No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
Antitrust Regulation in Japan and South Korea – What Influence Does Chicago School of Antitrust Exercise on Competition Policy and Digital Economy
Already leading the world in the development of consumer electronics, South Korea and Japan have been leading innovators in the creation of digital content economies. Both governments recognized both the commercial potential and the employment possibilities associated with the digital content industry. The sector, however, did not fit easily with existing industrial and technological models of economic development, particularly due to the small size of digital firms, the youth culture orientation of most products and services, and the antiestablishment ethos of the creative industries generally. In Japan, digital content firms created a robust domestic market but struggled to get international market share. Government policy, therefore, has focused on building international interest in digital products. Although South Korea has enjoyed considerable success through their K‐pop cultural exports, it has really capitalized on the country's highly successful online gaming industry. South Korean policy initiatives emphasize public promotion of Korean digital content with sizeable investments in creator and incubator spaces for start‐up firms. Together with initiatives in Singapore, Malaysia, Hong Kong, and Taiwan, the Japanese and South Korean efforts demonstrate how Asian countries have sought to integrate the digital content sector into their national innovation strategies and to jump‐start a promising and potentially valuable economic sector.
Recent calls for using the antitrust laws to break up the large Internet giants are misplaced for a number of reasons. First, similar efforts against oil, tobacco, motion-picture, and telecommunications monopolies have not proved to be beneficial to economic welfare. Second, the failure to break up Microsoft using Section 2 has not proved to be a mistake: competition in operating systems and Internet browsers has flourished recently. Finally, a Section 2 case against Amazon, Facebook, or Google could not succeed if it focused on the digital advertising market. Even in a case based on market power on the other side of their platforms, a structural remedy—a break-up—would not improve economic welfare in the long run.
In many countries, sustainable public procurement is a powerful tool to reflect on national strategic intentions and promote scientific and technological innovation. Based on the perspective of an institutional structure, we filtered out the core policies. Using policy bibliometrics, we analyzed Chinese public procurement policies on promoting scientific and technological innovation, revealed policy-making characteristics, and concluded that the Ministry of Finance should appropriately decentralize the policy-making work to other relevant agencies of the State Council. This article compares the main policy tools from four dimensions in China, the U.S., the United Kingdom, Japan, Germany, France, and South Korea. We issued these pertinent strategies: establishing the vendor database for small and medium enterprises, developing a grade system and the post-evaluation system, formulating detailed implementation methods for high-tech products (services), and carrying out classification management for imported products. For sustainable public procurement policies on promoting scientific and technological innovation, this article provides an effective reference to organize the agencies and formulate the detail measures. This article’s research framework could be applied to analyze other industry policies.
We clarify and defend the Chicago School of antitrust against incorrect and uninformed claims that it represents a narrow set of inefficiency impossibility theorems based on free market ideology. The Chicago School arose decades ago as a reaction to the then current antitrust policies. Chicago prevailed, both as a methodology and in changing antitrust law for the better. That triumph was based primarily on scholarship before 1980, work that focused largely on overthrowing the old order, not on the myriad details that are necessary to implement policy. Moreover, to the extent they addressed implementation issues, prominent Chicago scholars often disagreed. Despite Chicago’s successes, we argue for the term’s demise. The current popular understanding of the Chicago School of Antitrust as a narrow and uniform ideological approach to antitrust is inaccurate. As a result, the term Chicago, as well as the derivative terms Post- and Neo-Chicago, add little value and are frequently misused to make normatively incorrect points. We therefore add our voices to those who doubt the continuing usefulness of such labels, outside of discussions of antitrust history. We hope to hasten the demise of using labels like Chicago pejoratively and as a substitute for the economic analysis that has been at the core of the Chicago School of Antitrust.
