Michal Gal
University of Haifa, Faculty of Law, Faculty Member
- Michal Gal (LL.B., LL.M., S.J.D.) is Professor and Director of the Forum on Law and Markets at the Faculty of Law, U... moreMichal Gal (LL.B., LL.M., S.J.D.) is Professor and Director of the Forum on Law and Markets at the Faculty of Law, University of Haifa, Israel. She was a Visiting Professor at NYU, Columbia, Georgetown, Melbourne and Lisbon. Prof. Gal is the author of several books, including Competition Policy for Small Market Economies (Harvard University Press, 2003). She also published scholarly articles on competition law issues and has won prizes for her research and for her teaching. Inter alia, she was chosen as one of the ten most promising young legal scholars in Israel (2007) and as one of the leading women in competition law around the world. Her paper, "Merger Policy for Small and Micro Economies", won the Antitrust Writings Award for best paper on merger policy in 2013, and her paper on “Access to Big Data” (with Daniel Rubinfeld) won the award for best paper on unilateral conduct (2016).
Prof. Gal is the President of the International Academic Society for Competition Law Scholars (ASCOLA). She served as a consultant to several international organizations (including OECD, UNCTAD) on issues of competition law and was a non-governmental advisor of the International Competition Network (ICN). She also advised several small economies and regiional organizations on the framing of their competition laws. She is a board member of several international antitrust organizations, including the American Antitrust Institute (AAI), The Antitrust Consumer Institute, the Asian Competition Law and Economics Center (ACLEC). She clerked at the Israeli Supreme Court, and her work is often cited in the decisions of the Court on competition matters.edit
With data rapidly becoming the lifeblood of the global economy, the efficiency of its use significantly affects both social and private welfare. While the volume of data collected has reached astronomical proportions, the fact that most... more
With data rapidly becoming the lifeblood of the global economy, the efficiency of its use significantly affects both social and private welfare. While the volume of data collected has reached astronomical proportions, the fact that most data are collected in a system that is largely modular and distributed creates a “Tower of Babel” of different databases, thereby potentially limiting synergetic knowledge production. Data standardization is key to facilitating and improving the use of data. Indeed, standardization is a precondition for the operation of industries in which cross-firm and cross-industry data exchanges are critical. It can also create substantial benefits when data synergies carry high value. It does so by reducing the three main technological obstacles to data portability and interoperability: metadata uncertainties, data transfer obstacles, and missing data.
Despite the importance of data standardization, the role of the government in such standardization is rarely examined. This article analyzes the justifications for and the limitations of data standardization in light of data’s special characteristics. We first review the relevant characteristics of data and data markets. We discuss the three main technological obstacles to widening the use of data, based on interviews with data scientists. We then explain how data standardization affects these obstacles and analyze the benefits and costs of data standardization. As shown, data raises new considerations about the appropriate interventionist role for regulators, that are generally absent from debates about the standardization of other products, and adds a novel dimension to some of the traditional considerations raised in more typical cases. For example, on the plus side, data standardization can lead to smoother data flows, better machine learning, and easier policing in cases where rights are infringed or unjustified harms are created by data-fed algorithms. It might also help support a more competitive and distributed data collection ecosystem. At the same time, increasing the scale and scope of data analysis can create negative externalities in the form of better profiling, increased harms to privacy, and cybersecurity harms. Repercussions for investment and innovation in data collection and analysis are also analyzed.
Finally, we explore whether market-led standardization initiatives can be relied upon to increase welfare, and evaluate the role governmental-facilitated standardization should play, if at all. We show that the need for reviewing and possibly facilitating data standards can be especially strong where potential data synergies are cross-industry or inter-temporal. We also explore the appropriateness of different regulatory methods for achieving these tasks. While governmental facilitation of data standardization may be justified only in limited scenarios, the current situation in which data standardization is rarely considered carries a large price tag.
Despite the importance of data standardization, the role of the government in such standardization is rarely examined. This article analyzes the justifications for and the limitations of data standardization in light of data’s special characteristics. We first review the relevant characteristics of data and data markets. We discuss the three main technological obstacles to widening the use of data, based on interviews with data scientists. We then explain how data standardization affects these obstacles and analyze the benefits and costs of data standardization. As shown, data raises new considerations about the appropriate interventionist role for regulators, that are generally absent from debates about the standardization of other products, and adds a novel dimension to some of the traditional considerations raised in more typical cases. For example, on the plus side, data standardization can lead to smoother data flows, better machine learning, and easier policing in cases where rights are infringed or unjustified harms are created by data-fed algorithms. It might also help support a more competitive and distributed data collection ecosystem. At the same time, increasing the scale and scope of data analysis can create negative externalities in the form of better profiling, increased harms to privacy, and cybersecurity harms. Repercussions for investment and innovation in data collection and analysis are also analyzed.
Finally, we explore whether market-led standardization initiatives can be relied upon to increase welfare, and evaluate the role governmental-facilitated standardization should play, if at all. We show that the need for reviewing and possibly facilitating data standards can be especially strong where potential data synergies are cross-industry or inter-temporal. We also explore the appropriateness of different regulatory methods for achieving these tasks. While governmental facilitation of data standardization may be justified only in limited scenarios, the current situation in which data standardization is rarely considered carries a large price tag.
We analyze contractual clauses which limit the ability of licensees to challenge patents at the basis of their licensing agreements. In particular, we study no-contest clauses, which prohibit licensees from contesting the validity of the... more
We analyze contractual clauses which limit the ability of licensees to challenge patents at the basis of their licensing agreements. In particular, we study no-contest clauses, which prohibit licensees from contesting the validity of the patent, and challenge-penalty clauses, which penalize licensees for doing so. We develop a model that we use to compare three legal regimes: “No Restriction,” in which the patent holder is given complete contractual freedom, “Partial Restriction,” in which no-contest clauses are forbidden but challenge penalties are allowed, and “Total Restriction,” in which neither no-contest nor challenge penalty clauses are enforced. We show that No Restriction is unlikely to be optimal, and further, we provide necessary and sufficient conditions under which Total Restriction is optimal. The rule we suggest differs significantly from the one currently applied by most courts.
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While never completely dormant, international antitrust has gained a new momentum in the past two decades or so, evidenced by the intensity of the global exchange on international antitrust issues. This momentum is driven, inter alia, by... more
While never completely dormant, international antitrust has gained a new momentum in the past two decades or so, evidenced by the intensity of the global exchange on international antitrust issues. This momentum is driven, inter alia, by the significant increases in international trade. It is also fueled by the exponential growth in the number and trading power of jurisdictions that have adopted antitrust laws, thereby increasing possible jurisdictional overlaps while providing a wider toolbox to deal with antitrust matters with a transborder dimension. Such developments strengthen the need to solve an existing paradox: while major businesses are often global, antitrust rules regulating their conduct are not.
Academic scholarship plays an important role in these developments, both mapping the challenges that lie ahead - based on past efforts and the current state of antitrust around the world - and suggesting ways to meet such challenges. This book review analyzes three recent significant contributions to this literature, while focusing on three related questions that this scholarship raises. First, what is international about antitrust? Second, what challenges are faced by international antitrust? Third, what are the prospects for future developments in international antitrust: do history and realism militate against a true international solution, or can such a solution evolve and, if so, under what conditions?
Academic scholarship plays an important role in these developments, both mapping the challenges that lie ahead - based on past efforts and the current state of antitrust around the world - and suggesting ways to meet such challenges. This book review analyzes three recent significant contributions to this literature, while focusing on three related questions that this scholarship raises. First, what is international about antitrust? Second, what challenges are faced by international antitrust? Third, what are the prospects for future developments in international antitrust: do history and realism militate against a true international solution, or can such a solution evolve and, if so, under what conditions?
