Friso Bostoen ‘Online platforms and vertical integration: the return of margin squeeze?’ (2018) Journal of Antitrust Enforcement 6 355

The main challenge with anticompetitive conduct by online multisided platforms is finding a fitting theory of harm. The author argues here that one candidate theory has been overlooked: margin squeeze. Margin squeeze, occurs where a dominant undertaking charges a price for the product on the upstream market which, compared to the price it charges on the downstream market, does not allow an equally efficient competitor to trade profitably in the downstream market on a lasting basis. In other words, margin squeeze takes place when an upstream operator forces his downstream competitor—who is just as efficient—off the market by squeezing his profit margins. This class of abuse has for the most part been confined to the telecom sector, but its potential reaches beyond. Indeed, the tendency towards vertical integration and subsequent conduct of online platforms could renew the relevance of margin squeeze as an analytical tool. The paper is structured as follows: Section II outlines the fundamental elements of margin squeeze. This section…

Patrick Todd ‘Intra-platform exclusion in software markets’ (2018) Journal of Antitrust Enforcement 6 409

This article, available here, analyses situations where platform operators design their platforms in a way that is liable to exclude intra-platform competitors. Exclusion in intra-platform markets require certain intricacies that existing theories of harm in antitrust law do not anticipate; thus, applying those theories unyieldingly is liable to cause confusion and result in judicial error. Authorities must formulate policies that detect anticompetitive exclusion without deterring innovation, and apply that policy consistently across comparable cases. Existing cases reveal that some authorities and courts have been taking a sensible approach to intra-platform exclusion, whereas others, especially in the EU, have shown a tendency to protect excluded intra-platform firms at the expense of consumer welfare. The paper is structured as follows: Section II defines software platforms and describes platform owners’ relationships with third-parties that distribute services through their platforms. Software platforms are code-based infrastructures that facilitate exchanges and transactions through the creation of one or multiple downstream ‘intra-platform’ markets. Through a platform, users can transact with…

Jonathan Baker and Fiona Scott Morton on ‘Antitrust Enforcement against Platform MFNs’ (2018) Yale Law Journal 127 2176

 . This paper, available here, argues for more vigorous antitrust enforcement against Most Favoured Nation (MFN) provisions in the platform context. A MFN clause requires providers to refrain from offering their products or services at lower prices on other platforms. During the past two decades, antitrust enforcement against MFN provisions has grown, particularly in Europe. In contrast, there have been almost no enforcement actions against platform MFNs in the United States. The authors make a number of proposals to reverse this trend. The article is structured as follows: Part I shows how platform MFNs can harm competition and consumers, despite their potential competitive benefits. The authors’ draw on the economics’ literature on the effects of MFNs generally, and platform MFNs in particular. Simple MFNs commit sellers not to discount selectively, which assures covered buyers that they will be charged the lowest price offered by the seller. At first blush, one might expect this provision to lead to lower prices for covered buyers….

Chiara Caccinelli and Joëlle Toledano, focuses ‘Assessing Anticompetitive Practices in Two-sided Markets: The Booking.com cases’ (2018) Journal of Competition Law & Economics 14(2) 193

This paper, which can be found here, aims to shed light on the different approaches adopted by different European antitrust authorities to assess the allegedly anticompetitive MFN practices of a platform operating in a two-sided market. This is done by means of a law-and-economics analysis of the different approaches to Booking.com by competition authorities in France, Germany, Italy and Sweden, with an eye to discussing the specific difficulties raised by two-side market economics. The paper is structured as follows: Section II presents the key features of two-sided markets economics. Two-sided markets present some peculiar traits, which distinguish them from more “traditional” markets. Firms operating in these markets serve more than one group of consumers simultaneously and offer them the opportunity, as well as an interface, for fruitful exchanges. These value-enhancing interactions generate important direct and indirect network externalities among the groups, which platforms would typically aim to internalise. As a result, platform profitability depends not so much on the price level…

Marios C. Iacovides and Jakob Jeanrond ‘Overcoming methodological challenges in the application of competition law to digital platforms—a Swedish perspective’ (2018) Journal of Antitrust Enforcement 6(3) 437

This article, which can be found here, reviews three cases dealing with multisided markets handled by the Swedish Competition Authority (SCA). The cases concerned online hotel booking, online listings of properties and the market for online orders of take away food. The article tests some predictions on the economic behaviour of platform markets that can be found in the academic literature against the outcomes of these cases. The paper is structured as follows: Section II outlines methodological challenges raised by the digital and platform economy. Platform businesses operate differently from traditional businesses, mainly because they function as matchmakers between different groups of consumers. While economists have developed new models better to explain the particular economic features associated with multisided platforms, the incorporation of these particular economic features into competition law presents certain methodological challenges. Firstly, while a platform may offer some services that a traditional business does not, one side of the platform’s service offering may directly overlap with that…

