North American sporting teams receive enormous public funding for new stadiums after threatening to depart their hometowns, or by actually moving to a new town. Whereas English sporting teams neither receive massive public grants for stadium building, nor move towns. We argue that these differences are caused not by any inherent cultural or political cross-Atlantic variations; rather, it is the industrial organization of sports in the two countries - the structure of league control - that enables rent seeking by American sporting teams but not by their English counterparts. We support our claim with cross-country time series data contrasting American professional football and baseball stadiums with English soccer grounds, and by contrasting data regarding the stadiums of geographically flexible NFL teams with those of functionally immobile major collegiate football teams.North American sports leagues are cartels: they control entry of teams, then collaborate to maximize effective rent seeking, stave off competition and keep prices high. In most of the world, entrance into leagues is based on competitive merit via a system known as promotion-and-relegation, whereby the worst performing teams in one competitive tier are demoted to the next lower tier at season’s end, and an equivalent number of top teams are promoted from the division below. The fluidity created by promotion-and-relegation severely undermines the credibility of a team’s threat to leave town, and creates alternative entry points into the league. This open entry mitigates pressure to engage in intercity competition over scarce team slots, and thus relieves the pressure to transfer wealth from the public to private sporting team owners through stadium funding. The stadium rent seeking issue illustrates shortcomings in antitrust law in remedying problems at the intersection of market and political organization. While it is clear that stadium rent seeking stems from a competition problem in the U.S., it is not clear if there is an antitrust solution - it is questionable whether antitrust law can recognize or remedy this damage to taxpayers. Although the anti-competitive structure of American leagues provides the platform for stadium rent seeking, the harm that results is arguably a political injury and not an antitrust offense. Nonetheless, we argue that imposition of a promotion-and-relegation system would be the least intrusive means for the U.S. and Canada to limit sporting league cartel behavior to its proper functions, such as arranging schedules and defining homogeneous rules. The uncertain availability of promotion-and-relegation is a solution under antitrust law makes it all the more imperative for Congress to address this costly injury.
{"title":"League Structure & Stadium Rent Seeking - The Role of Antitrust Revisited","authors":"David D. Haddock, Tonja Jacobi, Matthew J. Sag","doi":"10.2139/SSRN.1983447","DOIUrl":"https://doi.org/10.2139/SSRN.1983447","url":null,"abstract":"North American sporting teams receive enormous public funding for new stadiums after threatening to depart their hometowns, or by actually moving to a new town. Whereas English sporting teams neither receive massive public grants for stadium building, nor move towns. We argue that these differences are caused not by any inherent cultural or political cross-Atlantic variations; rather, it is the industrial organization of sports in the two countries - the structure of league control - that enables rent seeking by American sporting teams but not by their English counterparts. We support our claim with cross-country time series data contrasting American professional football and baseball stadiums with English soccer grounds, and by contrasting data regarding the stadiums of geographically flexible NFL teams with those of functionally immobile major collegiate football teams.North American sports leagues are cartels: they control entry of teams, then collaborate to maximize effective rent seeking, stave off competition and keep prices high. In most of the world, entrance into leagues is based on competitive merit via a system known as promotion-and-relegation, whereby the worst performing teams in one competitive tier are demoted to the next lower tier at season’s end, and an equivalent number of top teams are promoted from the division below. The fluidity created by promotion-and-relegation severely undermines the credibility of a team’s threat to leave town, and creates alternative entry points into the league. This open entry mitigates pressure to engage in intercity competition over scarce team slots, and thus relieves the pressure to transfer wealth from the public to private sporting team owners through stadium funding. The stadium rent seeking issue illustrates shortcomings in antitrust law in remedying problems at the intersection of market and political organization. While it is clear that stadium rent seeking stems from a competition problem in the U.S., it is not clear if there is an antitrust solution - it is questionable whether antitrust law can recognize or remedy this damage to taxpayers. Although the anti-competitive structure of American leagues provides the platform for stadium rent seeking, the harm that results is arguably a political injury and not an antitrust offense. Nonetheless, we argue that imposition of a promotion-and-relegation system would be the least intrusive means for the U.S. and Canada to limit sporting league cartel behavior to its proper functions, such as arranging schedules and defining homogeneous rules. The uncertain availability of promotion-and-relegation is a solution under antitrust law makes it all the more imperative for Congress to address this costly injury.","PeriodicalId":345107,"journal":{"name":"LSN: Antitrust (Topic)","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-11-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127364709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Firm strategies are deeply affected by the legal framework which rules the relationships between the economic agents regarding monopoly and cartel policy. Undertakings have to manoeuvre through a complex universe. Not only must they master the rules of the economic game of competition but also the legal rules of competition law which are characteristic of competition and add up to the aforementioned. Monopoly and cartel policy presents itself as an important limitation to the freedom of action of firms and as a source of risks because some of their behaviours or choices are likely to be challenged, even punished by the competition authorities for the sake of the market preservation. Yet, firms can be strongly tempted to be harmful to competition insomuch as cartel and monopolies or taking advantage of a dominant position are means generally efficient for reaching the goals companies are aiming at in a capitalistic economy: the increase of profits thanks to the growth of margins and the "quiet life" thanks to a better control of their environment. First we will present the bases of monopoly and cartel policy (1) then the rules that result from it (2) before taking into account the competition authority decisional practices and their consequences on the firms' strategies (3).
