Price Fixing Research Articles

Edward Gibbon Wakefield, the liberal political subject and the settler state

Modern citizenship, with its exclusions and disaggregated freedoms, has a distinct genealogy in the state-formation of settler societies. Ethnic tensions and indigenous rights-claiming in many Anglophone states are frequently traced to their beginnings as settler societies. This is not only a legacy of the rights-claiming discourses of settlers, traced in individual national histories. It owes much to the formal body of literature that justified settler states not primarily as the embodiment of a nation but for the government of transnational populations. Using the writings of Edward Gibbon Wakefield and his contemporaries, this article examines the settler as a problem in British liberal thought. Wakefield’s unease about the settler as a political subject drew together three contemporary discourses, the critique of American society, post-Malthus thinking on poverty and the systematic colonization movement. For Wakefield, settler societies could only prosper through central planning, surveillance and land price fixing, leading to class formation.

Survey of Public Attitudes to Price Fixing in the UK, Germany, Italy and the USA

This paper reports the results of four surveys gauging public attitudes to price fixing and cartel enforcement in the United Kingdom, Germany, Italy and the United States. A previous study was carried out in the UK in 2007. The results show a robust understanding that price fixing is harmful and popular support for enforcement and punishment. In particular, there is an expectation that businesses should calculate their prices independently of each other. Overall there is surprising uniformity in opinion between the four jurisdictions despite significant differences in culture and levels of enforcement. Support for the imprisonment of cartelists has significantly increased in the UK since 2007, but the results suggest price-fixing is still viewed as being less serious than traditional crime and some other forms of corporate wrongdoing.

The anti-competitive agreements in the prospective of the law on competition protection - An inside in the Albanian practices and legal framework

In Albania legislation on competition was developed only after the 90s and this is natural depending on the economic development and market model, which before the 90s had spaces of a free and competitive development. Competition is an economic phenomenon that refers to such a state of a free market economy, where companies compete independently in order to benefit as many buyers so as to meet the objectives to increase profits and expansion of markets. In this way free competition is both beneficial for business development and profitable for consumers themselves, who should benefit from the prices set based on the demand–offer ratio. Competition should be perceived as a necessary mechanism that promotes increase of welfare in general, by providing enterprises with greater opportunities for profit and therefore better quality for consumers, a major benefit in the range of choices lower prices. Encouraged by the existence of competition, enterprises as market players should be motivated to be always on the alert and perhaps in uncertainty in order to be as much active in the way they compete with their competitors by providing investments and aggressive strategies as a reply to their, but also potential rivals. In competitive markets, the companies are motivated to gain market power in order to strengthen their positions in the markets where they operate and thereby they have an impact in the fulfillment of the growing needs of the consumer, which brings increase of welfare. Nevertheless, quite often companies have such an attitude that they may cause limitation of competition, such as the agreements, whose object or consequence is price fixing, market shares or the establishment of a market structure where competitors join (in case of concentrations). Price fixing is a classic element to all cases of cartels. By means of such behavior competitors try to avoid price competition between them to the detriment of the consumer, by applying higher prices. This may happen at horizontal level, but also at vertical level. What do we perceive with prohibited agreements under Albanian law of competition? What are the forms of agreements that are prohibited and which are excluded? These are some of the questions that this article adresses.

DOJ Has the Power to Crush Price-Fixers: Column

The four of us are known in antitrust circles for the points on which we disagree. We do agree, however, that price fixing among competitors is inadequately deterred, is often profitable despite existing fines and damages actions, and that it's time to focus more on the individuals who participate in illegal cartels. We propose that, as part of its plea agreements, the Department of Justice should insist that corporate defendants agree not to hire or rehire anyone who has been convicted of price fixing. This re-employment often occurs today. In addition, the Department should insist that corporations agree not to pay the fines of their convicted employees, either directly or indirectly, or compensate them for serving time. No new legislation would be needed to implement these measures, and there would be no significant budgetary consequences for taxpayers. These policies are logical extensions of a long-term bipartisan agreement on the necessity of tough anti-cartel enforcement, something that both conservatives and liberals support.

