ICLE Chief Economist Brian Albrecht gave a presentation to the Arkansas Center for Research in Economics discussing the 2022 Nobel Memorial Prize in Economic Sciences, which was awarded to Ben S. Bernanke, Douglas W. Diamond, Philip H. Dybvig “for research on banks and financial crises.” In this talk, he explored the recipients’ backgrounds and contributions to the practice of economics.

Video of the presentation is embedded below.

Introduction

The year 2022 of 12 October marks the official birth of the Digital Markets Act (DMA). As with the General Data Protection Regulation, the European Union sets itself as a forerunner in digital economy rulemaking, attempting to strengthen its global regulatory leadership, through the so-called and well-described Brussels effect. The new Regulation is, indeed, complemented by other relevant interventions addressing the role of data and digital intermediaries such as the Data Governance Act, the Digital Services Act, and the proposal for a Data Act, which will shape the European digital policy.

Against the emergence of large online platforms, several proposals have been advanced by policymakers around the world to tame digital gatekeepers, including public utilities-style regulations, break-ups, bans on vertical integration, and reforms of competition laws. Despite such different approaches, however, the envisaged solutions share the same premise, namely the urgent need for bespoke interventions because of the distrust towards current antitrust rules to face effectively the challenges of the brave new world.

The DMA endorses this view stating that, although antitrust rules apply to the conduct of gatekeepers, the scope of these provisions is “limited to certain instances of market power” (e.g., dominance on specific markets and of anti-competitive behaviour) and its “enforcement occurs ex post and requires an extensive investigation of often very complex facts on a case-by-case basis.” Moreover, competition law does not address, or does not address effectively, the challenges to the well-functioning of the market posed by the conduct of gatekeepers, which are not necessarily dominant in competition law terms.

According to this line of reasoning, given that competition law alone is unfit to tackle systemic problems posed by the platform economy, a regulatory intervention is enacted to introduce a set of ex ante obligations for digital gatekeepers dispensing enforcers from the standard antitrust analysis (i.e., relevant market definition, proof of dominance, and assessment of anticompetitive effects) and restraining gatekeepers from even providing an efficiency defence.

Against this background, the paper provides an overview of the critical aspects of the DMA to investigate whether the European Union will effectively benefit from a first-mover advantage. Section II illustrates the main features of the DMA highlighting some mismatches between its declared justification and the way in which the new Regulation will be effectively applied. Section III questions the coherency of an intervention that ostensibly disregard the ecosystem-based approach, even if it was intended to address the specific issues related to the fact that the competition in the digital economy is increasingly a competition among ecosystems. Section IV concludes.

ICLE Chief Economist Brian Albrecht was a guest on the Mornings with Brian Haldane show on Talk 107.3 in Baton Rouge, Louisiana, to discuss the Federal Trade Commission’s challenge to Facebook parent Meta’s proposed acquisition of virtual-reality app-maker Within. The full interview is embedded below.

The Sarbanes-Oxley Act of 2002 (SOX)—named for its chief sponsors, former Sen. Paul Sarbanes (D–Md.) and former Rep. Mike Oxley (R–Ohio)—was intended to restore trust in the transparency of publicly traded companies after the collapses of WorldCom and Enron Corp. revealed that their auditors had certified financial reports that overstated the firms’ assets and massively understated their liabilities.

But, of course, “transparency” isn’t quite the same thing as prudential safety and soundness. In the insurance space, more specifically, transparency doesn’t necessarily equal solvency.

Read the full piece here.

One of my favorite books is Thomas Sowell’s Knowledge and Decisions, in which he builds on Friedrich Hayek’s insight that knowledge is dispersed throughout society. Hayek’s insight that markets can bring dispersed but important knowledge to bear with substantial effectiveness is one that many of us, especially economists, pay lip service to, but it often gets lost in day-to-day debates about policy. Sowell uses Hayek’s insight to understand and critique social, economic, and political institutions, which he judges in terms of “what kinds of knowledge can be brought to bear and with what effectiveness.”

Read the full piece here.

On Jan. 5, 2023, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking (NPRM) to prohibit employers from entering non-compete clauses with workers. The proposed rule would extend to all workers, whether paid or unpaid, and would require companies to rescind existing non-compete agreements within 180 days of publication of the final rule. The FTC will soon publish the NPRM in the Federal Register, triggering a 60-day public comment period.? The rule could be finalized by the end of the year; court challenges to the final rule are likely to follow.

Read the full piece here.

Background…

In December 2022, the European Commission launched a public consultation on the regulation to implement the Digital Markets Act, including how the DMA will be enforced procedurally. Among the issues the regulation covers are parties’ rights to be heard, firms’ deadlines to submit documents to the Commission, access to those documents and to the Commission’s case file, and how confidentiality will be protected.

However…

While reasonable people may disagree about the merits of digital-markets regulation, appropriate procedural rules that safeguard parties’ rights and create legal certainty are essential. The timing, background, and content of the Implementing Regulation, however, all raise legitimate concerns and underscore broader issues in the DMA.

Read the full explainer here.

As the calendar flips to 2023, among the scores of new laws taking effect are a pair of legislative mandates that would, for the first time anywhere in the country, require firearms owners to obtain and maintain liability insurance. What remains to be seen, however, is whether either measure will survive Second Amendment challenges, particularly given the standard handed by the U.S. Supreme Court in its June 2022 New York State Rifle & Pistol Association Inc. v. Bruen decision.

Read the full piece here.