) during the late 1970s and the 1980s. The present paper describes this development in detail and shows how it affected the academic discourse and, more indirectly, policymaking. In academic economics, ordoliberal concepts were used to inform debates about pressing issues of the day such as unemployment, social security reform, competition policy, the provision of public goods, and European integration. There was, however, no consensus on the methodological question of whether ordoliberalism could be fully integrated into international research programs such as the new institutional economics or constitutional economics. The paper argues that the renaissance of ordoliberalism failed to have a lasting impact on German academic economics and discusses possible implications of this finding for the future of the ordoliberal research agenda.