Anticompetitive Behaviour of Undertakings - Case Studies

European Union's competition rules apply to all entities developing economic activities within the Member States. Companies whose market behaviours do not comply with EU regulation regarding competition rules take the risk to be fined and face the negative consequences of their actions (the legal actions of those affected by anticompetitive practices; image injuries, both connected to trade partners and to their customers and so on). Cartels as well as the arrangements between competitors do represent violations of competition law and they are always under the monitoring of competition authorities. Among the cartels, the most damaging for the development of a normal competitive environment, are the so-called “hard core cartels” which could be the price fixing cartels, the output restricting cartels, those of market sharing or of participation in bid rigging. The aim of this research paper is to present the main legal issues concerning the competition law as well as three case studies on anticompetitive practices in terms of cartels as they appear at the European Union's level.

Accountable Care Organizations: A Balancing Act

In 2010, the Patient Protection and Affordable Care Act (ACA) was signed into law by President Barack Obama. The ACA has three fundamental goals: (1) Increase access to health care; (2) Reduce the cost of health care; and (3) Improve the quality of health care. To reduce costs and improve quality, section 3022 of the ACA promotes the formation and operation of Accountable Care Organizations (ACOs) to treat Medicare beneficiaries in the new Medicare Shared Savings Program (SSP). ACOs are made up of competing health care providers collaborating to deliver efficient, coordinated care that meets quality performance and cost-saving standards that are determined by the Centers for Medicare and Medicaid Services (CMS). ACOs may take many forms, “including networks of individual practices, partnerships, hospitals, [joint ventures] and other health care professionals.” The ACA hopes to encourage new innovative delivery models and does not place heavy restrictions on the form or type of entity sufficient to gain the status of ACO.“It is expected that most health care providers that form ACOs for Medicare beneficiaries will also seek to use the ACO structure for their commercially-insured patients.” In order to produce cost-saving efficiencies, ACOs will look to negotiate contracts between their participating providers, including price terms. ACOs negotiating with private payers raises antitrust concerns over possible price fixing and exercise of market power to restrain trade. ACO practices that restrain trade would undermine the ACA’s attempt to reduce costs and improve quality by further impairing the health care market and harming consumers/patients.In 2011, CMS published the final rule implementing section 3022 of the ACA which creates the Medicare Shared Savings Program and encourages the creation of ACOs. The Department of Justice and the Federal Trade Commission are the two government agencies charged with enforcing antitrust law. The Federal Trade Commission and the Department of Justice have recently published guidance laying out antitrust enforcement as it relates to Accountable Care Organizations.There are three significant developments that flow from the guidance: 1) ACOs engaged in joint price negotiations with commercial health plans will be treated under the “rule of reason” if the ACO meets CMS’ eligibility standards for SSP participation; 2) ACOs that control up to 30% of market shares in any of its “common services” will be protected by a “safety zone” which shields the ACO from antitrust challenge absent extraordinary circumstances and 3) the Federal Trade Commission and the Department of Justice scrapped a mandatory review of ACOs that might wield market power and replaced it with a voluntary review process that can help ACOs that fall outside the safety zone to better assess its chances of raising antitrust concerns.As mentioned, collaboration between competing providers in ACOs raises antitrust concerns that providers may engage in horizontal price-fixing or exercise market power by setting supracompetitive prices for their services in the commercial market. Horizontal price-fixing violates section 1 of the Sherman Act. Horizontal price-fixing occurs when competitors agree on prices, allowing the competitors to raise prices to supracompetitive levels and possibly shield themselves from competition. ACOs bring competing providers together to share information and coordinate care in order to lower costs and improve the quality of care. An unintended outcome could be horizontal price-fixing by participant providers who use the ACO structure to negotiate with health insurance plans in the commercial market. The result of ACO participant providers engaging in anticompetitive behavior would be higher prices for consumers and lower quality of care. Thus, horizontal price-fixing threatens not only to undermine the goals of the Shared Savings Program, but to possibly exacerbate the very problems that the ACA attempts to solve.This research article explores the guidance, in light of past policy, with a focus on whether the Federal Trade Commission and the Department of Justice’s approach properly balances the need to incentivize provider participation in the SSP and the need to prevent restraint of trade in the health care markets. First, we will look at the dynamics of the health care market and the body of law that make up American antitrust law. Second, we will look at how the antitrust statutory law has been applied to the health care market in the past. Finally, we will address the marked changes in antitrust policy as it relates to ACOs under the ACA and whether or not these perceived changes are for the better or the worse.

