Robert D. Anderson, Alison Jones and Bill Kovacic ‘Preventing Corruption, Supplier Collusion and the Corrosion of Civic Trust: A Procompetitive Program to Improve the Effectiveness and Legitimacy of Public Procurement’ (forthcoming, George Mason Law Review)

You can find this paper here. There is also a shorter version of the paper available here. Governments around the world spend an estimated US$9.5 trillion on goods and services each year. This accounts for roughly one third of government expenditures (29.1% on average in OECD countries) and 10% to 20% of total gross domestic product (“GDP”) in many nations. Furthermore, public procurement is an essential input to the delivery of broader public services and functions of government that are vital for growth, development and social welfare. The special procedures that characterise public procurement are necessary in light of the principal-agent problem and moral hazards that public procurement entails. Conventional responses to the problems of corruption and supplier collusion in public procurement comprise two broad sets of tools. The first, focusing on corruption issues, involves measures to increase the transparency of public procurement and to strengthen the accountability of responsible public officials for malfeasance. The second, aimed at preventing supplier collusion,…

John Connor and Dan Werner  ‘Variation in Bid-Rigging Cartels’ Overcharges: An Exploratory Study’

This working paper  is available here. A summary version, called ‘New Research on the Effectiveness of Bidding Rings: Implications for Competition Policies’ (2019) CPI Antitrust Chronicle April,  can be found here but I have to say I found this shorter version to be slightly confusing, so I would advise you to read the longer paper. There seems to be a consensus that bid rigging is more harmful and deserving of higher penalties than ordinary price fixing violations. Reflecting this, there is empirical evidence that antitrust penalties are more severe for rings than for classic price-fixing cartels. A number of jurisdictions, such as Germany and Italy, impose criminal liability only for bid rigging infringements, but not for other types of cartel. Multilateral organisations, such as the OECD and the International Competition Network, have given special attention to the problems of enforcement against bid rigging. Yet, this antipathy toward bid rigging relative to the more common form of collusive conduct (classic price…

Thibault Schrepel ‘Collusion by Blockchain and Smart Contracts’ 33 Harvard Journal of Law Technology (forthcoming, 2019)

This article, available here, introduces the first taxonomy of collusion on the blockchain. It explores the functioning, robustness and limits of such collusive practices, and highlights how companies may use smart contracts and sophisticated algorithms to collude in the blockchain environment.   An introductory section describes blockchain technology and its potential uses. A blockchain is an open and distributed ledger recording all sorts of transactions between users. Consensus mechanisms are used to make sure that information and transactions are recorded on the blockchain. This, in turn, means that data and records on the blockchain cannot be easily modified, which in turn breeds trust. Blockchains assign three different roles to their users. Blockchain users may read the information on the blockchain, propose new transactions and validate the blocks. On public (“permissionless”) blockchain, all users can read and propose new entries into the blockchain. Block validation is restricted to some users only, following a consensus mechanism. On private (“permissioned”) blockchains, all three actions can…

The Blockchain (R)evolution and the Role of Antitrust

This piece, available here, explores a number of (EU) antitrust issues that may arise in the context of blockchains. It is structured as follows: The paper starts by explaining what the blockchain is and what it can do. The blockchain is a technology that uses a software protocol based on cryptography to keep exchanges secure. It allows anybody in the chain to see all transactions on it, removes the need for trusted intermediaries keeping a transaction ledger, and ensures that the transaction ledger is immutable and very hard to tamper with. Blockchains can be divided into open and permissioned networks. Open (i.e. public) networks are accessible to anyone, so that the database is truly public information. This is the case of the blockchains underlying Bitcoin and Ethereum. Permissioned (i.e. private) networks make access conditional upon authorisation by the owner or owners of the network. An example of a permissioned network is Corda, a distributed ledger platform designed specifically for financial institutions to…

Sebastian Louven and David Saive ‘Antitrust by Design – The Prohibition of Anti-Competitive Coordination and the Consensus Mechanism of the Blockchain’ ZRI Working Paper

This paper, available here , argues that important competition concerns arise from the use of consensus mechanisms in blockchains. Under such mechanisms, new information is only added to the database if the majority of network participants, the ‘nodes’, agree to do so. This requires coordination between the various network participants, which raises questions regarding whether and to what extent this voting behaviour is anticompetitive. The paper also discusses what type of measures may be adopted to ensure that a blockchain complains with competition law by design. It is structured as follows: Its second section provides the legal background for concerns about the functioning of consensus mechanisms. Information may be exchanged between competitors in a blockchain that would otherwise have remained undisclosed to the participating companies or the public. In some cases, public disclosure or selective disclosure of certain information may have procompetitive effects, e.g. when information is aggregated and contributes to greater price transparency so that customers can make more informed decisions, thus…

