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As members of the antitrust community, we contribute to the intellectual debate over today’s important competition issues.

The Antitrust Debate Surrounding Qualcomm

Qualcomm’s technology licensing practices and modem chip discount agreements with mobile phone suppliers have come under antitrust scrutiny. The U.S. Federal Trade Commission and Apple challenged Qualcomm’s conduct, alleging that Qualcomm abused its market power in modem chips by refusing to license its technology to rivals and that its discount agreements were exclusionary.

Dr. Chipty was one of Qualcomm’s antitrust experts. She assessed Plaintiffs’ asserted markets, claims that Qualcomm had monopoly power, and the competitive effects of the at-issue discount agreements. Her analysis highlighted, among other things, the importance of accounting for technological innovation in the dynamic modem chipset marketplace.

These disputes came to a head in 2019:

  • In Apple v. Qualcomm, the parties settled just as trial began in April 2019. As part of their global settlement, Apple agreed to pay Qualcomm an undisclosed amount and signed a multi-year agreement to purchase Qualcomm’s modem chips.

    Qualcomm’s and Apple’s joint statement on the settlement can be found here. Details on the settlement can be found here.
  • In FTC v. Qualcomm, the District Court ruled against Qualcomm and enjoined it from continuing the challenged conduct. Qualcomm appealed the decision. The Ninth Circuit stayed the injunction, stating “[w]hether the district court’s order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act, is a matter for another day.” The U.S. Department of Justice filed a statement of interest explaining that “Qualcomm is likely to succeed on the merits because the district court’s decision ignores established antitrust principles and imposes an overly broad remedy.”

    The District Court’s ruling can be found here. The Ninth Circuit’s order granting the stay can be found here. The DOJ’s statement of interest can be found here.

Tobacco Plain Packaging

Tobacco Plain Packaging

October 1, 2019

The World Trade Organization issued a favorable ruling for Australia rejecting complaints brought by tobacco exporting countries arguing that Australia’s tobacco plain packaging legislation violates trade rules. Citing econometric analyses conducted by Matrix Economics’ Dr. Tasneem Chipty, the WTO concluded that the legislation is a legitimate measure that is likely to achieve Australia’s public health objectives.

Plain packaging refers to the standardization of tobacco packaging through legislation that requires tobacco companies to remove branding from all tobacco packages. In 2012, Australia became the first country in the world to remove branding from all tobacco packages. Australia was challenged on three fronts: It faced a challenge, brought by British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris, in the High Court of Australia. It was challenged by Philip Morris Asia under the Hong Kong-Australia bilateral investment treaty. It also faced a set of disputes at the WTO, brought by Honduras, the Dominican Republic, Cuba, and Indonesia.

Dr. Chipty served as an economic expert for the government of Australia in the WTO proceedings, where she studied changes in cigarette sales and smoking prevalence before and after implementation of tobacco plain packaging. Based on a series of econometric analyses, submitted over the course of six expert reports, Dr. Chipty found that the tobacco plain packaging measures had a negative and statistically significant effect on both smoking prevalence and cigarette sales, relative to what the prevalence and sales volume would have been without the packaging changes. Further, Dr. Chipty concluded that the effect of the packaging changes would likely grow over time, given the mechanism through which the public health community expected the policy to work. Matrix’s Principals Dr. Hiu Man Chan and Dr. Ryan Booth also worked on this matter on behalf of the government of Australia to develop evidence in response to the legal challenges surrounding Australia’s tobacco plain packaging legislation.

Honduras and the Dominican Republic have filed appeals before the WTO Appellate Body. The matter is pending at the appellate stage.

Additional information is available here:
Full panel report. (See: WTO Panel Report.)

WTO Disputes and Australia’s Tobacco Plain Packaging. (See related documents here: Department of Foreign Affairs and Trade, Government of Australia.)

Australia’s High Court upheld plain packaging legislation. (See decision here: High Court of Australia.)

Australia prevailed in the investment challenge by Philip Morris Asia under the Hong Kong – Australia bilateral investment treaty.  (See decision here: Permanent Court of Arbitration.)

