The theory and practice of auctions

Due to advances in theory as well as in technology, the importance of auctions has increased significantly in the past years. They are routinely used on the internet (eBay) but have been also considered by the US government to buy banks' toxic assets as a means of reviving credit markets. Auctions of telecommunication frequency bands have caused stirs in recent years. In the Netherlands, a new auction of this type, which will be conducted over the internet this time, is coming up in the second quarter of 2009. The outcome of such auctions is greatly influenced by their design. On 27 February 2009, a one-day workshop on this topic will take place at Tilburg University. This meeting is organized jointly by the Royal Dutch Mathematical Society (KWG), section Industrial and Applied Mathematics (ITW), and TILEC, and is co-sponsored by the Department of Econometrics and Operations Research of Tilburg University. Four well-known experts will discuss the design of auctions from several perspectives: Eric van Damme (Tilburg), Jean-Jacques Herings (Maastricht), Emiel Maasland (Rotterdam) and Sven de Vries (Trier). The programme includes an auction under laboratory conditions, run by CentERlab, in which workshop participants will play a role as bidders. Registration is free but required by 15 February 2009.

Coming conference on 'Patent Reforms'

'Patent reforms' is the central theme of an international conference organized by TILEC on 26 and 27 March 2009 in Amsterdam. During one and a half day, fifteen internationally renowned scholars, judges, and practitioners shall discuss hotly-debated issues, such as the question whether patents contribute to, or restrict, innovation; whether patents under- or over-compensate innovators, whether trivial patents and the alleged laxity of some patent offices amount to a serious problem, whether intellectual property licensing in standard-setting organizations deserves a special regime, whether patent law is open to abuses, or the problem of effective enforcement, or uncertainty in patent law. The conference intends to foster an informed discussion on patents, innovation and competition policy between lawyers and economists, academics and market participants. Registration is now open and early booking is advised. For a full description of the programme and registration, please click here

Setting the right standard

Many recent competition law cases (Microsoft, Rambus, Qualcomm) revolve around standard-setting issues. Standardization is generally seen as a good thing. It may be the natural outcome of market interaction, perhaps following the outburst of a 'standard war'. It can also arise from a so-called cooperative procedure in a standard-setting organization (SSO), where interested parties negotiate the technological boundaries of the standard-to-be-adopted. On 23 January 2009, TILEC devoted a seminar to this topical issue. Heike Schweitzer (European University Institute, Florence) described the European regime currently applied to SSOs. This regime is characterized by near-complete immunity under article 81 EC but allows for the prosecution of various conducts under article 82, sometimes on grounds of otherwise rarely-invoked exploitative abuses. This combination apparently favors cooperative standard-setting over competition in the market. Jorge Padilla (LECG) exposed the various economic issues at stake, among which the determination of the prices paid to technologies considered for inclusion in a standard stands out. Although various proposals have been made to set them at the right level, it was argued that a lot of them disregard the recent appearance of pure (i.e. non-vertically integrated) innovators, whose interests may not be sufficiently protected by the current regime.

Network-based governance: something for everyone?

TILEC member Maartje de Visser was awarded her doctorate 'cum laude' at Tilburg University on 23 January 2009. Her thesis engages in the debate on the better application of European law. Network-based governance was introduced in the European Union for the application and enforcement of EC competition and EC communications law. The networks comprise the European Commission and national authorities, and create a sophisticated web of rights and obligations between these actors. Maartje argues that networks foster cooperation amongst national authorities and with the European Commission. Furthermore, participation in networks 'europeanizes' otherwise nationally-focused authorities when they apply EU law. At the heart of Maartje's analysis is a critique of the wider normative attractiveness of the network model. It is kaleidoscopic, engaging with a wide variety of notions including legitimacy, judicial review, subsidiarity, institutional balance and efficiency. Maartje's research demonstrates that network-based governance deserves careful consideration as a model that is able to mediate the competing concerns of coherence for internal market reasons, and diversity and respect for local autonomy. This makes it much more attractive than existing enforcement regimes and worth serious consideration for extension into other policy areas. Maartje's thesis will soon be published by Hart Publishing (Oxford).

A choice-based approach to European banking supervision

he financial crisis that has started in August 2007 has unveiled deficiencies in the regulation and supervision of banks, leading to calls for institutional changes and there with providing the opportunity to suggest an alternative approach. The main institutional reforms currently being proposed —including the establishment of a 'global' regulatory body, of 'European' supervisory colleges, or of a European system of financial supervisors — are likely to fail, and it is thus worth considering alternatives. In a recent TILEC DP, TILEC-AFM chairholder Joseph A. McCahery and co-authors Gerard Hertig (ETH Zurich, ECGI] and Ruben Lee (Oxford Finance Group) explore the merits of a choice-oriented approach. Individual Member states have the option to delegate prudential supervision of their largest banks to the European Central Bank, while still retaining the right to re-assume such a role for themselves at a later date. Responsibilities, commitments and costs are allocated by means of a binding agreement with the ECB that can be tailored to Member states' circumstances, to the extent permitted by supervisory coherence and equal treatment. While the authors admit that their approach is not perfect, they believe it to be the best feasible choice in the current circumstances