One of the most amorphous rules in antitrust is the rule of reason. One of the most important rules in antitrust is the rule of reason. One of the most misunderstood rules in antitrust is the rule of reason. Put together these three propositions and you have the making of real trouble.A decade ago, I showed that the rule of reason is far less amorphous than commonly believed. After reviewing all 495 rule of reason cases from 1977 to 1999, I showed that courts actually followed a burden-shifting approach.This article updates my 1999 study. It concludes that the burden-shifting trend has continued and, in fact, has increased. Courts dispose of 97% of cases at the first stage, on the grounds that there is no anticompetitive effect. They balance in only 2% of cases.Given the trend in the case law, the burden-shifting framework is an important observation. The rule of reason is even more crucial today than it was a decade ago. Because analysis is migrating away from per se analysis and towards the rule of reason, an exploration of what courts actually do in applying the framework may prove useful.This short symposium article begins in Part I with an explanation of my methodology. Part II then presents the results. After providing an overview of the conclusions, it explores the instances of balancing in detail. Part III concludes by synthesizing the approaches of many of the appellate courts.
The conventional wisdom in the antitrust community is that the purpose of the antitrust laws is to promote economic efficiency. That view is incorrect. As this article shows, the fundamental goal of antitrust law is to protect consumers. This article defines the relevant economic concepts, summarizes the legislative histories, analyzes recent case law in more depth than any prior article, and explores the most likely bases for current popular support of the antitrust laws. All these factors indicate that the ultimate goal of antitrust is not to increase the total wealth of society, but to protect consumers from behavior that deprives them of the benefits of competition. When conduct presents a conflict between protecting consumers and improving the efficiency of the economy (e.g., a merger that raises prices but reduces costs), no court in recent years has chosen efficiency over consumer protection. The only exception is the law's determination to protect small sellers from price fixing and other anticompetitive behavior by buyers. This limited concern, however, is just the mirror image of Congress' desire to protect consumers from exploitation. In both buy-side and sell-side cases, the overarching goal is the same - preventing firms that have unfairly acquired power from imposing noncompetitive prices or other terms on their trading partners, thereby transferring wealth from the trading partners to themselves. This conclusion supports a more aggressive approach to many areas of antitrust enforcement, including mergers and joint ventures.
The antitrust laws of the United States have, from their inception, allowed firms to acquire significant market power, to charge prices that reflect that market power, and to enjoy supra-competitive returns. This article shows that this policy, which was established by the U.S. Congress and affirmed repeatedly by the U.S. courts, reflects a tradeoff between the dynamic benefits that society realizes from allowing firms to secure significant rewards, including monopoly profits, from making risky investments and engaging in innovation; and the static costs that society incurs when firms with significant market power raise prices and curtail output.
This paper discusses what the growth of e-commerce means for tax policy and administration, both within countries and between them. Although the fiscal implications of such commerce as yet remain limited, the future may be different and the issues are important. The issues are first discussed with respect to consumption taxes, noting some differences in the situations facing the United States (US) on one hand, the European Union (EU) on the other, and Canada, which in some ways combines characteristics of both. When it comes to income taxes, however, everybody seems to be in more or less the same boat, although the new technology may offer solutions as well as problems for those in the tax business. The paper concludes that, while of course the future remains unknown, when it comes to taking action to deal with the potential implications of e-commerce for taxation, we are by no means at the beginning of the end, but we may, perhaps, be at the end of the beginning.
This article treats the striking divergence in standard of proof for civil casesthe required degree of persuasion for the factfinderbetween Japanese and U.S. law. The civil-law Japan requires proof to a high probability similar to the criminal standard, while the common-law United States requires only that the burdened party prove the fact to be more likely than not. This divergence not only entails great practical consequences, but also suggests a basic difference in attitudes toward the process of trial.As to the historical causation of the difference in standards of proof, civil-law and common-law standards diverged in the late eighteenth century, probably because of one system's French Revolution and the other's distinctive procedure. The French Revolution, in the course of simplifying the civilian law of proof, hid the standards of proof from view. Meanwhile, the common-law jury served to induce judges to articulate standards of proof for the adversary system.As to the current motivation to adhere still to the old standards, the different standards conform to the subtle differences between the two systems' procedural objectives. The civil-law system seeks the legitimating benefits of the myth that its courts act only on true facts and not on mere probabilities. Common-law courts seek legitimacy elsewhere, perhaps in other myths, and thus are free to adopt the standard of proof that more fairly and efficiently captures the real truth of the case.