The Supreme Court of the United Kingdom upheld plain packaging polices, citing heavily to Dr. Chipty’s work in Australia. (See decision here: BAT vs. Department of Health Judgement.)

EU High Court ruled that the new EU directive on tobacco products, which allows member states to introduce plain packaging, is valid. (See decision here: Court of Justice of the European Union.)

Dr. Chipty Speaks on the Role of Intent in Monopolization and Merger Cases

Thursday, February 28, 2020
12:00 to 1:15 pm

ABA Teleconference

Dr. Chipty participates in a panel hosted by the ABA’s Unilateral Conduct Committee Program, on the role of intent in monopolization and merger cases. She and her co-panelists have been asked to comment on Judge Posner’s statement “internal company documents used to show anticompetitive intent  . . . cast only a dim light on what ought to be the central question in an antitrust case: actual or probable anticompetitive effect.”  True or not true?

Dr. Booth Speaks on Vertical Merger Enforcement

Tuesday, September 17, 2019
12:00 to 2:00 pm

Knowledge Group Webcast

Dr. Booth will speak on a panel entitled “Vertical Merger Enforcement: How to Effectively Navigate Through the Uncharted Waters of Complexities.” The panel will provide an in-depth analysis of the fundamentals of vertical merger reviews and recent development in vertical merger enforcement. Dr. Booth will describe empirical strategies for proving a vertical merger case and tips for practitioners on assessing the antitrust risk of a prospective vertical deal.

Click here to register and for more information.

Drs. Chipty and Booth Speak on Working Effectively with Economic Experts

Tuesday, May 21, 2019

Freshfields Bruckhaus Deringer LLP

Drs. Chipty and Booth have been invited by Freshfields to share their experience on how to work effectively with economic experts. They will cover topics such as establishing good working protocols during retention, setting realistic budget expectations, and supporting your expert throughout the engagement.

Dr. Chipty Moderates a Discussion on “Competition and Policy in Health Markets”

Saturday, April 6, 2019
4:45 to 6:15 pm

The 17th Annual IIOC

Renaissance Boston Waterfront Hotel, Boston, MA (3rd Floor, Atlantic 1

Dr. Chipty will moderate a plenary session featuring two prominent health economists, Professors Leemore Dafny and Kate Ho. The plenary will focus on recent research on competition amongst healthcare providers, how that competition affects provider negotiations with insurers, and implications for merger review and antitrust policy in the healthcare and health insurance marketplaces.

Click here to view the conference program.

Dr. Booth Publishes Article on Airline Pricing

Dr. Booth Publishes Article on Airline Pricing

Matrix’s Dr. Ryan Booth published an article on airline pricing, called “Scarcity, Market Power, and Prices at Slot-constrained Airports: Evidence from Mexico City,” in the April 2019 edition of the Journal of Transport Economics and Policy. As he and his coauthors explain:

    “Many of the world’s major airports are both slot-constrained, meaning that demand for take-offs and landings exceeds airport capacity at certain time periods, and concentrated, meaning that a single airline operates a large share of take-offs and landings. Slot constraints and slot concentration can each lead to higher average fares, but for different reasons that may require different policy prescriptions. In this article, we demonstrate how policy makers can differentiate between the effects of scarcity and concentration on prices, and we apply our methodology to a recent investigation into the allocation of take-off and landing slots at Mexico City’s airport.”

The authors use a difference-in-differences econometric framework to separately identify the effects of scarcity and slot concentration on airline prices. They conclude that the higher prices at Mexico City’s airport are driven by the scarcity of take-off and landing slots, not by the concentration of slots allocated to Mexico’s flagship airline, Aeromexico.

Dr. Booth co-authored the article with Ms. Almudena Arcelus, Dr. Aaron M. Fix, Dr. Jee-Yeon K. Lehmann, and Dr. Federico G. Mantovanelli of Analysis Group and Professor Robert S. Pindyck of MIT Sloan School of Management.

Click here to read the article.