Jerome Pouyet and Thomas Trégouët ‘Assessing The Impact Of Vertical Integration in Platform Markets’ (2018) Competition Policy International Antitrust Chronicle December

This technical economics paper, which can be found here, argues that, in the context of vertical mergers, indirect network effects create a form of demand complementarity downstream that softens the anticompetitive effects of vertical integration. At the same time, vertical integration creates various sources of market power. How such market power is exerted, and its impact on competition, depends on how the integrated firm balances its price instruments to harness indirect network effects. This depends, in turn, on how each side of the market values the participation of users from the other side, or, in short, the structure of indirect network effects. The authors show, in particular, that there is no systematic correlation between stronger upstream market power and foreclosure of competitors or consumer harm. The paper is structured as follows: Section II introduces a framework to analyse vertical integration with two-sided network effects. The literature on vertical integration between an upstream input supplier and a downstream manufacturer has highlighted…

Michael Katz and Jonathan Sallet ‘Multisided Platforms and Antitrust Enforcement’ (2018) Yale Law Journal 2142

This paper,  available here, looks at two questions regarding competition enforcement in platform markets: (i) how should one account for the distinct characteristics of platforms when defining an antitrust market; and (ii) how, if at all, should one weigh user groups’ gains and losses on different sides of a platform against one another. In short, the authors argue that enforcers and courts should use a multiple-markets approach to multisided platforms, in which different groups of users on different sides of a platform belong in different product markets. This approach allows one to account for cross-market network effects without collapsing all platform users into a single product market. They further argue that enforcers should consider the price structure of a platform, and not simply its net price, when assessing competitive effects. This justifies the use of a separate-effects analysis, according to which anticompetitive conduct harming users on one side of a platform cannot be justified just because that harm funds benefits for users…

Lapo Filistrucchi ‘Two-sided v Complementary Products’ (2018) CPI Antitrust September Chronicle

This paper, which can be found here, It aims to clarify whether and to what extent two-sided platforms are different from platforms selling complementary products. It also seeks to explain why the distinction matters for the purposes of competition assessments of firms’ behaviour. The paper is structured as follows: A first section explains why firms operating in two-sided markets are different from firms selling complementary products. According to the economic literature, a two-sided platform is a firm that sells two different products or services to two groups of consumers, where the demand from one group of consumers depends on the demand from the other group and, potentially, vice versa. In other words, demand is affected by indirect network effects (i.e. consumers’ willingness to pay for a product depends on the number of consumers (or the quantity bought) of another product). A platform internalizes these indirect network effects. There are differences between platforms and firms selling complements. A first difference is that, in…

Gregory J. Werden and Luke M. Froeb ‘Why Patent Hold-Up Does Not Violate Antitrust Law’ (forthcoming, Texas Intellectual Property Law Journal)

As the title indicates, this paper argues that patent hold-up, as courts and commentators define the term, does not undermine the competitive process and thus cannot give rise to a valid antitrust claim, at least in the US. The paper is available here and is structured as follows: Part II describes patent hold-up and sets out the economic framework employed by many antitrust intervention advocates. A relatively recent phenomenon is that important standards are encumbered by many—perhaps thousands—of Standard Essential Patents (SEPs). “Inventors” own SEPs and grant licences to them, while “implementers” manufacture or sell standard-compliant components or devices. Antitrust intervention advocates argue that these sunk costs permit inventors to engage in “opportunism” by demanding royalties that could “capture part of the fruits of another’s investment,” i.e., part of the sunk investment of implementers. This “opportunistic” behaviour by inventors is what generally is meant by the term “patent hold-up.” Out of a conviction that inventor opportunism is a serious problem, advocates of…

Thomas Vinje ‘Intellectual Property and Antitrust Review (3rd Edition) – Chapter 5 – European Union’ (The Law Reviews, 2018)

The task of the book to which this chapter belongs is to provide an annual practical overview of developments on the relationship between antitrust and intellectual property. This chapter, which can be found here, describes the competition / IP law interface in Europe. It is structured as follows: Section II is devoted to a review of developments that took place in 2017. The section begins with a succinct description of the Google cases, before turning to a discussion on standard essential patents (SEPs). It also reviews the European Commission’s Communication on ‘Setting out the EU approach to Standard Essential Patents’. The paper then briefly discusses e-commerce. It begins by mentioning the ECJ’s Coty decision and the Policy Brief prepared by the European Commission concerning this judgment. This Brief states that Coty provides more clarity and legal certainty to market participants by confirming previous case law and establishing a clear legal framework for online commerce. The paper also mentions the Commission’s e-commerce sector…