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Congress has been considering legislation in recent months 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 attendant 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.

Professor Sean Sullivan, a member of the ABA Antitrust Law Section, will join representatives from ICLE and UVA in his individual capacity to discuss AICOA, the Section’s comments, and what reform could mean for consumers, digital platforms, and the future of antitrust law.

Please join us May 19, 2022, at 2 p.m. ET for this discussion. You can register for the event here.

	Sean Sullivan Law professor at University of Iowa and ABA Antitrust Section
	Elyse Dorsey Visiting Scholar at the University of Virginia and an Adjunct Professor at Antonin Scalia Law School at George Mason University
	Geoff Manne Moderator & speaker President & Founder, ICLE

On Sept. 15 and 16, 2022, the International Center for Law & Economics (ICLE) will host a research roundtable at our headquarters in Portland, Oregon, to bring together authors and commentators to discuss research relating to market structure and regulation.

We are soliciting proposals from potential authors for this event. Proposals should briefly describe the thesis, argument, or hypothesis the author is exploring; its importance as a research topic and relevance to contemporary policy discussions; the intended methodological approach; the current state of the work (both early- and mid-stage research is suitable for this event); and any challenges that the author anticipates needing to overcome to complete this work.

Authors of proposals selected for inclusion will receive $12,000 honoraria to facilitate this work. This honorarium will be awarded in stages: upon participation in the roundtable, including submission of a draft paper written for an academic audience by Sept. 2, 2022; upon publication of a short-form version of the work written for a non-academic audience; and upon acceptance of the paper for publication in an established academic journal.

We also welcome expressions of interest from potential commentators who would like to participate in this event.

Topics of Interest

We seek papers relating broadly to the following. We are primarily interested in policy-relevant research and are open to work from a range of disciplines, including those that may not currently be much engaged in policy debates on these topics (e.g., business, political science, history, engineering, sociology, anthropology) and using a range of approaches and methodologies, including both empirical and nonempirical work.

• Conglomerate business models: This topic includes work that studies potential benefits and harms for consumers arising from conglomerate business models and other large platform-based industries. Potential benefits and harms include economic issues (e.g., changes in prices or quality of service), but also may include topics such as impacts on trust in and governance of public institutions.
• Market-structuring regulation: There is a long history of using regulation to structure markets, including scholarly debate about the effectiveness of such regulation. Proposals relating to this topic should evaluate how or whether such regulation can be used in the contemporary setting, in particular relating to the structure or operation of platform-based industries. We note a special interest in empirical work that considers the structure of network markets and their regulation, the role of switching costs, the measurement of network effects, and similar topics.
• Vertical integration: This topic is relatively straightforward. There has been extensive discussion of vertical integration in recent years, including proposals for regulation (especially in the context of, e.g., self-preferencing, interoperability, and the like). Proposals relating to this topic may address issues relating to vertical integration generally but may also be responsive to contemporary policy proposals (including, e.g., how to effectively implement them or the risks and tradeoffs they may create).
• Other topics: While we have special interest in the topics listed above, it is not an exclusive or exhaustive list. We welcome proposals relating broadly to themes suggested by this call for proposals. In addition, recognizing that some research (especially empirical research) might require additional funding (e.g., to obtain access to data or research assistance), we are happy to include requests for additional funding as is necessary to support work selected for inclusion in this roundtable.

Submission Details

Research proposals should be submitted to both Gus Hurwitz ([email protected]) and Keith Fierro Benson ([email protected]). Any proposal submitted by Monday, June 13, will be given consideration. Proposals received after June 13 will be considered on a rolling basis.

IPWatchdog – ICLE President and Founder Geoffrey Manne, Director of Competition Policy Dirk Auer; Director of Innovation Policy Kristian Stout, and Associate Director of Legal Research Ben Sperry, ICLE were cited by IP Watchdog in a story about comments the institute submitted to the European Commission regarding standard-essential patents. You can read full story here.

Four scholars with the International Center for Law & Economics (ICLE) have sent comments to the European Commission urging against any changes to the EU’s legal framework for licensing of standard-essential patents (SEPs) that would limit SEP holders’ ability to seek injunctions against alleged infringers. The ICLE scholars write: “It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers.”

