Top

Published in:

2021 | OriginalPaper | Chapter

9. Comparative Analysis: Do Latin American Countries Follow the EU or US Standards for Entry Analysis?

Author : Francisco Eduardo Beneke Avila

Published in: Market Entry and Competition Law in Latin America

Publisher: Springer Berlin Heidelberg

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

In this chapter, the standards of entry analysis between the sample of Latin American countries, on one hand, and the EU and the US, on the other, will be compared. The analysis will be both positive and normative. First, the similarities and differences between the jurisdictions have to be established before one can make a conclusion of whether the relative points of view suit the different social and economic circumstances of the countries. Specifically, as will be seen, US courts seem to be more prone to dismiss cases on the basis of low entry barriers than the European Commission and the EU judiciary. Therefore, the comparative analysis will establish which rules of entry analysis have influenced the selected group of Latin American authorities and to which degree this influence is justified.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

previous chapter Entry Analysis in Abuse of Dominance Cases

next chapter How to Incorporate the Country Characteristics Studied in the Present Research Into Entry Analysis

Department of Justice. “Justice Department Requires Divestitures in Merger between General Electric and Honeywell”. May 2, 2001. Available at https://www.justice.gov/archive/atr/public/press_releases/2001/8140.htm. Commission Decision No. 2004/134/EC (General Electric/Honeywell), 2004 O.J. L 48/1.

Federal Trade Commission. “Google Agrees to Change Its Business Practices to Resolve FTC Competition Concerns In the Markets for Devices Like Smart Phones, Games and Tablets, and in Online Search”. January 3, 2013. Available at https://www.ftc.gov/news-events/press-releases/2013/01/google-agrees-change-its-business-practices-resolve-ftc.

Commission Decision in case COMP/39.740 (Google Search (Shopping)) (June 27, 2017).

Commission Decision in case COMP/40.099 (Google Android), (July 18, 2018).

European Commission. “Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising”. March 20, 2019. https://ec.europa.eu/commission/presscorner/detail/en/IP_19_1770.

15 U.S.C. § 13(a).

15 U.S.C. § 14.

15 U.S.C. § 45(a).

509 U.S. at 222.

Ibid (prerequisites to recovery are the same whether the claim is brought under the Sherman or Robinson Patman acts).

51 F.3rd at 1445.

Ibid.

127 F.3d 1157, 1162 (10th Cir. 1997).

Id., at 1164.

Id., at 1176 (Pregerson, C.J., dissenting).

15 U.S.C § 14. “It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities (…)”.

See Federal Trade Commission v. Sperry & Hutchinson, 405 U.S. 233, 244 (1972).

See E.I. Du Pont De Nemours & Co. v. Federal Trade Commission, 729 F.2d 128, 139 (2d Cir. 1984).

Federal Trade Commission. “Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act” (2015). Available at https://www.ftc.gov/system/files/documents/public_statements/735201/150813section5enforcement.pdf.

Federal Trade Commission. “Dissenting Statement of Commissioner Maureen K. Ohlhausen FTC Act Section 5 Policy Statement” (2015, p. 2). Available at https://www.ftc.gov/system/files/documents/public_statements/735371/150813ohlhausendissentfinal.pdf.

Prominent cases frequently cited on this respect are E.I. du Pont de Nemours & Co. v. Federal Trade Commission, 729 F.2d 128, 139 (2d Cir. 1984); Boise Cascade Corp. v. Federal Trade Commission, 637 F.2d 573, 582 (9th Cir. 1980); and Official Airline Guides, Inc. v. Federal Trade Commission, 630 F.2d 920, 927 (2d Cir. 1980).

See Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 481 (1992) (citing Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 502–503 (1969)).

Tops Markets, 142 F.3d at 97.

Id., at 99.

Id., at 97.

Id., at 99.

253 F.3d 34, 70 (D.C. Cir. 2001).

Treaty Establishing the European Economic Community, Mar. 25, 1957, 298 U.N.T.S. 11.

Hoffmann-La Roche v. Commission, Case 85/76, [1979] E.C.R. 461.

Id., par. 39.

Id., par. 48.

Id., pars. 50–51.

