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PORTLAND, Ore. (Oct. 4, 2022) – Germany’s system of “sectoral bargaining”—in which unions representing all workers in a given sector bargain over the terms of employment for all firms in that sector—has drawn growing interest from some quarters in the United States. But a new issue brief from the International Center for Law & Economics (ICLE) examines the legal and practical issues that would arise should U.S. policymakers seek to import the German model to these shores.

Advocates for sectoral bargaining argue that it is better for workers and can even protect the economy from adversarial labor-market disputes, claims that were examined in an earlier ICLE issue brief by Matthias Jacobs of Bucerius Law School and Matthias Münder of the law firm Schramm Meyer Kuhnke.

But as ICLE Senior Scholar Julian Morris and Director of Innovation Policy Kristian Stout note, the proportion of German employees working under a sectoral-bargaining agreement has fallen by more than 35% since 1996, with the reduction driven by the changing nature of work and increasing exposure of German markets to international competition.

“In an environment of international competition, Germany’s model required all manner of tweaks in order to make it ‘work.’ Even then, Germany’s rate of economic growth has been considerably lower than that of the United States,” Morris and Stout write, adding that the gap in per-capita output between Germany and the United States has increased from less than $2,000 in 1991 to more than $10,000 in 2021.

Nonetheless, proposals for German-style sectoral bargaining have proliferated in recent years. California recently passed the Fast Food Accountability and Standards Recovery Act (FAST Act), which applies important features of European sectoral-bargaining models to the state’s fast-food sector. Sectoral-bargaining proposals have also been floated in Illinois, Connecticut, and New York State, and several candidates in the 2020 U.S. Democratic Party presidential primaries forwarded proposals for labor-market reforms that were based explicitly on such ideas.

Sooner or later, Morris and Stout write, such proposals are bound to run headlong into U.S. antitrust law, which broadly prohibits competitors from coordinating their behaviors in ways that set prices or cause anticompetitive harm to consumers. Any attempt to bring sectoral bargaining to the United States would therefore need either an explicit statutory exemption from Congress or to qualify for one of the existing non-statutory exemptions, the authors argue.

“As the United States heads further into unstable economic times, it would be unwise to adopt a bargaining model that would make its labor market less flexible and more subject to the disruptive effects of competition from overseas and from new technology,” Morris and Stout write.

The full white paper is here. Journalists interested in interviewing ICLE scholars about the law & economics of sectoral bargaining should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

PORTLAND, Ore. (Sept. 27, 2022) — The International Center for Law & Economics (ICLE) today announced that Elizabeth Lincicome has joined the institute as media and communications manager.

Prior to joining ICLE, Elizabeth was the marketing and development writer at the Competitive Enterprise Institute. She has also done communications and media-relations work for such public-policy research organizations as the Heritage Foundation, the R Street Institute, the Texas Public Policy Foundation, and the North Carolina Institute for Constitutional Law.

Her previous roles include working as a writer and off-air political producer for CBS News, where she covered the 2002 midterm elections, and as an associate producer and researcher for CNN’s White House unit. She was also a staff writer for The Hill newspaper and a publicist for Regnery Publishing Inc., both in Washington, D.C.

“Elizabeth is a seasoned communications professional with more than two decades of experience, most it in the nonprofit public-policy sector,” ICLE President Geoffrey Manne said. “We are excited about the help she can offer the team in garnering broader attention for ICLE scholars and for law & economics scholarship.”

Lincicome received her bachelor’s degree in public policy from Duke University and a master’s in communications from Johns Hopkins University. In her spare time, she enjoys spending time with her family, running, golfing, swimming, and writing freelance pieces for various publications across North Carolina, where she currently resides.

ST. PETERSBURG, Fla. (Sept. 26, 2022) — As Hurricane Ian appears likely to intensify to a major hurricane of Category 3 or higher before making landfall somewhere on the Florida Peninsula or Panhandle later this week, International Center for Law & Economics (ICLE) Editor-in-Chief and Senior Fellow R.J. Lehmann is available to discuss the storm’s potential impact on the deeply indebted National Flood Insurance Program (NFIP) and the already-fragile Florida homeowners insurance market.

