Margin Squeeze: Where Competition Law and Sector Regulation Compete

This paper starts with an overview of the different ways in which an undertaking can abuse its dominant position through pricing and then zooms in on margin squeeze. We start by defining margin squeeze, and then take a thorough look at its assessment framework. It is examined why some undertakings appear to be more susceptible to this abuse than others. The paper subsequently investigates the place of margin squeeze in the European legislative framework, considering which kind of antitrust abuse margin squeeze could be and how the ECJ currently conceives it. Finally, we explore the interaction of the competition law approach with the regulatory approach to margin squeeze.
Reference :

Friso Bostoen, 'Margin Squeeze: Where Competition Law and Sector Regulation Compete' (2017) 53 Jura Falconis 3.

Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking

Recent case law concerning intermediation activity in digital markets shows that one of the key concerns of competition authorities is the use by online platforms of a type of agreement generally traced to the category of Most Favoured Nation clause (MFN), typically included in B2B long-term contracts, where the supplier undertakes to guarantee the best price conditions to the intermediary concerned as compared with any other dealer. The competitive assessment of such clauses (also known as parity clauses) is controversial in both traditional and digital markets. At first sight, they appear to offer potential benefits to consumers, at least in terms of price transparency and reduction of transaction costs; however, they also give rise to competition concerns, as they may serve to acquire or strengthen monopoly pricing. Their recurrence in the digital environment has revitalized an ongoing debate on the likely effects of these clauses on competition. The article first analyzes the business models adopted by intermediaries in e-commerce and the concerns that have arisen under competition law, with particular regard to the increasing use of some forms of MFN clauses. The analysis is conducted in the light of several cases in the field of online hotel booking brought before national competition authorities (NCAs) for alleged violation of competition rules. The article then questions the theories of harm and the main critical issues deriving from such case law, highlighting the difficulties hidden in the adoption of a generalized approach in the competitive assessment of the clauses at issue.
Reference :

M. Colangelo, Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking, (2017) 8 (1) Journal of European Competition Law & Practice 3-14 (published online on 27/07/2016)

Regulating Supermarkets: The Competition for Space

This paper shows how supermarket location, size and format are regulated privately by major supermarket chains and publicly by government planning and competition agencies. The inquiry is spurred by the tenacity of the competition policy prescription that public regulation of supermarket siting be wound back so that private regulation has a free hand. Having conducted case studies in the field, within a framework of regulatory studies, the paper finds that public regulation is often only a mild restriction on private strategies to site. Yet public regulation, and land-use planning law especially, remains a crucial point at which collective processes and social values may exert an influence over food provision and the social spaces of our suburbs and towns. The paper recommends that regulatory law reform be holistic rather than narrow minded.
Reference :

Christopher Arup, Caron Beaton-Wells and Jo Paul, 'Regulating Supermarkets: The Competition for Space' (2017) University of New South Wales Law Journal (forthcoming)

Problematising Supermarket-Supplier Relations: Dual Discourses of Competition and Fairness

The power asymmetryies that exists between major supermarket chains and suppliers, in Australia and abroad, have has been analysed largely through an economic-legal lens, focussed predominantly on consumer prices. This article takes a wider stance, considering the economic and then the social discourses that arise in response to the supermarket-supplier relationship, before examining how such discourses shape regulatory responses. We find that the two are not, as they appear on first blush, disconnected or in conflict. Rather, as with many socio-economic interactions, they are connected and interdependent. Applying a problematisation analysis, we interrogate the underlying assumptions and question the ways in which the issues relating to the imbalance in bargaining power between major supermarkets and suppliers are framed in mainstream policy debates, and then consider the implications. On our analysis, the problem that this imbalance is seen to pose has dimensions of both competition and fairness, creating challenges that require a range of responses. It is thus a problem that can be tackled by appealing to the traditional platforms of both the left and right of politics. A dual discourse also facilitates effective political risk management. While a neoliberal approach allows government to be seen as promoting competition to maximise efficiencies and consumer welfare, tough measures on socially unacceptable behaviour enables government to align with important social-cultural values.
Reference :

