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Your Weekly Digest | Issue 13/2022

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

The Justice Department endorsed House and Senate bills Monday that would keep the biggest digital platforms like Meta, Google, Apple and Amazon from giving preferential treatment to their own products. The big picture: "The fact that the DOJ’s regulatory goals are consistent with the Hill show the seriousness of the DOJ’s antitrust concerns in the technology sector," Jeffrey Jacobovitz, senior counsel at law firm Arnall Golden Gregory LLP and former Federal Trade Commission attorney, told Axios. Read more.
Regulators are looking to update rules, which target companies abusing their market power and those setting up illegal cartels, to make them more efficient, EU antitrust chief Margrethe Vestager said on Thursday. Read more.
The Korea Fair Trade Commission (KFTC) is investigating 20 local and overseas liner operators for colluding to fix freight on services from South Korea to China and Japan. The probe comes just two months after it imposed an $81m collective fine on these operators for fixing South Korea-South-east Asia freight rates. KFTC is understood to have sent review reports to the liner operators concerned, saying it is looking into allegations that they ... Read more.
European Commission antitrust officials have raided Gazprom's offices in Germany today as part of an ongoing probe into gas prices, Bloomberg reported. According to the report, which could not be independently verified, inspections were carried out at two of Gazprom's German subsidiaries: Gazprom Germania GmbH and Wingas GmbH. Read more.
The CMA has prohibited the merger between Cargotec Corporation and Konecranes Plc after finding, in its in-depth investigation, that this merger may be expected to give rise to competition concerns in the supply of a wide range of container handling equipment products. The final report and appendices will be published shortly. Read more. 
Margrethe Vestager gets a lot of headlines, but without results. It's time to stop taking her quest for headlines seriously, and to focus on whether there will be any impact from the new law. Read more.
The Biden administration finally has taken a public position on parallel House (H.R. 3816) and Senate (S. 2992) bills that would impose new welfare-reducing regulatory constraints on the ability of large digital platforms to engage in innovative business practices that benefit consumers and the economy. The administration’s articulation of its position—set forth in a March... Read more.
Thin markets, characterized by a small number of participants and low transaction volumes, create particular problems for antitrust enforcers. Hiba Hafiz explores the incoherent, sometimes-contradictory ways in which US antitrust enforcers have tried to address market failures in thin markets in the past, and explains how they can avoid what she calls the “thin market... Read more.
This paper scrutinizes the effects of the European Directive on Copyright in the Digital Single Market on platform competition. Platforms that are online content-sharing service providers must have a license agreement with collective management organizations that control the content platform that users may – or must not – upload to the platform. The paper shows that the new directive may imply market concentration and an aggregate welfare loss. The reason is that only users of the large platform (in a dual platform setting) will be allowed to upload content if the content assets are sufficiently valuable and if network effects are strong. Read more.
  • Greater competition endogenously changes the direction of innovation
  • This shift is towards easier and faster to invent projects
  • We present evidence of a direction shift in the pharmaceutical industry
In merger enforcement, entry is considered to be a factor that potentially can mitigate otherwise anti-competitive effects of a merger. The current framework for entry analysis evaluates whether potential entrants are likely to have the incentives and ability to enter the industry under the conditions of elevated profitability that are created by an anti-competitive merger. Missing from entry analysis is the notion that incumbent firms may proactively deter entry and how such incumbent incentives may change as a result of a merger. By modeling entry as the outcome of a game between incumbents and potential entrants, we show that a merger can reduce the likelihood of entry even at elevated profit levels by increasing incumbent incentives to invest in entry deterrence. The paper has two policy implications for merger enforcement: First, a merger that is benign by traditional measures may nonetheless have the effect of reducing future entry—entry that would have made the market more competitive relative to status quo. Second, evidence of recent historical entry—which is an important criterion that is used to assess the likelihood of post-merger entry—may be of less evidentiary value than is considered under the current merger enforcement policy. Read more.
Michael Lipsitz and Mark J. Tremblay
Employee spinoffs may harm incumbent firm owners for two reasons: first, they increase competition in relevant product markets, potentially decreasing rents associated with market power. Second, the threat of an employee spinoff may prevent a firm owner from making costly, productivity-enhancing investments in their workers. Noncompete agreements (NCAs) solve both problems. From the perspective of a consumer, NCAs may increase prices by decreasing competition, but the investments made by firm owners have the potential to mitigate competitive harms. We develop a model which formally demonstrates this tradeoff to assess the impacts of NCA policy on consumers, and discuss when a ban on NCAs is most likely to be beneficial for consumers. We show that the competitive environment, the nature of investment pass-through, and the benefits of investment play large roles. Counterintuitively, increased benefits of costly investments have the potential to harm consumers, such that industries where NCAs are most important to firms may also be those where harm is greater. Finally, we draw two analogies between NCAs and antitrust (merger analysis and pay-for-delay agreements) and show how insights in those areas may inform NCA policy. Read more.
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Kind regards, Valur Þráinsson, Founder of Email:
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