Big Bad Banks: Bid Rigging and Multilateral Market Manipulation

This paper assembles information from around the world of investigations and the resulting penalties imposed on price-fixing banking cartels (and similar violations) on the world’s largest corporate banks and their employees. I find that there have been more than 400 instances of large banks involved in at least 63 separate illegal conspiracies to manipulate markets. These markets are huge in terms of affected revenues or assets and most are global in scope. A preliminary and partial estimate of affected commerce is $1,432 trillion.As of January 2014, the total amount of monetary penalties imposed is more than $26 billion. Many investigations are incomplete, so I expect fines to climb to $40 billion within the next three years. At least 46 bank employees have been indicted for price fixing and bid rigging. Moreover, several banks have also had serious legal non-monetary restrictions imposed, potentially the most important being Deferred Prosecution Agreements (DFAs) by U.S. authorities. With one minor exception, U.S. and UK antitrust authorities have declined to bring criminal charges against the banks.Antitrust injuries are likely to rise to trillions of dollars, but compensation to victims will be difficult. Private damages suits are at very early stages and face many obstacles.

Nowhere to Hide? Extradition in Antitrust Cases from a European Perspective

Earlier this year, Germany surrendered Romano Pisciotti, an Italian citizen charged with price fixing and bid rigging in the marine hose cartel, to the US Government. This is the first time the USA secured the extradition of a foreign individual on antitrust charges. This article explores the implications of the Pisciotti case on antitrust practitioners counselling clients in international cartel cases. It also highlights important implications for antitrust policy makers in Europe, especially, when considering the introduction of criminal sanctions—a hotly contested battleground in antitrust policy making today.

Energy Flexible Production: Saving Electricity Expenditures by Adjusting the Production Plan

The energy turnaround in Germany increases the share of renewable energies. Since the amount of renewable energy supply is immanently subject of variation, the electricity price at the European Energy Exchange EEX is highly volatile. If companies would purchase the electricity directly at the EEX instead of from a wholesale power supplier along with price fixing, companies would benefit from increasing production in times with low electricity costs and reducing production in high-cost times. This paper shows, that influencing respectively shifting the time of electricity consumption –e.g. by adjustment of process parameter, shift period, order of jobs or machine utilization, by pausing of processes or delaying of job starts – can theoretically reduce electricity expenditures. The measures are being explained and discussed, followed by a description of company in-house and external requirements for the energy flexible production.

Tacit Agreement Under Section 1 of the Sherman Act

In dozens of cases each year alleging horizontal price fixing and other per se violations of Section 1 of the Sherman Act, the central issue is whether the defendants ever formed an agreement. One source of uncertainty in resolving this issue in litigation is the meaning of “tacit agreement,” a term the Supreme Court has continued to include within the reach of Section 1, even as it has emphatically excluded “mere interdependence” or tacit collusion. In this article, I try to clarify the meaning of tacit agreement and show its practical significance in litigation. After examining how the Court used the term in Bell Atlantic Corp. v. Twombly, I situate tacit agreement in the hierarchy of means of coordination, distinguishing it especially from mere interdependence on the one hand and express agreement on the other. Then I argue for a definition of tacit agreement — interdependent conduct coordinated by prior private communications of competitive intentions—and consider what forms of communication and conduct fit that definition. I argue that, so defined, tacit agreement is more effective than simple interdependence as a means of coordinating noncompetitive equilibria, and is easier for courts to penalize or enjoin without doing more harm than good. To show the analytical significance of the concept, I distinguish among four categories of communications based upon whether the communications are public or private on the one hand, and whether they relate to present or future conduct on the other. I then examine cases involving all four kinds of communication to show their relative importance in the identification and inference of tacit agreement. In the process, I consider the proper meaning and significance of “signaling” as communication that might form or implement an agreement. The clarified definition, illustrative cases, and categories of relevant communications will, I argue, help courts resolve, at every stage of litigation, whether rivals restricted competition by agreement.