Research Interests:
This article challenges the conventional wisdom that not much can be done under the existing atomistic system of antitrust enforcement to solve the problem of sub-optimal deterrence of international cartels. Low deterrence results from... more
This article challenges the conventional wisdom that not much can be done under the existing atomistic system of antitrust enforcement to solve the problem of sub-optimal deterrence of international cartels. Low deterrence results from the fact that international cartels are generally prosecuted by only a fraction of the jurisdictions harmed by them and that monetary sanctions in those jurisdictions are generally based on harm to their domestic markets only. To solve this problem, this article proposes a novel legal tool which enables countries to adopt and rely upon foreign findings of international hard-core cartels, provided that the foreign decisions meet criteria that ensure that such reliance is reasonable and fair. As elaborated, this free movement of judgments holds potential to overcome the main obstacles to efficient deterrence and to significantly increase both domestic as well as global welfare. Its costs can also be largely overcome by designing appropriate solutions. The political implications are also not prohibitive. As shown, jurisdictions already rely on foreign judgments that do not significantly differ from the decisions at hand.
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Current law and economics literature identifies two main types of errors courts can make in applying antitrust law. Courts may erroneously label a conduct as anti-competitive although competition is not harmed. Alternatively, courts may... more
Current law and economics literature identifies two main types of errors courts can make in applying antitrust law. Courts may erroneously label a conduct as anti-competitive although competition is not harmed. Alternatively, courts may fail to identify anti-competitive conduct and thus fail to attack it. This article focuses on a third possible error where a court identifies, correctly, anti-competitive conduct but its mode of interference, its proscribed remedy, harms competition. It analyzes such error in the context of anti-competitive contract reformation. Such error occurs, for example, where a court has chosen a reformation option that is less efficient and effective than an alternative reformation option. Accordingly, this article identifies a set of clear and coherent principles for contract reformation in order to eliminate, or at least reduce, the occurrence of the third error. The analysis moves beyond the received wisdom that contract reformation should simply sever the anti-competitive parts of a contract if so doing does not alter the nature of the contract, and suggests that in most cases courts should invalidate the contractual relationship in its entirety.
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International trade has changed some of the challenges faced by antitrust authorities: it has added an international dimension. Under the current system of international antitrust, the backbone of enforcement is unilateral: each country... more
International trade has changed some of the challenges faced by antitrust authorities: it has added an international dimension. Under the current system of international antitrust, the backbone of enforcement is unilateral: each country applies its own tools to deal with international antitrust issues within the constraints imposed upon it by public international law. This enforcement pattern is sometimes coupled with cooperation agreements which are based on the realization that while cooperation among firms might be anti-competitive, this is generally not true for cooperation among countries. Yet such cooperation is often limited.
This paper, which is part of a book on Cooperation, Comity And Competition Policy (Oxford University Press, 2009), analyzes the effects that a unilateral enforcement system has on a small economy, by focusing on a specific case study: Israel. The case of Israel is interesting not only as a stand-alone case study, but mostly because it provides useful insights into the reality of enforcing antitrust in a globalized world by a small economy. As the paper indicates, even when it possesses the legal tools to tackle international antitrust issues, Israel often suffer from serious practical deficiencies. Most importantly, it frequently cannot create a credible threat to large, multinational firms that engage in anti-competitive conduct which harms its economy. It also has limited resources and incentives to deal with international anti-competitive conduct, especially when such conduct is addressed by other jurisdictions. As a result, despite the sometimes severe effects of anti-competitive conduct on its markets, Israel, like other small economies, is a marginal player in the globalized antitrust regime and is generally a passive bearer of the effects of international anti-competitive conduct and of the enforcement actions of larger jurisdictions rather than proactive confronters of such issues and actions. This observation has important implications for a globalized antitrust regime.
The paper also analyzes some intriguing issues which arise from public international law doctrines of extraterritoriality. For example, it analyzes the issue of whether the effects doctrine acts as a pre-condition for a finding of an anti-competitive conduct if some of the parties are foreign or does it apply only if there is a finding of an anti-competitive conduct that has direct legal implications for a foreign firm. It also analyzes the issue of whether presumptions of illegality can apply in cases which involve foreign firms and in which jurisdiction is based on proof of "a significant and direct" anti-competitive effect.
This paper, which is part of a book on Cooperation, Comity And Competition Policy (Oxford University Press, 2009), analyzes the effects that a unilateral enforcement system has on a small economy, by focusing on a specific case study: Israel. The case of Israel is interesting not only as a stand-alone case study, but mostly because it provides useful insights into the reality of enforcing antitrust in a globalized world by a small economy. As the paper indicates, even when it possesses the legal tools to tackle international antitrust issues, Israel often suffer from serious practical deficiencies. Most importantly, it frequently cannot create a credible threat to large, multinational firms that engage in anti-competitive conduct which harms its economy. It also has limited resources and incentives to deal with international anti-competitive conduct, especially when such conduct is addressed by other jurisdictions. As a result, despite the sometimes severe effects of anti-competitive conduct on its markets, Israel, like other small economies, is a marginal player in the globalized antitrust regime and is generally a passive bearer of the effects of international anti-competitive conduct and of the enforcement actions of larger jurisdictions rather than proactive confronters of such issues and actions. This observation has important implications for a globalized antitrust regime.
The paper also analyzes some intriguing issues which arise from public international law doctrines of extraterritoriality. For example, it analyzes the issue of whether the effects doctrine acts as a pre-condition for a finding of an anti-competitive conduct if some of the parties are foreign or does it apply only if there is a finding of an anti-competitive conduct that has direct legal implications for a foreign firm. It also analyzes the issue of whether presumptions of illegality can apply in cases which involve foreign firms and in which jurisdiction is based on proof of "a significant and direct" anti-competitive effect.
Research Interests:
In most jurisdictions the legal inquiry into whether a firm enjoys a monopoly position is an integral part of an inquiry into whether a firm has abused its market power, and a positive answer to the first is a precondition for conducting... more
In most jurisdictions the legal inquiry into whether a firm enjoys a monopoly position is an integral part of an inquiry into whether a firm has abused its market power, and a positive answer to the first is a precondition for conducting the second. This combination creates some inefficiencies. Most notably, market participants, including the would-be monopolist, are uncertain of the monopolist's market position until its conduct is challenged before the courts. This paper explores a novel regulatory mechanism which seeks to separate the two stages of inquiry and to empower the antitrust authorities to declare a firm a monopoly even when it is not part of an inquiry into possible abusive conduct. As this article shows, the regulation by declaration mechanism has substantial benefits when applied to some categories of cases. It creates a red flag effect for the monopolist, which notifies it, in advance, of its legal position. It also creates a green flag effect that increases the incentives of market participants to monitor the conduct of the declared monopolist. As a result, the incentives of the declared monopolist to engage in anti-competitive conduct in the first place, are reduced. The declaratory mechanism also increases the level of coherency of law enforcement. At the same time, the declaratory mechanism comes with a significant price tag. Primarily, it requires the authority to spend significant resources on inquiring whether a firm holds a monopolistic position, despite the fact that it might never abuse its market power. Yet, as this article shows, in some categories of cases the benefits of the declaratory mechanism outweigh its costs. In such cases, the symbiosis that the proposed mechanism creates between government regulation and private orderings can increase the efficiency of regulatory tools designed to limit abusive conduct. The article, thus, further expands the literature on the restructuring of state regulation by mechanisms of self-control that operate in the shadow of the state.
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One of the most important market imperfections in modern capitalism and surprisingly one of the most under-regulated is oligopoly pricing (conscious parallelism). Only few suggestions have been made over the years to regulate oligopoly... more
One of the most important market imperfections in modern capitalism and surprisingly one of the most under-regulated is oligopoly pricing (conscious parallelism). Only few suggestions have been made over the years to regulate oligopoly pricing. All suggestions pose serious obstacles to their efficient application. Accordingly, oligopoly pricing is not regulated. It is left to the workings of the market (or pure luck), while acknowledging the marketis limited regulatory force. This article proposes a novel method for regulating oligopoly pricing by way of introducing a government-supported maverick into an oligopolistic industry for a limited time. The maverick will price its products at competitive or near-competitive levels, based on considerations of consumer or total welfare. His rivals will follow his pricing strategy, or incur significant losses and possibly exit the market. As will be shown, the proposal may significantly reduce allocative inefficiency by reducing the welfare losses from supra-competitive pricing. The threat of intervention might be sufficient, in itself, to reduce the problem of oligopoly pricing. It may also reduce productive inefficiency by combating the problem of inefficient plant and firm sizes. This article analyzes the market conditions that must exist for this proposal to be operational and points to its benefits as well as its costs and limitations.