In this article, the authors interrogate legal and economic history to analyze the process by which the Chicago School of Antitrust emerged in the 1950s and became dominant in the United States. They show that the extent to which economic objectives and theoretical views shaped the inception of antitrust law. After establishing the minor influence of economics in the promulgation of U.S. competition law, they highlight U.S. economists’ caution toward antitrust until the Second New Deal and analyze the process by which the Chicago School developed a general and coherent framework for competition policy. They rely mainly on the seminal and programmatic work of Director and Levi (1956) and trace how this theoretical paradigm became collective—that is, the “economization” process in U.S. antitrust. Finally, the authors discuss the implications and possible pitfalls of such a conversion to economics-led antitrust enforcement.
The Chicago School advanced a particular conceptualization of the relationship between law and economics in antitrust that has been misunderstood for decades. A well-known consequence for US antitrust of their scholarship was for greater determinations of legality through the ad hoc, conduct-specific analysis of the rule of reason standard, inspiring advocacy for a similarly “more economic” approach to EU competition law. But although supporting the substantive economic outcomes of overturning rules of per se illegality, Bork, Posner, Easterbrook, and other Chicagoans routinely and consistently rejected this form of market intervention for determining legality. Rather than ex post effects-based analysis, the Chicagoan approach was to incorporate economics ex ante into the design of generalized norms (rules, presumptions, structured tests) to thereby foster legal certainty and administrability, virtues associated with the formal rule of law. The overlooked importance of the formal rule of law ideal can be discerned from Bork and Easterbrook’s antitrust writing, Posner’s economic analysis of law, and even traced back to the foundational scholarship of the Chicago School of economics. Reemphasizing the importance of legal form in Chicagoan writing challenges their common contemporary portrayal, supporters of a particular version of “more economic” European enforcement, and the supposedly “neo”-Chicago approach.
Throughout the world, the rule against price fixing is competition law's most important and least controversial prohibition. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings conflict with the teachings of oligopoly theory that supposedly underlie modern competition policy. This book offers a fresh, in-depth exploration of competition law's horizontal agreement requirement, presents a systematic analysis of how best to address the problem of coordinated oligopolistic price elevation, and compares the resulting direct approach to the orthodox prohibition. The book elaborates the relevant benefits and costs of potential solutions, investigates how coordinated price elevation is best detected in light of the error costs associated with different types of proof, and examines appropriate sanctions. Existing literature devotes remarkably little attention to these key subjects and instead concerns itself with limiting penalties to certain sorts of interfirm communications. Challenging conventional wisdom, the book shows how this circumscribed view is less well grounded in the statutes, principles, and precedents of competition law than is a more direct, functional proscription. More important, by comparison to the communications-based prohibition, the book explains how the direct approach targets situations that involve both greater social harm and less risk of chilling desirable behavior—and is also easier to apply.
Information and communication technology (ICT) is evolving at an accelerating pace. Competition law and policy aim to secure an active competition process in the market in order to protect customers in their own countries, regardless of the nationality of the actors, including the ICT industry. As the platforms become more oligopolistic, the Japanese government has established a data portability that enables users to transfer from any specific platform, at any time, to open up an environment where new platform-type businesses are created one after another and where active competition is carried out. In this policy discussion, it is necessary to seek methods that include realistic international cooperation that is not subject to regulation or intervention-oriented measures. In addition, discussion based on economic empirical analysis is particularly needed. From the viewpoints of ensuring innovative research and development (R&D) concerning artificial intelligence (AI) and fair competition generally, the way of the Governance of AI Networking should be a nonregulatory and a nonbinding way, taking technical features and responsibility distribution among stakeholders (developers, providers, end users, and third parties) into account.
Although state transformation after the 1980s has been a major topic of debate in political science, the transformation of the Japanese state has not been fully explored, with the pluralist and rational choice approaches dominating within the Japanese politics literature. This article addresses the lacuna by exploring state transformation in Japan's antimonopoly regulation after the 1980s, focusing on the state at the macro level through analysing evolving power relations within the core executive in response to the challenges of governance. The case study reveals the flexible change of power relations within the core executive; the core executive retained its dominance within policy-making arenas through this adaptation, which is regarded as the reconstitution of the state. Drawing on that, the article argues that the nature of state transformation in Japan is the sustained dominance of the core executive as a collective group over the sector through reconstituting the state.
