Berkeley Law From the SelectedWorks of Daniel L. Rubinfeld 2016 Improving Antitrust Sanctions Daniel L Rubinfeld, Berkeley Law Available at: https://works.bepress.com/daniel_rubinfeld/76/ Global Antitrust Economics Current Issues in Antitrust and Law & Economics Editors Douglas H. Ginsburg Joshua D. Wright Assistant Editors Nicolas Charbit Elisa Ramundo Duy D. Pham © Concurrences Review, 2016 All rights reserved. No photocopying: copyright licenses do not apply. The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publisher accepts no responsibility for any acts or omissions contained herein. Enquiries concerning reproduction should be sent to the Institute of Competition Law, at the address below. Copyright © 2016 by Institute of Competition Law 60 Broad Street, Suite 3502, NY 10004 www.concurrences.com [email protected] Printed in the United States of America First Printing, 2016 ISBN 978-1-939007-48-3 Publisher’s Cataloging-in-Publication (Provided by Quality Books, Inc.) Global Antitrust Economics Conference (2015 : Arlington, Va.) Global antitrust economics : current issues in antitrust and law & economics / editors: Douglas H. Ginsburg, Joshua D. Wright ; associate editors: Nicolas Charbit, Elisa Ramundo, Duy D. Pham. pages cm Includes bibliographical references. LCCN 2016932014 ISBN 978-1-939007-48-3 (hardcover) ISBN 978-1-939007-49-0 (e-book) 1. Antitrust law (International law)--Congresses. 2. Antitrust law— Economic aspects--Congresses. 3. Conference papers and proceedings. I. Ginsburg, Douglas H., 1946- editor. II. Wright, Joshua D., editor. III. George Mason University. School of Law. Law and Economics Center, sponsoring body. IV. Institute of Competition Law (New York, N.Y.), sponsoring body. V. Title. K3850.A6G56 2015 343.07’21 QBI16-257 Cover and book design: Yves Buliard, www.yvesbuliard.fr Layout implementation: Darlene Swanson, www.van-garde.com Concurrences Books ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES Eleanor Fox - Harry First • 2016 CONSUMER CHOICE: THE EMERGENCE OF A POWERFUL CONCEPT IN COMPETITION LAW Paul Nihoul • 2016 COMPETITION CASE LAW DIGEST: A SYNTHESIS OF EU AND NATIONAL LEADING CASES Nicolas Charbit - Elisa Ramundo • December 2015 ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES Eleanor Fox - Harry First • October 2015 IAN S. FORRESTER QC LL.D. A SCOT WITHOUT BORDERS LIBER AMICORUM — VOLUME II Sir. David Edward, Jacquelyn MacLennon, Assimakis Komninos • December 2015 IAN S. FORRESTER QC LL.D. A SCOT WITHOUT BORDERS LIBER AMICORUM — VOLUME I Sir. David Edward, Jacquelyn MacLennon, Assimakis Komninos • September 2015 WILLIAM E. KOVACIC: AN ANTITRUST TRIBUTE LIBER AMICORUM —VOLUME II Nicolas Charbit - Elisa Ramundo • September 2014 WILLIAM E. KOVACIC: AN ANTITRUST TRIBUTE LIBER AMICORUM —VOLUME I Nicolas Charbit - Elisa Ramundo • January 2013 All books are published in print and electronic format. Editors’ Note DOUGLAS H. GINSBURG JOSHUA D. WRIGHT NICOLAS CHARBIT ELISA RAMUNDO DUY D. PHAM Concurrences Review in partnership with George Mason University School of Law, Law and Economics Center held The Global Antitrust Economics Conference in Arlington, Virginia on May 29, 2015. The conference featured keynote speech from Maureen Ohlhausen, Commissioner of the US Federal Trade Commission and five panels of prominent speakers that engaged in a heated debate about the different aspects of Antitrust Law and Economics. Antitrust law has become increasingly important in recent years, especially as the number of antitrust related disputes increases. It becomes crucial to analyze how courts and agencies currently deal with these cases; how they assess the concepts of market definition and market power; how they evaluate coordination issues, such as information exchange and price signaling, and what conduct can be consid- ered as violations of antitrust laws; how they determine remedies and settlements; and how they establish who should be punished in cases of antitrust violation (the violating firm, its agents or both). The Global Antitrust Economics Conference brought together lawyers, enforcers, economists, and academics to animate the discussion on those topics. In this book, 13 prominent authors offer 11 contributions that tackle some of the most stimulating topics debated during this one-day event in Global Antitrust Economics. Thus, Pierre-Yves Cremieux and Aaron Yeater, while they underline that convergence in antitrust economics is recent and remarkable, they also point out the still existing conflicts in economic evidence presented by competition experts; John Harkrider explains his point of view according to which the US Federal Trade Commission and Department of Justice are both law enforcers