As Posner`s career unfolded, his own positions moderated, including greater recognition of oligopoly and exclusionary practices than antitrust concerns. Stigler remained adamant, even though his ideas of perfect competition in American business schools were already losing theoretical and empirical support. They would continue to live in law schools, although that is no longer the case today. Stigler`s ideas are not as far removed from the mainstream on the right as the antitrust policies of the 1960s on the left, but they are still outside the mainstream. The Pfizer case is about the fact that the testimony of managers responsible for developing a competitive strategy will prevail over the anti-competitive statements contained in the “smoking” documents. The most telling discovery came in the summer of 2011, when the company was preparing to fend off the threat posed by Google`s rival platform, Google+. The complaint cites an email in which Sheryl Sandberg, Facebook`s chief operating officer, wrote: “For the first time, we have real competition and consumers have real choice. We have to be better to win. At the time, Facebook planned to deprive users of the ability to identify themselves in photos. An anonymous manager suggested pumping the brakes. “If ever there was a time to avoid controversy, it would be for the world to compare our offerings to G+,” they wrote. They suggested that it would be preferable to keep these changes “until direct comparisons with the competition fade.” It`s akin to a smoking gun: proof that, as Srinivasan suspected, Facebook preserves users` privacy when it fears competition and degrades privacy when it doesn`t.
This company-wide memo is important in the antitrust context, as this bonus incentive applied not only to those who worked on Google`s social efforts, but also to anyone working on Google Search and any other Google product, service, or activity. In his dramatic directive, Mr. Page made clear what the single collective intent of all Googlers should be, and then collectively motivated them financially to achieve it. It becomes clear why this memo could be an antitrust “smoking gun” when we learn what Google`s “grand plan” is on social media and what they have already done in the company to use Google`s market power to essentially ensure Google+`s success. To further emphasize the importance of social media to Google`s future, Google`s CEO “Page moved his office and much of the meeting room into the building that housed the Google+ team.” And “he blessed the project with massive resources,” Fortune said. The ACCC case dealt with anti-competitive language used in a number of Pfizer`s internal documents (the “smoking guns” documents). The ACCC relied on the contents of these documents to assert that Pfizer had acted in an anti-competitive manner. Even if the above obstacles can be overcome and an anti-competitive reimbursement settlement is therefore warranted, a private claimant has the additional difficulty of calculating the amount of damages. An important part of this calculation is the estimate of the period during which the event was delayed. Current literature indicates that if a dispute would have arisen without the settlement of reverse payments, a lower limit for that delay can be calculated by X, the amount of the overpayment (i.e. the excess of reverse payments over avoided court fees) divided by M, the additional profits per day that the patent owner makes by selling as a monopolist and not against competition from the new entrant.17 If a settlement would have been reached without the refund without the refund processing, a lower limit for this period may be calculated instead, dividing R, the amount of the reverse payment, by M.18.18 In both cases, existing methods require calculating the amount of the reverse payment, which can be difficult.
Moreover, these existing methods offer only a very conservative floor in both cases, as they assume that the patent owner gains nothing from the settlement and in fact transfers all the common benefits of the settlement to the comparator by payment. It is more realistic to assume that the patent owner also derives part of the common profits from liquidation, but existing methods do not provide a direct means of calculating this amount. As described above, a very conservative lower bound can be calculated for the period of time associated with the settlement of the refund if it is prudently assumed that all joint benefits of the settlement would have been paid to the billing market participant. If a dispute would have occurred without reverse payment processing, the prudent lower bound for default is the excess of reverse payment over avoided litigation costs, divided by the additional profits per day that the patent owner makes by selling as a monopolist and not against competition from the newcomer. If a comparison without reverse payment would have been successful without the reverse payment, the prudent lower limit, i.e. the amount of the reverse payment divided by M. An earlier article by some of us applied event study methods to 68 drug patent comparisons over the period 1993-2013 and found that comparisons with an indication of a reverse payment from the patent holder to the incoming new generic drug were associated with a Immediate, significant and statistically significant increase in the patent owner`s share price (on average and adjusted for general market trends and changes). whereas settlements without reference to reverse payment were not associated with such a change in the share price.20 The latter conclusion refuted any allegation that the stock market systematically underestimated the expected exclusion periods for litigation because the market had underestimated the strength of the patent and the bargaining power of patent holders. If this market underestimation explains why reverse payment settlements significantly increase patent holders` share prices, we would expect these reverse payment settlements to significantly lower generic stock market prices. Instead, these data show that comparisons with a reference to reverse payments did not lead to a statistically significant drop in generic stock prices, but to a statistically non-significant increase in the stock prices of publicly traded generics.21 The above results therefore suggest that reverse payment settlements were a late payment arrangement for the pharmaceutical industry as a whole. Increase the expected profits of the patent owner by extending the expected time to sell without generic competition.
The full hearing of the Federal Supreme Court confirmed the findings of the trial judge regarding the claim of exclusivity. It found that Pfizer had not made exclusive transactions with the aim of significantly lessening competition in a market. How does the Court deal with “smoking” documents against management`s “last word”? Read more about our alert from Sharon Henrick and Rebecca Prior. The event-driven study of stock prices is promising for several reasons. The inclusion of anti-competitive profits retained by the patent owner, and not only anti-competitive profits transferred by the patent owner, is more precise, as it seems certain that patent owners retain at least a portion of the anti-competitive benefits. If patent holders (which is likely) normally retain the lion`s share of anti-competitive profits, focus only on what the patent owner transfers to the market participant misses most of the anti-competitive delay in market entry. Event studies also have the advantage of focusing on the behavior of rational investors who closely follow industry news, rather than the behavior of traders with well-understood incentives to obscure the true nature of their settlements. The predictions of the “anti-competitive hypothesis” are sharp and verifiable using publicly available data, which we believe is worth calling event studies the “smoking gun” of reimbursement settlements.
The Tribunal rejected the ACCC`s argument that Pfizer made these offers to pharmacies in order to prevent or prevent other manufacturers of generic atorvastatin from supplying it to pharmacies. Consequently, the General Court found that Pfizer had not engaged in exclusive trade for a prohibited purpose. The ACCC did not contend that Pfizer had dealt exclusively with the likely effects of a significant lessening of competition in a market, so it was not necessary for the Tribunal to consider the effects of Pfizer`s conduct. “Part of an antitrust case is reporting anti-competitive harm, and because this is a marketplace where users don`t pay for the product, reduced quality is a very important measure of antitrust harm,” said Charlotte Slaiman, former FTC counsel and director of competition policy at Public Knowledge. a DC think tank. The break-up of Facebook could help spur renewed competition for privacy-conscious users. In fact, Facebook had to commit to respecting users` privacy as a condition of acquiring WhatsApp. WhatsApp`s founder later resigned after Facebook broke its promise.