Click on title below to see full information

An USTelecom by EI Senior Economist Kevin Caves was recently filed with the Federal Communications Commission. Dr. Caves analyzes competition in today’s converged communications markets, focusing on the price-disciplining effects of intermodal alternatives in general and wireless voice services in particular, as well as the framework for competitive analysis adopted by the Commission in its 2010 Phoenix Order. Dr. Caves’ conclusions are informed by extensive evidence of robust competition drawn from a variety of sources, including econometric work by Dr. Caves and other economists confirming that the cross-price elasticity between wireless and wireline telephony is positive and highly significant, in both a statistical and an economic sense. The declaration formed part of the Petition of USTelecom for Forbearance Pursuant to 47 U.S.C. §160(c) from Obsolete ILEC Regulatory Obligations that Inhibit Deployment of Next-Generation Networks.

 

EI Principal Hal Singer is a speaker on the rebates and tying panel at a George Mason GAI-Pharmaceutical titled “Global Antitrust Challenges for the Pharmaceutical Industry.” The conference will be held at the J.W. Marriott Hotel on September 23. Other speakers on the rebates and tying panel include Damien Geradin, Judge Douglas Ginsburg, Tad Lipsky, Dan Sokol, and Josh Wright. Dr. Singer will present his paper on bundling in the pharmaceutical industry, co-authored with EI Senior Economist Kevin Caves.

 

EI Senior Economist Clarissa Yeap contributed to the ABA Antitrust Section’s Economics Committee’s “Selected Readings in Antitrust Economics: Game Theory”, posted on the committee’s website here. This is an annotated bibliography of selected readings, chosen to provide intuitive, non-technical discussions of the basic principles of game theory as applied in antitrust analysis. The basic readings are supplemented with more technical references for readers who wish to delve deeper.

 

EI Senior Economist Kevin Caves and Principal Hal Singer today released a new empirical study analyzing pricing patterns in local advertising markets. Using a ten-year panel data set spanning 210 Designated Market Areas across the United States, the authors estimated econometric models of the determinants of local broadcast advertising prices, and tested various hypotheses regarding the nature of competition. The results (available here) indicate that local television broadcasters face substantial competition from non-broadcast alternatives, such as cable television and Internet-based advertising. In particular, the authors found no evidence that increases in concentration among local broadcasters confer increased pricing power; nor do agreements to sell television advertising jointly. The authors also explained that competition agencies have tended to minimize the competitive significance of non-broadcast alternatives without much supporting evidence, and that their study should help to fill this empirical vacuum.

Vice President Henry B. McFarland was appointed Co-Chair of the Insurance and Financial Services Committee of the Antitrust Section of the American Bar Association. The Insurance and Financial Services Committee promotes discussion of a wide range of competition and consumer protection issues that affect insurance and financial markets and institutions. The Antitrust Section is an organization of over 13,000 antitrust professionals that promotes analysis, debate, and education in the field of antitrust law and policy.

At the Antitrust in Asia Conference held in Beijing on May 21-23, EI Vice President Su Sun spoke on a panel about careers in antitrust. The conference was sponsored by the ABA Antitrust Section and the Expert Advisory Committee of the Anti-Monopoly Commission of China’s State Council.

Following news of a possible merger between Sprint and T-Mobile USA, many antitrust experts are weighing in on the possiblilty of the FCC’s approval. A merger between the #3 and #4 wireless carriers have led some to question whether this merger would reduce the number of competitors within the wireless industry. Dr. Hal J. Singer, a Principal at Economists Incorporated and an expert on antitrust regulation, was featured in the article found in the New York Times. CLICK HERE to read the article.

At a meeting of the New York State Bar Association Antitrust Section, EI Senior Economist Kevin Caves delivered  a presentation a entitled “Competition and Monopsony in Labor Markets: Theory, Evidence, and Antitrust Implications.” The discussion focused on a high-profile class action lawsuit in which top executives at some of Silicon Valley’s most prominent companies, including Apple, Google, Intel, and Adobe, allegedly conspired to suppress compensation for high-tech workers, and to restrict recruiting and hiring. The class, which was certified in late 2013, included approximately 64,000 employees seeking $3 billion in damages. The case reportedly settled for $324 million in late April 2014.

At the ABA Section of Intellectual Property Law’s Spring Conference in early April, EI Vice President Su Sun spoke on a panel entitled “China Has Amended Its IP Laws: Now What?” Dr. Sun discussed the increasing role of economic analysis in patent infringement litigation and antitrust countersuits in China.

Henry B. McFarland was moderator and session chair for a panel on “Looming Temptation: Antitrust and Benchmark Pricing,” which was presented at the Antitrust Section Spring Meetings in March. The panel considered benchmark prices’ potential for both anticompetitive harms and procompetitive benefits. It examined how firms that use benchmark prices, such as LIBOR in finance and Platts prices in energy, could avoid anticompetitive conduct and possible legal liability.

A number of EI economists contributed to several chapters of the book, Econometrics: Legal, Practical and Technical Issues (Second Edition), recently published by the ABA Antitrust Section. Allison Holt and Su Sun worked on Chapter 4: Collecting Relevant and Useful Data, Henry McFarland, Phil Nelson and David Smith worked on Chapter 13: Applying Econometrics to Address Class Certification, and Erica Greulich worked on the Appendix and Glossary.

EI Senior Economist Kevin Caves contributed to Communications & Strategies, a quarterly international peer-reviewed journal that publishes papers focusing on telecommunications, information technology, and media markets. In an article titled “Mobile Wireless Performance in the EU and the US: Implications for Policy,”  Dr. Caves and his co-authors assess the divergence in performance in mobile wireless markets between the EU and the US, analyze its causes, and suggest policy changes that would improve the performance of mobile wireless markets going forward. The article appears in the Q1 2014 issue, “Re-thinking the EU telecom regulation.”