Caron Beaton-Wells and Jo Paul, 'Problematising Supermarket-Supplier Relations: Dual Discourses of Competition and Fairness' (2017) Griffiths Law Review (forthcoming)

Identifying Anticompetitive Agreements in the United States and the European Union: Developing a Coherent Antitrust Analytical Framework

Commentary in both the US and the EU has repeatedly debated whether, and when, it is more efficient to use “rules” or “standards” to determine the legality of conduct subject to the antitrust laws and how such rules or standards should be formulated. This paper concentrates principally on the question of how this debate impacts on the analytical framework for identifying infringing agreements in the US and EU. It sets out the view that the question of how agreements are to be assessed under both the US and the EU jurisprudence is unduly opaque. Confusion as to, in particular, the role and scope of per se rules, the role and scope of ancillary restraint doctrines, and how competing anti- and procompetitive effects of mixed agreements are to be balanced against each other have led to excessive complexity in the system. The paper considers what factors might shape development of a coherent and optimal framework for antitrust analysis in a jurisdiction. Once these factors have been set out, it examines how US and EU competition law have approached the issues identified in relation to the appraisal of agreements and what features of each system have moulded the developments there. It concludes that both systems require some development to create more intelligible frameworks based on common concepts rather than historical categories of antitrust analysis and, further, that competition agencies could play an important part as catalysts in this progress.
Reference :

[2017] Antitrust Bulletin, Forthcoming TLI Think! Paper 57/2017 GWU Law School Public Law Research Paper No. 2017-12 GWU Legal Studies Research Paper No. 2017-12 King's College London Law School Research Paper No. 2017-17

Regulatory Avoidance and Suicide: An Empirical Analysis

This article is the first to empirically analyze the impact of tort liability on suicide. Counter-intuitively, our analysis shows that suicide rates increase when potential tort liability is expanded to include psychiatrists — the very defendants who would seem best able to prevent suicide. Using a 50-state panel regression for 1981 to 2013, we find that states that would hold psychiatrists (but not other doctors) liable for malpractice resulting in a suicide experienced a 12.8% increase in suicides. The effect is even stronger, 16.8%, when we include controls. We do not believe this is because suicide prevention doesn’t work. Rather, we theorize that it is because some psychiatrists facing potential liability choose not to work with patients at high risk for suicide. The article makes important contributions to the law of proximate cause and to the more general phenomenon of regulatory avoidance. Traditionally, one could not be liable for malpractice that causes another’s suicide — the suicide was considered a superseding and intervening cause. About half of states retain the old common law rule. Others have created exceptions for psychiatrists only, or for all doctors, and some have abandoned the old rule entirely. Our findings suggest that expanding liability for psychiatrists may have an adverse affect. Accordingly, this article suggests that the best policy might be to retain or revive the traditional no-liability-for-suicide rule for mental health specialists. The implications are enormous: over 40,000 people in the United States die each year from suicide. Keywords: torts, suicide JEL Classification: K13, K32, I18
Reference :

Indiana Law Journal (forthcoming 2017)

Causation Actually

The article debunks the consensus that in concerted action, concurrent causes and alternative liability situations, the actual causation requirement is missing. While courts and scholars insist that in these cases tort law holds liable parties who clearly did not cause the victim’s harm, this article offers a novel approach. Using a simple model and applying it to leading decisions, it shows that a party who did not and could not even potentially injure the victim could nevertheless be a but-for reason for the harm. The article also challenges claims that causation theories like concerted action, substantial factor and alternative liability are fair to the victim or that they are designed to deter actors from engaging in “antisocial” activities. In deviation from the prior literature, this article reveals that these causation theories reduce the parties’ incentives to take care and result in more, rather than fewer, accidents. This article further shows that, despite lip service to the contrary, tort law promotes harmful activities that judges declare immoral, antisocial and illegal. The article argues, however, that in many cases this result can be justified on efficiency grounds. The article concludes that the but-for test should have a larger role in causation analysis, and it provides a number of policy recommendations to courts and lawmakers. Keywords: actual causation, concerted action, concurrent causes, alternative liability, but-for, substantial factor, NESS, efficiency, welfare, fairness, deterrence
Reference :

