Antitrust Bulletin

Publisher:: Sage Publications, Inc.
Publication date:: 2021-08-12

ISBN:: 0003-603X

Issue Number

No. 69-2-4, December 2024

Latest documents

The Federal Trade Commission’s Antitrust Lawsuit Against the Proposed Microsoft/Activision Merger: Déjà Vu with a Surprise Ending
In 2018, the United States Department of Justice filed an antitrust lawsuit against the $80–100 billion merger between AT&T (a major cable provider) and Time Warner (a major content provider). The government predicted that the merged company would foreclose content to competitors, raise content prices, and slow innovation. The government lost the case because the court did not accept its theory that the merged company would enjoy increased bargaining leverage that would disadvantage competitors by offering the merged company’s content at increased consumer prices. In 2022, the Federal Trade Commission (FTC) offered a similar rationale in seeking to block the Microsoft/Activision Blizzard’s $68.7 billion merger. This paper compares and contrasts the two mergers, as well as three vertical merger cases that occurred around the same time of the closing of Microsoft/Activision, with the intent of highlighting the issues with assessing vertical mergers, with particular focus on online industries.
Retraction Notice
The Fight for the Right to Repair
For more than two decades, a burgeoning “right-to-repair” movement has been underway in the United States, evolving from a nascent effort to democratize automobile repair into a cultural and legal force with ramifications in numerous industries. At the highest level, the right-to-repair movement aims to require manufacturers to provide consumers and independent repair providers with replacement parts, repair manuals, and other such materials used to fix products they own. Although activists have lobbied for the right to repair automobiles since at least 2001, right-to-repair legislation began to gain momentum over the past decade and has expanded from automobiles to other consumer goods, including cell phones, appliances, and other electronic devices, as well as agricultural and medical equipment.
Implied Market Shares and Antitrust Markets as Fuzzy Sets
Market definition is an important aspect of antitrust analysis, but the exercise requires designating each potentially relevant good as either completely in or out of the market. In a market with differentiated goods, this often necessitates making unsatisfactory designations. This article introduces the concept of the antitrust market as a fuzzy set, where each relevant good can have a degree of membership in the market, rather than only the traditional binary in or out designation. A product’s degree of membership in the market is assigned based on its closeness of substitutability to the focal products. We then show how implied market shares can be calculated from a defined fuzzy antitrust market. We illustrate an implementation of these concepts using data from the grocery retail market and demand estimations from prior literature. We also discuss how this concept serves as a middle way between supporters and detractors of market definition, as implied market shares are objects that not only reflect demand substitutability but also allow for the rhetorical benefits of having delineated a market to focus discussion and analysis of competitive issues.
Deal Value Threshold and M&A: A Competition Law Analysis
In 2023, the Indian Parliament introduced amendments to the Competition Act, 2002. The primary focus of these amendments is to provide regulatory certainty, ensure faster market correction, and provide a trust-based business environment in India. These amendments also aim to give the Competition Commission of India (CCI) adequate power to ensure that no anti-competitive practices are undertaken in India. A plethora of amendments have been enacted, and one of the key amendments impacting M&A is the introduction of the Deal Value Threshold (DVT) while retaining the asset and turnover test. The rationale for this amendment is to ensure digital markets are covered within the ambit of DVT and to ensure that no anti-competitive M&A deals are undertaken in the digital market space. The impact of the new additional threshold in India has been analyzed, and the loopholes in the DVT framework have been highlighted. The impact of DVT on M&A deals undertaken in India has been showcased. In addition, solutions have been provided that can be adopted by the CCI in order to plug the loopholes in this new framework to make it comprehensive.
A Prospective Competitive Effects Analysis of the AT&T/Time Warner Merger
The vertical merger of AT&T and Time Warner combined one of the largest multiple video program distributors (MVPDs) in the United States with one of the largest providers of pay-TV programming. This study evaluates the potential competitive effects of the transaction by considering changes in the equity valuations of the respective upstream and downstream competitors to the merging parties when news of their proposed merger became public. Consistent with the government’s central theory of harm, it appears that financial markets expected the proposed transaction to result in Time Warner increasing its carriage fees to AT&T’s and DirecTV’s MVPD rivals. Market reactions to the announcement of AT&T’s commitment to enter into binding arbitration when negotiating future carriage fees for Tuner content provide further support for this inference. The results are difficult to rationalize in terms of the various efficiencies and synergies that AT&T claimed it would realize from the merger.