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The economic characteristics of an economy - most notably its size, its openness to trade and its remoteness from its trading partners, greatly affect the competitiveness and performance of its markets by reducing internal and external... more
The economic characteristics of an economy - most notably its size, its openness to trade and its remoteness from its trading partners, greatly affect the competitiveness and performance of its markets by reducing internal and external competitive pressures. Accordingly, small, insulated economies should devise appropriate policies that offset at least some of these effects. This paper analyzes some of the effects of smallness and remoteness on optimal competition law. The first part provides a basis for the discussion by surveying the basic economic effects of small market size. The second part builds upon these observations to analyze some of the major effects of small size on optimal competition law. In particular, a dichotomy is suggested between cases in which small size affects the content of the rules and those in which small size only strengthens the need for the adoption of a certain rule. The article exemplifies these general principles by focusing on New Zealand's competition law in an attempt to seek whether, and to what extent, such law is actually attuned to the effects of small, open, remote markets.
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A realistic analysis of antitrust must deal in positive terms with political influences. Political influences are especially strong in the antitrust arena, where decisions and policy measures often significantly affect the profitability... more
A realistic analysis of antitrust must deal in positive terms with political influences. Political influences are especially strong in the antitrust arena, where decisions and policy measures often significantly affect the profitability of market players. It is thus important, in designing an antitrust regime, to acknowledge such influences and to design institutions and methods that will harness political aspirations to the achievement of antitrust goals. Accordingly, the goal of this article is to analyze the different effects political motivations might have on antitrust, and to suggest tools that may minimize such effects. A short theoretical analysis of the political economy of antitrust enforcement is followed by some recent and interesting examples of cases in which political influences shaped antitrust decisions. The conclusion that is reached is that we should wisely recognize that politics cannot be simply ignored. Building upon this conclusion, the article then introduces and analyzes some institutional design mechanisms that can be applied in order to reduce political pressures and even harness them for the goals of antitrust.
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A bit over a decade ago the Israeli competition law was amended. The legislator simply 'cut and paste' Article 82 of the Treaty of Rome, which prohibits the abuse of dominance, into the Israeli Competition Act. The question this article... more
A bit over a decade ago the Israeli competition law was amended. The legislator simply 'cut and paste' Article 82 of the Treaty of Rome, which prohibits the abuse of dominance, into the Israeli Competition Act. The question this article addresses is whether the copying of Article 82 has been a Trojan horse - in that its adoption into brought in doctrines and legal rules which did not serve well Israeli competition law, or whether it served as a racing horse, in that it move forward the Israeli law of abuse. The answer, I suggest, is a hybrid horse. Nonetheless, a few years of exercise on the local racetrack have strengthened its racing abilities by acclimatizing it to the special conditions of the new legal environment. The article uses the Israeli experience as a case study and reaches some interesting conclusions with regard to the conditions necessary for a successful legal transplant.
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In the past two decades the number of jurisdictions that adopted a competition law has grown exponentially. Yet many of them, most notably developing jurisdictions and small ones, face significant obstacles to efficient enforcement.... more
In the past two decades the number of jurisdictions that adopted a competition law has grown exponentially. Yet many of them, most notably developing jurisdictions and small ones, face significant obstacles to efficient enforcement. Indeed, a World Bank study estimated that competition authorities in advanced countries are 40% more effective than their counterparts in developing ones. Many of these problems result from the unilateral enforcement model which currently dominates competition law.
This essay argues the regional competition law agreements on joint enforcement and advocacy (RJCAs) hold an important potential to solve many of the enforcement problems that developing and small jurisdictions face and can provide additional benefits that go beyond such solutions. It also argues that the costs involved in such agreements are not prohibitive and many can be overcome by structuring appropriate solutions. Accordingly, RJCAs hold the potential to create Pareto-superior solutions to enforcement problems relative to unilateral enforcement.
The essay then broadens the analysis and focuses on the potential effects of RJCAs on non-member states. It is argued that such agreements create much lower negative externalities on non-member states and on international coordination efforts than do regional trade agreements. On the contrary- they often create positive externalities on non-member jurisdictions. Accordingly, they offer an important potential for strengthening competition law enforcement and should generally be encouraged.
Finally, it argues that RJCAs generally further the international efforts for coordination and cooperation in competition law. They might even serve to overcome the main obstacle for including anti-cartel provisions in the WTO or in another supranational enforcement body.
The analysis is timely, given that the past few years have experienced a wave of regionalism which is not only characterized by an increased dynamism but is also often characterized by more ambitious and deeper levels of integration, taking steps that go beyond information sharing and comity. Not surprisingly, all of the new regional agreements involve developing or small signatories.
This essay argues the regional competition law agreements on joint enforcement and advocacy (RJCAs) hold an important potential to solve many of the enforcement problems that developing and small jurisdictions face and can provide additional benefits that go beyond such solutions. It also argues that the costs involved in such agreements are not prohibitive and many can be overcome by structuring appropriate solutions. Accordingly, RJCAs hold the potential to create Pareto-superior solutions to enforcement problems relative to unilateral enforcement.
The essay then broadens the analysis and focuses on the potential effects of RJCAs on non-member states. It is argued that such agreements create much lower negative externalities on non-member states and on international coordination efforts than do regional trade agreements. On the contrary- they often create positive externalities on non-member jurisdictions. Accordingly, they offer an important potential for strengthening competition law enforcement and should generally be encouraged.
Finally, it argues that RJCAs generally further the international efforts for coordination and cooperation in competition law. They might even serve to overcome the main obstacle for including anti-cartel provisions in the WTO or in another supranational enforcement body.
The analysis is timely, given that the past few years have experienced a wave of regionalism which is not only characterized by an increased dynamism but is also often characterized by more ambitious and deeper levels of integration, taking steps that go beyond information sharing and comity. Not surprisingly, all of the new regional agreements involve developing or small signatories.
Research Interests:
For the most part, competition policy literature focuses on large economies. Yet the economic paradigms on which such competition policies are based do not necessarily apply to the many small market economies that exist around the world.... more
For the most part, competition policy literature focuses on large economies. Yet the economic paradigms on which such competition policies are based do not necessarily apply to the many small market economies that exist around the world. As this paper argues, the size of an economy necessarily affects the optimal competition policy that should be adopted by it. The paper demonstrates the effects of market size both on rules of thumb used in competition policy as well as on more general policy prescriptions, such as policy goals, trade-offs and remedial tools. The implications of this article extend beyond domestic competition policy to the evaluation of the current global drive towards the world-wide harmonization of competition policies.
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Monopoly pricing per se, that is without need of proof of anti-competitive conduct or intent, is regulated very differently on both sides of the Atlantic, at least in theory. U.S. antitrust law sets a straightforward rule: monopoly... more
Monopoly pricing per se, that is without need of proof of anti-competitive conduct or intent, is regulated very differently on both sides of the Atlantic, at least in theory. U.S. antitrust law sets a straightforward rule: monopoly pricing, as such, is not regulated. In contrast, under EC law excessive pricing is considered an abuse of dominance and is punishable by fine and subject to a prohibitory order. These approaches fit the divide between the regulation of exclusionary and exploitative conduct: whereas exclusionary conduct is an offense against antitrust law on both sides of the Atlantic, exploitative conduct generally only breaches EU law.
