CRA economists at the GCR Antitrust Law Leaders Forum 2019

CRA economists at the GCR Antitrust Law Leaders Forum 2019

CRA economists spoke at several sessions during the GCR Antitrust Law Leaders Forum 2019. Below are summaries from selected sessions.

Minority investments and competition law

What are the risks when investors hold shares in multiple competitors? In this session Isabel Tecu, a co-author of a study that led to a debate of this topic in antitrust circles, discussed the economic theory and empirical research to date. While the economic theory for how minority interests may harm competition is well-established, Tecu and her co-authors were the first to apply it to institutional investors that own relatively small shares in almost every competitor in an industry, a situation also referred to as “common ownership.” They did in fact find patterns in the data that matched the predictions of the theory: prices were higher when airline markets were characterized by a greater degree of common ownership. The study has inspired new economic research on this topic. 

Panelists noted the relevance of Tecu’s study, for example in countries such as Brazil, where ownership of companies in the country is changing from family-owned to investor-owned. They also mentioned that the European Commission has taken interest in the topic and even given it consideration in two recent merger decisions, although the outcomes in these decisions were apparently not impacted by these considerations.

Platform regulation and antitrust

In this session, panelists, including Philip Marsden and Preston McAfee, raised issues of increasing enforcement and a desire by many authorities to keep markets open. This means authorities are seeking lower thresholds for intervention, and ways to provide complainants with access to data. Debate arose over the degree to which consumers are truly dependent on particular platforms and the degree to which data is important or the engineers who manipulate it. Panelists also noted that there is an important distinction between commercial platforms and communications platforms.  Regardless, consumers and authorities are demanding, at the very least, more transparency over how the platforms collect and use personal data. Dr. Marsden suggested some principles and a code of conduct for pro-competitive regulation that might help here to supplement antitrust enforcement without sacrificing an evidence-based, effects-based, economically-literate approach.

Merger review and economics: the next frontier

In a session devoted to merger review and economics, Yianis Sarafidis discussed the history of commonly used economic models in merger review, noting that while previously there was a focus on structure and market definition, the emphasis now is  on competitive effects and measuring the closeness of competition between merging firms. The panelists then delved into a discussion around practical considerations and best practices for developing the best economic model for each particular case, as well as tailoring that model to a particular judge or jury. When asked what trends should be expected in economic modeling in the future, Sarafidis noted that there is no consensus on how to model vertical effects. He also stressed the need for full merger simulation models in vertical effects cases, as using simpler models may lead to erroneous conclusions. Coverage of this panel session including comments from Dr. Sarafidis are accessible here.

Matthew Bennett spoke at a session titled "Mergers in the digital economy" and in this article (subscription required for access) he questions how much insight can be extracted from a retrospective merger review.

The conference also included a key note address from FTC Commission Christine Wilson about vertical mergers. A subscription is required to read her remarks here.

Margaret Sanderson chaired an Economic plenary that included panelist Carl Shapiro. See this article for a summary.

Cristina Caffarra was a panelist for the plenary session titled "Multi-sided platforms: Clarity, or confusion." She also spoke at the session titled "Is Europe setting the antitrust enforcement agenda today?”