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The Handbook of Competition Economics 2019

A Global Competition Review Special Report

Reproduced with permission from Law Business Research Ltd This article was first published in November 2018 For further information please contact [email protected]

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Albania...... 1 El Salvador...... 37

Algeria...... 3 Estonia...... 39

Argentina...... 4 European Union...... 40 Claus Kastberg Nielsen, Adina Claici, Julia Sabine Armenia...... 6 Wahl and Elisa Pau Copenhagen Economics Australia...... 8 Fiji...... 48 Austria...... 11 Finland...... 51 Azerbaijan...... 12 Emmi Martikainen and Anssi Kohonen Copenhagen Economics Barbados...... 13 France...... 54 Belgium...... 14 Germany...... 56 Bosnia...... 16 Hans W Friederiszick, Simone Kohnz and Rainer Nitsche E.CA Economics Brazil...... 17 Greece...... 63 Bulgaria...... 19 Hungary...... 64 Canada...... 21 Iceland...... 66 Channel Islands...... 24 Indonesia...... 67 Colombia...... 25 Ireland...... 69 Croatia...... 27 Israel...... 71 Cyprus...... 29 Italy...... 72 Czech Republic...... 30 Jamaica...... 73 Denmark...... 31 Henrik Ballebye Okholm, Torben Thorø Pedersen and Japan...... 75 Holger Vandel Rasmussen Hiroaki Ishigaki Copenhagen Economics NERA Economic Consulting

Egypt...... 36 Kenya...... 81

Korea...... 83 Serbia...... 122

Latvia...... 84 Seychelles...... 124

Lithuania...... 86 Singapore...... 126

Luxembourg...... 87 Slovakia...... 127

Macedonia...... 88 Slovenia...... 129

Malaysia...... 90 South Africa...... 130

Malta...... 92 Spain...... 132

Mauritius...... 93 Swaziland...... 134

Mexico...... 95 Sweden...... 135 Karl Lundvall, Mattias Almqvist and David Nordström Montenegro...... 97 Copenhagen Economics

Netherlands...... 99 Switzerland...... 140

New Zealand...... 101 Tunisia...... 142

Norway...... 103 Turkey...... 143 Henrik Ballebye Okholm and Karl Lundvall Copenhagen Economics Ukraine...... 146

Pakistan...... 108 United Kingdom...... 148 Vikram Kumar and Maria Maher Peru...... 111 Cornerstone Research

Philippines...... 112 United States...... 154 Henry J Kahwaty and Cleve B Tyler Poland...... 113 Berkeley Research Group

Portugal...... 115 Zambia...... 160

Romania...... 117 Zimbabwe...... 162

Russia...... 119

Global Competition Review is delighted to publish this twelfth annual edition of The Handbook of Competition Economics.

With economics at the centre of competition law, this handbook identifies the issues that antitrust economists are tackling today. The book’s comprehensive format provides contact details for competition agencies’ economists in 77 jurisdictions. A Q&A format illustrates how the advisers are organised and their input into the regulation and enforcement process.

Much of the information has been provided by the agencies themselves and we are, as ever, grateful for all their cooperation.

The Handbook of Competition Economics is one of five special reports included in a Global Competition Review subscription, alongside nine issues of the magazine and two signature surveys, ‘Rating Enforcement’ and ‘The GCR 100’, each year.

We would like to thank all those who have worked on the research and production of this publication.

The information listed is correct as of October 2018.

