David S. Evans  ‘Basic principles for the design of antitrust analysis for multisided platforms’ (2019) Journal of Antitrust Enforcement 7 319

Competition agencies and courts have increasingly had to deal with multiplatform businesses – and have started to incorporate economic insights on their operation into their decisions. Nonetheless, many questions concerning the design of antitrust analysis involving platform businesses remain unsettled. This article, available here, develops three basic principles for conducting the antitrust analysis of multisided platforms in light of economic learning, as follows: Section II explains how multisided platforms increase welfare by reducing transactions costs and resolving externalities among economic agents. Platforms lower transaction costs by bringing potential traders to a common place for interacting, thereby solving a collective action problem. The economics literature often relies on simple indirect network effects to explain how two-sided platforms create value. Positive indirect network externalities arise because the presence of additional numbers of the right counterparties increases the likelihood of good exchanges. In practice, however, the externality issues addressed by platforms are broader and subtler. Platforms also often deal with negative network externalities…

Gunnar Niels ‘Transaction Versus Non-Transaction Platforms: A False Dichotomy In Two-Sided Market Definition’ (2019) Journal of Competition Law & Economic

It is commonly accepted that market definition is more complex in two-sided markets than in normal (single-sided) markets. A proposal to simplify this exercise is to distinguish between transaction and non-transaction platforms. Two-sided transaction platforms such as payment card systems, online marketplaces and auction houses, are characterised by the presence and observability of a transaction between the two groups of platform users, so that the platform operator can impose a per transaction charge or two-part tariff (for joining and using the platform). In contrast, non-transaction platforms, including most media platforms, have no such transaction between the two sides. It follows that, while  in non-transaction markets one must define two (interrelated) markets, while a single market encompassing both sides should be defined for transaction platforms. The author argues here that this distinction is inapposite, particularly in the context of the hypothetical monopolist test. This article addresses the various theoretical and practical arguments put forward in support of the distinction between transaction and non-transaction,…

Francesco Ducci ‘Procedural implications of market definition in platform cases’ (2019) Journal of Antitrust Enforcement 7 419

One of the most important questions raised by the economics of platforms, particularly for the adjudication of competition law disputes, is how to structure a legal framework that incorporates multi-sidedness while remaining consistent with the general principles guiding a rule of reason/effects-based analysis. Such framework becomes more complex in platform cases because the presence of multiple sides with interrelated demand coordinated by an intermediary platform raises additional questions that need to be confronted. This include: (i) How many markets should be defined, a single platform market or separate markets on each side? (ii) Should one aggregate the welfare effects on different users on the various sides of a platform, or should effects on each market side be treated in isolation? (iii) How should the burden of proof of anticompetitive and pro-competitive effects be allocated? Depending on whether the relevant market includes the platform as a whole or just one side, the boundary of the relevant market has fundamental consequences for…

Alfonso Lamadrid ‘Shortcuts in the Era of Digitisation’ (2019) CPI Antitrust Chronicle – October

Competition law is arguably one of the areas of least importance when it comes to the major societal challenges posed by digitalisation. Nonetheless, competition law has been advertised as a sort of miraculous tool that would right all wrongs. In this context, the idea of entrusting a Report to three independent Special Advisers before advancing a reorientation of the competition rules was a very sensible initiative on the part of the European Commission. However, the author does not really agree with the report’s conclusions. He explain why in a paper that can be found here. Section two discusses what are the specific problems that digital markets raise for competition law. The first question to ask is whether there is consensus about competition problems in digital markets. If the answer is in the affirmative, we then need to ask whether we can address those problems while still preserving the benefits flowing from digitisation. The Report and other similarly-timed initiatives suggest that there…

Peter Alexiadis and Alexandre de Streel  ‘Designing an EU Intervention Standard for Digital Gatekeepers’ (working paper)

This paper is quite long and dense, so I am afraid this review will be both as well. A series of studies and reports on digital platforms have suggested that antitrust policy requires an overhaul. This view is driven by the belief that, as regards digital markets, the risk of making “Type 2” errors (i.e., under-enforcement) is greater than the risk of making “Type 1” errors (i.e., over-enforcement); and that, in addition to competition enforcement, there may be a role for regulation as well. While the authors take the view that the imperative for radical change is less pressing in the European Union than elsewhere, it is nonetheless appropriate to develop a blueprint for intervention against digital platforms both ex post and ex ante. This blueprint is developed as follows: A first section outlines the principles governing when to intervene in the digital economy. The Internet has generated significant levels of consumer welfare. Digital markets nevertheless have characteristics which lend…