Michael J. Frese ‘Civil Liability for Single and Continuous Infringements’ (2018) World Competition 41 (2) 179

Infringement decisions by competition authorities in Europe provide irrefutable, or at least prima facie evidence of antitrust violations in follow-on cases brought before national courts. This binding effect of infringement decisions is meant to ease the burden on injured parties seeking to obtain damages. Evidentiary rules applicable to investigations thus have a bearing on the outcome of civil litigation and the scope of potential damages exposure. The single and continuous infringement (SCI) is an example of such an evidentiary rule. This legal construct alleviates the burden on competition authorities to prove individual details of cartels whose membership and activities may have evolved over time. However, appropriate limiting principles are required to ensure that defendants are not paying for harm they have not caused or could not have prevented. This article, available here, discusses the evidentiary value of single and continuous infringement findings in follow on damages litigation, and explores the available limiting principles. It is structured as follows: After the introduction,…

Steve Davies  ‘The deterrence value of competition policy can and should be measured’

This blog post – which can be found here –  pulls together the results from three recently completed papers on cartel deterrence (namely: (1) “The Deterrent Effect of Anti-Cartel Enforcement: A Tale of Two Tails”, with Bos, Davies, Harrington and Ormosi, 2017; (2) “Quantifying the deterrent effect of Anti-Cartel Enforcement”, Davies, Ormosi & Mariuzzo, 2017; and (3) “Cartel enforcement and deterrence over the life of a Competition Authority”, with Armoogum, Davies & Mariuzzo, (2017)). Given that deterrence can never be directly observed – because it refers to events that never occur – the papers are instead based on two statistical regularities that the authors uncovered from close scrutiny of large databases already in the public domain. The first regularity comes from a historical comparison of the overcharges set by 500 legal and illegal cartels. This comparison reveals a significantly lower incidence of illegal cartels in the two tails of the distribution of overcharges – i.e. when it is illegal to…

Joe Harrington “A Proposal for a Structural Remedy for Illegal Collusion“ Antitrust Law Journal, Forthcoming

The argument of this paper – which can be found here – is straightforward: competition authorities should use a structural remedy when penalising some cartels. The remedy would force cartel member(s) to sell productive assets to other firms for the purpose of making the market more competitive.  Given the people the author thanks, and the example he provides, I believe this was inspired by the recent Brazilian experience. The paper begins with an overview of developments in cartel sanctions over the last 30 years, including: (i) the adoption of leniency programs, (ii) a marked increase in the amount of pecuniary penalties, and (iii) the imposition of criminal sanctions. However, ‘Even if all of these developments have resulted in substantial progress in the fight against cartels, the evidence is that current enforcement falls well short of being an effective deterrent. Many cartels continue to form and operate (…). Furthermore, many of these cartels are not the product of rogue employees but…

John Connor ‘Cartels Costly for Consumers’

This working paper – which can be found here – focuses on recent trends in cartels worldwide, with a special emphasis on the economic injuries generated by illegal collusion. The basic argument is that the harm caused by cartels is immense; and that global antitrust fines for discovered international cartels were less than 1% of the economic injuries sustained (my emphasis). The data is derived from his Private International Cartels (PIC) database; in particular, he examined a sample of more than 1100 private international cartels that were discovered between January 1990 and the middle of 2015. It leads to a number of findings: The number of discovered cartels across the world has consistently increased over the last 25 years. This trend is likely related to the increasing number of jurisdictions that  have adopted competition rules and created competition agencies during this period. Affected commerce (i.e. estimates of the dollar value of commerce controlled by these cartels)  are available for about…

Alison Jones and William E. Kovacic ‘Identifying Anticompetitive Agreements in the United States and the European Union – Developing a Coherent Antitrust Analytical Framework’ (2017) Antitrust Bulletin 62(2) 254

This is a very substantial paper on the appropriate analytical framework for identifying anticompetitive agreements . It can be found here. The paper focuses on how the debate on rules and standards, and on the balance of Type I and Type II errors, affects the analytical framework for identifying infringing agreements in the US and EU. From their standpoint, these debates have been influential in discussions about how to identify anticompetitive unilateral practices and mergers, but have not been relevant for similar discussions regarding horizontal agreements. Also, from their point of view: “the question of how agreements are to be analysed under both the US and the EU jurisprudence is also unduly opaque; it is frequently difficult to ascertain whether agreements, including joint venture and other horizontal collaboration and distribution agreements, are compatible with the law. In particular, confusion about the role and scope of per se rules, the role and scope of ancillary restraint doctrines, and how competing anti- and…