51 Georgia Law Rev. 1 (2016) (Lead Article)


This Article argues that mass torts involving multiple tortfeasors can be welfare enhancing. It begins by investigating the role of “dilution of liability” — a phenomenon that has been condemned for its role in facilitating accidents. According to the literature, in alternative care situations where the damage to the victim is constant, dilution of liability leads to inefficient precaution levels and consequently to more (bad) accidents. The Article deviates from this literature and shows that dilution of liability can be welfare enhancing. This is so even in the quintessential case where dilution of liability has been denounced. The Article further shows that an activity that is socially undesirable and should give rise to liability can become desirable as the number of tortfeasors increases. Put differently, it shows that in some situations an activity that would and should be condemned if conducted by one tortfeasor may become socially desirable if done by many. The Article analyzes the conditions under which such desirable “tortfests” occur, and it has important implications to the salience literature. After investigating the impact of tortfests on actors’ precaution and activity levels, the Article examines mechanisms that would incentivize actors, in certain situations, to join a group wrongdoing or combine with others to initiate one. The result, it is argued, could increase societal welfare. Keywords: tortfest, mass torts, dilution of liability, salience, alternative care, collusion, punitive damages, activity levels, precaution levels, economic analysis JEL Classification: A12, D20, D61, D72, K13
Reference :

80 U. Chi. L. Rev. 953 (2013)

Apportioning Liability Behind a Veil of Uncertainty

This article challenges the reason that led most states to abandon the “no contribution” rule. Under the rule if a victim obtains a judgment against two tortfeasors but chooses (even arbitrarily or out of spite) to recover only from one, the “chosen one” must pay the entire judgment while the other is exempt although both are liable. This is the case even if the paying tortfeasor is only 1% at fault while the non-paying tortfeasor is 99% at fault. The rule has been lamented by tort reform crusaders as immoral and unfair. One tortfeasor, the argument goes, should not bear the entire burden while the more culpable tortfeasor is exempted from liability. In deviation from the prior literature, the article employs economic theory to show that the “no contribution” rule that has been crowned as efficient is fair and just. It adopts a contractarian approach to analyze different apportionment regimes including joint and several liability (with and without contribution), several liability and market share liability. Relying on modern decision theory the article shows that individuals behind a veil of ignorance, unaware as to whether they would be victims or injurers may in fact choose the much criticized "no contribution" rule. In doing so the article sheds new light on a fierce and ongoing debate and concludes with a new framework for analyzing apportionment policies. Keywords: Apportionment, Contribution, Joint and Several Liability, Market Share Liability, Rawls, Veil of Ignorance, Harsanyi, Fairness, Justice, Economic Analysis JEL Classification: K13, D61, D63, D31, A12, A13
Reference :

62 Hastings L. J. 1729 (2011)

Predatory Bundling and the Exclusionary Standard

Recent decisions - all relying on a stylized example first provided by the Ortho court - hold that a multi-product seller that uses a bundled discount in a way that excludes an equally or more efficient competitor engages in predatory bundling. According to these decisions, a bundle can be considered predatory even when the price of the bundle exceeds its cost. The article offers evidence demonstrating that the Ortho's stylized example and its monopoly leveraging theory are erroneous. The article further shows that even when a bundle's price excludes more efficient competitors and even when a component in the bundle is priced below cost, and thus sold at a loss, it may still have welfare enhancing effects. The result is that bundles that fail the discount allocation test and even bundles that fail the Brooke Group test may still be desirable. The article provides a number of examples from the airline and telecommunication industries to illustrate that both exclusionary and below cost bundles can be not only welfare enhancing, but also very common. Keywords: Predatory Bundling, Bundled Discount, Package Discount, Predatory Pricing, Exclusionary Behavior, Antitrust, Industrial Organization JEL Classification: K21, L12, L41, L42
Reference :

67 Wash & Lee L. Rev. 1231 (2010) (Lead Article)