This article analyzes these regulatory approaches, their historical and theoretical roots, as well as the differences that exist in practice between the two systems. As will be shown, the divergent legal rules reflect different ideological goals and different assumptions about how markets operate. The U.S. views the unregulated economy as essentially competitive, if the creation of artificial barriers is prohibited. This approach places significant emphasis on the workings of the market and considers monopoly created by means other than artificial barriers to be relatively unimportant. It also reflects the limited role granted to government in regulating markets directly and the social, moral and political values attributed to the process of competition. EC law reflects a lesser belief in the ability of market forces to erode monopoly and a stronger belief in the ability of a regulator to intervene efficiently in setting the business parameters of firms operating in the market. It also reflects a stronger emphasis on distributional justice.
The importance of the analysis lies beyond antitrust intervention in monopoly pricing, as it opens a window to much broader themes which underlie the competition policies of both jurisdictions and enables us to exemplify and contrast the foundations of both regulatory systems. The regulation of excessive pricing encapsulates issues such as the goals and underpinning of EC and U.S. antitrust systems; the equilibrium point which was adopted to balance between the forces of Darwinian capitalism and those of social justice; the role of government regulation; the balance between practical problems and theoretical principles; and the assumptions regarding the relative administrability of various types of regulation. Monopoly pricing regulation is thus, in many ways, a microcosm of competition policy.
This article analyzes these regulatory approaches, their historical and theoretical roots, as well as the differences that exist in practice between the two systems. As will be shown, the divergent legal rules reflect different ideological goals and different assumptions about how markets operate. The U.S. views the unregulated economy as essentially competitive, if the creation of artificial barriers is prohibited. This approach places significant emphasis on the workings of the market and considers monopoly created by means other than artificial barriers to be relatively unimportant. It also reflects the limited role granted to government in regulating markets directly and the social, moral and political values attributed to the process of competition. EC law reflects a lesser belief in the ability of market forces to erode monopoly and a stronger belief in the ability of a regulator to intervene efficiently in setting the business parameters of firms operating in the market. It also reflects a stronger emphasis on distributional justice.
The importance of the analysis lies beyond antitrust intervention in monopoly pricing, as it opens a window to much broader themes which underlie the competition policies of both jurisdictions and enables us to exemplify and contrast the foundations of both regulatory systems. The regulation of excessive pricing encapsulates issues such as the goals and underpinning of EC and U.S. antitrust systems; the equilibrium point which was adopted to balance between the forces of Darwinian capitalism and those of social justice; the role of government regulation; the balance between practical problems and theoretical principles; and the assumptions regarding the relative administrability of various types of regulation. Monopoly pricing regulation is thus, in many ways, a microcosm of competition policy.
Research Interests:
Article 102 TFEU has been interpreted as prohibiting not only exclusionary abuses, but also exploitative ones. In particular, sub-section (a), which prohibits ‘directly or indirectly imposing unfair purchase or selling prices’ by a... more
Article 102 TFEU has been interpreted as prohibiting not only exclusionary abuses, but also exploitative ones. In particular, sub-section (a), which prohibits ‘directly or indirectly imposing unfair purchase or selling prices’ by a dominant firm, has been understood as proscribing not only unfair low prices (predatory prices) but also unfair high prices per se, that is without need of proof of anti-competitive conduct or intent.
The prohibition against excessive prices is one of the most intriguing competition law prohibitions. Its analysis involves a moral, economic and sociological exploration, with long historical roots. Such regulation encapsulates issues such as the goals and the underpinnings of competition law; the equilibrium point which is adopted to balance between the forces of Darwinian capitalism and those of social justice; the role of government regulation; the balance between practical problems and theoretical principles; and the assumptions regarding the relative administerability of various types of regulation. Monopoly pricing regulation is thus, in many ways, a microcosm of competition law. Accordingly, this chapter analyzes the rationales of the prohibition as well as its ability to achieve them in practice. It combines a doctrinal analysis with a critical one.
The chapter is structured as follows. Part I analyzes the rationales that stand at the basis of the excessive pricing prohibition: economic, moral and political economy rationales, as well as its historical roots. Part II analyzes the conceptual challenges that it raises. Part III focuses on the elements of the prohibition as well as the methodologies that were developed for applying it. Part IV challenges the prohibition on practical grounds. A conclusion ensues.
The prohibition against excessive prices is one of the most intriguing competition law prohibitions. Its analysis involves a moral, economic and sociological exploration, with long historical roots. Such regulation encapsulates issues such as the goals and the underpinnings of competition law; the equilibrium point which is adopted to balance between the forces of Darwinian capitalism and those of social justice; the role of government regulation; the balance between practical problems and theoretical principles; and the assumptions regarding the relative administerability of various types of regulation. Monopoly pricing regulation is thus, in many ways, a microcosm of competition law. Accordingly, this chapter analyzes the rationales of the prohibition as well as its ability to achieve them in practice. It combines a doctrinal analysis with a critical one.
The chapter is structured as follows. Part I analyzes the rationales that stand at the basis of the excessive pricing prohibition: economic, moral and political economy rationales, as well as its historical roots. Part II analyzes the conceptual challenges that it raises. Part III focuses on the elements of the prohibition as well as the methodologies that were developed for applying it. Part IV challenges the prohibition on practical grounds. A conclusion ensues.
Research Interests:
While much has been written on international antitrust, not much scholarship has focused on the unique antitrust enforcement challenges facing small and developing jurisdictions in a globalized world, their causes, or how these challenges... more
While much has been written on international antitrust, not much scholarship has focused on the unique antitrust enforcement challenges facing small and developing jurisdictions in a globalized world, their causes, or how these challenges shape coordination efforts. Moreover, while scholars often assume low enforcement levels on international antitrust issues in such jurisdictions, this assumption was never proven. This paper takes on this challenge. It reports on a unique dataset that is comprised of case studies of the enforcement actions of forty-eight jurisdictions. As shown, even when they possess the legal tools to tackle international antitrust issues, small jurisdictions and developing economies often suffer from serious practical and motivational deficiencies. Most importantly, they frequently cannot create a credible threat to enforce their laws against large, multinational firms that engage in anticompetitive conduct that harms their economy. Moreover, they also often have limited resources and incentives to deal with international anticompetitive conduct. As a result, despite the potentially severe effects of anticompetitive conduct on their markets, these jurisdictions are habitually passive bearers of the effects of international anticompetitive conduct rather than proactive confronters of it. Consequently, their interests are routinely overlooked both by international firms and by other jurisdictions. Yet some tools, explored in the paper, can help overcome at least some of these enforcement challenges.
These findings also have important implications for cooperative international antitrust. To be sure, jurisdictional overlap in international antitrust issues has created dependencies among different countries, which, in turn, enhance the need for coordinating antitrust policies between jurisdictions based on negotiation and persuasion rather than hierarchical mechanisms of control. Yet due to their limited bargaining power resulting from the enforcement patterns identified in this paper, a negotiated outcome is unlikely to grant small and developing jurisdictions a piece of the total welfare pie that is proportional to their size or their contribution to global welfare. Nor is it likely to solve many of the global welfare issues that arise from existing enforcement patterns. The paper suggests some tools that small and developing jurisdictions can employ in order to play a more effective role in the international antitrust arena.
Although this paper focuses on antitrust, some of its conclusions have implications that go well beyond this field of law. In fact, the analysis of the unique enforcement challenges faced by small and developing jurisdictions in a predominantly unilateral enforcement regime, and the implications that these challenges have for the creation of an international regime, may well carry over to other legal fields in which globalization creates domestic issues.
These findings also have important implications for cooperative international antitrust. To be sure, jurisdictional overlap in international antitrust issues has created dependencies among different countries, which, in turn, enhance the need for coordinating antitrust policies between jurisdictions based on negotiation and persuasion rather than hierarchical mechanisms of control. Yet due to their limited bargaining power resulting from the enforcement patterns identified in this paper, a negotiated outcome is unlikely to grant small and developing jurisdictions a piece of the total welfare pie that is proportional to their size or their contribution to global welfare. Nor is it likely to solve many of the global welfare issues that arise from existing enforcement patterns. The paper suggests some tools that small and developing jurisdictions can employ in order to play a more effective role in the international antitrust arena.