“Lawmakers both in Congress and the Florida Legislature have been warned for years that this day was coming, but have failed to muster the political will needed to adopt reforms,” Lehmann said. “In the case of the NFIP, Congress repeatedly has kicked the can down the road for five years with a series of short-term extensions. In the meantime, the program has made no progress on paying down the $20.5 billion it still owes the Treasury after having $16 billion of debt forgiven in 2017.”

“In Florida, the litigation crisis has left the market in a state of full-blown collapse, with a string of domestic insurers either having ceased writing new business or been taken into receivership, while a decade of efforts to shrink the state-backed Citizens Property Insurance Corp. are now almost completely reversed,” added Lehmann, a resident of St. Petersburg, Fla. “Lawmakers had ample warning about the need to act during the legislative session earlier this year, but they displayed more interest in waging culture-war battles than in helping Floridians to secure their lives and their property.”

For more on the Florida insurance crisis, see this piece R.J. wrote in March for Insurance Journal.  For more on proposals to reform the NFIP, see his May 2021 testimony to the U.S. Senate Banking Committee. Journalists interested in interviewing R.J. can contact him at [email protected] or 1-908-265-5272.

LUXEMBOURG CITY (Sept. 14, 2022) — The International Center for Law & Economics (ICLE) today expressed disappointment with the decision by the General Court of the European Union largely upholding the European Commission’s 2019 decision that terms imposed by Google parent Alphabet on manufacturers of Google Android mobile devices abused what the Commission deemed a dominant market position.

The following quote may be attributed to ICLE Director of Competition Policy Dirk Auer:

“Today’s ruling is a strong endorsement of the formalistic approach to competition law that has been a hallmark of Margrethe Vestager’s tenure. However, the upper court in Luxembourg has repeatedly rebuked this vision of competition enforcement, in favor of a more economically driven approach. There is thus every reason to believe Alphabet will appeal the ruling, and the outcome of those proceedings is anything but a foregone conclusion. The upshot is that, while the Commission may have won today’s battle, this merely sets up a deeper conflict surrounding the future direction of European competition law.”

For in-depth analysis of the original Commission ruling, see the February 2020 ICLE white paper “Making Sense of the Google Android Decision.” Journalists interested in interviewing Auer or other ICLE scholars about the decision should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 1-908-265-5272.

PORTLAND, Ore. (Sept. 13, 2022) — The International Center for Law & Economics (ICLE) today announced that Daniel Gilman has joined the institute as a senior scholar of competition policy.

Prior to joining ICLE, Dan spent 16 years as an attorney-advisor in the Federal Trade Commission (FTC) Office of Policy Planning, where he worked on competition issues in health-care and technology markets and, more broadly, on the competitive impact of regulation, with a focus on privacy regulations, among others. 

During a leave from the FTC in the 2014-2015 academic year, Dan visited Harvard Law School as the Victor H. Kramer Foundation Fellow in antitrust law and economics. He previously was a visiting professor of law at the University of Maryland School of Law, where he taught law and economics and health and science law. 

“We are thrilled to have the opportunity both to work with Dan and to learn from him,” ICLE President and Founder Geoffrey Manne said. “Few can match his combined expertise both as a scholar of competition law and as a practitioner.”

Dan has also taught at Georgetown University Law Center, Penn State University College of Medicine, and at Washington University in St. Louis. He also has experience in private practice with Hogan & Hartson LLP in Washington, D.C. 

“I’m excited to join the team at ICLE,” Giman said. “It’s an ideal place for me to continue the work at the heart of my career: economically grounded research and advocacy on competition policy and regulation, in the service of consumer welfare.”

Dan’s work has been published in such academic journals as Georgetown Law Journal, American Journal of Law & Medicine, Nursing Economics, the Journal of Health Care Law & Policy, Behavioral & Brain Sciences, and the British Journal for the Philosophy of Science. He holds a law degree from Georgetown, a PhD in philosophy from the University of Chicago, and an undergraduate degree from Dartmouth College.

PORTLAND, Ore. (Aug. 19, 2022) – Proposals before Congress and the Federal Reserve to control how credit- and debit-card transactions are routed threaten harms to consumers and smaller merchants, and could render co-branded cards a thing of the past, a new white paper from the International Center for Law & Economics (ICLE) concludes.

Written by ICLE Senior Scholar Julian Morris and Academic Affiliate Todd Zywicki, the George Mason University Foundation Professor of Law at Antonin Scalia Law School, the paper follows earlier ICLE research on the so-called “reverse Robin Hood” effect and the effects of price controls on payment-card interchange fees, as well as payment-card regulations in Brazil and Costa Rica.

