ANALYSIS OF COMPETITION LAW AND ENFORCEMENT ACROSS COUNTRIES:

Transcription

1 ANALYSIS OF COMPETITION LAW AND ENFORCEMENT ACROSS COUNTRIES: A Project Course for the Global Network for Advanced Management GNAM 581 Fall 2014 Instructors: Professor Fiona Scott Morton, Dean Ted Snyder and Dr. Pierre Cremieux Background: Competition policy and enforcement is now a global phenomenon. Over one hundred countries now have competition laws. Competition and antitrust authorities across the world have been increasingly active in: i. prosecuting transnational pricing-fixing conspiracies, e.g., LCD,, Auto parts; ii. challenging mergers that span multiple countries, e.g. Google-Motorola, UTC- Goodrich, the joint venture between BHP Billington and Rio Tinto; iii. changing various practices by large firms across the world, e.g., Intel, Google, and Microsoft While the U.S. and the EU have long traditions of enforcement with multiple investigations each year that generate billions ($US) in fines and significant divestitures and other relief, many other countries, including several in Asia and Latin America, have only recently become actively engaged in competition law enforcement. Many of the newer agencies and standards are modeled after the US and/or EU frameworks. Nonetheless, the laws in these countries are usually somewhat different from US/EU law, and enforcement priorities are different. Competition policy has, therefore, become an important part of the landscape of global business and highly relevant to senior leadership teams. An understanding of competition policy and enforcement across countries and regions requires an appreciation of what is common in competition policy as well as what is different across regions. The fundamental goal of competition laws is the protection of consumers. The overall objectives, design, and actual enforcement practices in any given country may also be affected by other factors, including the protection of domestic industry from foreign competition, concerns about the strength of particular industries, desire for policy consistency across countries, and overall experience with market economies.

2 Grading: Peer grading by teams at the conclusion of the course [20%] Engagement [20%]. This includes on line quizzes, discussions with facilitators, and presence in class as well as questions to other teams Three individual written exercises on basic principles, hypothetical merger, and unilateral conduct [30%] Research project [30%] Course Description and Team Structures: Course Description: Analysis of Competition Law and Enforcement Across Countries will combine (a) classes and discussion groups, and (b) a team research project. The first series of four classes will provide a common economic, legal, and business framework upon which student groups can develop their research projects. The remainder of the course will be focused on the team research projects, which will be supervised by project faculty and organized with the assistance of Yale SOM facilitators. Faculty and external experts will evaluate the research project and presentations. Readings: The textbook for the class is Modern Industrial Organization (4th Edition) by Dennis W. Carlton and Jeffrey M. Perloff. This book costs $198 new, $80 used, and $22-62 to rent, according to Amazon.com. The class will require that you read chapters 2, 3, 4, 5, 8, 10, and 12. We have requested that GNAM schools add the textbook to their libraries, so you may find it there also. Selected readings from textbooks, case books, and other sources will be made available by the instructors prior to the start of the course. Discussion Group Structure: Faculty will assign students to a discussion group before the start of the semester. Each discussion will be facilitated by a Yale SOM MBA student. Classes will be organized in lectures of about one hour in length, followed by a 20 minutes discussion online in a small group during which time students can ask questions and raise issues about the material. Logistics: The course will meet on Mondays and Wednesdays, from 8:30-9:50 US Eastern Time. The technology we will use for the class is Canvas. Details will be circulated closer to the start of class. Because of the startup costs of learning a new technology, students are asked to work with their administration to make sure the technology functions well prior to the first class. Local Yale students will meet just for this purpose at 8:30am (during class time) on Weds August 27. Additionally, students should arrive 15 minutes early for class (8:15am US Eastern time) the first three classes in order to make sure everything is working so that we can start on time. Students from the off-campus GNAM schools will be participating in the lectures through the technology provided by Canvas. The Yale SOM students will be in the classroom with the faculty and will facilitate discussions, as indicated above. Final Project Team Structure:

3 Later in the course, the discussion groups will be replaced with final project groups. The number and size of these groups will depend on enrollment across the GNAM schools. Each team will be composed of students from multiple jurisdictions and will include at least one Yale SOM student. Students will meet at least once a week using class technology with project faculty. The Yale SOM member(s) of the team will be expected to facilitate communications between faculty and team. All team members will also be expected to communicate regularly through various means including . Research Projects: Each group of students will choose a research project examining a current ore recent antitrust regulatory effort focused on a specific company under scrutiny for monopolization/unilateral conduct or a group of companies under scrutiny for potential price-fixing behavior. Each team will be expected to complete a research project which will culminate in a short research paper no longer than 15 pages (7,500 words) due as noted above. Teams will present their analyses to the class in 20 minute PowerPoint presentation followed by 10 minutes of discussion. Experts from industry, competition agencies, and faculty will comment on the presentations. Teams have two weeks after their presentations to incorporate comments and refine their research papers. The research project should apply class material to the case. This means that the research should not be limited to factual reporting and should include economic analyses drawing from material reviewed in class. Deliverables: All students in the course will be expected to (a) complete three written assignments in the initial classes, (b) engage fully in each class, including participating in the discussions, and (c) complete online quizzes. Each student will be expected to contribute substantially to the team project and learn to work with fellow team members across countries and time zones. Team members are dependent on one another. Hence, students who do not contribute to the project cause harm to their classmates. It is therefore important to instructors and students that each member of each group do their share. Important note: Students who do not meet expectations will continue the course on an individual track and will take a final examination instead of having a role in a team project. Class Schedule: 1. (FRIDAY Aug 29) Logistics and Introduction The first class will be devoted to introductions, a discussion of expectations and logistics including the description and use of relevant technologies. The instructors will describe the content of the course and what is expected for each assignment. Discussion groups will have