Dr. Chipty Speaks on Multi-Sided Platforms at FTC Hearing

Monday, October 15, 2018
3:15 to 5:00 pm

FTC Hearings on Competition and Consumer Protection
in the 21st Century

George Mason University, Arlington, VA

Dr. Chipty will discuss her views about market definition and market power in multi-sided platforms at the third session of the FTC’s hearings on Competition and Consumer Protection in the 21st Century. The session will focus on the potential for collusive, exclusionary, and predatory conduct in multi-sided, technology-based platform industries. She will describe circumstances in which a single-market approach to market definition and market power could be appropriate and the potential misuse of the concept of multi-sidedness.

Click here to view the hearing program.

Atrium Health Agrees to Cease Challenged Conduct

Oct 1, 2018

In June 2016, the U.S. Department of Justice and State of North Carolina challenged steering restrictions imposed by Atrium Health (formerly, Carolina’s HealthCare System) on health insurers. According to Plaintiffs, these steering restrictions interfered with health insurers’ ability to offer innovative new products and tools that encourage patients to use lower-cost healthcare providers. The parties reached a settlement in late 2018, in which Atrium Health agreed to end the challenged conduct.

Dr. Chipty was the DOJ’s antitrust liability expert. She submitted testimony that addressed relevant markets, Atrium Health’s market power, and the competitive effects of the challenged conduct.

The DOJ’s press release can be found here. The Final Judgement can be found here.

Disney Agrees to Divest Regional Sports Networks as a Condition for Acquiring FOX Assets

July, 2018

Disney sought regulatory approval to acquire FOX assets, including cable networks, film and television studios, and its 30 percent stake in Hulu. The U.S. Department of Justice conditionally approved the acquisition subject to Disney divesting 22 FOX regional sports networks.

A Matrix Economics team supported an academic economist to evaluate the competitive implications of Disney’s proposed acquisition. A key concern was that Disney would have owned a substantial percentage of revenues associated with cable sports programming. The work was presented to the DOJ and undertaken on behalf of the American Cable Association.

The DOJ’s press release can be found here. The Proposed Final Judgement can be found here.

Dr. Chan Speaks on Minimum Advertised Price Polices

Friday, June 8, 2018
12:00 to 1:00 pm

ABA Teleconference

Dr. Chan will speak on a panel on minimum advertised price policies and other resale issues. The panelists will discuss their views on the legal and economic issues related to minimum advertised pricing policies, including legal risk, enforcement issues, and setting realistic outcomes. The panel will also discuss best practices and risks in establishing pricing and distribution policies.

Click here to register and for more information.

Drs. Chipty and Booth Speak on Market Definition

Thursday, April 26, 2018

Wilmer Cutler Pickering Hale and Dorr LLP

Drs. Chipty and Booth have been invited by WilmerHale to give a presentation on the practice of market definition. They will cover topics such as the role of market definition in antitrust analysis, empirical strategies for defining relevant markets, and differences between merger and conduct cases.

Dr. Booth Chairs Session on Advertising and Price Dispersion on Platforms

Sunday, April 22, 2018
8:00 to 10:00 am

The 16th Annual IIOC

Hilton Indianapolis Hotel, Indianapolis, IN (Circle City 7, 7th floor)

Dr. Booth will chair a session on advertising and price dispersion on platforms at the 16th annual International Industrial Organization Conference. The session will feature three papers:

  • “Effects of an Advertising Tax in Two-sided Markets under Imperfect Competition” by C. Matthew Shi
  • “The Dynamics of Online Hotel Prices and the EU Case” by Andrea Mantovani, Claudio Piga, and Carlo Reggiani
  • “Internet Use, Competition, and Geographical Rescoping in Yellow Pages Advertising” by Lesley Chiou and Marc Rysman

Click here to view the conference program.

MOL, K-Line, and NYK Line Receive DOJ Clearance for Joint Venture

April 1, 2018

Japan’s three largest shipping carriers—Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha, and Nippon Yusen—sought regulatory approval for a joint venture called Ocean Network Express (ONE). The U.S. Department of Justice approved the joint venture without condition, and ONE is expected to begin operations in April 2018.

Dr. Chipty analyzed the competitive effects of the proposed joint venture. A key concern was competition along the supply chain for transporting refrigerated produce between the U.S. and Japan. Dr. Chipty’s work was presented before the DOJ on behalf of the parties in the summer of 2017.