Deterrence and Antitrust Punishment: Firms versus Agents

Antitrust enforcement regimes rely on two types of penalties for deterrence: penalties against the violating firm and penalties against the agents of the violating firm. In this paper I examine the economics of punishing agents versus firms. My area of application is antitrust, but the argument applies generally to other fields in which the government has the choice between punishing the agent, the firm, or both. This analysis suggests that whenever the firm has an incentive, given existing penalties, to engage in some illegal act that may result in relatively modest punishment for its agents, it can almost always induce its agents to carry out the illegal act. It follows that almost any plausible effort to use penalties against agents to deter price fixing can be undone by the firm’s own system of rewards for agents. For deterrence, penalties against the firm sufficient to eliminate the firm’s incentive to fix prices are necessary.

Antitrust and Information Technologies

Technological change strongly affects the use of information to facilitate anticompetitive practices. The effects result mainly from digitization and the many products and processes that it enables. These technologies of information also account for a significant portion of the difficulties that antitrust law encounters when its addresses intellectual property rights. In addition, changes in the technologies of information affect the structures of certain products, in the process either increasing or decreasing the potential for competitive harm.For example, digital technology affects the way firms exercise market power, but it also imposes serious measurement difficulties. The digital revolution has occurred in stages. The most recent is digital distribution, where all of the content being shipped to the consumer is digital. Prior to that, although continuing to this day, music and some books and other media are distributed in formats such as digital compact disc (CD) or digital video disc (DVD). Although most of the direct user content in such formats is digital, it is still placed on a physical object, which is then packaged and distributed to consumers through traditional channels, including brick-and-mortar retailers and the mails. By contrast, complete digital distribution refers to markets such as downloaded songs and downloaded or streamed video content, including movies, games, and software, as well as electronic books. The entire consumer package is distributed purely electronically. Complete digitization changes the size or shape of the markets in which firms operate, in the process affecting their opportunities to exercise market power. In purely digital markets intellectual property rights are crucial to the ability to exercise significant market power. Once a book such as Moby Dick enters the public domain it can be very cheaply copied and digitization reduces marginal costs to practically nothing. As a result even explicit price fixing is unable to maintain prices above cost for extended periods. If an anticompetitive restraint occurs in purely digital markets it is almost never in the itself, but rather in the infrastructure necessary for distribution. One feature of antitrust litigation in purely digital markets is that the product consumers want is frequently only the tail, while the delivery device is the dog. For example, the major bottlenecks in the eBook and eMusic industries have not been the books or songs themselves, which are rarely capable of being monopolized, but rather technological constraints on reading or listening devices and the software formats that they run.Another important characteristic of purely digital markets is high fixed costs but marginal costs that are very close to zero. So if digital media are sold in competition with one another then why is the price not zero or something very close? That answer has to do with the twin effects of intellectual property protection -- namely, per use royalties and differentiation. A per use royalty is a variable cost that the seller incurs each time it sells a unit. As a result it is part of marginal cost. For example, if the author of an ebook is entitled to one dollar on each copy sold, then the price must be at least one dollar. By contrast, lump sum royalties (or zero royalties, as is common for academic publications), which are a single royalty on a over its entire commercial life irrespective of output, do not show up in marginal costs.Intellectual property rights also create differentiation, which considerably blunts the impact of competition. Books that are still under copyright cannot be precise copies of one another. The second of two identical books would infringe the copyright on the first. To the extent they differ, however, customers have preferences for one over another and this permits prices at above cost even though the market has multiple competitors. Entry into the public domain leads to homogeneity under competition, often driving the price of purely digital products to zero. This is reflected in the pricing of public domain books and other texts.This paper focuses mainly on five issues: (1) assessments of market power and the opportunities for its exercise in information technologies; (2) the largely misconceived antitrust inquiries into Google Search; (3) the eBooks price-fixing and most-favored nation litigation, where the Second Circuit recognized that the use of naked collusion to force increases in eBook prices was not only per se unlawful but also an attempt to prevent a revolution in book distribution and pricing that is all but inevitable; (4) the appropriate role of antitrust policy in facilitating internet neutrality; (5) the important but also limited role of antitrust law in assessing certain patent practices, including standard setting, FRAND commitments, and patent pools.There is little reason for thinking that competition cannot work in most digital markets, including most that are purely digital. The trick is keeping the channels open for new entry, movement, and consumer choice.