Although this paper focuses on antitrust, some of its conclusions have implications that go well beyond this field of law. In fact, the analysis of the unique enforcement challenges faced by small and developing jurisdictions in a predominantly unilateral enforcement regime, and the implications that these challenges have for the creation of an international regime, may well carry over to other legal fields in which globalization creates domestic issues.
Research Interests:
One of the most interesting and challenging phenomena of our information age is the rapid and significant change that takes place in high-technology industries. This change is shaking some of our assumptions regarding the role of... more
One of the most interesting and challenging phenomena of our information age is the rapid and significant change that takes place in high-technology industries. This change is shaking some of our assumptions regarding the role of technology (e.g., endogenous or exogenous), productions methods (e.g., commercial entities vs. social communities), markets (e.g., product or innovation markets), market characteristics (e.g., network industries, faster information transfer to market players and consumers), and non-market management systems. . It requires us to recognize the effects of such changes on the economic environment and to ensure that our regulatory tools secure the positive welfare effects that such changes can bring about. The papers in this special issue of the Journal of Competition Law and Economics attempt to meet this two-pronged challenge and shed light on the implications of changes in the marketplace for both the market's invisible hand and the government's visible one. In particular, they address the over-arching concerns expressed by some commentators that competition law may not be sufficiently nimble or accurate to detect and remedy competition violations in more innovative industries.
Research Interests: Antitrust (Law), Open Source Software, Behavioral Economics, Remedies (Law), Open Source, and 12 moreNetwork Effects, Intelectual Property, Inovation, High Technology Market, Schumpeter, Definition of Marketing, Hightech, Monopolization, Dynamic efficiency, Search Neutrality, Abuse of Dominance, and reverse payments
Developing jurisdictions often share some socio-economic characteristics, including highly concentrated markets, state ownership of major businesses, scarce human and financial resources, poor infrastructure, systemic poverty, cronyism,... more
Developing jurisdictions often share some socio-economic characteristics, including highly concentrated markets, state ownership of major businesses, scarce human and financial resources, poor infrastructure, systemic poverty, cronyism, and corruption. This article attempts to sketch some of the implications of such characteristics on the competition law rules to be adopted by developing jurisdictions, based, inter alia, on the experience some developing jurisdictions already have with such laws. The analysis raises intriguing and complex issues, such as what the country seeks to and can probably derive from a competition law; What should be the presumptions that stand at the basis of the law; How should the lack of resources and the political economy characteristics affect the design of competition law institutions and the formulation of substantive prohibitions; and should public interest considerations be incorporated into the law, and if so how and by whom.
Research Interests:
This article introduces a special symposium issue of the Antitrust Law Journal based on a conference on monopolization. It argues that monopolization law has been experiencing simultaneous expansion and contraction processes that are not... more
This article introduces a special symposium issue of the Antitrust Law Journal based on a conference on monopolization. It argues that monopolization law has been experiencing simultaneous expansion and contraction processes that are not wholly contradictory but at least partly complementary. Specifically, the authors suggest that the contraction of monopolization law in the United States and the EU might serve to facilitate its expansion and increased importance worldwide, providing other antitrust regimes with more focused and effective tools to address the challenges involved in regulating dominant firms. Moreover, monopolization law's increased reach internationally also has made its refinement and rationalization all the more important for jurisdictions seeking to avoid the harmful chilling effects associated with excessive enforcement in this area. Finally, the contraction of monopolization law might also be motivated by external pressures, resulting from spillover effects. A better understanding and evaluation of these expansion and contraction trends is therefore likely to necessitate their joint rather than separate evaluation in future antitrust scholarship.
Research Interests:
The wide-spread adoption of merger regulations all around the globe raises the question of whether there is a one-size-fits-all merger policy, or whether some jurisdictions' economic characteristics affect their ability to effectively... more
The wide-spread adoption of merger regulations all around the globe raises the question of whether there is a one-size-fits-all merger policy, or whether some jurisdictions' economic characteristics affect their ability to effectively apply a merger policy in a way which requires some fine-tuning. This question, which generates interesting scholarly and practical debates, is addressed in this paper, focusing on small and on micro jurisdictions. The latter, in particular, bring some of the tradeoffs involved in the design of merger policy to an extreme and provide an interesting and under-explored case study.
Two forces push and pull merger policy. On the one hand, the "follower push" whereby jurisdictions-mostly small, developing or young-benefit from transplanting and following the laws of large, developed jurisdictions with efficient and effective merger regimes. The follower push is often comprised of both internal and external forces. On the other hand, the "unique characteristics pull" whereby the characteristics of a jurisdiction affect its ability to effectively enforce a transplanted law and pull towards adopting a merger policy that best fits its characteristics. Designing a merger law mandates each jurisdiction to find its optimal balance between these two forces and may vary from one jurisdiction to another, depending, inter alia, on the jurisdiction's trade ties and the effectiveness of its enforcement system. Yet these forces do not necessarily lead in different directions; Rather, many parts of a merger regime may fit both the follower and the followed jurisdictions (e.g., adopting a Significant Lessening of Competition test as a benchmark for merger illegality). The challenge is to identify those instances in which the unique characteristics pull leads in a different direction and is stronger than the follower push and to design rules accordingly.
Chapter I briefly explores the two forces noted above. The following chapters focus on the "unique characteristics pull." Chapter II introduces the methodology. Chapter III then explores the effects of the unique characteristics of small size on merger policy. This paper attempts to carry the analysis one step further than that previously performed by the author by proposing a methodological framework to assist in the analysis and by focusing on aspects not previously explored. Chapter IV performs such an analysis for micro economies, a subject which so far has been largely neglected in the literature. Of course, dealing with all aspects of merger policy in such jurisdictions is beyond the scope of a short paper, but some relevant observations and suggestions are offered, based on theoretical observations as well as real-world examples.
Two forces push and pull merger policy. On the one hand, the "follower push" whereby jurisdictions-mostly small, developing or young-benefit from transplanting and following the laws of large, developed jurisdictions with efficient and effective merger regimes. The follower push is often comprised of both internal and external forces. On the other hand, the "unique characteristics pull" whereby the characteristics of a jurisdiction affect its ability to effectively enforce a transplanted law and pull towards adopting a merger policy that best fits its characteristics. Designing a merger law mandates each jurisdiction to find its optimal balance between these two forces and may vary from one jurisdiction to another, depending, inter alia, on the jurisdiction's trade ties and the effectiveness of its enforcement system. Yet these forces do not necessarily lead in different directions; Rather, many parts of a merger regime may fit both the follower and the followed jurisdictions (e.g., adopting a Significant Lessening of Competition test as a benchmark for merger illegality). The challenge is to identify those instances in which the unique characteristics pull leads in a different direction and is stronger than the follower push and to design rules accordingly.
Chapter I briefly explores the two forces noted above. The following chapters focus on the "unique characteristics pull." Chapter II introduces the methodology. Chapter III then explores the effects of the unique characteristics of small size on merger policy. This paper attempts to carry the analysis one step further than that previously performed by the author by proposing a methodological framework to assist in the analysis and by focusing on aspects not previously explored. Chapter IV performs such an analysis for micro economies, a subject which so far has been largely neglected in the literature. Of course, dealing with all aspects of merger policy in such jurisdictions is beyond the scope of a short paper, but some relevant observations and suggestions are offered, based on theoretical observations as well as real-world examples.