Read more about the joint venture here.

Dr. Chipty Was Featured in the March 2018 Spotlight Series

Dr. Chipty Was Featured in the March 2018 Spotlight Series

Matrix’s Dr. Tasneem Chipty was featured in an interview-style format by the Antitrust Practice Group of the American Health Lawyer’s Association, in its March 2018 Spotlight Series. Among other subjects, Dr. Chipty was asked about key issues in health care antitrust analyses, lessons from prominent health care cases, why she started Matrix, and career advice for younger practitioners. Some of the issues she discussed include:

  •  Current position of antitrust analysis in health care and its future.
  • Distinctions in analytical framework between hospital merger evaluations and hospital-physician group merger evaluations, from her involvement in St. Luke’s and Saltzer Medical Center merger.
  • Efficiency justifications in merger cases and expected success of such arguments for future mergers.
  • Applicability of Dr. Chipty’s article on the role of firm size in bilateral negotiations to consolidation in the health care industry.
  • Views on cross market effects in mergers involving health care systems that operate in separate geographic or product markets.

    Dr. Chipty’s interview is published in the March 29, 2018 issue of the AHLA Antitrust Practice Group’s PG Briefing.

    Hillsdale Community Health Center Agrees to Cease Challenged Conduct

    Early 2018

    In June 2015, the U.S. Department of Justice and State of Michigan alleged that Allegiance Health agreed with its horizontal competitors, including Hillsdale Community Health Center, to allocate territories for the marketing of their services in Hillsdale County, Michigan. According to Plaintiffs, the challenged agreement was a customer allocation agreement that resulted in harm to competition and consumers. Allegiance Health was the last Defendant to settle. In early 2018, weeks before trial, Allegiance Health agreed not to communicate with competitors about their respective marketing activities and not to enter into agreements to allocate customers.

    Dr. Chipty was the DOJ’s antitrust expert. Her work focused on the economics of collusion and the role of marketing in patients’ choices of hospital.

    The DOJ’s press release can be found here. The Final Judgement can be found here.

    Dr. Chipty Speaks on Market Definition at ABA Event

    Tuesday, November 14, 2017
    12:00 to 1:00 pm

    ABA Teleconference

    Dr. Chipty will speak on an ABA panel on market definition in Section 2 and Section 7 cases. The panel will discuss whether the same test (e.g., the hypothetical monopolist test) can be used to define markets in monopolization cases and merger cases. The panel will also discuss whether market definition is a question of law or fact, and whether the use of a specific tool to define markets should be subject to review on appeal as a question of law or fact.

    Dr. Chipty’s Research with Massachusetts HPC on Hospital Price Variation to Be Presented

    Sunday, June 25, 2017
    12:15 to 1:45 pm

    2017 AcademyHealth Annual Research Meeting

    Hyatt Regency, New Orleans, LA (Elite Hall, Level 1)

    Dr. Chipty worked with staff of the Massachusetts Health Policy Commission to understand the determinants of price variation across Massachusetts inpatient hospitals. The results of the analysis will be presented at the 2017 AcademyHealth Annual Research Meeting as a poster entitled “Factors Underlying Variation in Inpatient Hospital Prices.”

    Click here to view the poster.

    Matrix Economics Sponsors Session on Empirical Studies in Two-Sided Markets

    Sunday, April 9, 2017
    10:15 am to 12:15 pm

    The 15th Annual IIOC

    Renaissance Boston Waterfront Hotel, Boston, MA (Atlantic 3)

    Matrix Economics will sponsor a session on two-sided markets at the 15th annual International Industrial Organization Conference. The session will feature four papers:

    • “Competition and Welfare Consequences of Information Platforms” by Amedeo Piolatto
    • “How Efficient are Decentralized Auction Platforms?” by Aaron Bodoh-Creed, Jörn Boehnke, and Brent Hickman
    • “Working Under Search and Information Frictions: Evidence from an Online Crowdsourcing Platform Experiment” by Yusuke Narita and Kosuke Uetake
    • “Airline Services Agreements: A Structural Model of Network Formation” by Phillip McCalman and Marc Rysman

    Click here to view the conference program.