Abstract

Dynamic competition defines an improvement path for antitrust law. Interested in competitive realities more than political activities, the growing body of scholarship studying dynamic competition wants to make antitrust diagnosis and analysis more accurate without sacrificing administrability. At a high level, the dynamic competition approach appears to some as a twenty-first-century equivalent of the Chicago School of antitrust. This article shows that the analogy is only partially correct. Unlike the Chicago School of antitrust law, the dynamic competition scholarship is innovation oriented, empirical, enforcement friendly, and interdisciplinary. More generally, dynamic competition is the natural evolution for all systems of antitrust law that reassess doctrine in light of the progression of economic and technical understanding of competition.

Read at SSRN.

In a previous article, we refuted four common critiques of the consumer welfare standard (CWS). In this article, we argue that the CWS has key benefits which opponents overlook. Understood as a method rather than a set of goals, the CWS allows enforcers and courts to overcome fact-finding ambiguities inherent in competitive processes. Without the benefit of a consumer welfare standard as a yardstick, alternative frameworks such as “the protection of the competitive process” lack depth, are self-referential and, ultimately, arbitrary.

Read the full piece here.

The consumer welfare standard has been the subject of a very effective contestation in modern antitrust law and policy literature. This contestation targets mostly United States law but, as we know, ideas travel fast. In spite of differences in law, policy, and institutions, contestations of consumer welfare frameworks have also emerged in slightly different terms in the European Union .

In this article, we lay bare the fundamental flaws of the modern critique of the consumer welfare standard. We show that critics misrepresent the meaning of the consumer welfare standard, distort the U.S. case law, and ignore important facts that do not align with their normative preferences. We conclude with the assertion that many criticisms of the consumer welfare standard among U.S. antitrust scholars reflect a critique of the U.S. judiciary’s attitude toward uncertainty and hard evidence rather than a critique of the consumer welfare standard itself.

Read the full piece here.

A lot of water has gone under the bridge since my book was published last year. To close this symposium, I thought I would discuss the new phase of antirust statutorification taking place before our eyes. In the United States, Congress is working on five antitrust bills that propose to subject platforms to stringent obligations, including a ban on mergers and acquisitions, required data portability and interoperability, and line-of-business restrictions. In the European Union (EU), lawmakers are examining the proposed Digital Markets Act (“DMA”) that sets out a complicated regulatory system for digital “gatekeepers,” with per se behavioral limitations of their freedom over contractual terms, technological design, monetization, and ecosystem leadership.

Read the full piece here.

The denizens of Silicon Valley (and Seattle) have picked up a slew of nicknames: GAFA (for Google, Apple, Facebook, and Amazon); FAANG (add Netflix in there); or, most ominously, the Frightful Five (sub out Netflix, sub in Microsoft). The central charge is these firms are monopolizing their respective markets, and have achieved such dominance that their market positions are now unchallengable. The side effects may include dampened innovation, reduced labor power, and any number of democracy-is-in-peril concerns.

ICLE Academic Affiliate Nicolas Petit joins the Political Economy Podcast to argue against this alarmist case against the tech titans. Drawing from his 2016 paper, “Technology Giants, the Moligopoly Hypothesis and Holistic Competition: A Primer,” as well as new research from a forthcoming book, Petit makes the argument these “Frightful Five” firms engage in cutthroat competition with one another, benefiting the economy as a whole — and government regulation against these companies is premature.

The full episode is embedded below.

With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.

Read the full piece here.

Summary

This paper looks at whether the standard unilateral effects model can be applied to non-price competition parameters such as innovation. This question arises because competition authorities are intervening in horizontal mergers that are found to give rise to a “significant impediment to effective innovation competition” (“SIEIC”) as a result of a reduction in post-merger R&D efforts (including lower expenditure). SIEIC is distinct from the mainstream unilateral effects theory of harm that predicts a “significant impediment to effective competition” (“SIEC”) as a result of increased prices. Most recently, the European Commission (“Commission”) used its powers under the EU Merger Regulation (“EUMR”) to impose remedies in the Dow/DuPont merger. This was in part because of concerns that that the transaction “would be likely to significantly impede effective competition as regards innovation both in innovation spaces where the Parties’ lines of research and early pipeline products overlap and overall in innovation in the crop protection industry.” At the heart of the development of SIEIC analysis lies a fundamental question of competition theory: under what conditions can variations of existing economic models be applied in merger cases?

This paper is divided into three sections. In Section I, the SIEIC theory of harm is described and put into perspective against past competition policy on innovation competition. Section I concludes that SIEIC constitutes a small but significant change in merger policy. In Section II, the economics of SIEIC are discussed. In particular, it will be seen that SIEIC is an application of the standard unilateral effects analysis where the focus is shifted from price to innovation effects. Section II demonstrates that this variant of the model can only deliver sound and robust empirical predictions if three critical innovation-specific questions are addressed. Section III discusses the economic methodology of merger control policy. This Section shows that agencies should remain free to rely on new or adapted pre-existing economic models in merger control reviews, provided they are able to discharge the “burden of persuasion”. With this, the paper hopes to contribute to the ongoing development of optimal merger control policy in innovative and R&D-driven markets.

Regardless of the merits and soundness (or lack thereof) of this week’s European Commission Decision in the Google Shopping case — one cannot assess this until we have the text of the decision — two comments really struck me during the press conference.

Read the full piece here. 

This symposium offers a good opportunity to look again into the complex relation between concentration and innovation in antitrust policy. Whilst the details of the EC decision in Dow/Dupont remain unknown, the press release suggests that the issue of “incentives to innovate” was central to the review. Contrary to what had leaked in the antitrust press, the decision has apparently backed off from the introduction of a new “model”, and instead followed a more cautious approach. After a quick reminder of the conventional “appropriability v cannibalization” framework that drives merger analysis in innovation markets (1), I make two sets of hopefully innovative remarks on appropriability and IP rights (2) and on cannibalization in the ag-biotech sector (3).

Read the full piece here.