Economic Analysis at the European Commission 2012–2013

In 2012–2013 the European Commission has had particularly prominent merger cases, with two prohibitions of transactions and several clearances with far-reaching remedies. In these cases economic analysis has been tightly integrated into the general argument of the Commission and became central to the outcome of the cases. Based on economic theory and supporting data, the Commission has pursued novel economic theories of harm and challenged some economically dubious “common wisdom” in merger assessment. The second area in which economic analysis has had a major impact is in state aid modernization. The new regional aid guidelines of 2013 have moved the rules much closer to economic thinking about effective regional aid and introduced requirements for economic ex-post analysis. Finally, the decisions on the e-books case reflect close cross-Atlantic cooperation with respect to the economic analysis and the design of appropriate remedies. This article reports on a number of examples for the most important cases.     

Industry Characteristics and Anti-Competitive Behavior: Evidence from the European Commission’s Decisions

We analyze all the European Commission’s decisions on antitrust cases between 1999 and 2004 using a unique dataset that also contains information on all the cases that were filed for the Commission’s consideration but were never pursued. This data allow us to determine whether there is any type of bias in the selection process followed by the Commission when deciding which cases to pursue until a final decision is reached. We find that the selection of cases is not random and that it is quite efficient but not very significant. We also find that the economic literature criteria are important for the Commission’s decisions.     

Department of Justice Antitrust Enforcement, 1955—1997: An Empirical Study

This is an empirical study of Department of Justice(DOJ) enforcement of the antitrust laws. Its purposeis fourfold:1. To update Posner's study ``A Statistical Study ofAntitrust Enforcement' (Posner, 1970, pp. 365–419).2. To provide consistent andcomparable measures of antitrustenforcement effortby the Department of Justice.3. To report these measurements in a concise andsystematic way inorder to encourage empiricalstudies of antitrust issues.4. To explore some implications for antitrustissues.The purpose is to present the overall historicalrecord of DOJ antitrust activity as well as somepatterns in that history. More detailed analysis isleft for future work.The following information for cases undertaken by theDOJ are reported: number of cases, choice of civil orcriminal remedies, alleged violations, corporateofficials prosecuted, won-loss record, civil andcriminal sanctions imposed, and length of theproceedings. The principal source of data is theCCH Trade Regulation Reporter, commonly referred toas the CCH Bluebook which contains briefsummaries of all DOJ antitrust cases in order of theirfiling.     

The Year in Review: Economics at the Antitrust Division 2003–2004

This paper covers the activities of the Economic Analysis Group (EAG), during 2003–2004. It describes the economic analysis undertaken by EAG in several important investigations, litigations, and administrative and appellate matters.The authors are, respectively, Deputy Assistant Attorney General for Economics, U.S. Department of Justice, Antitrust Division, and Economics Director of Enforcement, U.S. Department of Justice, Antitrust Division. The views contained herein are solely those of the authors and do not necessarily represent those of the U.S. Department of Justice.     

Do Court Decisions Drive the Federal Trade Commission’s Enforcement Policy on Merger Settlements?

Mergers are generally conglomerate in nature with only minor (if any) horizontal overlaps. Under U.S. law, an enforcement agency may challenge any anticompetitive aspect of the merger and the consequent delay associated with litigation would impose costs on the firm. These costs may give the enforcement agency “leverage” to extract a settlement even when the firm would prevail in court. This paper explores whether the FTC’s decisions to challenge transactions approximate the case law. We find that the representative enforcement regimes of the FTC and the courts are remarkably similar, although the FTC credits efficiencies, while courts consider buyer sophistication as a mitigating factor.     

Antitrust Update: DG Competition 2007–2008

This article discusses some significant developments in the enforcement activities of the Directorate General for Competition at the European Commission, during 2007–2008, focusing on two main themes: non-horizontal mergers and two-sided markets.     

The Year in Review: Economics at the Antitrust Division, 2004–2005

This paper covers the activities of the Economic Analysis Group (EAG), during 2004–2005. It describes the economic analysis undertaken by EAG in several important investigations, appellate matters, and other activities as an advocate for competition.     

Economic Analysis at the Federal Communications Commission, 2012–2013

Pointing to the role of economic analysis, this article reviews major Federal Communications Commission actions and initiatives that are related to universal service support in high-cost areas that are served by price-cap incumbent local exchange carriers, special access policy, secondary market spectrum transactions, spectrum reassignments, and rules that govern interoperability among certain licensees in the 700 MHz band and spectrum ownership. Also discussed are activities of the recently created Technology Transitions Policy Task Force and challenges to communications policy that are posed by the transition to voice over internet protocol interconnection.     

Economics at the Antitrust Division: 2017–2018

This article describes some of the work of Antitrust Division economists over the past year, with a focus on modeling. It begins by illustrating the mapping from evidence to prediction using tools for assessing the effects of mergers using Bertrand, Cournot, and auction models. It then turns to two hot topics in competition policy: the implications of claims of increasing margins for merger enforcement and the validity of claims of increasing concentration. Finally, it considers how mergers affect prices in bargaining models.     

Present at the Beginning of a New Era for Antitrust: Reflections on 1982–1983

The early 1980s were an important time of transitionfor antitrust policy for the Antitrust Division of theU.S. Department of Justice. I had the privilege to beselected to serve as the first ``Chief Economist' forthe newly installed Assistant Attorney General forAntitrust, William F. Baxter. In this essay I discusssome of the important achievements of that period, aswell as some missed opportunities.     