Id., pars. 53–56 and 59–67.

Id. par. 57.

AKZO v. Commission, Case 62/86 [1991] E.C.R. 3359, par. 60.

Hilti v. Commission, Case T-30/89, [1991] E.C.R. II 1439, pars 91–92, upheld, Hilti v. Commission, Case 53/92 P [1994] E.C.R. 667; and Atlantic Container v. Commission, Joined Cases T-191/98, T-212/98 to T-214/98, [2003], E.C.R. II 3275, par. 907.

United Brands, [1978] E.C.R. 207, par. 108.

Id., par. 111.

Gøttrup-Klim e.a. Grovvareforeninger v Dansk Landbrugs Grovvareselskab AmbA, Case 250/92 [1994] E.C.R. 5641, par. 48.

The CJEU certainly recognizes this point. See Hoffmann-La Roche, [1979] E.C.R. 461, par. 41; and AstraZeneca v. Commission, Case 457/10, [2012] E.C.R. ___ (delivered December 2012), par. 176.

Hoffmann-La Roche [1979] E.C.R. 461, page 466 (facts of the case).

United Brands, [1978] E.C.R. 207, par. 122.

Id., pars. 69–81.

Hoffmann-La Roche, [1979] E.C.R. 461, par. 48.

Commission Decision in case COMP/37.990 (AMD/Intel), slip op. par. 866 (May 13, 2009), upheld Intel v. Commission, Case T-286/09, [2014] E.C.R. II ___ (delivered June 12, 2014), reversed on other grounds Intel v. Commission, Case C-413/14, [2014] E.C.R. I ___ (delivered September 6, 2017).

Id., pars. 859–861.

Id., par. 861.

Id., par. 856.

Id., par. 852.

Continental Can v. Commission, Case 6/72, [1973] E.C.R. 215, par. 36.

Id., pars. 33–35.

United Brands, [1978] E.C.R. 207, par. 123.

Hoffmann-La Roche, [1979] E.C.R. 461, par. 48.

Harbord and Hoehn (1994), pp. 424–425.

The logic is similar to the rationale for a per se rule for certain antitrust violations. The fact that the financial system is underdeveloped would result that in almost every case a new entrant would suffer higher borrowing costs at the same projected return than those of the incumbents. Therefore, it would be an unnecessary burden to require the plaintiff to produce evidence of costs asymmetries. In addition, the defendant would be in the best position to provide its borrowing costs in order to prove that, on the contrary, there is no asymmetry.

Continental Can, [1973] E.C.R. 215, page 234 (pleas and arguments of the parties).

See Sect. 5.2.

Bodson v. Pompes Funèbres des Régions Libérées, Case 30/87, [1988] E.C.R. 2479, par. 29.

Commission Decision No. 92/21 3/EEC (British Midland/Aer Lingus), 1992 O.J. L 96/34, par. 19.

Commission Decision No. 97/624/EC (Irish Sugar), 1997 O.J. L 258/1, par. 104.

Commission Decision in case COMP/37.685 (Georg Verkehrsorganisation/Ferrovie dello Stato), slip op. par. 100 (Aug. 27, 2003).

Commission Decision No. 89/113/EEC (Decca Navigator), 1989 O.J. L 43/7, pars. 92 & 8.

Id., par. 8.

Deutsche Telekom v. Commission, [2010] E.C.R. I ___ (delivered October 14, 2010).

Id., par. 3.

Id., par. 2.

Id., pars. 67–73.

Id., par. 92.

Id., par. 62.

Commission Decision in case COMP/38.784 (Wanadoo España/Telefónica), slip op. pars. 139, 140, & 227 (Jul. 4, 2007), upheld, Telefónica and Telefónica de España v. Commission, Case T-336/07, [2012] E.C.R. II ___, par. 126 (delivered March 29, 2012) appeal dismissed, Telefónica and Telefónica de España v. Commission, Case C-295/12, [2014] E.C.R. I ___ (delivered July 10, 2014).

Gavil et al. (2008), pp. 986–987.

Areeda et al. (2007), p. 74.

