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  • Series: Research Handbooks in Competition Law series x
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Edited by Deborah Healey, Michael Jacobs and Rhonda L. Smith

This content is available to you

Edited by Deborah Healey, Michael Jacobs and Rhonda L. Smith

This content is available to you

Deborah Healey and Rhonda L. Smith

Chapter 1 outlines the changes in the competition law environment occasioned by issues such as the increase in the number of competition law systems globally, and the diversity of approaches to competition law. These and other issues such as differing political economies, legal systems, and economic views, influence what constitute effective competition law and policy from the perspective of different jurisdictions. Issues around world trade and digitization complicate matters further. This chapter outlines the approach to selection of jurisdictions for participation in this edited collection, and the methodological approach to analysis of competition law within one or several jurisdictions which is contained in each chapter. The approach of the various contributors is outlined.

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Deborah Healey

Chapter 2 explores the goals of competition law both historically and currently, when there is significant debate about the effectiveness of existing models and whether they should be amended or more broadly interpreted than laws for efficiency and consumer welfare. The chapter examines in detail the differing approaches of the US and the EU to goals and assesses the approaches of newer adopters of the competition laws, particularly in Asia. The chapter seeks to give form to current debates about goals and methodology, recognizing that competition law is particularly susceptible to changes in economic thinking and political ideology. It considers other goals which might be adopted, such as fairness and equality. The chapter draws some conclusions about the implications of different jurisdictional choices in relation to goals and prospects for change.

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Alan Devlin

Antitrust is ultimately empirical. It asks whether restraints, practices, and mergers injure competition and hence consumers. Armed with the facts, enforcers can answer that question without regard to doctrinal considerations. Alas, the competitive implications of impugned conduct are not always clear. Some effects lie in the future and can only be predicted, not measured. Others are incommensurate, hard to reduce to a utilitarian calculus, or difficult to model. Stymied by insufficient knowledge, antitrust has developed a process for resolving the core question. The law defines markets, assigns shares, infers power, and deduces pro- or anticompetitive effects. That process reflects suppositions drawn from economic theory, albeit often with lag. The resulting doctrine is what we know as antitrust today. As competition law rests on empiricism, we should expect doctrinal analysis to ebb as the body of useful evidence grows. To a degree, that is what has happened. At the US competition agencies today, for instance, the decision whether to challenge a merger invariably turns on data-driven analysis. Merger simulation based on willingness to pay can predict price effects, diversion ratios estimate substitutability, and gross-upward-pricing-pressure indices measure a firm’s post-merger incentive to raise price in a market for differentiated products. Such empirical methods are now standard fare. The result can bypass traditional assessments of market definition, like interchangeability, and may obviate inferences about a firm’s power to raise price from its share of a market. The increasing use of empirics through econometric modeling is to be applauded. Yet, the march of progress has raised at least three difficulties, which are the object of this chapter. First, a disparity has emerged between (1) how the agencies analyse a merger’s competitive effects in deciding to intervene and (2) how the agencies prove up their cases in court. Second, empirical methodologies that relegate doctrinal considerations like market definition to an ancillary role may undermine predictability and, perhaps, consistency. The conventional methodology first defines the market by assessing functional characteristics and then draws prescribed inferences from market shares. That process limits gamesmanship and goal-driven analysis. Yet, its inflexibility can overlook nuance, especially in novel contexts. As the law progresses towards an ever-more-factual approach, the role of doctrinal analysis may subside further, with attendant costs and benefits. Third, antitrust’s economic progress has yielded a more refined enquiry focused on price, output, and dynamic-efficiency effects. In 2016, however, claims arose that such neoclassical analysis has narrowed antitrust’s remit, fostering industrial concentration and an entrenchment of economic power. This chapter explores those points, illustrating them with recent cases that have emerged from the new economy and traditional industries.