Private International Cartels: A Concise Introduction

This three-page article is a succinct, nontechnical introduction to the topic of the economics private international cartels. It explains contemporary economic theories of collusion, the major empirical features of discovered cartels, antitrust laws meant to combat price fixing, and the concept of deterrence.

Patents, Antitrust, and the Rule of Reason

For a century and a half the Supreme Court has described perceived abuses as conduct that reaches the of the That phrase, which evokes an image of boundary lines in real property, has been applied to both government and private activity and has many different meanings. It has been used offensively to conclude that certain uses are unlawful because they extend beyond the of the patent. It is also used defensively to characterize activities as lawful if they do not extend beyond the patent's scope. In the first half of the twentieth century the phrase was imported from law into antitrust law, where it continues to be used to assess license agreements or other arrangements involving patents, as well as settlements of infringement cases.While the scope of the patent metaphor might remain useful for assessing conduct thought to be inconsistent with law, it is generally not a helpful antitrust tool. Offensive antitrust use of the of the test often identified practices as anticompetitive when they were in fact competitively harmless. By contrast, defensive antitrust use of the of the formulation creates a silo that protects collusion or anticompetitive exclusion from antitrust scrutiny. The result limits adversity between a patentee and potential licensee or infringer, producing a socially costly collusive equilibrium that benefits the parties but harms consumers.A pervasive problem of the of the test is that it confuses value with product value. For example, both product price fixing and product market division agreements contained in licenses have been found to fall within the of the patent. If the price fix or market division lasts no longer than the duration of the patent, then it is no more harmful to customers than a patentee's simple solo production under its patent.Recognizing this, several courts have concluded that product price fixes should be unlawful under the antitrust laws only if the patents involved are likely to be invalid, making the license nothing more than a cover for collusion. The important question is not validity, however, but rather value. Many perfectly valid patents have little value because they add little to a licensee's technology, or alternative patents or technological routes exist that serve the same purpose. Further, this phenomenon is ubiquitous. Cartel markups in industries prone to collusion run in the range of 20% to 50% over the pre-cartel price. By contrast, average royalty rates on licensed patents average around 3%, and this value is much larger than the value of the great majority of patents that are never licensed. The real problem of product restraints in licenses is that they are attempts to attribute the full product cartel markup to the patents being licensed. Only a tiny percentage of patents do anything like that. A better rule for identifying the boundaries of antitrust liability than the of the formulation permits antitrust intervention in the case of post-issuance conduct that is not explicitly authorized by the Patent Act. Of course, only a relatively small proportion of such conduct will actually violate the antitrust laws. With immunity off the table, however, assessing the competitive and innovation effects of challenged practices involves questions of antitrust law, not of law. Seen this way, certain questions such as a pioneer patentee's agreement to refrain from entering the market with an authorized generic become fairly easy. Such agreements are nothing more than cartel arrangements under which a firm agrees to make another firm's production more profitable by restraining its own output. Under the of the test as the Actavis dissenters would have applied it the equilibrium period of delay is up to the expiration date of the patent. In that case, however, the agreement never involves a license at all. During the life of the the generic firm produces nothing, and once the expires it no longer needs a license.Outside of damages measurement, law has no tool kit for assessing either the market or even the innovation effects of a particular practice. While that criticism may seem harsh, the reality is that law has developed in relative isolation from any significant inquiry into how patents function in the marketplace. The result gives antitrust policy a comparative advantage, not only for assessing competition effects but ironically, even for assessing innovation effects.