A Prospective Competitive Effects Analysis of the AT&T/Time Warner Merger
The vertical merger of AT&T and Time Warner combined one of the largest multiple video program distributors (MVPDs) in the United States with one of the largest providers of pay-TV programming. This study evaluates the potential competitive effects of the transaction by considering changes in the equity valuations of the respective upstream and downstream competitors to the merging parties when news of their proposed merger became public. Consistent with the government’s central theory of harm, it appears that financial markets expected the proposed transaction to result in Time Warner increasing its carriage fees to AT&T’s and DirecTV’s MVPD rivals. Market reactions to the announcement of AT&T’s commitment to enter into binding arbitration when negotiating future carriage fees for Tuner content provide further support for this inference. The results are difficult to rationalize in terms of the various efficiencies and synergies that AT&T claimed it would realize from the merger.
How Long Is Too Long? Disentangling the Disposition of Antitrust Cases in the U.S. Federal Courts
The contribution of this study is to disclose the main determinants of the duration of the U.S. antitrust federal court decisions, an issue that has been nearly overlooked by most related studies. As an indirect measure for the time needed to dispose cases, this study uses the duration of the case from the filing of the complaint to the date of the opinion. Using this metric, we employ parametric and nonparametric panel data techniques on a sample of 613 appellate court proceedings on U.S. antitrust cases during the period 1995–2018. The empirical research reveals spatial heterogeneity in terms of case duration among the circuits of the appellate U.S. courts. The econometric analysis supports that the duration of appellate antitrust court decisions depends on administrative-related factors including the way the case was filed in the circuit, the jurisdiction in the case, the “pro se” representation of the undertakings, and the nature of the final judgment. Lastly, based on the flexible semi-parametric analysis, we argue that the impact of these parameters on case duration is linear, regardless of the specification of the parametric part of the model.
How Long Is Too Long? Disentangling the Disposition of Antitrust Cases in the U.S. Federal Courts
The contribution of this study is to disclose the main determinants of the duration of the U.S. antitrust federal court decisions, an issue that has been nearly overlooked by most related studies. As an indirect measure for the time needed to dispose cases, this study uses the duration of the case from the filing of the complaint to the date of the opinion. Using this metric, we employ parametric and nonparametric panel data techniques on a sample of 613 appellate court proceedings on U.S. antitrust cases during the period 1995–2018. The empirical research reveals spatial heterogeneity in terms of case duration among the circuits of the appellate U.S. courts. The econometric analysis supports that the duration of appellate antitrust court decisions depends on administrative-related factors including the way the case was filed in the circuit, the jurisdiction in the case, the “pro se” representation of the undertakings, and the nature of the final judgment. Lastly, based on the flexible semi-parametric analysis, we argue that the impact of these parameters on case duration is linear, regardless of the specification of the parametric part of the model.
How to Exploit Market Power: Horizontal Ownership Concentration and Network Access Pricing
This article reports an evaluation of the impact of horizontal ownership concentration on communications sector access pricing outcomes. Detailed historical data of postacquisition impacts on firms’ access revenue outcomes have enabled analysis for the entire local exchange sector of the United States telecommunications industry. The findings are (1) the sector’s horizontal ownership concentration process has caused key access-providing firms’ average access revenue ratios to be over 16 percent higher; (2) access revenue enhancements, through using market power, by entities belonging to larger groupings, have resulted in aggregate annual fiscal windfalls of between $5 and $6 billion; (3) these windfalls have accounted for between 4.5 and 5 percent of provider firms’ total revenues; (4) on average, each entity evaluated has received approximately between $120 and $150 million in incremental annual revenues via potential overcharge of access rates; and (5) United States telecommunications customers have incurred a between 6 and 7 percent overcharge on monthly bills, over several years, because network access charges have been higher, in part due to horizontal ownership concentration. Access charges are regulated, and horizontal ownership concentration-enhancing deals were allowed only after stringent institutional assessments. The resultant market power exploitation has led to the significant exploitation of United States telecommunications customers. Creation of substantial potential, and across-the-board, inflationary pressures and harm to consumers has been immense. Classic topics, such as access regulation and merger control, remain contemporary, demanding detailed attention, if digital technology is to be ubiquitous in humanity’s service. Concomitantly, key contemporary corporate governance concerns, relating to the emergence of horizontal ownership concentration patterns, also become apposite since the associated outcomes have innate major welfare impacts.