Commission Decision No. 92/21 3/EEC (British Midland/Aer Lingus), 1992 O.J. L 96/34, pars. 18 & 22.

Commission Decision No. 88/138/EEC (Eurofix-Bauco/Hilti), 1987 O.J. L 65/19, par. 67.

Id., pars. 70 & 71.

148 F.2d at 424.

Gavil et al. (2008), p. 607.

Id., p. 719.

142 F.3d at 98.

Ibid.

Id., at 99.

Ibid.

51 F.3d at 1438.

Gavil et al. (2008), p. 719.

In the merger context, see United States v. Phillipsburg National Bank & Trust Co., 399 U.S. 562, 368–369 (1972) (not enough ease of entry proven to dismiss anticompetitive effects of merger); Id. (Harlan, J., concurring in part and dissenting in part), at 377 (the possibility of entry can act as a check on market power). In exclusionary conduct cases, general considerations of entry barriers have figured more prominently in Supreme Court decisions on predatory pricing. See Brooke Group, 509 U.S. at 226 (summary judgment appropriate when entry into the market is easy) and Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 591 (1986) (n. 15).

479 U.S. 104, 120–21 (n. 15) (1986). Even though it is technically a merger case, the reasoning of the Court revolved around whether the merged entity could successfully employ a predatory pricing strategy. Id., at 117–120. Therefore, the analysis was closer to that of a Sherman Act section 2 violation rather than the typical Clayton Act prospective analysis of the merger’s effect on prices and other market conditions.

190 F.3d 974, 975 (9th Cir. 1999).

619 F. Supp. 441, 456 (N.D. Cal. 1985), affirmed, 890 F.2d 139 (9th Cir. 1989).

This is an example of a mistake that can occur if one focuses only on the static analysis of entry, which is strongly condemned by Carlton (2005), and differs from the approach enshrined in the DOJ-FTC Merger guidelines.

853 F. Supp. 1454, 1473 (W.D.N.Y. 1994), affirmed, 63 F.3d 95 (1995).

Ibid.

131 F. Supp. 2d 151, 171 (D.D.C. 2000).

86 F. Supp. 2d 154, 164–165 (W.D.N.Y. 2000).

479 U.S. at 119–120 (n. 15).

There is, however, one problem with the Court’s reasoning. It does not take into account the economic depreciation of capital. Although it is true that existing facilities of bankrupt firms may be purchased, this may happen toward the end of their useful life, at which point the firms have to consider whether it is a good investment to replace the assets. In that sense, the predation may pay off if the subsequent purchasers decide to exit (or, what is the same, to not re-enter) the market by not purchasing new capital, which will allow for the recoupment of the predator’s losses incurred by selling below cost. In any case, for the purpose of this research it is still noteworthy to see the relatively more relaxed attitudes toward capital investments in US courts.

619 F. Supp. 441, 456 (N.D. Cal. 1985), affirmed, 890 F.2d 139 (9th Cir. 1989).

853 F. Supp. 1454, 1473 (W.D.N.Y. 1994), affirmed, 63 F.3d 95 (1995). The rule that can be interpreted from the court’s reasoning is that if there are already other competitors that have incurred in sunk costs, they can exert sufficient competitive pressure because, having incurred in irreversible investments, they will be less willing to exit the market if an exclusionary tactic is employed. Therefore, entry analysis is of no significance. A different matter could be if the court considers that current competitors are not of a sufficient enough size to represent a threat to the defendant firm.

824 F.2d 582 (8th Cir. 1987).

100

Areeda et al. (2007), n. 4.

101

51 F.3d 1191, 1200–02 (3rd Cir. 1995).

102

Gavil et al. (2008), p. 985.

103

824 F.2d. at 599–600.

104

51 F.3d at 1200–1201.

105

See Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1428 (9th Cir. 1993).

106

In a later decision, the Ninth Circuit appears to have focused rather on high capital requirements in themselves and not in the difference of borrowing costs between entrants and incumbents. See Image Technical Services, Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1208 (9th Cir. 1997). The court, however, did not enter into a deep analysis of barriers to entry and relied merely on an expert’s testimony that named high capital demands as obstacles for potential competition. Ibid. However, in subsequent decisions, the Ninth Circuit did state again clearly that the barrier to entry would be that entrants face higher capital costs than incumbents. See Confederate Tribes of Siletz Indians of Oregon v. Weyerhaeuser Company, 411 F.3d 1030, 1044 (9th Cir. 2005), reversed on other grounds, 549 U.S. 312 (2007).