The Antitrust Division: Economic Issues Presented in 2010–2011

The Antitrust Division of the US Department of Justice had a number of interesting cases during the last year. The merger between Comcast and NBC-Universal presented an interesting challenge of preserving existing competition from an emerging technology. The abandoned attempt by NASDAQ to acquire NYSE shed light on a number of competitive interactions between financial exchanges. Hospital contracts in Texas illustrated that exclusive dealing is still a violation of Section “NASDAQ’s Proposed Acquisition of NYSE” and will be pursued by the Antitrust Division. And, a number of cases as well as a new policy guide on the subject demonstrate that the Antitrust Division will work with parties and accept innovative remedies to eliminate competitive problems in ways that may better preserve efficiencies.     

The Year in Review: Economics at the Antitrust Division 2013–2014

During 2013–2014, the Antitrust Division of the U.S. Department of Justice brought a wide range of matters to successful conclusions. The three matters that are discussed below demonstrate the diverse set of issues that the division examines every year.     

Long-Term Contracts and Asset Specificity Revisited: An Empirical Analysis of Producer–Importer Relations in the Natural Gas Industry

This paper discusses long-term contracts as a particular organizational form situated somewhere between full vertical integration and short-term, market-based trading in the natural gas industry. We focus on the determinants of the duration of contracts under changing technical, economic, and institutional conditions. Using 311 long-term contracts we find that duration decreases as international market structures grow more competitive, and that contracts linked to an asset-specific investment extend, on average, three years longer.     

The Year in Review: Economics at the Antitrust Division, 2018–2019

Review of Industrial Organization - This article highlights the economic analysis that underlay certain enforcement efforts of the Antitrust Division over the past year. The Division’s...     

The Year in Review: Economics at the Antitrust Division 2012–2013

During 2012–2013, the Antitrust Division brought a wide range of litigated matters to successful conclusions. Litigation puts the economic analysis of an antitrust investigation to the ultimate test, and the Division continues to rely on its first-rate economic staff to help explain a wide range of matters to the courts. The four cases discussed below demonstrate the diverse set of issues the Division examines every year.     

Ocean Carriers’ Collusion Under Antitrust Immunity: Evidence of Asymmetric Pass-Through

As fuel costs are the largest component of the shipping industry’s operating costs, this study examines whether ocean carriers pass fuel cost increases through to freight rates more quickly than they pass through fuel cost decreases. The focal price collusion theory suggests that such asymmetric pass-through could be a result of collusive behavior because collusion is easier to sustain when costs are falling than when costs are rising. Using a lag-adjustment model as the econometric framework, findings from this study show strong evidence for asymmetric adjustments of the US inbound freight rates in response to fuel cost changes. Such asymmetry persisted after the passage of the Ocean Shipping Reform Act of 1998. Moreover, the findings do not support the consumer search theory as an alternative explanation for the freight rate asymmetry.     

The Year in Review: Economics at the Antitrust Division, 2009–2010

This paper covers the activities of the Economic Analysis Group of the Antitrust Division, U.S. Department of Justice, during 2009–2010. It describes the economic analysis undertaken by EAG in several important investigations and other activities as an advocate for competition.     

The role of epistemic communities in the “constitutionalization” of internet governance: The example of the European Commission High-Level Expert Group on Artificial Intelligence

In the last few years, digital constitutionalism has emerged as a novel, alternative, Internet Governance approach aiming at ordering and limiting the exercise of power by both states and private operators, as well as at promoting people's control over digital technology development.Although digital constitutionalism is encountering growing popularity, the prevalent non-binding nature of its initiatives, the discrepancy between the jurisdictional border and transnational digital processes, and the technological embedment of governance mechanisms, have hindered the effectiveness of its impact.This paper identifies epistemic communities as a crucial factor for the constitutionalization of the digital technologies since they have the necessary technical expertise and policy commitment to create norms and standards at transnational level, informing the policy choices of both state and non-state actors.In order to illustrate this nexus, the article performs an in-depth investigation on the case of the European Commission High-Level Expert Group on Artificial Intelligence (HLEG-AI). The analysis revealed that the HLEG-AI effectively gathered an epistemic community strongly committed with fundamental rights promotion and capable to influence the following policy-making activities of the European Commission, as well as of other non-state stakeholders, whose involvement is essential in order to embed digital constitutionalism principles within the design of AI systems.     

The Year in Review: Economics at the Antitrust Division, 2020–2021

Challenging anticompetitive acquisitions of nascent competitors is a top priority of the Antitrust Division of the U.S. Department of Justice. It is especially important that competition agencies remain vigilant of such acquisitions in platform markets, where indirect network effects and other market forces tend to preserve the status quo at the expense of smaller, more innovative rivals and potentially final consumers. This article discusses two such attempted acquisitions: (1) Visa’s acquisition of technology firm Plaid that threatened to disrupt Visa’s monopoly power in online debit; and (2) Sabre’s acquisition of Farelogix, which is a firm that allows airlines to connect directly to travel agencies and thereby disintermediates Sabre and other global distribution systems.

     

Workforce Composition and Individual Wages — An Employer–Employee Data Analysis

The study analyses the impact of workforce composition and employee isolation — based on age, gender and citizenship — on entry wages of new employment relationships in German firms using employer–employee data. We allow for heterogeneous effects across distinct groups of workers and include worker and firm fixed effects to account for selection effects and unobserved heterogeneity. The results point to a negative impact of gender and age diversity for males and females, natives and foreigners and workers across the skill spectrum. Only for high-skilled workers, the negative effect of gender diversity is not statistically significant. Females receive, in addition, relatively low entry wages in establishments with a rather old workforce. With regard to the relative position, mainly gender isolation tends to exert an important influence on entry wages. The effect is positive only for females. In contrast, we estimate significant negative wage effects for males, natives, medium- and high-skilled workers. An international background of a firm's workforce and cultural isolation do not appear to generally affect entry wages.