Table of Contents

Price-Fixing Hits Home: An Empirical Study of U.S. Price Fixing Conspiracies

Margaret C. Levenstein, University of Michigan at Ann Arbor - Survey Research Center, The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy
Valerie Y. Suslow, Johns Hopkins Carey Business School

Consumer Actions after the Adoption of the EU Directive on Damage Claims for Competition Law Infringements

Josef Drexl, Max Planck Institute for Innovation and Competition, Ludwig Maximilian University of Munich

Vertical Merger Enforcement Actions: 1994-2015

Steven C. Salop, Georgetown University Law Center
Daniel P Culley, Cleary Gottlieb Steen & Hamilton LLP

Trade Treaties: Undemocratic, Anti-Competitive and Unbalanced?

Hazel V. J. Moir, Australian National University (ANU) - Centre for European Studies

Promoting Competition in Digital Markets; A Case Against the Google Case, and the Futile Search of ‘Neutrality’ in On-Line Searches

Fernando Diez, Centro Universitario Villanueva

Brief Amici Curiae of 48 Law, Economics, and Business Professors and the American Antitrust Institute in Support of Appellants

Michael A. Carrier, Rutgers University School of Law - Camden
Steve Shadowen, Hilliard & Shadowen LLP


"Price-Fixing Hits Home: An Empirical Study of U.S. Price Fixing Conspiracies" Free Download
Ross School of Business Paper No. 1290

MARGARET C. LEVENSTEIN, University of Michigan at Ann Arbor - Survey Research Center, The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy
VALERIE Y. SUSLOW, Johns Hopkins Carey Business School

This paper analyzes all Section 1, Sherman Act price fixing cases brought by the U.S. Department of Justice between 1961 and 2013. Over 500 cartels were prosecuted during this period. The determinants of cartel formation and cartel breakup are estimated, including analysis of the impact of the discount rate, business cycles, and antitrust policy. We find that cartels are more likely to breakup during periods of high real interest rates, presumably because higher interest rates are associated with greater impatience. The adoption of a stronger amnesty policy has no significant impact on cartel breakup over this period, although the results suggest some association with lower cartel formation rates.

"Consumer Actions after the Adoption of the EU Directive on Damage Claims for Competition Law Infringements" Free Download
AIDA - Anali italiani del diritto d'autore, della cultura e dello spettacolo 2015 (Luigi Ubertazzi ed.), Forthcoming
Max Planck Institute for Innovation & Competition Research Paper No. 15-10

JOSEF DREXL, Max Planck Institute for Innovation and Competition, Ludwig Maximilian University of Munich

In line with primary EU competition law, the new Damages Directive 2014/104/EU aims to provide all victims of competition law violations with a right to compensation. This includes consumers who often suffer harm at the very end of the supply chain. This article analyses the impact of this Directive on consumer redress. Thereby, it identifies a tension built into the Directive between the public interest in enhancing the respect of competition law, on the one hand, and the private interest in compensating the victims of anti-competitive conduct, on the other hand. By concentrating the right to claim damages on the — direct or indirect — purchaser who ultimately had to pay the overcharge, the Directive runs the risk that infringers of competition law will escape private enforcement actions in cases where this overcharge was passed down to final consumers who, especially in mass damage cases, will not have sufficient incentives to bring individual damage claims to the courts. This problem is aggravated by the fact that the Damages Directive itself does not provide for any collective redress mechanisms. Rather, in 2013, the Commission decided to address that issue only through adopting the non-binding Collective Redress Recommendation. Thereby, the Commission recommends avoiding all the features that make up the so-called ‘toxic cocktail’ of US class actions. Yet past experience and most recent reforms in some Member States seem to indicate that pure systems of opt-in collective redress mechanisms will not significantly contribute to private enforcement of competition law. Indeed, for the time being, experimenting with different national systems is the best approach to identifying the best system of collective redress for competition law cases.

"Vertical Merger Enforcement Actions: 1994-2015" Free Download

STEVEN C. SALOP, Georgetown University Law Center
DANIEL P CULLEY, Cleary Gottlieb Steen & Hamilton LLP

We have created a listing of vertical merger enforcement actions by the Department of Justice and Federal Trade Commission during the period 1994-October 2015. This listing is an Appendix to Salop and Culley, Revising the Vertical Merger Guidelines: Policy Issues and an Interim Guide for Practitioners, Journal of Antitrust Enforcement (forthcoming).

"Trade Treaties: Undemocratic, Anti-Competitive and Unbalanced?" Free Download

HAZEL V. J. MOIR, Australian National University (ANU) - Centre for European Studies

The major benefit from free trade is from domestic reform (Section 2A). Current preferential trade treaties have large sections concerning the wide range of domestic regulation that might impede trade in agriculture or services (Section 2B). These regulatory sections are highly detailed and prescriptive – the worst form of old-fashioned heavy-handed regulation (Section 2C). They need to be replaced by modern outcome-oriented objectives, with countries free to implement these as best fits other social, cultural and economic goals.

As trade treaties receive little attention during elections a mandate cannot reasonably be claimed (Section 3A). These treaties tie the hands of both the current and future governments across a wide range of domestic regulation – open debate about these goals and the best means of achieving them is essential. Such an open agenda would re-build trust in government and better suit decision-making processes in a democracy. An important part of this would be independent evidence-based analysis by a trusted body (Section 3B). This would provide a factual basis for any consultations (Section 3C).

The submission also considers what fair trade provisions might look like. The elements of a fair, balanced, patent policy are set out in Section 4A. These are assessed against our current treaties in Section 4B. There is a large gap. Many of our treaties fail the TRIPS Article 7 test of what a fair balanced patent policy should look like.