In this paper, we address duopolistic competition when the firms have to assess the results of the interaction at different scenarios. Specifically, we consider the case in which the scenarios are identified with several states of nature and, therefore, the firms face uncertainty on their results. The probability of occurrence of the scenarios is unknown by the firms and they make their output decision before uncertainty is resolved. Within this framework, we analyze competition between firms when these firms exhibit extreme and neutral attitudes toward uncertainty with respect to the final profits. For the variety of cases that can occur, we characterize the sets of equilibria, and provide procedures to determine them. The analysis proposed can also be applied to study situations in a deterministic setting with simultaneous multiple scenarios, and to the analysis of multiple criteria duopolistic competition.
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of ecommerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm’s structure and conduct pose anticompetitive concerns—yet it has escaped antitrust scrutiny. This Note argues that the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output. Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational—even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors. This Note maps out facets of Amazon’s dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon’s structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon’s power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties.
Collusion among buyers leads to social welfare losses, which provide the economic rationale for public enforcement of the antitrust law. This conduct also imposes losses on the victimized sellers, which provide the foundation for private enforcement through private damage actions. In this paper, we present a rigorous economic analysis of buyer cartels. This effort includes both full participation and partial conspiracies. We review the antitrust treatment of collusive monopsony in the United States, the European Union, and Asia, offer a measure of antitrust damages, and examine the necessary precision of the damage estimate. We also suggest that the proper use of modern econometrics should allay judicial concerns with speculation.
This paper shows that competition policy, rather than industrial policy, generated the rapid economic growth in post-war Japan. It also reveals that Japan’s growth rate was lowered from the mid-1970s due to newly introduced industrial policies and paucity of further competition policy. The current Abe government recognises the need for competition policies in Japan to recover from the low-growth period. The paper describes the types of competition policy carried out under Abenomics, especially in National Strategic Special Zones.Abbreviations: METI: Ministry of Economy, Trade, and Industry NSSZ: National Strategic Special Zones
Using new measures of the scope and strength of antitrust policies, we find no evidence that more robust antitrust regimes correlate with more intense local competition or less corporate dominance. The results cast doubt on the common textbook assumption that antitrust policies improve levels of competition.
The study first takes a normative perspective and examines the various goals that have been advanced by competition law literature on the objectives of EU competition law. A critical analysis of this literature shows the weaknesses of an economic welfare approach and the difficulties, as well as some normative objections, to incorporating non-welfare goals in the implementation of EU competition law. The normative perspective is then followed by an analysis of positive EU competition law arriving to the conclusion that the case law of the EU Courts is ambiguous as to the existence of a hierarchy of objectives in EU competition law and that the drafting of the Lisbon Treaty opens the door to a more holistic competition law, in congruent co-existence with the other Treaty provisions and policies instituted by the EU Treaties. The final part criticizes the literature on the goals of EU competition law for its monotonous emphasis on goals. I argue that the choice of a general objective as an enforcement criterion tells us little about whether any particular institution, for example the adjudicative process, should be charged with implementing that criterion. Comparative institutional analysis emphasizes the connections between issues of institutional choice and goals. The question of goals should follow and not precede that of institutional choice. Institutional choice should, however, be comparative and not proceed to choosing an institution without a proper analysis of the weaknesses of the alternative institutions on offer. The conceptualization of the role of courts, and other institutions in a holistic competition law, using comparative institutional analysis, is one of the major challenges faced by EU competition law, and new competition law regimes, in the future.
This article, published in 1989, examines the influence of the Chicago School's antitrust paradigm on the evolution of antitrust law. It argues that courts have accepted many of the Chicago Schools positive models of practices like cartels, tying arrangements, and predatory pricing, but have been slower to adopt key elements of the Chicago School's policy program -- particularly rules of per se legality -- as substantive rules. The article identifies the primary influence of the Chicago School's models in subsidiary decisional contexts, particularly the characterization of practices as within or without established substantive rules; the determination of whether private harms from practices constitute antitrust injury; and in the determination of whether a plaintiff's evidence is sufficient to raise a triable issue of fact that a violation has occurred.
