C. Scott Hemphill and Tim Wu on ‘Nascent Competitors’ (2020) University of Pennsylvania Law Review (forthcoming)

A nascent competitor is a firm whose prospective innovation represents a serious future threat to an incumbent. Nascent rivals play an important role in both the competitive process and in developing innovation. New firms with new technologies can challenge and even displace existing firms; sometimes, innovation by an unproven outsider may be the only way to provide new competition to an entrenched incumbent. For competition enforcers, nascent competitors pose a dilemma. While nascent competitors often pose a uniquely potent threat to an entrenched incumbent, the firm’s eventual significance is uncertain, given the environment of rapid technological change in which such threats tend to arise. That uncertainty, along with a lack of present, direct competition, may make enforcers and courts hesitant or unwilling to prevent an incumbent from acquiring or excluding a nascent threat. This essay, available here, identifies nascent competition as a distinct category and outlines a program of antitrust enforcement to protect it. It favours an enforcement policy that…

C. Scott Hemphill and Nancy L. Rose on ‘Mergers that Harm Sellers’ (2018) Yale Law Journal 127(1) 2078

In typical mergers, the main concern is that the parties will be able to raise the prices they charge purchasers. Some mergers, however, reduce competition among competing buyers, thereby reducing the prices that sellers receive for their products and services. These adverse “buy-side” effects may harm a wide variety of sellers, including workers.  This paper, available here, examines the antitrust treatment of mergers that harm sellers. Its central claim is that harm to sellers in an input market is sufficient to support antitrust liability. Part I considers mergers that increase classical monopsony power. Monopsony is used here as the mirror image of monopoly, i.e. market power susceptible of affecting the price of inputs. Monopsony is a frequent concern in labour and agricultural markets. As with lawfully acquired monopoly power, antitrust law does not prohibit the exercise of lawfully acquired monopsony power, despite its economic costs. Yet antitrust problems do arise when buyers increase their monopsony power by combining forces. Agreements…

David Glasner and Sean P. Sullivan on ‘The Logic of Market Definition’ (forthcoming) Antitrust Law Journal

This paper,available here , is not technically about merger control, but it is as relevant here as in any other competition topic – and it fits nicely with wider discussions of market power and market entry, which, as we have seen in past weeks, are common in merger control. While the usefulness of, and methodologies concerning market definition would seem to be well established, in practice both are actively questioned. Some have even argued that market definition is unnecessary in competition law. While this argument is not new, Louis Kaplow has recently advanced this thesis with a particularly pointed argument that: (1) market definition serves no role except to produce market shares, (2) market shares are poor measures of market power, and (3) antitrust would be better served by ignoring market shares and trying to assess market power from estimates of residual-demand curves and the like instead. The goal of this paper is to trace the internal logic of market…

Julian Nowag and Liisa Tarkkila on ‘How much effectiveness for the EU Damages Directive? Contractual clauses and antitrust damages’ (2020) Common Market Law Review 57 433

Market actors often include clauses in contracts which determine the jurisdiction, and/or forum in which any claim arising from the contract may be heard; or clauses which prohibit reassigning a claim or joining a class action. In some situations, these clauses may make it more difficult to obtain full compensation for a competition law infringement. Antitrust victims can be forced to bring damages actions in jurisdictions or before arbitrational tribunals that have less favourable cost and evidential rules; they may also encounter language-related problems. Similarly, preventing forms of collective redress has obvious benefits for defendants whenever a large number of victims only suffered very small individual harm. This paper, available here, explores the extent to which the aims of the Damages Directive and development of a strong EU private enforcement system in Member States’ courts might be undercut by such contractual arrangements. It argues that EU law protects consumers against clauses that could hinder the full effectiveness of the right to compensation…

Michal Gal ‘The Case for Limiting Private Litigation of Excessive Pricing’ (2020) Journal of Competition Law and Economics 15(2-3) 298

Excessive pricing raises strong concerns for private competition litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair in order to calculate damages; and (3) the institutional features of general courts in EU member states. Given that private litigation of competition law violations is only beginning to develop in the EU, and collective redress mechanisms are still viewed with caution by many member states, this is exactly the time to ensure that, as private litigation expands, it will increase welfare. This is the purpose of this paper, which is available here. Section 2 addresses the inherent difficulty of determining when a price becomes unfair. The excessive pricing prohibition, though longstanding, suffers from serious and inherent difficulties in its implementation. In particular, it lacks clear and workable criteria. The challenges can be summarised as follows: to decide…