The most essential first steps in ensuring that preferential trade treaties are democratic, procompetitive and balanced are to ensure that there is independent evidence-based assessment of the proposed content, and that the approval authority rests with parliament. Ideally there should be an active economic reform agenda, with full public debate of all the options likely to be included in trade treaties.

"Promoting Competition in Digital Markets; A Case Against the Google Case, and the Futile Search of ‘Neutrality’ in On-Line Searches" Free Download

FERNANDO DIEZ, Centro Universitario Villanueva

The technological foundations and businesses models upon which digital companies currently function, the so-called ‘platforms’, are characterized by the sort of features that attract antitrust scrutiny. They are usually conformed as multi-sided markets; they pervasively exhibit network effects; the nature and scope of entry barriers is uncertain; dominance in each market is duly granted to the successful company; foreclosure of small firms is always wandering around. Thus, it’s no surprise that digital markets champions such as Facebook, Amazon, Google and Apple have received close attention from the regulators in both sides of the Atlantic. Accordingly, antitrust enforcement efforts both in Europe and the United States have recently increased in number of actions taken and the amount of fines imposed in high-tech industries. Recent decisions in this field have rekindled in-depth and largely unresolved debates concerning the appropriate role of antitrust enforcement in such markets.

Nevertheless, the Statement of Objections sent recently by the European Commission to Google, for allegedly abusing its dominant position in the internet-search market goes a step further, jeopardizing the very goals and objectives competition policy is supposed to pursue. Against this background and in light of other recent high-profile cases (Intel, Tomra, Post Danmark, and the everlasting Microsoft) this paper seeks to set an adequate legal and economic framework for the prohibition of monopolization under article 102 of the Treaty of Functioning of the European Union (TFUE). This sort of high tech markets are usually characterised for a heavy reliance in ICT (information and communication technologies), the importance of product design and the development of platforms. In addition, on the basis of ‘winner-takes-it-all’ paradigm, the platform on which they operate may be considered as an ‘essential facility’. As a result, any discrimination or denial of access may be considered abusive.

However, the legal treatment to be applied to ‘refusals to supply’ remains as one of the most contentious issues in contemporary EU competition law. It was at the heart of Microsoft’s misbehaviour in 2004 -- and all the subsequent fines that followed -- and, ten years later, if Google’s conduct regarding discrimination of competing firms in favour of its own services may walk the very same path. The four topics addressed in this paper concern three long-lasting controversies and one recent matter: i) under what circumstances a dominant firm is entitled to respond -- albeit, aggressively -- to its competitor’s challenges; ii) the precise scope -- if there’s any -- of the ‘objective justification’ defence; iii) if that sort of conduct is prohibited only when leads to anticompetitive foreclosure, without restrictive effects, is there room for a ‘by object’ interdiction of abuse of a dominant position?; iv) finally, in the specific digital industry, and given the still uncertain economics of multi-sided market and the evolving nature of prevalent businesses models, is really a ‘monopoly’ as bad and harmful as with the bricks-and-mortar or oil-well-and-pipeline predecessors? The ultimate question is, does current antitrust enforcement in these specific markets achieve its goal of fostering competition or rather the undesired effect of chilling innovation?

"Brief Amici Curiae of 48 Law, Economics, and Business Professors and the American Antitrust Institute in Support of Appellants" Free Download
Third Circuit brief in In re: Effexor XR Antitrust Litigation, 2015

MICHAEL A. CARRIER, Rutgers University School of Law - Camden
STEVE SHADOWEN, Hilliard & Shadowen LLP

In FTC v. Actavis, the Supreme Court held that a brand payment to a generic to delay entering the market could have "significant anticompetitive effects" and violate the antitrust laws. In In re Effexor, the District of New Jersey court erred in requiring plaintiffs to produce, at the motion-to-dismiss stage, evidence typically considered at summary judgment or trial. The court's opinion is inconsistent with Actavis, the Third Circuit's Lamictal decision, and pleading standards articulated in the Supreme Court's Twombly and Iqbal rulings. On behalf of 48 professors and the American Antitrust Institute, this Third Circuit amicus brief urges reversal.

The brief first argues that Actavis would be significantly undermined if courts could impose excessive standards at the pleadings stage that effectively make it impossible for plaintiffs to succeed on a claim despite allegations of conduct that violates the antitrust laws and costs consumers hundreds of millions of dollars.

The brief next contends that the excessive pleading requirements imposed are not consistent with Lamictal, as the Third Circuit made clear that Actavis applies to non-cash payments, in particular settlements in which brands agree not to introduce their own version of generics (known as "authorized generics" or "AGs") that would compete with true generics. Entry by an authorized generic threatens to cut true generics' revenues in half in the 180-day exclusivity period reserved for the first generic to challenge a brand firm's patent, claiming invalidity or infringement. For that reason, it is common business practice in the pharmaceutical industry to recognize that brands' promises not to introduce AGs are extremely valuable to generics and entail sacrifice by the brand that cedes the revenue it would gain from selling generics.

Finally, in manufacturing heightened pleading thresholds, the Effexor court misread Twombly, Iqbal, and Third Circuit opinions. And it ignored the well-pleaded components of a complaint that alleged (1) an 11-month delay in marketing an authorized generic; (2) well-documented findings of the effects of AGs on first-filing generics; (3) reference to a drug with similar revenues for which an AG reduced revenues by hundreds of millions of dollars in a period roughly half as long; and (4) a lopsided comparison of the value provided by the no-AG agreement with litigation costs.


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Antitrust: Antitrust Law & Policy eJournal

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