Global Competition Review London October 2018

Overview

Henry J Kahwaty and Cleve B Tyler Berkeley Research Group

The antitrust landscape in the United States has to the anti-steering provisions at issue in American evolved in several ways: Express. • the Supreme Court ruled in American Express that both sides of certain two-sided markets must be Vertical merger challenge denied (AT&T/Time analysed; Warner) • a district court ruled against the Department of A district court declined the DOJ’s attempt to enjoin Justice (DOJ) in its challenge of the vertical merger the proposed merger between AT&T and Time between AT&T and Time Warner; Warner, a rare challenge to a vertical merger. The • the Supreme Court ruled in a price-fixing matter decision began by stating, ‘If there were an antitrust that US courts are not bound by statements of a case where the parties had a dramatically different foreign government regarding that country’s laws; assessment of the current state of the relevant market • enforcement activity has increased related to and a fundamentally different vision of its future agreements among rivals not to compete for development, this is the one.’ The DOJ’s case rested employees; and primarily on the theory that Time Warner’s content • efforts are accelerating to modernise antitrust (including from HBO and CNN) was ‘must have’ and enforcement policy. that AT&T would use this content to raise programming costs for rivals of its subsidiary DirecTV, thereby Supreme Court’s American Express decision harming competition. The merging parties pointed to The Supreme Court found that the anti-steering rules a ‘revolution’ in the video programming and distribu- used by American Express to prevent merchants from tion market. In particular, they identified declining directing consumers to alternative credit cards do not video subscriptions and increased competition from violate antitrust law. The Court directly addressed companies like Netflix and Amazon (who are verti- a scenario where firms operate in industries with cally integrated and increasingly creating content), two-sided markets, in this case with merchants and as well as losses in advertising dollars to firms such separately with card holders. The Court described the as Google and Facebook. The court took a broad view two-sided platform developed by American Express as of industry developments in assessing the merger’s a ‘transaction’ platform competing to sell credit card likely competitive impact. The decision highlights the transactions. Analysis of only one side of this platform importance of demonstrating likely competitive harm would be incomplete owing to bi-directional ‘indirect through solid evidence. network effects.’ The Court further distinguished between two- Price-fixing and comity sided markets in which a firm seeks to sell transactions In the vitamin C antitrust price-fixing multi-district (such as credit cards) from other two-sided markets litigation against two Chinese suppliers, a jury had (such as newspapers) where the two sides (readers and found the defendants in violation of antitrust laws advertisers) are not subject to indirect network effects and had awarded damages of US$147 million. However, that are bi-directional. For newspapers, though adver- the Second Circuit considered issues of international tisers care about the number of readers, readers do not comity and an amicus brief from the Chinese govern- care about the number of advertisers. Going forward, ment (its first appearance in US federal court) stating American Express requires an evaluation of the type that it required the defendants to fix quantities of two-sided market at issue to assess whether both and prices for vitamin C sold outside China. The sides of the market need be analysed. Industries with Supreme Court ruled unanimously that while courts two-sided markets that may be impacted by American can consider foreign government interpretations of Express include healthcare, where anti-referral provi- their laws for ‘clarity, thoroughness, and support’, a sions used by health insurers have been compared US court is ‘not bound to accord conclusive effect to

154 The Handbook of Competition Economics 2019 © 2018 Law Business Research Ltd UNITED STATES the foreign government’s statements’. Therefore, the in late 2018 will cover topics including the consumer Supreme Court ruled that the Second Circuit erred by welfare standard, vertical merger analysis, monop- not looking beyond a foreign government’s statement sony, the digital economy, labour markets, intellectual regarding the meaning of its laws, vacated the lower property and big data. The DOJ has held a series of court decision and remanded the case. similar roundtables on competition and deregulation, and it is reviewing older antitrust judgments to iden- No-poach cases tify those necessary to protect competition. The DOJ’s In October 2016, the DOJ and the Federal Trade standard practice until 1979 was to enter into perpetual Commission (FTC) released guidance for human final judgments, but more recently has sought 10-year resource professionals related to the antitrust treat- judgments. Many older judgments are no longer effec- ment of agreements among competitors regarding tive because, for example, the parties are no longer in employee pay or recruitment (no-poach agreements). business or market conditions have changed substan- This guidance includes a statement that the DOJ tially. In several cases, legacy judgments continue to would prosecute agreements entered into or active affect markets, such as the BMI and ASCAP decrees after October 2016 among rivals not to compete for each (music) and the Paramount decrees (movie distribu- other’s employees as criminal cartel cases (while treat- tion), and the DOJ has announced that these specific ing any such agreements terminated as of the release decrees are under review for modification or termina- of the guidance as civil matters only). According to the tion. The DOJ has moved in court to terminate its first agencies, no-poach agreements deprive workers of tranche of 20 older antitrust judgments and their opportunities, information and the ability to obtain terminations have been approved. Nearly 1,300 legacy better employment terms. In 2018, the DOJ brought its antitrust judgments are under review by the DOJ. first case since the release of the guidance, settling a The role of big data has become a greater focus matter against Knorr-Bremse AG and Westinghouse for antitrust policy as a product, an input into down- Air Brake Technologies Corporation (two of the world’s stream products and a source of currency. In particu- largest rail equipment suppliers). This case was settled lar, concern has been expressed that the use of pricing as a civil violation. The FTC similarly brought a case algorithms (especially those that use artificial intel- relating to an agreement among home health agencies ligence), either by design or unwittingly, may result in the Dallas–Fort Worth, Texas area to reduce the rates in collusion. Finally, some have expressed concerns paid to physical, occupational and speech therapists. about concentration levels that have been measured The agencies have indicated additional no-poach broadly across the economy and whether this is a investigations are underway. result of relatively lax antitrust enforcement by the agencies. While it is too early to see whether these Antitrust modernisation concerns will impact the direction of antitrust policy, Both the FTC and the DOJ are engaged in activities to they are expected to play a role in the modernisation modernise antitrust enforcement policy. FTC hearings hearings.