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Geoff Edwards and Jennifer Fish

This chapter focuses on the evolving relevance of economic analysis in competition law and policy in the US, the EU and Australia. A battle has played out in each country between legal form-based approaches that focus on preserving market structures and economic effects-based analyses that focus on consumer welfare. Antitrust in the US, populist and structural since the 1930s, underwent a distinct shift to the consumer welfare standard in the 1970s, and has remained firmly focused on effects, although, today, a new wave of populism is threatening to reassert structural thinking. Competition policy in the EU, conceived by ordo-liberals, has remained in the grip of form-based structural approaches for much longer, but since the turn of the century there has been some evolution towards a more economic effects-based approach, albeit in fits and starts. In Australia, effects-based analysis and the consumer welfare standard have enjoyed some favour, particularly in the latter part of the last century, but structural form-based thinking remains common.

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Lin Ping and Yan Yu

China has become the third-largest antitrust jurisdiction after the United States and the European Union since it passed its Anti-Monopoly Law (AML) 2007. The enforcement of the AML has attracted worldwide attention. Hong Kong, on the other hand, as a small economy and having started enforcing its general competition law only two years ago, is a very new member of the international antitrust community. A special administrative region of China, Hong Kong established its Competition Ordinance (CO) independently. Hong Kong’s CO is set up and enforced under its common law system, whereas the AML of China is a part of China’s continental legal system. Despite these distinctions, some interesting comparisons can be made between the two competition law systems and the roles of economics in their enforcement. This chapter reviews the competition law regimes of China and Hong Kong and analyses the use of economic analysis in implementing their respective laws.

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Mark Williams

This chapter seeks to consider and compare the cartel penalty regimes of the US, EU, China and Australia. The underlying policy objectives of cartel penalties are analysed and the approaches of different jurisdictions in seeking disgorgement of unlawful profits, and the imposition of civil and criminal penalties on firms and individuals is assessed. Policy makers appear sometimes to be confused as to the policy objectives they seek to achieve and the tools they employ to achieve those outcomes. Deterrence, punishment and restitution are the three primary goals of cartel penalty policy but often the tools and remedies employed by enforcement agencies and the courts are not necessarily optimal to achieve one or more of these goals. The chapter considers, in particular, the imposition of criminal sanctions on firms and individuals and whether the theoretical and practical difficulties of criminal prosecution justify the deterrent or punishment objective achieved or whether civil personal liability in terms of director disqualification and liability to civil claims could be more effective in achieving a reduction in cartel activity.

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Rob Nicholls

This chapter examines the effects of algorithm-driven horizontal and vertical anticompetitive collusive conduct through the lens of competition law in a number of jurisdictions. It finds that existing antitrust law is able to address some conduct, but that other forms of restraint which are algorithmically driven and facilitated by platform business models may require a change in competition law. The chapter analyses current application of competition law in a number of jurisdictions and provides recommendations as to the form of changes required.

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Miguel de la Mano and Alison Jones

This chapter examines the analysis of vertical agreements under Article 101 of the Treaty on the Functioning of the European Union (TFEU). It observes that, in spite of modernization and the European Commission’s promise to adopt a more ‘effects-based’ approach towards vertical agreements based on a consumer welfare objective, Article 101 analysis has not evolved as might have been anticipated. Rather, the legal system still fails adequately to reflect, and is out of kilter with, the economic logic of vertical restraints. Not only does it continue to rely heavily on broad presumptions of illegality which, as applied, are not justified by economic theory or experience (creating Type I error risks), but the dearth of decided cases means that a transparent structure for analysing and balancing the competitive harms and benefits of vertical arrangements (especially new online distribution practices) has not developed. This uncertainty has been compounded by the disparities in approach to enforcement emerging at the national level. The chapter considers how best to align European Union (EU) law with mainstream economic thinking, and proposes an approach which focuses more closely on the concepts underpinning the rules than the historic categories of analysis that have, to date, been relied upon. It suggests how these changes might be effected and an administrable system governing vertical restraints put in place. It argues that, in order to achieve this change, the Commission should publish some carefully selected decisions in relation to vertical agreements, especially in more complex effects cases. Such decisions will provide the opportunity for scrutiny of the Commission’s policy by the EU courts and ensure that the law in this important area is elucidated, particularly as distribution practices adapt to the challenges presented by the online environment and growth of e-commerce. These decisions, along with the information gathered in the course of the Commission’s e-commerce sector inquiry, and its review of the 2010 regime, may provide the crucial foundations for the revision of the guidelines and block exemption governing vertical agreements in the EU.