This article, published in 1995, argues that legal realism has influenced antitrust decision making ever since the New Deal. Until the mid-1970s, a majority of the Supreme Court, accepting the realist concept of market coercion, created rules of per se illegality and strict merger standards. Since Sylvania (1977), the Court has largely endorsed the Chicago School's evolutionary view of the market, but has retained the early realists' insights about the judicial role. Most members of the Court have endorsed the legal process school's view of judicial legitimacy. The Court uses economic theory to guide its inquiries, but with an awareness of its institutional limitations within the larger legal system. Instead of using theory to formulate rules of legality, the Court has used it primarily to guide the application of established rules in subsidiary decisional contexts.
During the first seven decades following the enactment of the Sherman Act, competition was the uncontroversial goal of antitrust. The introduction of the consumer welfare standard led to the dissipation of “competition” as the goal of U.S. competition laws. This Essay explores how antitrust lost the goal of competition and argues that this goal should be restored. The Essay reevaluates several influential antitrust propositions. First, while “consumer welfare” was offered as a remedy for reconciling contradictions and inconsistencies in antitrust, the adoption of the consumer welfare standard sparked an enduring controversy, causing confusion and doctrinal uncertainty. In effect, the consumer welfare standard established the greatest antitrust paradox yet. Second, the small-business interests hypothesis, which has often been used to explain the enactment of the Sherman Act, is inconsistent with the well-documented historical record. Third, the logic of Robert Bork’s consumer welfare thesis requires restoration of “competition” as the goal of antitrust. The Essay concludes with a straightforward observation: “consumer welfare” may continue serving as the stated goal of U.S. competition laws but, practically, antitrust has always been and will always be about the preservation of competition.
In this Article, I examine Japanese competition law and policy with a view toward increasing its effectiveness in establishing a pro-competitive Japanese economy.
Online retail has fundamentally changed how consumers shop and products are distributed. As a result, manufacturers impose Internet Minimum Advertised Price (IMAP) policies, prohibiting Internet retailers from advertising prices below a fixed amount. Consumers often encounter these policies through website instructions such as “see price in cart,” “to view price, add to your shopping cart,” and “price unavailable – click to see more.” Manufacturers argue that IMAP policies are non-price vertical restraints that do not run afoul of antitrust laws because they regulate only advertising. However, IMAP policies can and do impact resale pricing, resulting in higher prices and unjustifiable limitations on consumer choice. Recent jurisprudence regarding price fixing, general uncertainty around the legality of resale price maintenance (RPM) under state and federal antitrust statutes, and high pleading standards have led to nearly insurmountable barriers for plaintiffs who raise antitrust challenges to IMAP policies. The Supreme Court held in 2007 that RPM may have procompetitive justifications, and should thus be analyzed using the rule of reason when challenged under federal antitrust law. This Note examines the analysis of IMAP policies in the context of recent antitrust jurisprudence. After a discussion of the relevant antitrust law and an analysis of recent IMAP litigation, this Note concludes that IMAP policies are sufficiently anticompetitive to justify per se prohibition and should be treated as such in state and federal courts.
Antitrust, or competition law, is said to be comprised of two types of offenses—exploitative and exclusionary. The paradigmatic exploitative offense is a cartel, which raises prices to buyers and ultimately to consumers. The paradigmatic exclusionary offense is a boycott to enforce a
The goals of antitrust law continue to be debated because there is no single goal that is unambiguously correct. There is one goal, however, that now commands wider support than any other: protecting consumers and small suppliers from anticompetitive conduct – conduct that creates market power, transfers wealth from consumers or small suppliers, and fails to provide them with compensating benefits. This goal is the predominant objective in the legislative histories, it is broadly supported by the American people, it is easier to administer than total welfare, and it is now espoused by the majority of courts. Proponents of total welfare advance two principal arguments, but neither warrants elevating it over consumer and small supplier protection. First, from a normative perspective, total welfare is arguably the superior goal because it considers the welfare of all participants in the economy, including producers and consumers outside the relevant market. It ignores, however, the transfer of wealth that anticompetitive conduct causes, a transfer that many people regard as exploitative and unfair. Second, from a legal perspective, total welfare is arguably the goal of section 2 of the Sherman Act because it allows a firm to gain monopoly power through superior efficiency. But this safe harbor is equally consistent with a consumer protection goal, since it encourages firms to succeed in the marketplace by providing customers with better products, lower prices, and wider choice.
