Read e-book online Economics and the Interpretation and Application of U.S. and PDF

By Richard S. Markovits

ISBN-10: 3642243126

ISBN-13: 9783642243127

ISBN-10: 3642243134

ISBN-13: 9783642243134

Volume 2 makes use of the commercial and criminal concepts/theories of quantity 1 to (1) research the U.S. and E.U. antitrust legality of mergers, joint ventures, and the pricing-technique and contractual/sales-policy distributor-control surrogates for vertical integration and (2) determine comparable positions of students and U.S. and E.U. antitrust officers. Its research of horizontal mergers (1) delineates non-market-oriented protocols for settling on whether or not they appear particular anticompetitive motive, may decrease pageant, or are rendered lawful by way of the efficiencies they'd generate, (2) criticizes the U.S. courts’ conventional market-share/market-concentration protocol, the HHI-oriented protocols of the 1992 U.S. DOJ/FTC directions and the ecu fee (EC) guidance, and many of the non-market-oriented protocols the DOJ/FTC have more and more been utilizing, (3) argues that, even if the 2010 U.S. directions and DOJ/FTC officers talk about industry definition as though it issues, these directions really reject market-oriented ways, and (4) reports the suitable U.S. and E.U. case-law. Its research of conglomerate mergers (1) exhibits that they could practice an analogous valid and competition-increasing services as horizontal mergers and will yield illegitimate gains and reduce pageant via expanding contrived oligopolistic pricing and retaliation obstacles to funding, (2) analyzes the determinants of some of these results, and (3) assesses limit-price idea, the toe-hold-merger doctrine, and U.S. and E.U. case-law. Its research of vertical behavior (1) examines the valid capabilities of every kind of such behavior, (2) delineates the stipulations below which each and every manifests particular anticompetitive reason and/or lessens pageant, and (3) assesses comparable U.S. and E.U. case-law and DOJ/FTC and EC positions. Its research of joint ventures (1) explains that they violate U.S. legislation merely after they show up particular anticompetitive rationale whereas they violate E.U. legislations both therefore or simply because they reduce festival, (2) discusses the which means of an “ancillary restraint” and demonstrates that even if a joint-venture contract will be unlawful if it imposed no restraints and even if any restraints imposed are ancillary might be decided purely via case-by-case research, (3) explains why students and officers overestimate the commercial potency of R&D joint ventures, and (4) discusses similar U.S. and E.U. case-law and DOJ/FTC and EC positions. The study’s end (1) stories how its analyses justify its cutting edge conceptual structures and (2) compares U.S. and E.U. antitrust legislations as written and as applied.

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Additional resources for Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law: Volume II Economics-Based Legal Analyses of Mergers, Vertical Practices, and Joint Ventures

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The merged firm will find such consolidation or rationalization profitable when the profits the use of the removed QV investment generated for that MP were lower than the amount by which the relevant QV investment reduced the profit-yields of the projects of the other MP or, more to the point, the other projects of the merged firm and the merged firm knows that the withdrawn QV investment will not be replaced by a rival QV investment (or possibly by an equally-competitive rival QV investment). A horizontal merger that generates no dynamic efficiencies can reduce QV-investment competition in the ARDEPPS in which it is executed by deterring an established rival or potential competitor of the merged firm from making a QV investment that rival would have made had no merger been executed in two ways: (1) by critically raising the retaliation barrier to expansion or entry that rival faces (A) by creating a merged firm that can better coordinate the retaliation that its antecedents and perhaps the retaliation its remaining rivals and its antecedents direct at an expanding established firm or new entrant, inter alia, by reducing the risk that defensive retaliation will lead to a price-war because one or more nonunderminers mistake a retaliator’s retaliation for non-retaliatory price-cuts aimed at them (and perhaps others); (B) by increasing the harm-inflicted to loss-incurred ratio for retaliation against a relevant expander for both the merged firm and other potential retaliators by raising the expander’s (OCA þ NOM) figures in individualized-pricing contexts and its (HNOP À NOM À MC) figure in an across-the-board-pricing context; and (C) by creating a merged firm that will find maintaining and building a reputation for retaliating against rival QV investments (and other rival competitive moves) more profitable than its individual antecedents would have done because the merged firm can take advantage of company-wide economies of scale in building and maintaining such a reputation when, as I suspect will usually be the case, those effects are stronger than the countervailing tendency of such a merger to reduce the retaliation barriers to QV investing the merged firm’s rivals face by increasing the law-related costs the merged firm will face if it retaliates above those the relevant MP would have faced if it retaliated; and (D) by increasing the harm-inflicted to loss-incurred ratio for the investing R’s retaliating against the merged firm’s retaliation above its counterpart for the investing R’s retaliating against the relevant MP’s retaliation by raising the merged firm’s (OCA þ NOM)s or (HNOP þ NOM À MC) figure (s) above the MPs’ and by creating a merged firm whose defenses are more spread than those of its individual antecedents and 20 12 Horizontal Mergers and Acquisitions (2) by causing an established rival that would not otherwise have faced M disincentives to expansion (indeed, that might otherwise have had a monopolistic QV-investment incentive to expand) because it knew that, if it did not expand, an MP would have expanded instead to face critical M disincentives (not to have critical M incentives) by creating a merged company that would not expand despite the fact that one of its antecedents would have done so after the date of the merger or by causing two or more established rivals that would not otherwise have faced O disincentives to do so by substituting for an MP that would not have been deterred from expanding by the (PD þ R þ S þ L) barriers it faces a merged firm that faces one or more barriers of these kinds that are critically higher.