and regulators, enforcing laws that are regulatory in nature, relying more on economists than eyewitnesses, reacting more to what may happen, than what has already occurred; Keith Hylton discusses why monetary fines, to be a more effective deterrent threat, should focus on the firm rather than on its agents;Francine Lafontaine offers an analysis of the use of economics in support of the competition mission at the US Federal Trade Commission; Carlos Mena-Labarthe discusses the Mexican experience to show how remedies and their negotiation are valuable tools for emerging competition authorities; Maureen Ohlhausen tackles the “Brother, May I?” problem or the GLOBAL ANTITRUST ECONOMICS | CURRENT ISSUES IN ANTITRUST AND LAW & ECONOMICS v challenge of competitor control over market entry; William Page tries to identify those signals that solicit cooperation to achieve noncompetitive equilibria, thus bringing about agreements under Section 1 of the Sherman Act; Dan Rubinfeld explains why, in his point of view, our current systems of private and public enforcement can be improved if more attention is given toward increasing individual incentives; Loren Smith and Maria Stoyadinova highlight the prominence of market definition in antitrust evaluation and litigation; Gregory Werden addresses the concept of the relevant market by highlighting that it is a device for separating active competitive forces that directly and immediately affect economic performance (e.g., prices) from forces that are passive or have indirect, delayed, or highly uncertain effects on economic performance; finally,Lawrence White shows why the US Merger Guidelines and its guidance on market definition continue to provide a robust and powerful analytical framework for defining markets for the purpose of merger analysis. This volume guides readers through some of the most important and cutting-edge issues in global antitrust economics. The editors would like to give their sincere thanks to the 13 authors for their hours of labor dedicated to this unique collection of articles. vi GLOBAL ANTITRUST ECONOMICS | CURRENT ISSUES IN ANTITRUST AND LAW & ECONOMICS Foreword DOUGLAS H. GINSBURG JOSHUA D. WRIGHT During the Global Antitrust Economics conference that took place last May, we heard from panels on a variety of topics, including the use of economic evidence in antitrust cases, the role of market definition in modern antitrust analysis, the mechanisms through which competitors coordinate with each other, the process of negotiating settlements and remedies, and the relative merits of punishing corporations and individuals. Many panelists submitted papers for inclusion in this volume; in this Foreword we briefly describe each of their contributions. Commissioner Maureen Ohlhausen of the US Federal Trade Commission led off the event with a trenchant analysis of the challenge to competition when incumbent firms have control over market entry. Like restrictions that require innovators to obtain permission from government gatekeepers before entering a market – which she likened to the childrens’ game “Mother, May I?” – competitor-imposed restrictions upon entry may also undermine free-market principles and economic liberty, and may do so to an even greater extent. This particular problem, which Ohlhausen aptly coins the “Brother, May I?” problem, may manifest itself as a law or regulation, a decision of a financially-interested state board, or exclusionary conduct by a monopolist. The paper examines the problem through the lens of three recent cases: North Carolina State Board of Dental Examiners v. Federal Trade Commission (state licensing boards), Federal Trade Commission v. Phoebe Putney Health Systems, Inc. (certificate-of-need laws), and McWane, Inc. v. Federal Trade Commission (exclusionary conduct). In addition to its sound analysis, the paper contrib- utes to antitrust scholarship a simple expression to describe a widespread problem that may take varied forms. We predict the term “Brother, May I?” will, in short order, be ubiquitous in the vernacular of the antitrust bar. Pierre-Yves Cremieux of the Analysis Group in Boston proceeded from the observation that, though economists rarely disagree regarding fundamental principles, such as gains from trade or the importance of incentives, highly qualified economists appear on opposite sides of litigation in virtually every case. Use and Abuse: The Myth of Divided Antitrust Economics, which Cremieux co-authored with his colleague Aaron Yeater, posits that the reason for such divergent conclusions is not attributable to theoretical or GLOBAL ANTITRUST ECONOMICS | CURRENT ISSUES IN ANTITRUST AND LAW & ECONOMICS vii methodological disagreement