{"title":"Cartel and Monopoly Policy","authors":"Hugues Bouthinon-Dumas, F. Marty","doi":"10.2139/ssrn.2151719","DOIUrl":"https://doi.org/10.2139/ssrn.2151719","url":null,"abstract":"Firm strategies are deeply affected by the legal framework which rules the relationships between the economic agents regarding monopoly and cartel policy. Undertakings have to manoeuvre through a complex universe. Not only must they master the rules of the economic game of competition but also the legal rules of competition law which are characteristic of competition and add up to the aforementioned. Monopoly and cartel policy presents itself as an important limitation to the freedom of action of firms and as a source of risks because some of their behaviours or choices are likely to be challenged, even punished by the competition authorities for the sake of the market preservation. Yet, firms can be strongly tempted to be harmful to competition insomuch as cartel and monopolies or taking advantage of a dominant position are means generally efficient for reaching the goals companies are aiming at in a capitalistic economy: the increase of profits thanks to the growth of margins and the \"quiet life\" thanks to a better control of their environment. First we will present the bases of monopoly and cartel policy (1) then the rules that result from it (2) before taking into account the competition authority decisional practices and their consequences on the firms' strategies (3).","PeriodicalId":345107,"journal":{"name":"LSN: Antitrust (Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132262019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The standard of proof required in merger cases has become the centre of considerable controversies and confusion following the Australian Federal Court’s decision in Metcash. This paper reviews the use of counterfactuals and the inherent contradictions in adopting the real chance standard of proof. It also critically examines the different approaches of the judgments in Metcash, and the more formal approach by the New Zealand High Court in the Warehouse decision. This is assessed using probability theory. The discussion points to the adoption of the balance of probabilities as the requisite standard of proof, and a watering down of the counterfactual in preference to a more direct approach to merger assessments. The discussion also critically assesses the use of counterfactuals in monopolisation and anticompetitive practices cases under Australian and New Zealand competition laws.
{"title":"Metcash, Market Power and Counterfactuals","authors":"C. Veljanovski","doi":"10.2139/ssrn.2070268","DOIUrl":"https://doi.org/10.2139/ssrn.2070268","url":null,"abstract":"The standard of proof required in merger cases has become the centre of considerable controversies and confusion following the Australian Federal Court’s decision in Metcash. This paper reviews the use of counterfactuals and the inherent contradictions in adopting the real chance standard of proof. It also critically examines the different approaches of the judgments in Metcash, and the more formal approach by the New Zealand High Court in the Warehouse decision. This is assessed using probability theory. The discussion points to the adoption of the balance of probabilities as the requisite standard of proof, and a watering down of the counterfactual in preference to a more direct approach to merger assessments. The discussion also critically assesses the use of counterfactuals in monopolisation and anticompetitive practices cases under Australian and New Zealand competition laws.","PeriodicalId":345107,"journal":{"name":"LSN: Antitrust (Topic)","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125349019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The past decade has seen growing antitrust concerns about the impact of private label goods on consumer welfare and competition in the grocery trade. Market investigations of the sector have been launched in several Member States, and there have also been legislative attempts to curb the power of large grocery retailers. Private labels have provoked interest not only because they increase the bargaining power of a retailer, but also because they fundamentally change the relationship between retailers and suppliers from one between trading partners to one between competitors. Because they place the retailer in the double role of a customer and a competitor of its suppliers, private labels are believed to create incentives for the grocery chains to resort to practices, which in turn lead to unfavorable outcomes for the consumers. Some of these practices include: misuse of a branded good’s product information to introduce competing private label products, de-listing of tertiary brands in order to replace them with undifferentiated me-too private labels, and using the strict rules on resale price maintenance to position the private label product in a more favorable position vis-a-vis the brand. Legal scholars and practitioners have been under pressure to find out in what ways competition rules may be used to limit these practices. The goal of this paper is to give a comprehensive overview of the competition law issues that might arise in the context of private labels. The paper is divided into two parts: first, it contextualizes the claims related to the welfare effects of the introduction and continued presence of private labels. It shows that private labels may lead to a reduction in consumer welfare and discusses the practices and conditions that might lead to this negative outcome. The second part of the paper sketches the applicable legal framework under EU competition law as it may apply to the practices mentioned. The paper concludes with a discussion of the challenges for the effective treatment of harm arising from the retailer practices associated with private labels.
