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TOTM Commissioner Rosch has offered an interesting separate statement on the new HMGs. While favoring the new guidelines generally, Commissioner Rosch offers several criticisms. I concur . . .
Commissioner Rosch has offered an interesting separate statement on the new HMGs. While favoring the new guidelines generally, Commissioner Rosch offers several criticisms. I concur with a few of these criticisms, for example, Commissioner Rosch also argues for a more empirical approach to merger analysis. I agree with that general proposition despite, as we shall see below, the fact that the Commissioner offers it along with the peculiar distinction between “economic evidence” which he rejects and “empirical evidence”. The Commissioner should be applauded for putting these criticisms, as well as those with which I disagree of course, on the record.
Read the full piece here.
Scholarship Abstract The market definition analysis endorsed by the 2010 Proposed Horizontal Merger Guidelines (“new HMGs”) tends toward narrower relevant markets. Because the merging parties cannot . . .
The market definition analysis endorsed by the 2010 Proposed Horizontal Merger Guidelines (“new HMGs”) tends toward narrower relevant markets. Because the merging parties cannot point to the consumer gains outside of the narrowly defined product market, the new approach could lead to Section 7 liability for mergers that result in net increases in consumer welfare. This “out of market” efficiency problem obviously does not originate with the new HMGs, nor with the HMGs at all. However, the value of diversion approach to market definition is likely to dramatically increase its practical significance. Failure to incorporate “out of market” efficiencies into merger analysis flies in the face of the modern trend in favor of analyzing actual competitive effects rather than adopting simplifying and potentially misleading proxies. Further, the value of diversion approach adopted by the new HMGs is likely to increase the need for guidance on this score. This comment proposed that the new HMGs amend note 11 to make clear that they would not bring enforcement actions where the Agencies can prove anticompetitive effects in a narrower market, but where the evidence also supports the conclusion that out of market efficiencies are sufficient to eliminate consumer harm in the aggregate. A commitment to forbear from challenging mergers where out of market efficiencies outweigh anticompetitive effects merely updates the new HMGs in a manner consistent with the modern intellectual foundation of merger analysis.
TOTM One of the first reactions I had when reading the settlement is that it is quite striking how much and at what level of detail . . .
One of the first reactions I had when reading the settlement is that it is quite striking how much and at what level of detail the settlement micro-manages Intel’s business decisions. Lets consider a just a handful of provisions and look at the language in the settlement. Again, I think these provisions should be read with the benefit of some perspective in market performance during the relevant time period.
TOTM Let me add on a few brief observations on the Intel settlement to Dan’s earlier comments, with which I largely agree. There is a lot . . .
Let me add on a few brief observations on the Intel settlement to Dan’s earlier comments, with which I largely agree. There is a lot to say about the settlement: the predatory design aspects, Section 5, the (I found) quite odd self-congratulatory settlement press conference and webcast, and of course, what the settlement means for consumers. I’m very interested in all of these issues, but perhaps none is more important than the last. We cannot simply assume that the settlement equates to a victory for consumers. Readers of this blog will be very familiar with the argument that merely counting cases, or agency activity, and of course settlements, are not reliable measures of the quality of agency performance or meaningful from a consumer welfare perspective. But problems with this case make that warning especially appropriate here. Thus, before delving into some first reactions based on language in the settlement over the days and maybe weeks to come, some perspective is in order.
TOTM The Comprehensive Alcohol Regulatory Effectiveness Act — yes, the “CARE Act” — or HR 5034, is a piece of legislation aimed at supporting “State-based alcohol . . .
