Taming digital gatekeepers: the ‘more regulatory approach’ to antitrust law

Antitrust enforcement and competition policy in the digital economy is high on the agenda of authorities and policymakers. The distinctive features of digital markets and the strategic role played by large platforms apparently require a rethinking of the antitrust regime. Several reform proposals point to the need to integrate the antitrust toolkit with ex ante measures since there is a risk that ex post enforcement would be too slow to successfully keep markets competitive and contestable. The aim of this paper is to investigate whether the invoked regulatory approach reflects the distinctive structural features of digital markets or whether it is just an enforcement short-cut.     

Anticompetitive Employment

Scholars, antitrust agencies, and policy makers have historically paid little attention to anticompetitive practices in labor markets. This was largely due a misconception that antitrust law is meant to govern conventional markets in which goods and services trade, rather than govern labor markets. Antitrust law may also offer a poor remedy to redress employers who enter no-poaching agreements or otherwise impair competition. The primary tension involves antitrust's purpose, which is to promote “consumer welfare.” To identify whether conduct eroded consumer welfare, courts tend to scrutinize whether prices increased. But here, lessening wages can enable firms to sell goods at cheaper prices, benefiting consumers. Another issue is that the typical restraint affects only a smattering of workers instead of lessening wages throughout the greater market. This article uses empirical analyses to show that antitrust should promote labor's welfare as it does consumer welfare, and it argues that enforcement must condemn labor cartels as per se illegal. The research demonstrates that labor cartels are more pernicious than restraints in product markets, as employers can lessen wages with less effort than in product markets. Antitrust should even proscribe no-poaching agreements formed for a legitimate purpose (e.g., to protect trade secrets) because employers could have achieved the same goals using less coercive means; the noncompete agreement, at least, provides labor with a semblance of notice and bargaining power without drawing antitrust scrutiny. The prohibition of labor cartels would thus promote competition and consumer welfare, especially in minimum wage labor markets.     

国外电信法律体制的改革及其对中国的启示

电信业传统上被认为是具有自然垄断性质的行业。为了既避免竞争破坏资源优化配置又保护消费者的利益,许多国家要么对提供服务的私有垄断者进行价格管制,要么对垄断服务企业实行国有化。垄断经营者的低效益和电信技术发展的突飞猛进使得对电信业改革的政治呼声不断提高。在我国电信业改革不断深入的今天,学习外国在互联互通、拨打平等性与号码可带性和频谱分配方面的电信管制改革的政策和实践具有重大的意义。     

Fixing the emissions trading scheme: Carbon price stability in the EU and China

This paper critically questions the legal and economic foundation of price regulation in environmental markets, with a focus on the European Union (EU) and Chinese Emissions Trading Schemes (ETSs). In 2018, the EU adopted a structural reform of its own ETS with the objective of increasing and stabilising carbon prices. This reform raises fundamental questions concerning the free market nature of the ETS and its function as a driver of low‐carbon investments. On the one hand, regulatory adjustments are necessary to address the large surplus of allowances that can result from exogenous shocks (e.g. economic downturn). On the other hand, the risk of regulatory intervention in the market undermines investor certainty. In China, limited regulatory independence and more stringent government control over the market exacerbates the threat posed by price control measures to the integrity of China's ETS and its role as a driver of investments in environmental protection.     

Threat-Based Competition Policy

This note suggests a link between the theory of contestable markets and competition policy. We propose that in the absence of potential hit and run entrants into an industry the behaviour of a firm may be constrained by the fear of intervention by the competition authorities. Hence, in periods in which hit and run entry is believed to be a non-credible threat, the competition authorities can affect a firm's behaviour by the threat of intervention, as well as by intervention itself. Requirements for the successful use of threat-based competition policy are identified, and its potential benefits are outlined.     

