Abstract

The GAI filed this Comment with the Canadian Competition Bureau in response to the Bureau’s request for public feedback on draft Guidance on Wage-Fixing and No-Poaching Agreements. Such agreements will be subject to a new statute (subsection 45(1.1), Canadian Competition Act) taking effect June 23, 2023, prohibiting such agreements as per se offenses and making violations subject to criminal remedies. The GAI’s Comment commends the Bureau for seeking public comment prior to implementation and generally concurs with the basic approach taken by the Bureau. To further refine and improve the Bureau’s approach, the Comment identifies potential ambiguities in the Guidance. Ambiguity complicates compliance, since businesses are likely to avoid even procompetitive or competitively neutral conduct potentially exposed to challenge. Avoidance of lawful conduct by business firms due to uncertainty regarding applicable legal standards may inhibit competition and ultimately reduce economic performance and innovation. Per se condemnation and criminal remedies should be reserved for conduct always or almost always anticompetitive and lacking plausible procompetitive rationale. The GAI therefore asks the Bureau to take particular care in defining the types of agreements that may be subject to the new law. Principal areas of focus involve (1) transition provisions; (2) the scope of an exemption for agreements between “affiliates”; (3) the definition of what constitutes an “employment relationship,” a key term defining the scope of the new law; (4) the line between permissible information sharing and impermissible coordinated conduct, and (5) the proper interpretation of the “Ancillary Restraints Defense” that will be applicable.

Abstract

A reform movement is underway in antitrust. Citing prior enforcement failures, deviations from the original intent of the antitrust laws, and overall rising levels of sector concentration, some are seeking to fundamentally alter or altogether replace the current consumer welfare standard, which has guided courts over the past 50 years. This policy push has sparked an intense debate on the best approach to antitrust law enforcement. In this Article, we examine a previously unexplored potential social cost from moving away from the consumer welfare standard: a loss in the information value to the public from a finding of liability. A virtue of the current standard is the knowledge that firms who violate the antitrust laws have harmed consumers. This simple reality is a direct, easy-to-interpret signal to market participants and investors. In contrast, a broader and more nebulous standard, such as a “public interest” approach—which has been proposed by some academics and agency officials—could conceivably water down the information value of a finding of liability. In essence, the greater license that regulators and courts have to condemn a business practice beyond a finding of harm to consumers, then the noisier the signal to the public about what the verdict actually means. We can call this phenomenon “the stigma dilution effect.” To that end, we develop a formal model to gain insight into the role of reputation in the enforcement and deterrence effects of antitrust laws. The model reveals broadening the welfare standard is likely to weaken the reputational impact of antitrust violations. This dilution can, in turn, have implications which go against what the proponents of abolishing the consumer welfare standard desire. Namely, a new standard could increase, rather than decrease, the frequency of conduct they seek to deter. Thus, our analysis suggests that there may be important and underappreciated costs associated with departures from the consumer welfare standard. In fact, the presence of reputational considerations suggests that these departures can produce effects contrary to the stated goals of their proponents.

Mandates to restrict the flow of data across national boundaries have taken hold in a growing number of jurisdictions, including India. Spearheaded by nations like China, Iran, and Russia, the idea has vocal proponents among those who claim it will forward the goal of “digital sovereignty.”

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ICLE Academic Affiliate Adam Mossoff was a guest on the Patently Strategic podcast to discuss options for patent reform. Audio of the full episode is embedded below.

Self-preferencing by a powerful service provider is usually analyzed as constituting an exclusionary abuse of market power. Examples of this kind of abuse might include the provider manipulating search and recommendation rankings to favor its own goods over close competitors (Google Shopping case) or integrating its own applications into an operating system that artificially worsens the performance of competing software (Microsoft case; Android case). This focus stands in line with the practice of competition authorities and courts on both sides of the Atlantic, and we are not denying that it represents an important avenue of competition policy enforcement.

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The dumbest economics discussion over the past few years — and that’s a high bar — has to go to “greedflation.” The White House tried to blame the greed of meat packers and gas companies for rising prices. I would have blamed the Fed for inflation, but I’m no political strategist. According to this theory, inflation rose in the first half of 2022 because, all of a sudden, people became greedy. I guess. They must have become less greedy when inflation fell in the second half of 2022. I don’t know how this theory is supposed to work. Someone write down a model!

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International Center for Law & Economics President & Founder Geoffrey A. Manne and Santiago Martinez Lage, president of Ayala de la Torre Abogados, offer closing remarks at ICLE’s March 24, 2023 event “Exploring the Outer Boundaries of Antitrust: Democracy, Sustainability, & Industrial Policy” in Madrid, Spain. The full video is embedded below.

Video from the International Center for Law & Economics’ (ICLE) March 24, 2023 event “Exploring the Outer Boundaries of Antitrust: Democracy, Sustainability, & Industrial Policy” in Madrid, Spain. This session features a debate, moderated by ICLE Academic Affiliate Thibault Schrepel of Vrije Universiteit, between Giorgio Monti, professor of competition law at Tilburg Law School, and Nicolas Petit, joint chair in competition law at the European University Institute’s Department of Law and at the Robert Schuman Centre for Advanced Studies, on the topic “Should Antitrust Pursue Broader Social Goals?” The full video is embedded below.

Video from the International Center for Law & Economics’ (ICLE) March 24, 2023 event “Exploring the Outer Boundaries of Antitrust: Democracy, Sustainability, & Industrial Policy” in Madrid, Spain. In a panel moderated by ICLE Senior Scholar Lazar Radic, panelists Frederic Jenny, chairman of the OECD Competition Committee; Wendy Ng, associate professor of law at Melbourne Law School; Don Rosenberg, resident fellow at the University of California-San Diego; and Angela Wigger, associate professor of international relations at Radboud University discuss the topic: “Antitrust and Industrial Policy, or Antitrust as Industrial Policy?” The full video is embedded below.