Both the difference between the frequency with which the merged firm and the MPs will contrive OMs and the difference in the average COMs they contrive) is (1) directly related to the frequency with which the elimination of MP2 as a potential undercutter of MP1 (and vice versa) reduces the number of potential Us because pre merger MP2 belonged to a group of second-placed or close-tosecond-placed suppliers relative to the frequency with which the elimination of MP2 as a potential undercutter of MP1 (and vice versa) increased the number of MP1’s potential undercutters because pre merger MP2 was MP1’s closest competitor by a considerable margin and more than one R was or was close to being the third-placed supplier of the buyer in question, (2) directly related to the contribution the merger makes to the MPs’ ability to estimate their costs and OCAs (by enabling the MPs to share information about their product-Rs’ costs or the relative attractiveness of their own products versus those of their product-Rs to particular buyers), (3) directly related to the extent to which the merged firm has a stronger reputation for making contrived oligopolistic offers and carrying out its threats and promises than one or both of its antecedents (because it inherits the reputation of the tougher MP or because it creates a merged firm with a greater stake in deterring undercutting by enabling the whole company to profit from the reputational effects of any act of retaliation or reciprocation the merged company commits), (4) directly related to the extent to which the merged company’s ability to infer undercutting from circumstantial evidence exceeds its antecedents’ because the merger enables the company to pool its antecedents’ repeat-sales, sales-to-othersuppliers’-customers, and new-buyer-sales records (an effect that will probably increase with the sales of the MPs and the extent to which they have common product-Rs, [“probably” because increases in MP sales cut in both directions since the value of any given amount of additional sales-record information will be inversely related to the original amount of such information available to the seller in question]), (5) directly related to the extent to which the merged company’s ability to identify its undercutter from sales-record circumstantial evidence exceeds its antecedents’ because it has access to the relevant sales-records and rivalcompetitive-position information of both MPs (directly related to the sales of the MPs, the extent to which they have common product-Rs, and the complementarity of the rival-competitive-position information in their possession), (6) directly related to the amount by which the merger increases each MP’s ability to reciprocate (directly related to the extent to which one MP had excess reciprocatory power pre merger and directly related to the frequency with 10 12 Horizontal Mergers and Acquisitions which the MPs were a rival’s closest two rivals not to be co-opted pre merger and, in those instances in which they were the relevant rival’s two closest nonco-opted rivals, directly related to the amount by which the worse-placed MP was better-placed than the next-placed supplier of the relevant rival’s customer not to be co-opted), (7) directly related to the extent to which the merger reduced the harm-inflicted to loss-incurred ratio for MP-retaliation by enabling the MPs to pool their power (by combining MPs with different marginal harm-inflicted to loss-incurred ratios for the last act of retaliation that would have been necessary for each had they remained separate in relation to a given potential U), and (8) inversely related to the amount by which the merger increased the MPs’ OCAs (at least if, as I suspect, increases in a seller’s OCAs reduce the average COMs it will find most profitable to attempt to contrive by increasing the safe profits it must put at risk to do so by more than they raise those COMs by increasing the credibility of its related anti-competitive threats and promises by increasing the amount of profits it can protect by carrying them out).

A horizontal merger that generates no dynamic efficiencies can reduce QVinvestment competition in the ARDEPPS in which it is executed either (1) by deterring the merged firm from making a QV investment that one of the MPs would have made pre merger when no other established firm or potential entrant would otherwise have introduced an additional QV investment into the relevant area of product-space (because all other established firms faced barriers to expansion and/ or monopolistic QV-investment disincentives that were critically higher than those that confronted the relevant MP and because all potential competitors faced barriers to entry that exceeded the sum of the barriers to expansion and M or O QV-investment disincentives facing the relevant MP) or (2) by deterring one or more actual or potential Rs of the merged firm from adding a QV investment to the relevant area of product-space when the deterred QV investment would not be replaced by a QV investment made by someone else.

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Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law: Volume II Economics-Based Legal Analyses of Mergers, Vertical Practices, and Joint Ventures by Richard S. Markovits


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