AbstractEU has been the protagonist in promoting the internationalization of competition laws based on EU competition law norms. The development of China's Antimonopoly Law shows that EU has succeeded so far in establishing itself as the main reference point for China's competition regulation. The success can be mainly attributed to the EU‐China Competition Dialogue (Dialogue), a new initiative set up by EU and China in 2004. The paper reviews the internationalization of EU competition law and its characteristics. It then examines the Dialogue and how EU exported its competition law norms to one of the latest AML secondary legislations on Antimonopoly Pricing. It argues that the Dialogue's informal nature, EU's routinized technical assistance to Chinese competition authorities and its China‐oriented strategy in communication have been highly important in ensuring that the EU Competition Law becomes the main reference point for the AML. However, the paper argues that it is for the same reasons that EU faces weakness in controlling the reception of EU competition law norms by China. Based on this, the paper further illustrates that EU's understanding of competition law internationalization as reflected under the Dialogue has not undergone fundamental changes.
This article describes how prices are treated in economic theory. Section 17.2 begins by introducing the concepts of 'rational preference' and 'utility function', which are standard building blocks of models that attempt to explain choice behaviour. Section 17.3 introduces the notion of a Walrasian equilibrium, where supply equals demand and market prices are determined by the self-interested behaviour of market participants. Section 17.4 considers the possibility of disequilibrium and Walrasian âtonnement as a price-adjustment process in an otherwise stationary economy. Section 17.5 deals with the problem of 'externalities', where agents' actions are payoff-relevant to other agents. Sections 17.6 and 17.7 consider strategic interactions between agents, in the presence of complete and incomplete information, respectively. Section 17.8 deals with dynamic pricing issues and Section 17.9 mentions some of the persistent behavioural irregularities that are not well captured by classical price theory. Section 17.10 concludes and provides a number of directions from which further research contributions may be expected.
“Consumer welfare” is the only articulated goal of antitrust law in the United States. It became the governing standard following the 1978 publication of Robert Bork’s The Antitrust Paradox. The consumer welfare standard has been instrumental to the implementation and enforcement of antitrust laws. Courts believe they understand this standard, although they have failed to effectively analyze it. Scholars hold various views about the desirable interpretations of the standard, and they use judicial statements selectively to substantiate their personal views. This Article introduces the Antitrust Consumer Welfare Paradox: It shows that, under all present interpretations of the term “consumer welfare,” there are several sets of circumstances in which the application of antitrust laws may hurt consumers and reduce total social welfare. The Article shows that Bork’s use of the term “consumer welfare” obscured basic concepts in economics. The Article clarifies that the antitrust methodology permits only surplus analysis and does not accommodate welfare analysis. It explains the conceptual differences between the terms “surplus” and “welfare” and the relevant implications of each. The Article further explains the differences between two other competing standards - “consumer surplus” and “total surplus” - that presently serve as proposed interpretations for the term “consumer welfare.” Each interpretation has its limits and the necessary analytical progress requires conceptual clarity. The Article argues that, whatever good ends the “consumer welfare” phrase once may have served, antitrust law should now lay it to rest.
Many tying arrangements are used by firms that do not have substantial market power in either of the two markets linked together by the tie. Their function must be something other than the enlargement or perpetuation of power. A few ties do involve fairly explicit exercises of market power, but they need not be used for a different purpose than the ties imposed by more competitive firms. This paper considers firms’ use of ties to exploit whatever power they already have over the tying product. The "leverage" theory sees ties as exploiting customers as a group via higher prices, whether or not the tie excludes any rival. By contrast, the foreclosure theory of ties is concerned with exclusion of rivals, mainly in the tied product market, with extension or perpetuation of monopoly as a long term goal. The dominant explanation for variable proportion ties is price discrimination, although it explains some fixed proportion ties as well. Like leveraging, price discrimination results in some customer exploitation. However, while some customers are injured, most price discrimination ties benefit an even larger number of customers and by a greater amount. As a result they are beneficial under both general welfare and consumer welfare antitrust tests. Also like leveraging, a tying firm can profit from price discrimination without foreclosing any rival. Indeed, even firms with small amounts of tying product market power can use price discrimination ties. Although a price-discriminating tie might cover most purchasers of a tied product and thus foreclose a substantial share of the tied market, effective price discrimination neither requires nor typically generates a significant foreclosure or other impairment of the tied market's structure or performance. Indeed, in many litigated cases the tying product was a common commodity such as dry ice, salt, or ordinary printing ink. The least warrant for antitrust intervention occurs when higher tied product prices fail to result from foreclosure of rivals and are not reflected in customer prices that are not higher overall. For example, most ties of complementary products (1) fail to foreclose any rival from anything because the tied product is a common ingredient or other common expendable input; and also (2) fail to result in higher consumer prices for the tying/tied combination because the firm is in competition with other firms and could not assess a monopoly price increase. The last conclusion is true even though a price discrimination tie typically results in higher prices for the tied product alone. Finally, an even stronger case for lower prices results in situations where the tied product is a manufactured good sold at prices above cost. In those cases tying can eliminate double marginalization, thus benefiting both consumers and the tying seller.
