Faculty of Law

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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?

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.

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.

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.

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.

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.