Research Interests:
In the past two decades the number of jurisdictions which have empowered their Competition Authorities to engage in market inquiries (MIs) has grown substantially. Although jurisdictions differ in the scope and procedure adopted for such... more
In the past two decades the number of jurisdictions which have empowered their Competition Authorities to engage in market inquiries (MIs) has grown substantially. Although jurisdictions differ in the scope and procedure adopted for such studies, they all share an important common trait: attempting to allocate the roots of limited competition in the studied market. Market studies differ from traditional competition law tools in their triggers, range, object, and the level of pro-activity of the Competition Authority. They are not triggered by a suspicion of anti-competitive conduct of specific firm(s), but rather allow the Authority to use a broad prism which focuses on a wider set of potential obstacles to competition, including the Authority's own past conduct, in order to find ways to enhance competition. MIs entail many advantages. Yet, bestowing this power upon a Competition Authority is not self-explanatory. Furthermore, it is far from costless. Beyond the direct costs imposed on both the Authority and market participants, MIs often carry less tangible price tags. They raise a host of constitutional, democratic and practical issues that have not been thoroughly studied as of yet, which are the focus of this paper. In so doing, the paper builds, inter alia, on the recent administrative law literature which focuses on multi-agency interactions. Accordingly, this paper seeks to provide a synergetic analysis of MIs for the benefit of policymakers.
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Regional competition agreements (RCAs) hold great potential for overcoming the major enforcement problems of developing jurisdictions. Indeed, it is no coincidence that the past two decades have seen an unprecedented upsurge in the number... more
Regional competition agreements (RCAs) hold great potential for overcoming the major enforcement problems of developing jurisdictions. Indeed, it is no coincidence that the past two decades have seen an unprecedented upsurge in the number and scope of such agreements, especially in the developing world. Yet, as the experiences analyzed throughout this book clearly demonstrate, the accumulated experience of almost all of these newly sprung RCAs is that thus far they have not significantly enhanced competition law enforcement in their regions, or have encountered serious difficulties in doing so. This empirical finding applies regardless of the region and the special characteristics of the jurisdictions within it. This creates a paradox: why do so many countries invest in adopting such agreements in the first place, if the obstacles to their successful operation are high.
This chapter attempts to offer some answers to this paradox by analyzing the obstacles that stand in the way of realizing the potential benefits of RCAs. Our purpose is to identify and analyze at least some of the variables that affect their adoption and operation in the real world. Such an analysis can hopefully provide better tools to understand and predict when an RCA is likely to succeed or to fail, and what can be done to increase its chances of success. To do so, we combine the empirical observations on how RCAs operate in practice with a theoretical analysis. The analysis builds, inter alia, on studies of the collective action problem, including studies of successful collaborations in environments which face relatively similar obstacles to a successful joint collaboration. Such an analysis can also assist us in determining whether the current failure is mainly rooted in the regional aspect of the RCAs or rather in the fact that they involve competition law, the application of which would have encountered serious difficulties in the relevant jurisdictions regardless of its regional aspect.
Accordingly, the chapter is divided into three parts. The first explores the potential benefits that can accrue from a successful RCA. The second, which is the heart of this chapter, analyzes some of the obstacles to realizing such benefits that emerge from the case studies of the different RCAs and places them in a wider theoretical context. The third part offers some potential solutions for overcoming such problems.
This chapter attempts to offer some answers to this paradox by analyzing the obstacles that stand in the way of realizing the potential benefits of RCAs. Our purpose is to identify and analyze at least some of the variables that affect their adoption and operation in the real world. Such an analysis can hopefully provide better tools to understand and predict when an RCA is likely to succeed or to fail, and what can be done to increase its chances of success. To do so, we combine the empirical observations on how RCAs operate in practice with a theoretical analysis. The analysis builds, inter alia, on studies of the collective action problem, including studies of successful collaborations in environments which face relatively similar obstacles to a successful joint collaboration. Such an analysis can also assist us in determining whether the current failure is mainly rooted in the regional aspect of the RCAs or rather in the fact that they involve competition law, the application of which would have encountered serious difficulties in the relevant jurisdictions regardless of its regional aspect.
Accordingly, the chapter is divided into three parts. The first explores the potential benefits that can accrue from a successful RCA. The second, which is the heart of this chapter, analyzes some of the obstacles to realizing such benefits that emerge from the case studies of the different RCAs and places them in a wider theoretical context. The third part offers some potential solutions for overcoming such problems.
Research Interests:
While never completely dormant, international antitrust has gained a new momentum in the past two decades or so, evidenced by the intensity of the global exchange on international antitrust issues. This momentum is driven, inter alia, by... more
While never completely dormant, international antitrust has gained a new momentum in the past two decades or so, evidenced by the intensity of the global exchange on international antitrust issues. This momentum is driven, inter alia, by the significant increases in international trade. It is also fueled by the exponential growth in the number and trading power of jurisdictions that have adopted antitrust laws, thereby increasing possible jurisdictional overlaps while providing a wider toolbox to deal with antitrust matters with a transborder dimension. Such developments strengthen the need to solve an existing paradox: while major businesses are often global, antitrust rules regulating their conduct are not.
Academic scholarship plays an important role in these developments, both mapping the challenges that lie ahead - based on past efforts and the current state of antitrust around the world - and suggesting ways to meet such challenges. This book review analyzes three recent significant contributions to this literature, while focusing on three related questions that this scholarship raises. First, what is international about antitrust? Second, what challenges are faced by international antitrust? Third, what are the prospects for future developments in international antitrust: do history and realism militate against a true international solution, or can such a solution evolve and, if so, under what conditions?
Academic scholarship plays an important role in these developments, both mapping the challenges that lie ahead - based on past efforts and the current state of antitrust around the world - and suggesting ways to meet such challenges. This book review analyzes three recent significant contributions to this literature, while focusing on three related questions that this scholarship raises. First, what is international about antitrust? Second, what challenges are faced by international antitrust? Third, what are the prospects for future developments in international antitrust: do history and realism militate against a true international solution, or can such a solution evolve and, if so, under what conditions?
Research Interests:
Regulation is an important tool to deal with market imperfections. Regulation might, however, sometimes go beyond what is socially justified and create undue restraints on competition. The problem of social engineering is thus to devise a... more
Regulation is an important tool to deal with market imperfections. Regulation might, however, sometimes go beyond what is socially justified and create undue restraints on competition. The problem of social engineering is thus to devise a system that will ensure that the optimum combination of competition and regulation is achieved.
This article suggests harnessing the comparative advantages of competition authorities to this task. It proposes six general principles that are aimed at creating a system of "checks and balances" which maintains adequate safeguards to ensure that competition will be limited only where socially warranted. Whereas much has been written about where to draw the line between regulation and competition, the question of what institutional role competition authorities and courts can play to ensure that these boundaries are not overstepped has generally received little attention. This paper attempts to fill this gap.
The first part of the article provides a basis for the discussion by surveying possible justifications and motivations for government-facilitated or imposed restrictions on competition. A dichotomy between two main types of restraints is suggested, based on their effects on social welfare. This dichotomy then serves as the basis for the discussion in the second part of the article, which focuses on the tools available to competition authorities and courts to combat welfare-reducing restraints on competition. Six general principles to achieve this goal are proposed. Some of these principles suggest that competition authorities should be allowed to venture outside their traditional confines and build upon their institutional comparative advantages in order to ensure that regulation increases social welfare. The third part of the article analyzes the existing EU law to evaluate whether, and to what extent, the proposed principles currently apply. It suggests several changes to the current system that have the potential to limit the existence of welfare-reducing restraints.
This article suggests harnessing the comparative advantages of competition authorities to this task. It proposes six general principles that are aimed at creating a system of "checks and balances" which maintains adequate safeguards to ensure that competition will be limited only where socially warranted. Whereas much has been written about where to draw the line between regulation and competition, the question of what institutional role competition authorities and courts can play to ensure that these boundaries are not overstepped has generally received little attention. This paper attempts to fill this gap.