Structural Reform Policy: Privatisation and Beyond—The Case of Greece

Privatisation, coupled with liberalisation and competition, constitutes one of the most popular policy options to improve the performance of state-owned enterprises. However, in Greece, it was only after 1991 that privatisation started to gain ground in the political and economic agendas of governments. Drawing upon the theoretical underpinnings of privatisation, the paper overviews and critically analyses the new legal framework on denationalisation in Greece. The paper argues that, though the modernisation of the legal regime is welcomed, the Greek government has failed to treat privatisation as part of wider structural reforms aiming at enhancing competition and foreign investment. The paper concludes that wider structural reforms, including regulatory reform and liberalisation, as well as combating corruption and bureaucracy and promoting transparent capital markets, are absolutely necessary in order to create a competitive environment, which would both complement and support privatisation efforts.     

Iranian methamphetamine and Turkey: an emerging transnational threat

Traditionally, Turkish security officials were engaged with state-level threats from Iran. Their primary concerns were export of revolutionary ideology, sponsorship of terrorism, proliferation of nuclear weapons and energy blackmail. In the recent years, however, the nature of the threat has changed and diversified. Non-state actors, mainly transnational crime syndicates, have begun to pose a significant threat to both Turkey and Iran. Iranian drug networks (IDNs) have become the primary actors in heroin and methamphetamine trafficking through Turkey. The IDN threat transcends the jurisdictions of the two states and casts a debilitating impact on the Asia-Pacific countries. Despite a plethora of enacted initiatives, high profits sustain large-scale trans-regional methamphetamine trafficking. Retail prices in the Asia-Pacific markets approach hundred-fold profits over the production costs of methamphetamine in Iran. In this context, Turkish law-enforcement agencies report increasing amounts of methamphetamine seizures since 2009. The upsurge in seizure quantities is coupled with an escalation of cases and arrests. This paper investigates dimensions of the methamphetamine threat in Turkey, profiles of the actors, shipment routes, and modus operandi of the trafficking syndicates. It provides insight into a non-traditional non-state threat coming out of Iran. The inferences are based on an analysis of 183 methamphetamine case files and 81 provincial questionnaires of the Department of Anti-Smuggling and Organized Crime (KOM).     

Sumptuary administration: How contested market actors shape the trajectory of policy when regulated under fragmented governance

In contemporary society, sumptuary laws regulate contested markets by delegating enforcement responsibilities to the private sector. This can decouple the intention behind policies from the practices to implement them. When state interests do not align concerning the legality of a market, can policy and practice recouple, and if so, how? This article reports on a case study of commercial cannabis in the United States to answer this question. Interviews with 56 cannabis industry stakeholders in California, Arizona, and Texas reveal that policy and practice recoupled through a patterned process that I call sumptuary administration. In each state, regulators drew on a unique set of schemas, or “framework of accountability,” that prioritized a subset of cannabis market participants during the policy-making process. This resulted in missing or ambiguous sumptuary laws. To address business challenges that were tethered to this regulatory environment, cannabis businesses drew on similar schemas to identify appropriate practices. I show how grounding practices in these frameworks legitimized the preferences of the cannabis industry in the eyes of state authorities and influenced specific program policy revisions. Sumptuary administration represents a novel mechanism for understanding the social construction of legality in markets that are regulated under fragmented governance.     

A review of telecom markets in the EU: What did the European Commission learn or not from the past?

The EU telecom regulation relies on a market-by-market sunset approach. In order to facilitate the market review of national regulatory authorities, the European Commission has offered two successive sets of recommended markets susceptible to ex ante regulation. The inclusion or exclusion of a recommended telecom market is analyzed on its competition conditions across the EU. Beginning in 2014 the European Commission published the draft third Market Recommendation. This article aims to give a critical evaluation of those recommended markets by surveying the competition situations on every telecom market in the EU Member States. It observes that while the drafted Third Recommendation makes a reasonable assessment for most telecom markets, it may not have appropriately addressed markets such as retail fixed access, wholesale call origination, wholesale fixed and mobile call termination, wholesale high-quality access, and wholesale broadcasting transmission.     