BRUSSELS (May 11, 2022) — European policymakers should proceed with caution as they look to update the legal framework that underpins licensing of standard-essential patents (SEPs), scholars with the International Center for Law & Economics (ICLE) argue in comments filed with the European Commission.

Responding to concerns about patent holdup and royalty stacking affecting SEPs, the commission is considering changes that would constrain SEP holders’ ability to seek injunctions against alleged infringers. But the empirical evidence suggests that the current system works and that the ills associated with the alleged overenforcement of intellectual-property rights do not materialize in industries that rely on SEPs, according to the filing from ICLE President Geoffrey Manne, Director of Competition Policy Dirk Auer, Director of Innovation Policy Kristian Stout, and Associate Director of Legal Research Ben Sperry.

“It is simply not helpful for a regulatory body to impose a particular vision of licensing negotiations if the goal is more innovation and greater ultimate returns to consumers,” the ICLE scholars write. “Instead, where possible, policy should prefer allowing parties to negotiate at arm’s length and to resolve disputes through courts. In addition to maintaining the sometimes-necessary remedy of injunctive relief against bad-faith implementers, this approach allows courts to explore when injunctive relief is appropriate on a case-by-case basis.”

ICLE cautions that weakening protections for SEP holders would encourage firms to integrate vertically, rather than to specialize; reduce startup companies’ access to capital markets by making it harder to collateralize intellectual property; and erode American and European firms’ technological leadership.

Journalists interested in interviewing ICLE scholars about standard-essential patents should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

PORTLAND, Ore. (May 4, 2022) — As the Senate Judiciary Committee convenes a hearing this morning on the subject of swipe fees and competition in the credit- and debit-card markets, scholars with the International Center for Law & Economics (ICLE) caution lawmakers that capping interchange fees has done far more harm than good, transferred wealth from consumers to the shareholders of large merchants, and impeded competition, and that such caps should not be expanded.

Congress imposed price caps on interchange fees for debit cards issued by banks with more than $10 billion in assets in 2010, under an amendment to the Dodd-Frank Act introduced by current Judiciary Committee Chairman Richard Durbin (D-Ill.). While Durbin’s stated goal was to save consumers money at the checkout counter, a recent ICLE literature review details that, in practice, the caps have had the opposite effect. To offset lost revenue from interchange fees, banks increased account fees and other charges, passing through 42% of their losses. Meanwhile, merchants passed through, at most, 28% of the savings they realized from lower debit-card interchange fees.

“Poorer consumers were hit the hardest, because banks reduced the availability of free checking accounts and raised the minimum deposit amounts to qualify for free checking,” ICLE Senior Scholar Julian Morris said. “Many poorer customers appear to have left the banking system as a result.”

The Durbin amendment also introduced requirements prohibiting exclusivity arrangements among debit-card issuers and payment networks, on the premise that this would lead to competition in the routing of debit-card payments. But according to Morris, this has primarily affected community banks and credit unions, who have been forced to accept the lower interchange fees charged by some PIN debit networks. Credit unions alone have lost more than $6 billion in interchange-fee revenue, Morris notes, with many forced to increase other fees and/or reduce lending.

“Ironically, the Durbin Amendment also seems to have delayed entry by financial technology or ‘fintech’ companies. Since these companies are at the cutting edge of innovation, offering new products and reducing costs, it would appear that the Durbin amendment has actually hindered competition,” Morris said.

For more details on the economics of payment-card networks, see the ICLE white papers “The Effects of Price Controls on Payment-Card Interchange Fees: A Review and Update” and “Credit Cards and the Reverse Robin Hood Fallacy: Do Credit Card Rewards Really Steal from the Poor and Give to the Rich?” Journalists interested in interviewing Julian Morris or other ICLE scholars about the economics of payment-card networks should contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

Yahoo Finance – ICLE Academic Affiliate Todd Henderson was quoted by Yahoo Finance in a story about Elon Musk’s proposed acquisition of Twitter. You can read full story here.

University of Chicago Law School professor Todd Henderson said a “no” vote by Twitter shareholders is the only factor that he anticipates could derail the deal, though that seems unlikely.

On the other hand, he points to Twitter’s share price, trading at a wide arbitrage spread, around $49 on Tuesday, as an indication that there’s some market hesitation about the deal going through.