The coauthored article, “Rainbow v. Johnson & Johnson: RPM Litigation in China,” was published on Distribution, the newsletter of the Distribution and Franchising Committee of the ABA Antitrust Section, Vol. 18, No. 1, March 2014. As the first RPM case in China,  Rainbow v. Johnson & Johnson has set an important precedent of applying the rule of reason approach to RPM cases in China. The authors discussed various legal and economic issues in this case, in particular, how the economic analysis could be improved to shed light on the competitiveness of the relevant market and the competitive effects of the RPM agreement at issue. Read full article HERE.

EI Principal John R. Morris testified at trial before the Federal Energy Regulatory Commission (FERC) on behalf of TransCanada Energy Ltd.  TransCanada is a diversified energy company that sold electric energy to the California Energy Resources Scheduling (CERS) division of the California Department of Water Resources during 2001. California alleged that TransCanada exercised price discrimination against CERS, sold at excessively high prices, and seriously harmed the public interest by its sales.  Dr. Morris explained that TransCanada’s prices to CERS were similar to prices it received from others and consistent with supply and demand conditions in the Pacific Northwest in early 2001. He also showed that the amount of TransCanada sales to CERS was too small to have seriously harmed the public interest even if one accepted California claims of excessively high prices. On March 28, 2014 the Administrative Law Judge hearing the matter issued an initial decision denying the California claims. EI economists Keith Everhart, Lona Fowdur, Gale Mosteller, and Su Sun assisted Dr. Morris in his analysis.  Dr. Morris worked with attorneys at Andrews Kurth on the matter.

On March 18, 2014 the Federal Energy Regulatory Commission (FERC) approved NRG Energy, Inc.’s acquisition of generation assets and companies owned by Edison Mission Energy.  Dr. Morris filed testimony before FERC indicating that the acquisition  would not result in reduced competition in either the California ISO or the PJM electric power markets.  EI economists Keith Everhart, Gale Mosteller, and Su Sun assisted Dr. Morris with his report. Dr. Morris worked with outside counsel at King & Spaulding on the matter.

Barry Harris and Matthew Wright, along with their co-authors Kevin Murphy and Robert Willig, contributed to Antitrust magazine with their article Activating Actavis:  A More Complete Story. The article, which will appear in the Spring 2014 issue, addresses the Supreme Court’s decision in FTC v. Actavis, Inc.

ABSTRACT:  In FTC v. Actavis, Inc. the Supreme Court asked whether a patent settlement agreement involving a so-called “reverse payment” from a patent holder to an alleged infringer of a pharmaceutical patent “can sometimes unreasonably diminish competition in violation of the antitrust laws.” Edlin, Hemphill, Hovenkamp, and Shapiro (2013) propose a method of evaluating the competitive effects of reverse payment settlement agreements that compares the magnitude of the reverse payment to the sum of the patent holder’s prospective litigation costs and the value of services provided by the alleged infringer to the patent holder. This paper shows that the method proposed by Edlin et al. holds only under limited conditions. This paper also identifies conditions where a reverse payment in excess of litigation costs may lead to earlier generic entry and would be pro-competitive. In addition to avoided litigation costs, relevant factors in evaluating patent settlements involving a reverse payment may include inter alia the risk-tolerance of the parties, the level of the drug’s sales, the parties’ expectations and information asymmetries related to future competition for the drug, the parties’ subjective views of the likely outcome of the litigation, the parties’ differences in time-values of money, the applicability of Hatch-Waxman first-filer exclusivity, the relative size of the alleged net reverse payment, and the extent of the alleged delay and associated diminution of competition. A PDF file of the article can be downloaded here.  A more technical version of the article can be downloaded here.

EI Principal Hal Singer and Senior Economist Kevin Caves contributed to Antitrust magazine with their article, “Life After Comcast: The Economist’s Obligation to Decompose Damages Across Theories of Harm.” The article analyzes the conditions under which the economic expert must decompose damages in so-called Section 2 “monopoly broth” cases.

EI Senior Economist Su Sun coauthored an article entitled “Determining the FRAND Rate – U.S. Perspectives on Huawei v. InterDigital” that was published on CPI Antitrust Chronicle, Feb. 2014(1). The authors discussed how the framework and methodologies adopted in the recent U.S. cases shed light on how the FRAND rate might be determined in the standard essential patent licensing dispute between InterDigital and Huawei in China. Read full article.

Dr. Ingraham has extensive expertise in the fields of auctions, game theory, econometrics, and corporate finance. He has advised participants in dozens of high-stakes auctions conducted in Asia, Europe, Latin America, and the United States. Dr. Ingraham has also advised numerous clients on the competitive effects of various auction mechanisms, and he has presented these results to both auction participants and government regulators. He has published research that studies the detection of price fixing and calculation of damages, assorted topics in network industries, optimal commodity taxes, and changes in investment behavior attributable to government regulation.

Hal J. Singer is a Principal at Economists Incorporated, a Senior Fellow at the Progressive Policy Institute and an Adjunct Professor at Georgetown University’s McDonough School of Business. He is the co-author of the e-book The Need for Speed (Brookings Press 2013), and the book Broadband in Europe (Springer Press 2005). In addition, his articles have appeared in dozens of legal and economic journals. Although his consulting experience spans several industries, Dr. Singer has particular expertise in communications and media. He recently advised the Canadian Competition Bureau on a large vertical merger in the cable television industry. He has served as consultant or testifying expert for such companies as Apple, AT&T, Google, Mid-Atlantic Sports Network, NFL Network, and Tennis Channel. Dr. Singer earned M.A. and Ph.D. degrees in economics from the Johns Hopkins University and a B.S. magna cum laude in economics from Tulane University.