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Your Weekly Digest | Issue 10/2022

Valur Thrainsson
6 min read

Welcome to CompetitionFeed, a weekly newsletter with the most recent and relevant competition and anti-trust news, blogs and journal publications. Never miss an update. If you’d like to receive issues over email, you can sign-up here

EU and U.K. antitrust authorities launched parallel probes into an agreement between Google and Facebook owner Meta for online display advertising services. The European Commission and the U.K.’s Competition and Markets Authority are concerned that the companies hindered competition in the markets for online display advertising services and pledged to cooperate “closely” as they carry out their investigations. Read more.
Mike Cowie and James A. Fishkin of Dechert LLP discuss ways in which merger enforcement could change as a result of a comprehensive analysis of the FTC and DOJ initiative on merger guidelines. Read more.
Raytheon Technologies Corp. is a target of a criminal investigation by the U.S. Justice Department into alleged agreements to limit hiring between its jet-engine unit and some of its suppliers, the company revealed. Read more.
The European Commission on Thursday suggested temporarily relaxing the bloc's state aid rules so member countries could help companies facing liquidity problems due to sanctions on Russia. Read more.
The Justice Department’s Antitrust Division and the Labor Department signed a memorandum of understanding (MOU) today to strengthen the partnership between the two agencies to protect workers from employer collusion, ensure compliance with the labor laws and promote competitive labor markets and worker mobility. The objectives of the President’s Executive Order on Promoting Competition in the American Economy will be supported by this continued partnership. Read more.
UK has “sleepwalked” into a system in which children are failing to get suitable placements in foster care and children’s homes, finds new report published today. Read more.
The Bundeskartellamt has published a paper on “The effects of narrow price parity clauses on online sales - Investigation results from the Bundeskartellamt’s Booking proceeding” as part of its series of papers on “Competition and Consumer Protection in the Digital Economy”. Read more.
Alan Renwick
Most consumers want a better deal, but New Zealand’s small size and relative isolation make it hard for large-scale competitors to enter the supermarket sector. Read more.
Lena Hornkohl
Better late than never. Last year’s recap post on European Union competition law and policy developments already was quite long (see post here). This year’s post might even be longer. Sorry, dear readers, nothing much I can do – 2021 was a very busy year.   Article 101 – of principles, evaluation of rules and... Read more.
U.S. antitrust policy seeks to promote vigorous marketplace competition in order to enhance consumer welfare. For more than four decades, mainstream antitrust enforcers have taken their cue from the U.S. Supreme Court’s statement in Reiter v. Sonotone (1979) that antitrust is “a consumer welfare prescription.” Recent suggestions (see here and here) by new Biden administration... Read more.
  • The ‘as-efficient-competitor’ principle and the ‘as-efficient-competitor’ test should not be conflated, as this can generate a very narrow perspective on the goals EU competition law does and should promote.
  • Although the ‘as-efficient-competitor’ principle remains a fundamental aspect in Article 102 TFEU, the relevance and application of the ‘as-efficient-competitor’ test in price-based exclusionary conduct has diminished over the years.
  • The General Court in Google Shopping embraces a categorical distinction between price and non-price based exclusionary conduct and reserves any application of the ‘as-efficient-competitor’ test to the former category only. We argue that there might be scope to introduce an ‘as-efficient-competitor’ test as one of the tools for assessing effects in ‘self-preferencing’ cases.
Kei Kawai, Jun Nakabayashi, Juan M. Ortner & Sylvain Chassang
Cartels participating in procurement auctions frequently use bid rotation or prioritize incumbents to allocate contracts. However, establishing a link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such patterns. We show that by focusing on auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting non-competitive environments. We apply our tests to two datasets: the sample of Ohio milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions from Japan. Read more.
José Azar and Ricardo M. Ribeiro
We develop an empirical model of overlapping ownership conduct. The model (i) links firm conduct parameters to deep parameters of the firm's process of shareholder preference aggregation through voting; (ii) can cope with ownership settings involving both intra- and inter-industry overlapping ownership; and (iii) yields an equilibrium flexible formulation for the management’s objective function that allows for no internalization, partial internalization and full internalization of shareholder objectives by managers. Using data for the U.S. airline industry in the 2015-2017 period, we find evidence for a partial internalization formulation in which managers put significant weight on shareholder objectives, but substantially less than in the full-internalization limiting case. We find also that inter-industry overlapping ownership is associated to lower inferred marginal costs, and that omitting inter-industry overlapping ownership leads to substantial bias towards zero in the parameters that drive how much intra-industry overlapping ownership is internalized by the firms. Finally, we find, focusing on the 2017Q4 period, that overlapping ownership overall (both intra- and inter-industry) seems to increase the average airline fare by 4.0%, increase industry profit by 24.4% and decrease consumer surplus by 1.8%, and that these effects are mostly due to overlapping ownership by shareholders other than the “Big Three” asset managers. Read more.
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Kind regards, Valur Þráinsson, Founder of CompetitionFeed.com. Email: valur@competitionfeed.com
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