Price competition in hospital markets: the significance of managed care

Anticompetitive conduct in the healthcare industry is often hard to detect, and has been ignored by some courts that appear to lack an understanding of managed care and its significance in maintaining price competition. These courts have adopted an approach that is far too historical and mechanistic, and is characterized by outdated factors analyzed in isolation from each other. In order to preserve effective price competition, the courts should embrace a realistic analysis that accurately reflects the workings of health services markets. This article describes the many facets of market power and anticompetitive conduct, and how they affect healthcare prices. The author then tums to an analysis of two recent hospital antitrust decisions, and critiques them for their failure to properly analyze the dynamics of local hospital markets.     

BIDDING MARKETS

The existence of a "bidding market" is commonly cited as a reasonto tolerate the creation or maintenance of highly concentratedmarkets. We discuss three erroneous arguments to that effect:the "consultants' fallacy" that "market power is impossible,"the "academics' fallacy" that (often) "market power does notmatter," and the "regulators' fallacy" that "intervention againstpernicious market power is unnecessary," in markets characterizedby auctions or bidding processes.Furthermore we argue that theterm "bidding market" as it is widely used in antitrust is unhelpfulor misleading. Auctions and bidding processes do have some specialfeatures—including their price formation processes, common-valuesbehavior, and bid-taker power—but the significance ofthese features has been overemphasized, and they often implya need for stricter rather than more lenient competition policy.     

BARGAINING OVER FIXED-TO-MOBILE TERMINATION RATES: COUNTERVAILING BUYER POWER AS A CONSTRAINT ON MONOPOLY POWER

The conventional wisdom that mobile operators are able to actas monopolists in pricing call termination on their networkshas recently been challenged by Hutchison 3G's entry into Europeanmobile markets. The European Commission's electronic communicationsregime allows national regulatory authorities to regulate mobiletermination rates if an operator is found to possess ‘significantmarket power’. This requires that the mobile operatornot be constrained by the ‘countervailing buyer power’of incumbents. The claim that incumbent operators possess countervailingbuyer power has been dismissed repeatedly because of their obligationto interconnect with other networks. This conclusion is erroneous.We analyse bargaining over fixed-to-mobile termination ratesand demonstrate that the existence of an interconnectivity obligationis entirely consistent with new entrants such as Hutchison 3Ghaving no market power at all in pricing call termination ontheir own networks.     

Financial reforms and regional investment conflicts in China: A game-theoretic analysis

In the transition from a command to a market economy, macroeconomic stabilization poses a grave problem facing the reform governments. A distinct feature of China's economic fluctuations in the post-1979 period has been its “soft-constraint competition”. A two-region game theoretical model is developed in this paper. We find that monetary decentralization in the earlier stage of economic liberalization takes the inflation and fiscal deficits out of the control of the central monetary authorities. The prospective financial reforms will subject local governments' investment drives to the indirect regulations of monetary policy; but by strengthening monetary restraints, will result in massive borrowing from the domestic, or perhaps more likely, the international financial market to finance government deficits, and hence a large build-up in the stock of debts.     

Contracts, Investment Incentives and Efficiency in the Restructured Electricity Market

The paper highlights and analyzes the tension between designing power sale agreements that reduce uncertainty for the private investors and running the power systems as more efficiently as possible in the restructured electricity market. The features of such agreements are preliminary in resolving this tension and, therefore, in orienting the development of electricity markets restructuring towards a competitive direction. We define a theoretical contractual model, highlighting the tension between the two opposite directions: reducing uncertainty and risk in order to attract private investment and operating the power system efficiently. We apply the theoretical model for analysing the formal structure of a selected sample of power purchase agreements, really operating in the restructured electricity markets all over the world. We show how competitive contracting can increase efficiency pressures and, at the same time, increase investment risk. We then discuss some policy implications for the design of power purchase contracts in the restructured electricity market.     