The Federal Reserve already requires all debit cards to include at least two unaffiliated networks on their cards, as specified in Regulation II, the 2011 rule that implemented the Dodd-Frank Act’s so-called “Durbin Amendment.” The Fed currently is considering whether to interpret that requirement much more expansively, such that issuers would be required to enable two networks to process debit transactions on card-not-present transactions, including online transactions, and “for every geographic area, specific merchant, particular type of merchant, and particular type of transaction for which the issuer’s debit card can be used to process an electronic debit transaction.”

The authors identify several harms that would be expected if the Fed moves forward with the proposed changes, which will prompt more merchants to route transactions on the lowest-cost network, rather than the one primarily tied to the issuer.

“First, by splitting transactions over two or more networks, the cardholder’s payment patterns will be obfuscated, making it more difficult for machine-learning algorithms to detect unusual spending patterns and thus flag potential fraud,” Morris and Zywicki write.

“Second, to the extent that cardholder benefits are tied to a particular network—including, but not limited to, fraud-prevention tools such as card blocks—these may not be available to consumers if the merchant chooses not to route over that network,” the authors add.

In addition to the proposed changes to Regulation II, Sen. Richard Durbin (D-Ill.)—author of the original Durbin Amendment—has introduced the Credit Card Competition Act, which would impose similar routing requirements on credit cards. Morris and Zywicki note the bill “is specifically intended to reduce the volume of credit-card payments routed over Visa and Mastercard’s rails.”

“If enacted, it would likely achieve that effect, with the result that interchange fees received by issuing banks would be much reduced,” the authors write. “Issuers would then respond by raising fees and reducing rewards on credit cards, just as they did in Australia and elsewhere when credit-card interchange fees were forcibly reduced.”

“The only unambiguous beneficiaries of the proposed routing changes will be the shareholders of very large retailers and service providers that have their own machine-learning-based profiling and fraud-prevention tools, enabling them to use cheaper, less secure routing without a significant in-crease in fraud and other losses,” Morris and Zywicki conclude.

The full white paper is here. Journalists interested in interviewing ICLE scholars about the law & economics of payments networks should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

Congress has been considering legislation that would mark the most significant change to antitrust law in a generation. At issue is whether the bills would increase competition in digital markets, and what impacts may be anticipated. A recent comment letter from the American Bar Association Antitrust Law Section, the world’s largest professional organization for antitrust and competition law and consumer protection, discussed one of those bills, the American Innovation and Choice Online Act (S. 2992), at length in an effort to assist with ongoing consideration of the measure.

The International Center for Law & Economics (ICLE) hosted a May 19 digital event (video is embedded above) with two experts to discuss recent proposed legislative changes to current antitrust law, and S. 2992 in particular. Will such bills increase competition in digital markets and what consequences might they have? ICLE Founder and President Geoffrey A. Manne moderated the virtual panel and we joined by guests Sean Sullivan, an associate professor of law at the University of Iowa and member of the ABA Antitrust Law Section, and Elyse Dorsey, visiting scholar at the University of Virginia and adjunct professor at Antonin Scalia Law School at George Mason University.

As deliberations on the legislation continue, we also recommend reading the following ICLE resources:

