Christopher Townley, Eric Morrison and Professor Karen Yeung ‘Big Data and Personalised Price Discrimination in EU Competition Law (2017) Yearbook of European Law 36 683

This paper – which can be found here – seeks to determine whether ‘algorithmic consumer price discrimination’ can amount to an abuse of a dominant position. It is structured as follows: Section 2 explains how ‘big data’ allows for greater personalisation of prices, and how recourse to digital algorithms facilitates personalised pricing. The paper seeks to identify whether ‘algorithmic consumer price discrimination’ enhances or diminishes economic efficiency. To do so, the paper reviews, in detail, the main economic theories on price discrimination, which have already been summarised when describing the paper reviewed in the post below. The authors observe that price discrimination can have rent-transfer effects (from consumers to producers), allocation effects (reflecting consumers’ willingness to acquire the product) and output effects (by pricing some consumers into the markets and/or out of the market). Which of these effects predominates in imperfectly competitive markets is a very hard question. Ultimately, the effects of price discrimination will have to be assessed on a…

Inge Graef  ‘Algorithms and fairness: what role for competition law in targeting price discrimination towards end consumers?’

This paper – which can be found here –  tries to identify when algorithmic price discrimination will be anticompetitive. Price discrimination is not per se unlawful or anticompetitive; on the contrary, price discrimination  may be efficient and lead to increased output. However, personalised pricing is commonly felt to be unfair – and it is undisputed (in Europe, at least) that some forms of price discrimination can be anticompetitive. This paper seeks to distinguish between those situations when algorithmic price discrimination is anticompetitive and those in which it is not. The paper is structured as follows: Section 2 looks at how price discrimination can harm competition. Two types of harm are identified: (i) primary line injury occurs where the supplier’s conduct discriminates against competitors in markets in which the supplier also operates; and (ii) secondary line injury takes place when a supplier discriminates between a number of its customers as against one another. While behaviour giving rise to primary line injury…

Paul Bates ‘Network effects, antitrust, and falsifiability’ (2017) Journal of Antitrust Enforcement 5(3) 341

This  (short) piece – that can be found here – makes a rather straightforward argument: as competition law confronts new business models enabled by new technologies, it is important to advance theories of harm that are scientific – in the Popperian sense that they must be drawn in such a way as to allow one to demonstrate that the theory might be wrong (or, as the technical jargon puts it, falsified). The paper begins with a description of network effects, before describing how quality is at the heart of a number of cases concerning digital platforms. network effects mean that increased concentration – and reduced competition – may improve the perceived quality of the product. This leads to a heretical question: ‘should we relax antitrust enforcement when network effects are strong? (…) as big data and network effects become more common in the economy, competition enforcement should become less aggressive so as to allow the benefits of network effects to…

Peder Østbye ‘The Adequacy of Competition Policy for Cryptocurrency’

This working paper – available here – discusses whether traditional competition policy instruments such as antitrust and regulation are adequate to address competition concerns in the cryptocurrency field. In short, the author finds that traditional competition policy instruments are inadequate. The paper is structured as follows: Section 2 describes the topic. It begins with a short description of how means of payment (i.e. money and the like) are created. It then explains how the current monetary and financial system creates risks of excessive production of money, leading to inflation and/or asset-bubbles, which can lead to a decline of trust in a system that is reliant on it to function. Various bank regulations and public policies – such as capital regulation and deposit insurance – and rescue policies – such as lender of last resort – have been introduced to increase trust in the system. The paper then moves to a description of cryptocurrencies, which have a fundamentally different nature from…

Peter Menell  ‘Economic Analysis of Network Effects and Intellectual Property’ in Ben Depoorter & Peter S. Menell (eds.), Research Handbook on the Economics of Intellectual Property Law: Vol I. Theory (2018)

This piece – which can be found here – is a rather long , but very comprehensive book chapter that surveys and integrates the economic, business strategy and legal literatures on IP, competition and network effects. It is structured as follows: Part I introduces network effects. I have done this to death in the past, so I’m not going to repeat it here. Suffice it to say that the author looks mainly at demand side network effects, and what its implications are for IP and competition policy: ‘In a static economic model (i.e., one without innovation), consumers benefit from robust competition within product standards. Open access to product standards encourages realization of network externalities. Although bandwagon effects can enhance consumer welfare in a static context, they can also make it more difficult for developers of improved platforms to enter the market. Consumers and suppliers of complementary products can face significant switching costs in migrating from one platform to another.’ Like…