The first part of the article provides a basis for the discussion by surveying possible justifications and motivations for government-facilitated or imposed restrictions on competition. A dichotomy between two main types of restraints is suggested, based on their effects on social welfare. This dichotomy then serves as the basis for the discussion in the second part of the article, which focuses on the tools available to competition authorities and courts to combat welfare-reducing restraints on competition. Six general principles to achieve this goal are proposed. Some of these principles suggest that competition authorities should be allowed to venture outside their traditional confines and build upon their institutional comparative advantages in order to ensure that regulation increases social welfare. The third part of the article analyzes the existing EU law to evaluate whether, and to what extent, the proposed principles currently apply. It suggests several changes to the current system that have the potential to limit the existence of welfare-reducing restraints.
Research Interests:
Laws are oftentimes modeled, at least in part, on those of jurisdictions with established antitrust regimes, a trend we call “the follower phenomenon.” Follower behavior might involve a transplant of a legal rule, its interpretation, or... more
Laws are oftentimes modeled, at least in part, on those of jurisdictions with established antitrust regimes, a trend we call “the follower phenomenon.” Follower behavior might involve a transplant of a legal rule, its interpretation, or both.
This article analyzes the main causes of the follower phenomenon in antitrust and its welfare effects, both on the following jurisdiction and on the followed one. It argues that the proliferation of one's antitrust prohibitions can sometimes act as a boomerang, negatively affecting the welfare of the followed jurisdiction as well as third jurisdictions. This boomerang effect can result from three main causes: (a) the limited ability of the followed jurisdiction's domestic firms to monopolize or cartelize foreign markets due to stricter antitrust policies of the following jurisdiction based on a correct following of the followed jurisdiction’s antitrust prohibitions; (b) the abandonment of neutral or procompetitive conduct by firms based in the followed jurisdiction (or trading in it) due, for example, to increased costs resulting from parallel and often similar regulation in several following jurisdictions; and (c) negative externalities resulting from increased error costs due, for example, to the misapplication of the followed jurisdiction's complex rules in following jurisdictions with limited institutional capabilities.
Based on the above findings, we then propose ways for the followed jurisdiction, as well as for other jurisdictions, to increase the positive externalities and limit the negative externalities resulting from the follower phenomenon. We suggest that under certain circumstances the followed jurisdiction could anticipate the follower phenomenon and modify its choice of optimal rule to account for the boomerang effect. Less extreme methods are also explored, such as aiding and directing less experienced jurisdictions in the correct application of their antitrust laws.
This article analyzes the main causes of the follower phenomenon in antitrust and its welfare effects, both on the following jurisdiction and on the followed one. It argues that the proliferation of one's antitrust prohibitions can sometimes act as a boomerang, negatively affecting the welfare of the followed jurisdiction as well as third jurisdictions. This boomerang effect can result from three main causes: (a) the limited ability of the followed jurisdiction's domestic firms to monopolize or cartelize foreign markets due to stricter antitrust policies of the following jurisdiction based on a correct following of the followed jurisdiction’s antitrust prohibitions; (b) the abandonment of neutral or procompetitive conduct by firms based in the followed jurisdiction (or trading in it) due, for example, to increased costs resulting from parallel and often similar regulation in several following jurisdictions; and (c) negative externalities resulting from increased error costs due, for example, to the misapplication of the followed jurisdiction's complex rules in following jurisdictions with limited institutional capabilities.
Based on the above findings, we then propose ways for the followed jurisdiction, as well as for other jurisdictions, to increase the positive externalities and limit the negative externalities resulting from the follower phenomenon. We suggest that under certain circumstances the followed jurisdiction could anticipate the follower phenomenon and modify its choice of optimal rule to account for the boomerang effect. Less extreme methods are also explored, such as aiding and directing less experienced jurisdictions in the correct application of their antitrust laws.
Research Interests:
Today a growing number of goods and services are provided in the marketplace free of charge; indeed, free or the appearance of free, have become part of our ecosystem. More often than not, free goods and services provide real benefits to... more
Today a growing number of goods and services are provided in the marketplace free of charge; indeed, free or the appearance of free, have become part of our ecosystem. More often than not, free goods and services provide real benefits to consumers and are clearly pro-competitive. Yet free goods may also create significant costs. We show that despite the fact that the consumer does not pay a direct price, there are indirect prices that reflect the opportunity cost associated with the consumption of free goods. These indirect costs can be overt or covert, in the same market in which the product is distributed or in related markets, monetary or non-monetary, and short-term or long-term. Most of the economic literature on free goods has focused on two-sided markets in which the free good is provided in exchange for attention or information. We analyze the welfare effects of additional cases that are becoming commonplace in our economy. Our analysis indicates that even goods that are offered for philanthropic motivations might sometimes harm competition and welfare. The article also stresses the need to evaluate the pricing strategies of firms that offer free goods in light of new research pointing to the "irrational" behavioral response of consumers when faced by a free option.
This welfare analysis serves as a basis for the exploration of the antitrust implications of the provision of free goods, which has been relatively neglected. Indeed, as this paper shows, free goods raise significant issues for antitrust enforcement, which run the gamut from market definition to market power and to the evaluation of the competitive effects of mergers and more generally to strategic business behavior. We use examples from diverse jurisdictions and markets to exemplify our arguments and, in particular, focus on three case studies: free search services, free internet browsers and free newspapers.
This welfare analysis serves as a basis for the exploration of the antitrust implications of the provision of free goods, which has been relatively neglected. Indeed, as this paper shows, free goods raise significant issues for antitrust enforcement, which run the gamut from market definition to market power and to the evaluation of the competitive effects of mergers and more generally to strategic business behavior. We use examples from diverse jurisdictions and markets to exemplify our arguments and, in particular, focus on three case studies: free search services, free internet browsers and free newspapers.
Research Interests: Regulation and Antitrust
participants at the Haifa/Loyola conference for excellent comments and/or fascinating discussions; to Oshrit Aviv and Avital Bruker for excellent research assistance. All views are explicitly my own.
Research Interests:
This article seeks to explore whether institutional solutions to antitrust enforcement problems can be transported from one jurisdiction to another. It does so by focusing on the effects of scarce enforcement resources (both financial and... more
This article seeks to explore whether institutional solutions to antitrust enforcement problems can be transported from one jurisdiction to another. It does so by focusing on the effects of scarce enforcement resources (both financial and human) on optimal institutional design. The prevalence of this characteristic in small, developing and transition economies makes it an interesting and important subject to study. Accordingly, the following question is raised: if a country has a small institutional endowment, can it transplant the institutional structure of another jurisdiction with a large resource endowment and simply shrink it to fit its budget - like the shrinking of the house in Alice in Wonderland - or should it apply a different institutional structure? To answer this question, the article first analyzes the effects of a limited institutional endowment on the effective enforcement of antitrust law. It then analyzes the tools which have been employed or that can be employed to limit such negative effects, such as prioritizing and sharing. One of the more interesting solutions relates to the interplay between substantive rules and institutional structures: a combination of poorly equipped institutions with limited economic expertise and antitrust laws which require complex analysis of market conditions and their effect on welfare are apt to create erroneous decisions; thus, as this article argues, designing an efficient antitrust regime also involves the creation of a delicate balance between institutional conditions and substantive rules.
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While data were always valuable in a range of economic activities, the advent of new and improved technologies for the collection, storage, mining, synthesizing, and analysis of data has led to the ability to utilize vast volumes of data... more
While data were always valuable in a range of economic activities, the advent of new and improved technologies for the collection, storage, mining, synthesizing, and analysis of data has led to the ability to utilize vast volumes of data in real-time in order to learn new information. Part I explores the four primary characteristics of big data: volume, velocity, variety, and veracity and their effects of the value of data. Part II analyzes the different types of access barriers that limit entry into the different links of the data value chain. In Part III, we tie together the characteristics of big data markets including potential entry barriers, to analyze their competitive effects. The analysis centers on those instances in which the unique characteristics of big data markets lead to variants in the more traditional competitive analysis. Our analysis suggests that the unique characteristics of big data have an important role to play in analyzing competition and in evaluating social welfare.