• Aurelien Portuese, “The Road to Antitrust’s Least Glorious Hour”
• Friso Bostoen, “Waking up to Platform Regulation”
• Stephen Dnes, “The Four Ways of Spending Data”
• Lazar Radic, “A Day in the Fair New World of Perfectly Open Platforms”
• Dirk Auer, “Woman in the High Office”
• Ramsi Woodcock, “Verses on Self-Preferencing”
• Julie Carlson, “Antitrust Populists Don’t Seem to Care About the Poor”
• Filip Lubinski & Lazar Radic, “New Frontiers of Fairness”
• Geoffrey Manne, “The Catch-22 of AICOA’s Guidelines”
• Alden Abbott, “The Bitter Fruits of Federal Antitrust ‘Reform’ Legislation”
• Dan Crane, “Winter in Helsinki”
• Thom Lambert, “AICOA Is Neither Urgently Needed Nor Good: A Response to Professors Scott Morton, Salop, and Dinielli”
• Brian Albrecht, “Confusion Can Make for Good Politics, but Bad Economics”
• Brian Albrecht & Geoffrey Manne, “A New Bill for Big Tech, with the Same Flaws”
• Geoffrey Manne, “How Tech Startups Could Be a Casualty of the War on Self-Preferencing”
• Lazar Radic & Geoffrey Manne, “The ABA’s Antitrust Law Section Sounds the Alarm on Klobuchar-Grassley”
• Brian Albrecht, “The American Innovation and Choice Online Act Would Foster Neither Innovation Nor Choice”
• Alden Abbott, “Suggested Redline Edits to the DOJ’s Letter to Judiciary Committee Leadership”
• Dirk Auer, “10 Things the American Innovation and Choice Online Act Gets Wrong”
• Samuel Bowman, “U.S. Senate Self-Preferencing Bill Offers Perfect Recipe for Regulatory Overreach”
• Samuel Bowman & Brian Albrecht, “A Big Tech Crackdown Could Just Make the Internet Worse”
• Samuel Bowman & Geoffrey A. Manne, “tl;dr – Platform Self-Preferencing: Benefits to Consumers and to Competition”
• Samuel Bowman & Geoffrey A. Manne, “5 Thoughts on the Senate’s Proposed Platform Self-Preferencing Ban”
• Samuel Bowman, “Breaking Down the American Choice and Innovation Online Act”
• Eric Fruits & Geoffrey Manne, “The Klobuchar Bill’s Not-So-Bright Lines for Antitrust Scrutiny”
• Samuel Bowman, “Breaking Down House Democrats’ Forthcoming Competition Bills”
• Samuel Bowman & Geoffrey Manne, “Platform Self-Preferencing Can Be Good for Consumers and Even Competitors”
• Geoffrey Manne, “Against the Vertical Discrimination Presumption”

And finally, we offer this Twitter thread from ICLE Senior Scholar Lazar Radic, summarizing some of the key points made by the panelists during the May 19 event.

https://twitter.com/laz_radic/status/1531988573267841024?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988575109136386?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988577344802818?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988579408392192?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988582004555777?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988584177213441?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988585959895040?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988587775926273?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988589789302795?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988591798362115?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988594021236741?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988596605038595?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988598383329280?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988605291339777?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988609351426050?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988613726183428?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988616284622850?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988618583105539?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988624484487168?s=20&t=xRoCphZhAU1NR769336lQQ

https://twitter.com/laz_radic/status/1531988627475124224?s=20&t=xRoCphZhAU1NR769336lQQ

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PORTLAND, Ore. (June 2, 2022)—Claims that the digital-advertising market is monopolized by one or two large players have been at the core both of legislation recently introduced in the U.S. Senate and an antitrust lawsuit filed by Texas and 17 other states. A new issue brief from the International Center for Law & Economics (ICLE), however, argues that critics take an exceedingly narrow view of the relevant market and fail to consider how advertisers and publishers can choose among competing forms of advertising, either online or offline.

Written by ICLE President Geoffrey Manne and Senior Scholars Eric Fruits and Lazar Radic, the brief notes that advertising technology, or “adtech,” bears none of the markers of a sector subject to monopoly, such as decreasing output and rising costs. Indeed, U.S. digital advertising grew by an average annual increase of 19% last decade, from $26 billion in 2010 to $152 billion in 2020, even as the Producer Price Index for Internet advertising sales declined by an annual average of 5% over the same period.

But digital advertising is just one kind of advertising, and advertising more generally is just one piece of a much larger group of marketing activities, the ICLE scholars note. They argue that the weight of evidence suggests that offline and online advertising represent a far more unified and integrated economically relevant market than is commonly assumed.

“What publishers sell to advertisers is access to consumers’ attention,” the ICLE scholars write. “While there is no dearth of advertising space, consumer attention is a finite and limited resource. If the same or similar consumers are variously to be found in each channel, all else being equal, there is every reason to expect advertisers to substitute between them, as well.”

The problem, the scholars note, is that the use of erroneously narrow market definitions to bring antitrust litigation, or as the basis of legislation that would impose new rules on market participants, is likely to raise the cost of business for advertisers, publishers, and intermediaries alike.

The full issue brief is here. Journalists interested in interviewing ICLE scholars about the law & economics of digital advertising should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.