Ioannis Lianos & Pierre Regibeau “Vexatious”/”Sham” Litigation: When can it Arise and How can it be Reduced?’ (2017) Antitrust Bulletin 62(4) 643-689

It is possible that companies may, through regulatory and litigation processes, be able to exclude or marginalize their competitors from the market and therefore charge higher prices, limit output, maintain the status quo price, or diminish innovation. But while these strategies may offer a cheap mechanism for non-price predation, litigation and regulatory process have been set up to protect public goods regardless of the risk that their use may negatively impact competition. Furthermore: ‘assessing on a case-by-case basis the welfare effects of each use of the regulatory and litigation process through some form of sophisticated cost benefit analysis would be too burdensome and would generate too much uncertainty, chilling the legitimate use of such governmental processes and thus frustrating their aims. For this reason, in practice, the use of the regulatory and/or litigation process stays presumptively outside the scope of competition law, through the operation of some form of antitrust immunity, in both the U.S. and in Europe, this being…

Robert D. Anderson and Bill Kovacic ‘The application of competition policy vis-à-vis intellectual property rights: The evolution of thought underlying policy change’

This paper was written at the behest of the WTO, and can be found here. It examines the evolution of national competition policies and enforcement approaches vis-à-vis intellectual property rights (IPRs) in major jurisdictions over the past decades. I think it is particularly useful because it provides an integrated analysis of some of the most important developments at the intersection between competition and IP. A first section describes how the application of competition law in IP has been characterised over the last decades by the replacement of form-based approaches for case-by-case analyses of the effects of IP-related practices.  Furthermore, following a period in which competition authorities largely deferred to intellectual property offices with respect to issues concerning the scope and legitimacy of patents and other IPRs, leading agencies have devoted significant resources to advocacy efforts aimed at ensuring the integrity of patent regimes and avoiding the issuance/recognition of ill-founded rights that potentially weaken competition or impede follow-on innovation without serving valid…

Pat Treacy,  Matthew Hunt ‘Litigating a ‘FRAND’ patent licence: the Unwired Planet v Huawei judgment’(2018) Journal of International Property Law and Practice 13(2) 124

This is a paper – which can be found here – on the the Unwired Planet v Huawei judgment reviewed in a post of 28 April 2017. You may remember that this is primarily an IP law decision. It is nonetheless relevant to us because it is the first decision I’ve seen where an (English) court determined a FRAND rate, and because it dealt with a number of competition law issues which were relevant for such determination. It is also relevant – and topical – because the court imposed a (quasi-)worldwide license, which brings to mind the lively discussion we had at the OECD in December on extra-jurisdictional remedies following Korea’s decision to impose a global FRAND license on Qualcomm. The paper begins by summarising the context in which SEP litigation tends to arise, before describing the specific factual background of this case. In March 2014, Unwired Planet (UP) sued Huawei, Samsung and Google in the English Patents Court alleging infringement of…

Carl Shapiro and A. Douglas Melamed ‘How Antitrust Law Can Make FRAND Commitments More Effective’ (2018) Yale Law Journal 127 (7) 2110

In this paper – which can be found here – the authors argue that antitrust laws have an important role to play in ensuring that the rules established by standard-setting organizations are effective in preventing the owners of standard-essential patents from engaging in patent holdup after the standard is established and becomes commercially successful. The paper begins by summarising how the standard setting system operates, and how it can lead to holdup. While this was described in some of the pieces reviewed over the last weeks, the authors provide a good summary of the topic: ‘The largest and most immediate commercial and antitrust concern regarding SEPs is that the owners of SEPs will command very substantial market power once the standard in question becomes widely adopted. Put simply: without some checks, SEP owners could opportunistically engage in patent holdup, taking advantage of the fact that the firms and users adopting the standard become individually and collectively locked in to the…