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The number of developing countries that have adopted a competition law has grown exponentially over the past two decades. Yet the mere adoption of a competition law is a necessary but not sufficient condition for it to be part of market... more
The number of developing countries that have adopted a competition law has grown exponentially over the past two decades. Yet the mere adoption of a competition law is a necessary but not sufficient condition for it to be part of market reform. Just as ecological conditions determine the ability of a flower to bloom, so do some preconditions affect the ability to apply a competition law effectively. This study seeks to identify the ecology of antitrust in developing countries: the soil, sun, water and pesticides of competition law adoption and enforcement. In particular, it analyzes the socio-economic ideology (soil), the institutional and organizational conditions (sun and water), and the political economy conditions (pesticides) that are necessary for competition law to bloom. It does so based on a theoretical framework as well as by analyzing the experiences of developing countries in applying competition laws.
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Competition law is generally focused on competition in a market. Yet, as recent economic studies have clearly indicated, one of the main sources of competition concerns of jurisdictions around the world is the impact of high levels of... more
Competition law is generally focused on competition in a market. Yet, as recent economic studies have clearly indicated, one of the main sources of competition concerns of jurisdictions around the world is the impact of high levels of aggregate concentration in their markets, when a small group of economic entities controls a large part of the economic activity through holdings in many markets. High levels of aggregate concentration can significantly impact competition and welfare. On the one hand, conglomerates' substantial resources and varied experiences, as well as their economies of scale and scope, often enable them to enter markets more readily than other firms, especially when entry barriers are high. On the other hand, high levels of aggregate concentration raise significant competitive concerns. Most importantly, oligopolistic coordination in and across markets as well as entry barriers into markets might be increased. These effects, in turn, might lead to stagnation and poor utilization of resources, which adversely affect growth and welfare. Another major concern is a political economy one: given their size and economic heft, large conglomerates may attempt to translate their economic power into political power in order to create, protect and entrench their privileged positions. Given these effects, the paper attempts to explore the weight given-if at all-to aggregate concentration in the application of competition laws around the world. The analysis is based, inter alia, on the experiences of 35 different jurisdictions in dealing with aggregate concentration through competition law, based on a survey performed with the assistance of the UN Conference on Trade and Development.
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May a dominant firm justify below-cost pricing by simply arguing that it aligned its prices with those of its rivals? In this essay I show that generally the answer is negative. I also argue, however, that such a rule should not be... more
May a dominant firm justify below-cost pricing by simply arguing that it aligned its prices with those of its rivals? In this essay I show that generally the answer is negative. I also argue, however, that such a rule should not be categorical and that in some circumstances a below-price meeting competition defense should be allowed, in order to protect competition. Such an exception is necessary in order to take account of the special economic characteristics of dynamic industries which differ from the brick-and-mortar industry model that assumes that scale economies are small and entry barriers are low. The article exemplifies these arguments by using the EU recent France Telecom case.
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The next generation of e-commerce will be conducted by digital agents, based on algorithms that will not only make purchase recommendations, but will also predict what we want, make purchase decisions, negotiate and execute the... more
The next generation of e-commerce will be conducted by digital agents, based on algorithms that will not only make purchase recommendations, but will also predict what we want, make purchase decisions, negotiate and execute the transaction for the consumers, and even automatically form coalitions of buyers to enjoy better terms, thereby replacing human decision-making. Algorithmic consumers have the potential to change dramatically the way we conduct business, raising new conceptual and regulatory challenges.
This game-changing technological development has significant implications for regulation, which should be adjusted to a reality of consumers making their purchase decisions via algorithms. Despite this challenge, scholarship addressing commercial algorithms focused primarily on the use of algorithms by suppliers. This article seeks to fill this void. We first explore the technological advances which are shaping algorithmic consumers, and analyze how these advances affect the competitive dynamic in the market. Then we analyze the implications of such technological advances on regulation, identifying three main challenges.
This game-changing technological development has significant implications for regulation, which should be adjusted to a reality of consumers making their purchase decisions via algorithms. Despite this challenge, scholarship addressing commercial algorithms focused primarily on the use of algorithms by suppliers. This article seeks to fill this void. We first explore the technological advances which are shaping algorithmic consumers, and analyze how these advances affect the competitive dynamic in the market. Then we analyze the implications of such technological advances on regulation, identifying three main challenges.
Research Interests:
Patent licensing contracts commonly prohibit licensees from challenging the validity of the patents at the basis of the contract or penalize such challenges. A considerable debate has emerged as to whether courts should enforce these... more
Patent licensing contracts commonly prohibit licensees from challenging the validity of the patents at the basis of the contract or penalize such challenges. A considerable debate has emerged as to whether courts should enforce these challenge clauses. We argue that this debate has not gone far enough. Challenge clauses should be illegal under antitrust law. Our argument is based on two grounds. The first, doctrinal route, argues that this new antitrust offense is a natural extension of the logic of the Supreme Court's landmark case of Federal Trade Commission v. Actavis, decided three years ago. The second, normative route, shows that a normative foundation exists for recognizing this antitrust offense. We propose three cumulative conditions that should exist for a new antitrust offense to be realized, and show that they are met in the case of challenge clauses. Our conclusion challenges the existing laws and draws a new line between contract law and antitrust law, which is applicable to other cases as
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Competition law constitutes an important part of the social contract that stands at the basis of market economies, which conceptualizes the relationship between the state and its citizens, as well as among citizens, and legitimizes state... more
Competition law constitutes an important part of the social contract that stands at the basis of market economies, which conceptualizes the relationship between the state and its citizens, as well as among citizens, and legitimizes state action. This article seeks to unveil the social contract that stands at the basis of competition laws by shedding light on the assumptions at its basis. It then explores whether these assumptions indeed further the goals of the social contract, namely total and individual welfare. In particular, in light of recent challenges to the welfare effects of market economies, this short article seeks to determine whether equality and inclusive growth goals should play a more pronounced role in the competition laws of developed jurisdictions, and if so, by what means.
Research Interests:
Human choice is a foundational part of our social, economic and political institutions. This focus is about to be significantly challenged. Technological advances in data collection, data science, artificial intelligence, and... more
Human choice is a foundational part of our social, economic and political institutions. This focus is about to be significantly challenged. Technological advances in data collection, data science, artificial intelligence, and communications systems are ushering in a new era in which digital agents, operated through algorithms, replace human choice with regard to many transactions and actions. While algorithms will be given assignments, they will autonomously determine how to carry them out. This game-changing technological development goes to the heart of autonomous human choice. It is therefore time to determine whether and, if so, under which conditions, are we willing to give up our autonomous choice.
To do so, this article explores the rationales that stand at the basis of human choice, and how they are affected by autonomous algorithmic assistants; it conscientiously contends with the “choice paradox” which arises from the fact that the decision to turn over one’s choices to an algorithm is, itself, an act of choice. As shown, while some rationales are not harmed – and might even be strengthened – by the use of autonomous algorithmic assistants, others require us to think hard about the meaning and the role that choice plays in our lives. The article then examines whether the existing legal framework is sufficiently potent to deal with this brave new world, or whether we need new regulatory tools. In particular, it identifies and analyzes three main areas which are based on choice: consent, intent and laws protecting negative freedom.
To do so, this article explores the rationales that stand at the basis of human choice, and how they are affected by autonomous algorithmic assistants; it conscientiously contends with the “choice paradox” which arises from the fact that the decision to turn over one’s choices to an algorithm is, itself, an act of choice. As shown, while some rationales are not harmed – and might even be strengthened – by the use of autonomous algorithmic assistants, others require us to think hard about the meaning and the role that choice plays in our lives. The article then examines whether the existing legal framework is sufficiently potent to deal with this brave new world, or whether we need new regulatory tools. In particular, it identifies and analyzes three main areas which are based on choice: consent, intent and laws protecting negative freedom.