EVENT: Commerce Comission talk on new merger guidelines (Auckland)

The Commerce Commission recently updated it Mergers & Acquisitions guidelines for the first time in 10 years (read them here). They also updated the Authorisation guidelines, which is the mechanism available to the Commission to approve mergers that lesson competition but have an offsetting public benefit (available here).

In Auckland on 10 September (just under two weeks away) the Law and Economics Association of New Zealand (LEANZ) is putting on a special event with the ComCom’s top competition economist (Lilla Csorgo) and top competition lawyer (David Blacktop) talking about the new guidelines.

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Do lawyers really understand economics?

With more and more policy being founded in economic analysis, lawyers are having to become ever more familiar with economic concepts. Competition law (antitrust to Americans) is an area that has become particularly mired in economic analysis. In New Zealand we have seen plenty of debate over large cases in which anti-competitive behaviour has been alleged. So it is apropos to find two economists asking whether “antitrust [is] too complicated for generalist judges”:

We find that decisions involving the evaluation of complex economic evidence are significantly more likely to be appealed, and decisions of judges trained in basic economics are significantly less likely to be appealed than are decisions by their untrained counterparts. Our analysis supports the hypothesis that some antitrust cases are too complicated for generalist judges.

One of the authors has an interesting and detailed (for a blog post) discussion here. It’s certainly a worthwhile topic for investigation, since the decisions in these cases can be extremely expensive for the parties involved. If there is enough evidence, does it point to the need for specialist judges in this field?

Google buys Motorola: Vertical integration or Android IP play?

So Google has just bought Mobile handset maker Motorolo Mobility (see announcement on the Google blog), a move that sees Google  vertically integrating into phone hardware.

My initial reaction to this was a worry that by vertically integrating to compete against Apple, this might discourage non-integrated phone makers (such as Sony, Samsung and HTC) from using Android. The argument being that by virtue of the vertical integration, Motorola would have an advantage over other phone manufacturers who use Android (e.g. closer hardware/software integration ala the Apple model).

However, signs point to this being a patent play in response to RIM, Microsoft et al buying up the Nortell patents (which Google has complained to the Antitrust authorities about). The worry being that threats of legal action or patent fees will make Android costly to install on phones.  By acquiring Motorolo’s IP this gives Google something to fight back with (i.e. the ability to threaten to counter-sue).

So hopefully Motoroloa continues to be run as a separate company competing against Sony/Samsung/HTC etc., while Google’s control of Motorola’s patents gives these companies some more legal certainty.

For more reading check out Chris Keal’s piece at the NBR and a pretty detailed piece at the WSJ

UPDATE: A neat info-graphic which shows “who is suing who” in the smartphone wars (HT: @d7street and the NBR article already linked)


Drugs and anti-paternalism

On Saturday I had an article in the Dom ranting about how harm minimisation was a dumb goal – as there are benefits from the consumption of drugs.  This argument has been on the internet a million times (see these two searches for example), so there is no need to rehash it here.

Originally, the article was a little different.  It was a direct attack on the paternalism implicit in the policy making associated with the anti-drug crusade and the policy target of minimising harm.  Fundamentally, this is a critique of what the Law Commission has done – they are an independent body that should critique how the law differs from the target of policy (which they do well IMO) AND critique where policy differs from its practical aim (something they haven’t done).  Often the implementation of laws differs from policy because the policy is bad!

The last three paragraphs from this far more libertarian style article were:

However, why as a society are we determined to stop people hurting themselves?  Part of life is learning to take responsibility when your own choices and actions hurt you – having a government act in a paternalistic way to stop this, and make it harder for people to learn about individual responsibility, seems dangerous to me.

Even if we do have sufficiently little faith in our fellow man, and believe that the government should act like our parents, is this type of policy intervention equivalent to good parenting?  A good parent will set some boundaries, but also give a child the opportunity to learn from their mistakes, and will be there to help if things go wrong – only a bad parent would focus only on potential harm and ignore any benefit to the child when setting boundaries.  In this sense, even the most paternalistic people must agree that solely focusing on harms from any action is a poor way to ensure that we have the happiest society possible.

Ultimately, I’m of the opinion that a truly civilised society must be based on compassion, not control – it should be based on people’s happiness and freedom, not the desire of some policy wonks to create their ideal world.

Comments and criticism of this view welcome.

Update: Relevant points from Eric Crampton (Uni of Canterbury/Offsetting Behaviour) and Luke Malpass (Centre for Independent Studies).

Licensing fees vs open source software

I work (if you can call it that…) for an organisation that uses a suite of Microsoft applications. In addition to Windows XP it runs MS Office. For the ability to do this, a licensing fee, probably quite sizeable (I don’t know though) is paid to Microsoft.

Now, it was pointed out to me that an open source alternative, “Open Office” is compatible with MS Office, and has most all of the same functionality. There would have to be some retraining, however, to ensure that everyone could use it correctly.

It was put to me that my organisation could save quite substantial sums (even after the cost of retraining for its use) from changing to this alternative, and that there would be very few costs to the change.

I searched for reasons why this person was wrong:

  • We work collaboratively with a lot of other organisations, and need to be using the same software. But apparently they are completely compatible.
  • The support that microsoft offers means it is much safer to use MS office. I can’t recall the response, but apparently this isn’t a big deal.
  • People just won’t retrain and will insist on using MS Office because it is what we know. My friend scoffed with contempt.

Why do we all pay so much to use Microsoft intellectual property? I have my suspicions why, but would like to hear from others.

Defending the Bank’s attack on “prices”

Yesterday I said that I thought the Bank’s speech on bringing down the price level was ridiculous. Not only is asking for a decline in prices a strange thing for a central bank to do, the mentioning of “oil companies” was slightly off the mark – given that they have slashed prices in the face of falling crude oil (although to be fair the Bank was just asking them to keep going – it was the Dom Post that exaggerated it – or maybe I was being generous!).

Now I am going to defend it.

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