De-Humanizing Antitrust: The Rise of the Machines and the Regulation of Competition

Increasingly, firms are knitting together newly available mass data collection, Internet-driven interconnective power, and automated algorithmic selling with their traditional supply-chain and sales functions. Traditional sales functions such as competitive intelligence gathering and pricing are being delegated to software “robo-sellers.” This Article offers the first descriptive and normative study of the implications of this shift away from humans to machines (the “robo-sellers”) for antitrust law. This change is a critical challenge for antitrust law – both in how it is currently applied and in highlighting and exacerbating its existing weaknesses. First – and critically – robo-sellers will increase the risk that oligopolists will coordinate prices above the competitive level, thereby harming consumers. The Sherman Act contains a well-known gap in its coverage under which oligopolists that achieve price coordination interdependently, without communication or facilitating practices, generally escape antitrust enforcement, even when their actions yield supracompetitive pricing that harms consumers. Because robo-sellers possess traits that will make them better than humans at achieving supracompetitive pricing without communication, all things being equal, they will increase consumer harm due to this gap.A second problem concerns blackletter antitrust law in dealing with price coordination through communication or facilitating practices; current doctrine requires that there be an anticompetitive “agreement” for there to be a violation of the Sherman Act for price fixing. Under standard models, even where oligopolists have independent incentives to price supracompetitively, they can often do better via an agreement; moreover, in other cases, competing firms can only achieve supracompetitive pricing by explicit collusion. In these cases, usually analyzed as a prisoner’s dilemma in which the Nash equilibrium is to “cheat” on the cartel, an agreement is required to avoid the inferior (from the price-fixers’ perspective) outcome. In order to find such an “agreement,” courts, government enforcers, and practitioners tend to focus on finding “intent,” efforts to sowing fear and distrust, and discovering a “meeting of the minds.” These standard inquiries derive from a more than a century-old embedded assumption that antitrust regulates sales by human actors; they will be a poor fit in addressing robo-sellers, which will function differently and which will likely not create the same kinds of evidence that these inquiries rely on.What can be done about the anticompetitive effects of robo-selling? This Article assesses several possible solutions, but find that they will be quite difficult to reconcile with current antitrust law. It conclude that, at least as a feasible second-best result, incorporating an evolving approach to robo-sellers may be a worthwhile expansion of the FTC’s ongoing regulatory program that has already begun target the competition and consumer protection aspects of consumer data collection by sellers. For example, the FTC has already begun to consider the effects of mass data collection and algorithmic processing on consumers from the perspective of disclosure and discrimination (both price and social); efficiencies should exist in broadening the inquiry to include effects on price coordination and cartel behavior.

The Private International Cartels (PIC) Data Set: Guide and Summary Statistics, 1990-2013

This paper describes the sources and methods used to create the PIC data set, which the author believes to be the largest collection of legal-economic information on contemporary price-fixing cartels. It details the scope, strengths, and limitations of the data therein. Moreover, summary descriptive statistics are shown for the years 1990-2013. A few highlights of those statistics are: •In the past four years 70 new cartels were uncovered each year, a record. •Of the 1014 suspected cartels, 717 were convicted; 217 await a decision. •Relative to GDP, cartelization in Europe is triple the rate than in North America. •Nominal affected sales total $1.5 to $1.7 trillion; global cartels average $10 billion. •However, the size of European cartels is much smaller than other regions. •More than 34,000 companies (7,238 named) are liable for international price fixing. •77% of corporate cartelists are from Europe of North America. •863 persons were indicted or sanctioned, 8 per cartel and 2 per employer. •Prison sentences imposed total 400 years. •Gross cartel overcharges exceed $1.6 trillion, of which global cartels were 60%. •Monetary penalties reached $123 billion: 0.8% of sales and less than 5% of overcharges.