{"title":"Private Labels (Own Brands) in the Grocery Sector: Competition Concerns and Treatment in EU Competition Law","authors":"V. Daskalova","doi":"10.2139/ssrn.1981958","DOIUrl":"https://doi.org/10.2139/ssrn.1981958","url":null,"abstract":"The past decade has seen growing antitrust concerns about the impact of private label goods on consumer welfare and competition in the grocery trade. Market investigations of the sector have been launched in several Member States, and there have also been legislative attempts to curb the power of large grocery retailers. Private labels have provoked interest not only because they increase the bargaining power of a retailer, but also because they fundamentally change the relationship between retailers and suppliers from one between trading partners to one between competitors. Because they place the retailer in the double role of a customer and a competitor of its suppliers, private labels are believed to create incentives for the grocery chains to resort to practices, which in turn lead to unfavorable outcomes for the consumers. Some of these practices include: misuse of a branded good’s product information to introduce competing private label products, de-listing of tertiary brands in order to replace them with undifferentiated me-too private labels, and using the strict rules on resale price maintenance to position the private label product in a more favorable position vis-a-vis the brand. Legal scholars and practitioners have been under pressure to find out in what ways competition rules may be used to limit these practices. The goal of this paper is to give a comprehensive overview of the competition law issues that might arise in the context of private labels. The paper is divided into two parts: first, it contextualizes the claims related to the welfare effects of the introduction and continued presence of private labels. It shows that private labels may lead to a reduction in consumer welfare and discusses the practices and conditions that might lead to this negative outcome. The second part of the paper sketches the applicable legal framework under EU competition law as it may apply to the practices mentioned. The paper concludes with a discussion of the challenges for the effective treatment of harm arising from the retailer practices associated with private labels.","PeriodicalId":345107,"journal":{"name":"LSN: Antitrust (Topic)","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125640824","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
International mobile roaming has been subject to market interventions since the 1990s, first requiring operators to be provide customers with roaming, then trying to limit the increasing prices, that were seemingly immune to the effects of competition. The European Commission, in trying to improve the wholesale roaming market, caused the introduction of a system of non-discriminatory prices that were not subject to competition but instead to low levels of price transparency and with incentives to increase prices. While the operators achieved economies of scale by foreign acquisitions, they failed to abolish roaming surcharges, because of commitments made to obtain merger approvals from the European Commission. The originally random selection of a roaming operator in foreign country was gradually brought under control by a range of traffic direction technologies, allowing the negotiation of discounts. However, the inter-operator relationships seem frozen, seldom changing partners, demonstrating little evidence of competition. Analyses of the wholesale markets by national regulators revealed little. The approach was abandoned in favour of European Union legislation setting price caps, supported by price transparency measures. Impact assessments had to be based on incomplete models and may have overestimated price elasticity. The reduction of prices within Europe led operators to raise prices for non-European operators and for their own retail customers going beyond Europe. Some customers prefer to switch SIM cards, buying service from the foreign operator. In the absence of a massive data collection exercise and the creation of a dynamic model of the roaming markets, interventions continue to be doomed to imprecision and unpredictable side-effects.
{"title":"International Mobile Roaming: Competition, Economics and Regulation","authors":"E. Sutherland","doi":"10.2139/ssrn.1622759","DOIUrl":"https://doi.org/10.2139/ssrn.1622759","url":null,"abstract":"International mobile roaming has been subject to market interventions since the 1990s, first requiring operators to be provide customers with roaming, then trying to limit the increasing prices, that were seemingly immune to the effects of competition. The European Commission, in trying to improve the wholesale roaming market, caused the introduction of a system of non-discriminatory prices that were not subject to competition but instead to low levels of price transparency and with incentives to increase prices. While the operators achieved economies of scale by foreign acquisitions, they failed to abolish roaming surcharges, because of commitments made to obtain merger approvals from the European Commission. The originally random selection of a roaming operator in foreign country was gradually brought under control by a range of traffic direction technologies, allowing the negotiation of discounts. However, the inter-operator relationships seem frozen, seldom changing partners, demonstrating little evidence of competition. Analyses of the wholesale markets by national regulators revealed little. The approach was abandoned in favour of European Union legislation setting price caps, supported by price transparency measures. Impact assessments had to be based on incomplete models and may have overestimated price elasticity. The reduction of prices within Europe led operators to raise prices for non-European operators and for their own retail customers going beyond Europe. Some customers prefer to switch SIM cards, buying service from the foreign operator. In the absence of a massive data collection exercise and the creation of a dynamic model of the roaming markets, interventions continue to be doomed to imprecision and unpredictable side-effects.","PeriodicalId":345107,"journal":{"name":"LSN: Antitrust (Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114728775","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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