Jean-François Laborde ‘Cartel damages actions in Europe: How courts have assessed cartel overcharges’ (2019) Concurrences

The primary objective of this study, available here, is to analyse how national European courts have assessed cartel overcharges. In addition, it also provides figures on the development of cartel damages actions in Europe (how many cases were decided, in which countries, with which outcomes, etc.). It was completed with the help of lawyers, law professors, economists, national competition authorities and national judges from 30 European countries.   Now in its fourth edition, this study shows that national courts in Europe have handed down judgments in at least 239 cartel damages actions in 13 countries, relating to more than 63 cartels. In these judgments, courts have given many insights into how to assess cartel overcharges. Section I describes the methodology followed. The process employed for this research involved four steps. The cases were identified; copies of judgments were gathered; using a recent automatic translation service, judgments were translated into English; their content was then analysed. To identify cases, contributors were asked whether they…

Eugenio Olmedo-Peralta ‘The Evidential Effect of Commitment Decisions in Damages Claims’ (2019) Common Market Law Review 56 979

The European Commission and national competition authorities (NCAs) make extensive use of commitment decisions. Since these decisions do not establish the existence of competition infringements, claimants still have to bear the burden of proof in stand-alone damages actions concerning conduct covered by them. However, some evidential effects should be recognised to commitment decisions, as well as to certain statements made in the context of related public enforcement proceedings. This article, available here, describes such effects as follows. Section II outlines the relationship between commitment decisions and the private enforcement of competition law. According to Regulation 1/2003, commitment decisions are adopted without concluding whether competition law has been infringed. Commitment decisions merely state that there are no longer grounds for action by a competition authority, as the behavioural or structural measures taken by the companies involved in an investigation are sufficient to put an end to the potential restriction of competition. In short, the main features of commitment decisions are that: (i) they…

Miguel Sousa Ferro ‘Antitrust private enforcement and the binding effect of public enforcement decisions’ (2019) Market and Competition Law Review 3(2) 51

This paper, available here, provides an overview of the binding effect of public enforcement decisions in follow-on competition law cases in Europe. It discusses the material, subjective and temporal scope of this binding effect. It also tackles other issues, such as the obligations of national courts vis-a-vis non-infringement decisions and ongoing investigations. Finally, it looks into some arguments put forward by litigants before national courts to avoid or circumvent the binding effect of public enforcement decisions. Sections II and III explain the basis for EU and national competition infringement decisions being binding in subsequent damages claims. It follows from Article 16(1) of Regulation /2003, which mainly codified preceding case law, that European Commission decisions identifying infringements of EU competition law which have become final (res judicata) are binding upon national courts in follow-on private enforcement actions. A national court can only escape this binding effect if it believes that the Commission’s infringement decision is invalid and the CJEU declares it to be…

OECD papers on the implications of the pandemic for competition law – merger control, cooperation agreements and exploitative pricing

This post reviews three OECD papers on the implications of the pandemic for competition law. Each paper focuses on a different topic. A first paper focuses on merger control in the time of COVID-19. In times of acute crisis, such as the one provoked by COVID-19, many firms may need to leave the market, which may trigger increased merger activity. Without thorough merger review, there is a serious risk that the economic crisis would result in higher market concentration and market power in several sectors. At the same time, the unparalleled economic uncertainty we are living through means that competition authorities face a number of challenges in the exercise of their merger control powers. A first challenge relates to how to conduct forward-looking competitive assessments in turbulent market conditions. Merger reviews assess the effects of transactions by comparison to the circumstances that would have prevailed without the transaction (i.e. a counterfactual). In most cases, the counterfactual starts from the competitive…

Christian Kersting ‘Liability of sister companies and subsidiaries in European competition law’ (2020) European Competition Law Review 41 125

Traditionally, tort liability – which governs private competition enforcement – attaches to specific legal entities. However, liability for a competition infringement under European law attaches to undertakings, i.e. economic units that may comprise multiple legal entities. Increasingly, jurisdictions have relied on this latter approach also for assigning private liability for competition damages, and a similar approach even seems to have been endorsed by the European Court of Justice in Skanska. As a result, questions regarding which legal entities are liable for competition damages are increasingly coming to the fore, particularly as the answer is often crucial to determine whether certain courts (and countries) have jurisdiction over the claim. Under EU competition law, an undertaking encompasses every entity engaged in an economic activity. An undertaking may consist of several legally independent entities, provided that together they form an economic unit. Within the scope of this economic unit, an innocent parent company is generally liable for the competition infringements of its subsidiaries….