The Comprehensive Alcohol Regulatory Effectiveness Act — yes, the “CARE Act” — or HR 5034, is a piece of legislation aimed at supporting “State-based alcohol regulation.” Recall the Supreme Court’s decision in Granholm v. Heald, which held that states could either allow in-state and out-of-state retailers to directly ship wine to consumers or could prohibit it for both, but couldn’t ban direct shipment only for out-of-state sellers while allowing in for in-state sellers. Most states thus far have opened up direct shipping laws to the benefit of consumers. While we occasionally criticize the Federal Trade Commission from time to time here at TOTM, its own research demonstrating that state regulation banning direct shipment and e-commerce harmed consumers is an excellent example of the potential for competition research and development impacting regulatory debates. Indeed, Justice Kennedy’s majority opinion in Granholm cites the FTC study (not to mention co-blogger Mike Sykuta’s work here) a number of times. But in addition to direct shipment laws, there are a whole host of state laws regulating the sale and distribution of alcohol. Some of them have obviously pernicious competitive consequences for consumers as well as producers. The beneficiaries are the wholesalers who have successfully lobbied for the protection of the state. Fundamentally, the CARE Act aims to place these laws beyond the reach of any challenge under the Commerce Clause as per Granholm, the Sherman Act, or any other federal legislation. Whether the CARE Act has any ancillary social benefits is an important empirical question — but you can bet that the first-order effect of the law, if it were to go into effect, would be to increase beer, wine and liquor prices. More on the CARE Act and state regulation of alcoholic beverages below the fold.
TOTM While Intel Corporation nears its settlement deadline with the Federal Trade Commission, it received good news from a federal district court in Delaware evaluating the . . .
While Intel Corporation nears its settlement deadline with the Federal Trade Commission, it received good news from a federal district court in Delaware evaluating the evidence of alleged consumer harm from the discounts Intel offers to buyers. It is also very important to note that this pass from a US court applying standards of consumer harm embedded in US Section 2 case law — that is, actual harm to consumers and the competitive process rather than allowing harm to competitors to serve as a sufficient condition for proof of the former — is the first to evaluate the consumer welfare effects of Intel’s conduct from this more rigorous perspective. One has to wonder whether this ruling will shift settlement negotiations in favor of Intel. Its true that the FTC can use Section 5 to evade this Section 2 competitive effects analysis. But not without eventually testing their interpretation of Section 5 in front of a panel at the D.C. Circuit.
Scholarship Abstract The Twenty-first Amendment repealed prohibition, but granted the states broad power to regulate the distribution and sale of alcohol to consumers within their borders. . . .
The Twenty-first Amendment repealed prohibition, but granted the states broad power to regulate the distribution and sale of alcohol to consumers within their borders. Pursuant to this authority, states have established a complex web of regulations that limit the ability of beer, wine, and liquor producers to control the distribution of their product. From a consumer welfare perspective, one of the most potentially harmful state alcohol distribution regulations are “post and hold” laws (“PH laws”). PH laws require that alcohol distributors share future prices with rivals by “posting” them in advance, and then “hold” these prices for a specified period of time. Economic theory would suggest that PH laws reduce unilateral incentives for distributors to reduce prices and may facilitate tacit or explicit collusion, both to the detriment of consumers. Consistent with economic theory, we show that the PH laws reduce consumption by 2-8 percent. We also test whether PH laws provide offsetting benefits in the form of reducing a range of social harms associated with alcohol consumption. We find no evidence of such offsetting benefits. Taken together these results suggest that PH laws are socially harmful and result only in a wealth transfer from marginal alcohol consumers, who are unlikely to exert externalities on society, to wholesalers. These results also suggest a socially beneficial role for antitrust challenges to PH laws and similar anticompetitive state regulation. If states wish to reduce the social ills associated with drinking, our results suggest that increasing taxes and directly targeting social harms are superior policy instruments to PH laws.
TOTM Josh’s ongoing series on “Nudging Antitrust” and FTC Commissioner Rosch’s recent thoughts on behavioral economics has been excellent and I look forward to the next . . .
Josh’s ongoing series on “Nudging Antitrust” and FTC Commissioner Rosch’s recent thoughts on behavioral economics has been excellent and I look forward to the next installment. Rosch’s speech, not surprisingly, also elicited a strong response from me. What follows are my thoughts on Rosch’s speech, focusing on some of the same issues Josh addressed in his first post.
TOTM Simon Johnson argues that the conventional antitrust tools of Sherman Act are outdated and ill-equipped to deal with the power of big banks… Read the . . .
Simon Johnson argues that the conventional antitrust tools of Sherman Act are outdated and ill-equipped to deal with the power of big banks…