“The market must think there is some risk of non-consummation,” Henderson said, noting Musk’s history of making unsubstantiated public statements. “It is unlikely this is regulatory.”

PORTLAND, Ore. (April 22, 2022)— The Federal Trade Commission (FTC) and U.S. Justice Department’s (DOJ) request for information (RFI) on whether and how to update the antitrust agencies’ merger-enforcement guidelines is based on several faulty premises and appears to presuppose a preferred outcome, according to a response to the RFI filed by the International Center for Law & Economics (ICLE).

Written by ICLE President Geoffrey Manne, Director of Competition Policy Dirk Auer, Chief Economist Brian Albrecht, and Seniors Scholars Eric Fruits and Lazar Radic, ICLE’s comments observe that the RFI misconstrues the role of merger guidelines, which is to reflect the state of the art in a certain area of antitrust. The RFI instead seeks information to support a broad invigoration of merger enforcement, the scholars argue.

“The RFI telegraphs an attempt by the agencies to pronounce as settled what are hotly disputed, sometimes stubbornly unresolved issues among experts, all to fit a preconceived political agenda,” the ICLE scholars write. “This not only overreaches the FTC’s and DOJ’s powers, but it also risks galvanizing opposition from the courts, thereby undermining the utility of adopting guidelines in the first place.”

Among the most pressing and problematic substantive questions raised in the RFI are:

• An uncritical acceptance of the contentious narrative that lax antitrust enforcement has caused increased concentration in U.S. markets, when empirical data demonstrates that concentration is decreasing in local markets and that increased national-level concentration has been caused by productivity advances;
• An interpretation that existing merger-control tools, such as the Herfindahl-Hirschman Index (HHI), allow too many anticompetitive mergers to slip through the cracks, without grappling with the role that such tools play in the overall antitrust framework to reduce total error costs and the cost of administration;
• An eagerness to welcome new guidelines for mergers that affect labor markets and “monopsony” markets more broadly, despite little scholarly analysis of the fundamental complexity involved in applying merger-control rules to monopsony markets, where output is the relevant consideration;
• An unwarranted presumption of a negative relationship between market concentration and innovation, or between market concentration and investment, when the opposite is often true;
• A tendency to blur the longstanding demarcation between vertical and horizontal mergers, in ways that are likely to have chilling effects on procompetitive vertical mergers;
• An inclination to treat firms’ possession of data as a special factor in merger rules, rather than as any other intangible asset; and
• A premature desire to apply the notion of “attention markets” in a merger-control context, despite a lack of scholarship offering objective, let alone quantifiable, criteria to identify firms that are unique competitors for user attention.

To schedule an interview about the DOJ/FTC merger guidelines with Geoffrey Manne or any of the other ICLE competition scholars, contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or 908-265-5272.

TechTarget – ICLE Academic Affiliate John Lopatka was quoted by TechTarget in a story about antitrust scrutiny of Microsoft’s cloud-licensing practices. You can read full story here.

Whether Microsoft’s behavior runs afoul of U.S. antitrust law is a complicated matter, said Penn State law professor John Lopatka. If Microsoft is using its power in the OS and productivity suite markets to drive companies away from competing cloud providers, that could be considered an anticompetitive practice. However, Lopatka cautioned against drawing conclusions based on the harm to Microsoft’s competitors. The possibility that the conduct is anticompetitive does not necessarily mean it is anticompetitive, he said.

“What should be clear is that the antitrust laws in this country are concerned with the welfare of consumers, not rivals,” he said.

It remains to be seen how the U.S. government will respond to the issue. There has been heightened scrutiny on tech firms in recent days, and Lopatka said he believes regulators will take a hard look at Microsoft’s behavior.

 

Yahoo Finance – ICLE Academic Affiliate John Lopatka was quoted by Yahoo Finance in a story about antitrust scrutiny of Apple’s App Store. You can read full story here.

“Maintaining central control is immensely profitable for Apple — it is the mechanism that allows Apple to set prices for users on both sides of its platform, app developers and consumers,” Penn State Law professor John Lopatka told Yahoo Finance. “And maintaining central control inevitably injures competitors.”