Henry J Kahwaty Berkeley Research Group

Henry J Kahwaty is a managing director at BRG’s also includes analysis of merger efficiencies, price- Washington, DC office and co-head of BRG’s antitrust fixing allegations, class certification and competition and competition policy practice. His areas of exper- damages. tise include microeconomics, industrial organisation, Dr Kahwaty has presented analyses to agencies antitrust economics and econometrics. He has com- including the DOJ, the FTC, the Directorate-General pleted antitrust reviews of mergers and horizontal for Competition of the European Commission, the and vertical contractual arrangements, and studies Canadian Competition Bureau and the Competition of monopolisation and abuse of dominance in the Tribunal of Canada. He has prepared studies for the context of government investigations and private Competition Authority in Ireland. He started his litigation. His merger work includes studies in met- career as an economist with the US DOJ, where he als, solid and hazardous waste, industrial products, specialised in market power analysis for merger and avionics and pharmaceuticals, among others. He monopolisation cases with a focus on the computer has analysed competition issues in industries software, banking, manufacturing and defence indus- including mining, luxury goods, banking, chemicals tries. He spent 15 years as an economist, principal and and diamonds. He has completed studies of vertical director with LECG in Washington, DC and London. restraints and vertical integration, and the impact of He received his PhD in economics from the University such vertical relationships on competition. His work of Pennsylvania in 1991.

Berkeley Research Group

1800 M Street NW, second floor Berkeley Research Group, LLC is a leading global strategic advisory and expert Washington, DC 20036 consulting firm that provides independent advice, data analytics, valuation, United States authoritative studies, expert testimony, investigations, restructuring services, Tel: +1 202 480 2700 and regulatory and dispute consulting to Fortune 500 corporations, financial Fax: +1 202 419 1844 institutions, government agencies, major law firms and regulatory bodies around the world. Henry J Kahwaty BRG experts and consultants combine intellectual rigour with practical, real- [email protected] world experience and an in-depth understanding of industries and markets. Their expertise spans economics and finance, data analytics and statistics, and Cleve B Tyler public policy in many of the major sectors of our economy, including healthcare, [email protected] banking, information technology, energy, construction and real estate. BRG is headquartered in Emeryville, California, with offices across the United www.thinkbrg.com States and in Asia, Australia, Canada, Latin America, the Middle East and the United Kingdom. BRG provides to counsel, corporations and governments throughout the world independent and objective testimony in matters involving antitrust litigation, mergers and acquisitions, and agency competition reviews. BRG experts combine a deep understanding of actual market behaviour with relevant economic theory and sound empirical research. They have provided testimony and made presentations concerning antitrust issues in courts and in meetings and hearings before the FTC, the DOJ, the European Commission and other competition agencies and tribunals, and before sector-specific regulators.

Cleve B Tyler Berkeley Research Group

Cleve B Tyler is a managing director at BRG’s disposal, pharmaceuticals, insurance, avionics, medi- Washington, DC office. He is an adjunct professor of cal devices, video games, automobile components, economics in Johns Hopkins University’s applied home appliances, software, and food and beverages. economics programme, teaching courses in industrial He has evaluated antitrust implications of reverse organisation and microeconomics. He has analysed payment settlements between branded and generic competition, intellectual property and damages issues pharmaceutical companies. He also has analysed in matters before federal and state courts, administra- competition and regulation in the electric industry, tive law judges and regulatory commissions, and in including issues related to electric power sales, deriva- FTC and DOJ merger investigations as a consulting tive trading, entry conditions and capacity payments. expert. He has developed or analysed damages models Dr Tyler holds a PhD in economics from Clemson pertaining to allegations including patent infringe- University specialising in industrial organisation, ment, antitrust, breach of contract and fraud. finance and the economics of the public sector. He has Dr Tyler’s antitrust work includes evaluation published papers and made presentations on com- of market definition and competitive effects using petition and damages issues. He is the editor of the regression analysis and economic modelling. He has BRG Review and a member of the American Economic evaluated horizontal and vertical competition issues Association and American Bar Association. in many industries, including waste collection and

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