107

858 F.2d 1487, 1495 (11th Cir. 1988).

108

In fact, the district court did consider whether capital costs were substantial, concluding that the initial investment was not prohibitive. McGahee v. Northern Propane Gas Co. 658 F. Supp. 189, 195 (N.D. Ga. 1987). The appellate court, however, was persuaded by the defendant firm’s market share of over 60% and concluded that it was enough to raise a factual dispute to be decided by a jury in an attempt to monopolize case. McGahee, 858 F.2d, at 1506.

109

858 F.2d. at 1495 (n. 11).

110

426 F.2d 592, 605 (6th Cir. 1970).

111

708 F. 2d 1081 (7th Cir. 1983) (n. 57).

112

Ibid.

113

892 F.2d 62 (9th Cir. 1989).

Id., at 63.

51 F.3d at 1441.

Id., at 1439.

431 F. 3d 917, 947 (6th Cir. 2005).

118

540 U.S. 398 (2004).

119

Deutsche Telekom, [2010] E.C.R. I ___ (delivered October 14, 2010).

540 U.S. at 412–415.

Id., at 412–413.

190 F.3d at 976–977.

Ibid.

142 F.3d at 98–99.

51 F.3d at 1441.

Stavins (2001).

Sutton (1996).

Jones and Laudadio (1990). Some studies arrive to the same conclusions for manufacturing activities. One example is Domowitz et al. (1986).

129

Landes and Posner (1981), p. 958.

130

Id., p. 953.

131

Ibid.

132

United Brands, [1978] E.C.R. 207, pars. 69–81.

133

131 F. Supp. 2d at 171.

134

479 U.S. at 119–120 (n. 15).

135

858 F.2d. at 1495 (n. 11).

136

426 F.2d at 605.

137

There was no interconnection case in Chile during the period of decisions that was covered (2001–2015).

138

Deutsche Telekom, [2010] E.C.R. I ___ (delivered October 14, 2010), par. 62.

139

Wanadoo España/Telefónica, 2007, slip op. pars. 139, 140, & 227.

140

Areeda et al. (2007), p. 74.

Areeda P, Solow J, Hovenkamp H (2007) Antitrust law–an analysis of antitrust principles and their application. Aspen Publishers, United States of America

Carlton D (2005) Barriers to entry. NBER Working Paper No. 11645. https://doi.org/10.3386/w11645

Domowitz I, Hubbard R, Petersen B (1986) Business cycles and the relationship between concentration and price-cost margins. RAND J Econ 17(1):1–17CrossRef

Gavil A, Kovacic W, Baker J (2008) Antitrust law in perspective: cases, concepts and problems in competition policy. Thomson/West, St. Paul

Harbord D, Hoehn T (1994) Barriers to entry and exit in European competition policy. Int Rev Law Econ 14(4):411–435CrossRef

Jones J, Laudadio L (1990) Price rigidity, inflation and market concentration: some Canadian evidence from the 1970s. Appl Econ 22(12):1625–1634CrossRef

Landes M, Posner R (1981) Market power in antitrust cases. Harv Law Rev 94(5):937–996CrossRef

Stavins J (2001) Price discrimination in the airline market: the effect of market concentration. Rev Econ Stat 83(1):200–202CrossRef

Sutton J (1996) Technology and market structure. MIT Press, CambridgeCrossRef

Title: Comparative Analysis: Do Latin American Countries Follow the EU or US Standards for Entry Analysis?
Author: Francisco Eduardo Beneke Avila
Publisher: Springer Berlin Heidelberg
Book: Market Entry and Competition Law in Latin America
Print ISBN: 978-3-662-62346-6

Electronic ISBN: 978-3-662-62347-3

Copyright Year: 2021
DOI: https://doi.org/10.1007/978-3-662-62347-3_9

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"