The Role of Antitrust in Protecting Competition, Innovation, and ConsumerssAs the Digital Revolution Matures: The Case Against the Universal-EMI Merger and E-Book Price Fixing

This paper presents a detailed analysis of the proposed merger between Universal Music Group (UMG) and EMI by applying the standards and methods outlined in the recently revised Department of Justice/Federal Trade Commission Merger Guidelines. It shows that the UMG-EMI merger is “an unfair method of competition” that constitutes “an unreasonable restraint of trade” because it will “substantially lessen competition” and is “likely to enhance market power.” Simply put, the post-merger firm will have a strong incentive and increased ability to exercise market power, particularly in undermining, delaying, or distorting new digital distribution business models, in a market that has been a tight oligopoly for over a decade.The merger creates a highly concentrated market by eliminating one of only four major record labels and results in an increase in concentration that is five times the level that the DOJ/FTC identify as a cause of concern. The recent history of anticompetitive, anti-consumer conduct by this tight oligopoly and the role of EMI as a maverick in the digital era compound the anticompetitive effects of the merger and significantly increase the likelihood that the merger will not only result in higher prices but also undermine incipient competition.Claims that piracy will prevent the abuse of market power are directly refuted by evidence on consumer purchasing behavior, estimates of elasticities of demand by academics, and marketing research conducted by the music industry. The analysis demonstrates that the industry has chronically and grossly overestimated the role of copyright infringement in the development of digital distribution. Correcting this misrepresentation of the extent of infringement is necessary to ensure that policymakers have a proper understanding of the full benefits of digital technologies.The strong parallels between the impact of the merger on the development of digital disintermediation in the music sector and the recent case brought by the Department of Justice against e-book publishers highlight the economic efficiency and consumer benefit from the digital distribution of goods and services. The anticompetitive tactics of the dominant, incumbent, physical space firms remind us that these firms will stop at nothing to delay change and preserve their dominance. Antitrust authorities and others must use the full range of tools available to protect competition, innovation, and consumers and ensure that consumers and the economy enjoy the full benefits of the development of digital technologies.

Natural Gas Pricing in India

Pricing of natural gas in India suffers from asymmetry because of the presence of limited suppliers having byzantine contracts. The oligopolistic market combined with price regulation results in welfare losses, and market failure. We argue that for the sake of long-term development of natural gas sector in fast developing economies like India, the long-run marginal cost (LRMC) seems to be the most suitable pricing policy. In the case analysis, we present a theoretical framework of calculating LRMC while acknowledging that the conditions necessary for a ‘first-best world’ rarely exist. We conclude that it is very much possible to gradually move from the existing ad-hoc pricing mechanism to a more robust LRMC regime that takes into account not just the production cost but also a scarcity premium as well as any externalities resulting from the natural-gas fuel cycle. The outcome based on our model compares very well with the one from the Rangarajan Committee's formula that got the government's nod recently for fixing of price of indigenously produced natural gas, to be effective from 01st April 2014.

Kaplow, Louis: Competition policy and price fixing

Book's Review:Louis Kaplow, Competition Policy and Price Fixing, Princeton University Press, Princeton and Oxford, 2013

Market Allocation Under Competition Law

The Competition Act prohibits “agreement[s] in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.” Under the Competition Act, certain horizontal agreements – price fixing, bid-rigging and market allocation – are presumed to have an appreciable adverse effect on competition. Other restraints, including vertical restraints, mergers and alleged abuse of dominance are analyzed under a balancing test to determine whether they have an appreciable adverse effect on competition.The Competition Act identifies three areas of possible anticompetitive conduct: Anti-competitive agreements, Abuse of dominant position and Combination [merger] regulation. Market allocation is also known as Market Division Scheme. Market allocation or market division schemes are agreements in which competitors divide markets among themselves. In such schemes, competing firms allocate specific customers or types of customers, products, or territories among themselves. For example, one competitor will be allowed to sell to, or bid on contracts let by, certain customers or types of customers. In return, he or she will not sell to, or bid on contracts let by, customers allocated to the other competitors.