4 been formed in advance and a facilitator assigned to each discussion group. We will allow time and introduce technology for those groups to meet separately during class. 2. (WEDNESDAY Sept 3) Economics of competition policy Economic framework: The second 1.5 hours will provide a basic framework in the economics of competition policy, a subject that is common across jurisdictions. This will be taught by faculty from the Yale School of Management (SOM) and will be focused on general concepts such as consumer welfare, efficiency, incentives for innovation, public v private enforcement, etc. To the extent this first lecture must draw on specific examples, it will be largely focused on the most extensive and oldest competition agencies in the U.S. and the EU. Evaluation: The material taught in this class as well as some of the reading material assigned to accompany it will be the subject of a short quiz to be taken online before the second class. 3. (MONDAY Sept. 8) Collusion The class will be a lecture on the harms from cartel behavior, containing both economic analysis and an overview of legal issues such as the per se standard and criminal penalties. Problems in international harmonization of cartel enforcement will be discussed (e.g. ICN, overlapping fines, extraterritorial enforcement, and extradition). 4. (WEDNESDAY Sept 10) International Differences International differences: The second half of class will consist of a lecture that provides a survey of competition enforcement in four world regions, Asia, South America, North America, and Europe, with a focus on specific countries of interest. Evaluation: A take-home student exercise will accompany this module and will test students understanding of collusive practices as well as international differences in competition enforcement around the world. 5. (MONDAY Sept 15) Horizontal Mergers The class will be focused on horizontal merger analysis. The content here will include both the economics of analyzing a merger such as market definition and substitution patterns, and practical legal issues for managers concerning documents, strategy, and witnesses. 6. (WEDNESDAY Sept 17) Unilateral Conduct The class will include a discussion of unilateral conduct and what actions, including predatory pricing, bundling, tying, and foreclosure, may violate antitrust laws in various jurisdictions. The economic theories underlying unilateral conduct will be discussed as well as the legal standard of proof. The material taught in this class as well as some of the reading material assigned to accompany it will be the subject of a short take home quiz due the following week. Deliverables: Students will receive an from faculty indicating their groups for the final project. Each group should rank three reject projects among those listed in this syllabus and provide their listed preferences to Fiona at Fiona.scottmorton@yale.edu. You should be ready to discuss your choices during class on September 24 th.

5 7. (MONDAY Sept 22) Case Studies Case Studies: The first half of this class will delve in detail into enforcement examples from non- EU or US countries and compare outcomes relative to those resulting from EU and/or US enforcements. We will review the reasons for differences in enforcement and implications for firm strategies. 8. (WEDNESDAY Sept 24) Case Studies continued Logistics: Additionally we will save time at the end of this class for final research project logistics. Groups will be assigned a facilitator and will be expected to discuss their preferences so that a specific research project can be assigned to their group 9. (MONDAY Sep 29): Facilitators will share a template that the team should fill out. The goal of the exercise is to help outline their projects, focus on major issues, and discuss responsibilities within the group. Faculty will be present to provide guidance. 10. (WEDNESDAY Oct 1): Each group will meet with faculty or facilitators during class to outline what economic concepts will be most important to their project choice and make sure they have the resources to cover it in their project. 11. /12. (WEEK of Oct 6): Teams begin work on their projects. Faculty will be available by request during class time or by for advice and direction. (WEEK of Oct 13): Yale break, no class. Students continue to work on their projects 13. (MONDAY Oct 20): Groups provide an update to faculty and peers on their research project. This should include a 10 minute (5 or so slides) PowerPoint presentation. Evaluation: Each student must send a constructive comment or question to the facilitator of each presenting team (i.e., each student will send as many questions as there are teams presenting). 14. (WEDNESDAY Oct 22): Remaining groups provide an update to faculty on their research project. This should include a 10 minute (5 or so slides) PowerPoint presentation. Evaluation: Each student must send a constructive comment or question to the facilitator of each presenting team (i.e., each student will send as many questions as there are teams presenting). 15. (MONDAY Oct 27): Lecture and discussion of additional material TBD relevant to research projects. Students meanwhile review and address comments from students and faculty and continue to improve research project. 16. (WEDNESDAY Oct 29): Lecture and discussion of additional material TBD relevant to research projects.

6 17. /18. (WEEK of Nov 3): Last week to work on research project with group 19. / 20. (MONDAY Nov 10 and WEDS Nov 12): Final presentations 25 minutes each 21. /22. (MONDAY Nov 17 and WEDS Nov 19): Final presentations 25 minutes each (WEEK of Nov 24): Yale University breaks for Thanksgiving. No class. 23. (MONDAY Dec 1): Due date for final papers for groups who presented in November. Any remaining presentations (LAST CLASS) (FRIDAY Dec 14): Due date for final papers for groups who presented on December 1st. Choices for research projects: Unilateral Conduct: Google (US (FTC), EC, France, Argentina, India, South Korea) Motorola Standard Essential Patents (EC) Eaton v. ZF Meritor (Private litigation) Collusion: AU Optronics criminal litigation (US) LCD manufacturers civil litigation (US (DOJ), EC, Japan, South Korea) Ebooks (US (DOJ), EC) Auto parts (US, other various) High Tech Employee Antitrust Litigation (US DOJ and private litigation) High voltage power cables (EC) Mergers: USAirways/American Airlines ABInbev/Groupo Modelo Telecom in Europe (various mergers such Austria, Netherlands)