Independence and accountability of independent regulatory agencies: the case of Turkey

For a long time, governments have delegated their regulatory powers to independent regulatory agencies (IRAs). The aim is to reduce transaction costs and to ensure a credible commitment in the regulatory institutional structure. This paper discusses transition to IRAs in Turkey in terms of independence and accountability. To this aim, we firstly analyze the institutional foundations of transition to IRAs in Turkey from a political economy perspective and then measure their formal independence levels. We find that the pragmatic policies of the incumbent government regarding IRAs negatively influence their independence. This injures the credibility of regulatory commitment and increases the political transaction costs of regulatory process in Turkey.     

THE CASE OF EXPORT CARTEL EXEMPTIONS: BETWEEN COMPETITION AND PROTECTIONISM

Most competition laws do not prohibit anticompetitive conductthat affects foreign target markets as long as there is no spillover effect on the home market. The U.S. in particular justifiesthis leniency towards export cartels by the aim of increasingefficiency in target markets that are suffering from high entrancebarriers for importers. Attempts to use the legal regime ofthe WTO to overcome private restrictions of competition arelikely to fail, because of the fundamental differences betweentrade policy and competition policy. Although a multilateralcompetition policy would be best suited to challenge exportcartels, the current state of the political debate makes itmore likely that second-best solutions such as capacity buildingin lesser developed target states will have to be established.     

监管失灵与市场监管权的重构

从中国市场监管权的制度设计看,明显存在定位模糊、设立缺乏合理考量、配置分散、监管者非专业性等缺陷,实质上是“政企不分”、行政主导的立法模式以及权力文化等体制痼疾在监管法制架构上的一种表象。因此,必须在推进市场化进程和政治改革的过程中,通过厘清政府经济职能、明晰政府经济职权的内涵和范围、重塑监管机构、设计适当的控制机制等路径,实现市场监管权的重构。     

金融全球化视野下的统一监管模式检讨

为了提高金融监管的有效性,越来越多的国家开始采用统一监管的模式,或者通过建立职责覆盖全部金融领域的统一监管机构,或者将两个主要的监管机构合并。统一监管模式在提高监管有效性、对金融集团实施监管、降低监管成本方面具有制度优势,但在监管权力和机构整合问题上存在困难,这需要结合一国的实际情况制定监管改革方案。     

Electricity Market Restructuring and Energy Contracts: A Critical Note on the EU Commission’s NEA Decision

As highlighted in the economic literature, contracts are crucial policy instruments to organize and manage restructured electricity markets. In the early 90’s, during the restructuring of the electricity market in UK, the three main Scottish electricity generators stipulated a long-term, “take-or-pay” contract, the Nuclear Energy Agreement, which contained provisions for the trade of wholesale electricity in Scotland.The European Commission scrutinized such contract in order to derive the congruity of the agreement to European laws. Whilst the NEA was awarded an exemption under Article 85, paragraph 3 of the EU Treaty, the Commission recognized the inner anticompetitive content and potential effects of the contract.In this paper, we criticize the Commission NEA decision and economic reasoning and provide an alternative reading and analytical approach, which lead to opposite results and conclusions (the NEA contract is not anticompetitive and it enhances efficiency in competitive electricity markets). Given that the restructuring process in the EU electricity market is still in fieri, we select the NEA contract as a benchmark-case, in order to provide an alternative reading and a case-study for eventual, future energy contracts administration and authority decisions.JEL K, K2, K230     

Regulatory Threat in Vertically Related Markets: The Case of German Electricity

This paper applies the concept of regulatory threat to analyse the electricity supply industry in Germany, where in contrast to other European member states there is no ex-ante regulation of network access charges. Instead, network access relies on industrial self-regulation and ex-post control by the Cartel Office. The paper extends the concept of regulatory threat to vertically related markets, stressing an optimal balance between the level of the network access charges and discrimination against third parties. The conceptual framework appears to explain developments in the German electricity sector accurately and thus provides a useful tool for policy analysis.