Many reasons have been given for weak antitrust enforcement in Japan. In this paper we explore one reason that has been overlooked--the concentration of enforcement authority in Japan's Fair Trade Commission.The paper begins with a description of Japan's antitrust enforcement system, with a particular focus on the current position and activities of the JFTC. We then compare Japan's system to the antitrust enforcement system that has evolved in the United States, primarily to provide the contrast of a system where enforcement is more deconcentrated and enforcers operate in a networked environment rather than in a hierarchical one. We conclude with three suggestions for opening up antitrust enforcement in Japan: increase the networking of the JFTC and other ministries regarding competition matters; strengthen the support structure for private litigation; and encourage the JFTC to participate fully in the growing internationalization of antitrust enforcement.
Chicago School theorists have argued that tying cannot create anticompetitive effects because there is only a single monopoly profit. Some Harvard School theorists have argued that tying doctrine’s quasi-per se rule is misguided because tying cannot create anticompetitive effects without foreclosing a substantial share of the tied market. This Article shows both positions are mistaken. Even without a substantial foreclosure share, tying by a firm with market power generally increases monopoly profits and harms consumer and total welfare, absent offsetting efficiencies. The quasi-per se rule is thus correct to require tying market power and a lack of offsetting efficiencies, but not a substantial tied foreclosure share. However, the quasi-per se rule should have an exception for products with a fixed ratio that lack separate utility, because those conditions generally negate anticompetitive effects absent a substantial foreclosure share. Cases meeting this exception should instead be governed by a traditional rule of reason that requires a substantial foreclosure share or effect.Bundled discounts can produce the same anticompetitive effects as tying without substantial tied foreclosure, but only when the unbundled price exceeds the but-for price. Thus, when the unbundled price exceeds the but-for price, bundled discounts should be condemned based on market power absent offsetting efficiencies, with the same exception for products with a fixed ratio that lack separate utility. When the unbundled price does not exceed the but-for price, bundled discounts should be condemned only when there is substantial foreclosure or direct proof of anticompetitive effects. Alternative tests for judging bundled discounts, such as comparing the effective price to cost, are not only underinclusive, but perversely exempt the bundled discounts with the worst anticompetitive effects.
After a long antitrust slumber, the Supreme Court has become active again in antitrust law, deciding seven cases in the last two years. Since all seven of these cases were decided against the plaintiff, one might think the Court has finally decided to implement the highly conservative Chicago school of antitrust. But so far, it shows no signs of doing so. Rather, while its opinions indicate a determination to cut back on some excesses from an earlier era of pro-plaintiff antitrust decisions, they also indicate an embrace of the moderate Harvard school approach to such issues, rather than an embrace of Chicago school principles. They further indicate a clear embrace of using sound economic analysis to resolve antitrust issues, rather than a resort to either the old formalisms that favored plaintiffs, or new formalisms that try to favor defendants.
Information Technology & Innovation Foundation (ITIF)
- Robert Atkinson
- David Audretsch
Atkinson, Robert, and David Audretsch. 2011. "Economic Doctrines and Approaches to Antitrust."
Information Technology & Innovation Foundation (ITIF).
Google Korea faces antitrust probe for abusing game firms
- Byung-Yeul Baek
Baek, Byung-Yeul. 2018. "Google Korea faces antitrust probe for abusing game firms."The Korea
Times. https://www.koreatimes.co.kr/www/tech/2018/08/133_254496.html (accessed January 17,
2020).