Cyril Ritter ‘Antitrust in two-sided markets: looking at the U.S. Supreme Court’s Amex case from an EU perspective’ Journal of European Competition Law & Practice (2019, forthcoming)

As reviewed in last week’s email/posts, the U.S. Supreme Court recently found that American Express’s ‘anti-steering’ rules did not violate U.S. antitrust law (in a decision reviewed here). In its judgment, the Supreme Court addressed a variety of topics essential to antitrust analysis – market definition, two-sided markets, harm through price effects and output effects, cross-market efficiencies and ancillary restraints – in ways which are at odds with the European approach. This paper, available here, seeks to compare the EU and US approaches in this respect.   It is structured as follows: Section three contains a comparison of the AmEx majority and dissenting opinions. In the interest of clarity, I will review it here, instead of following the paper’s structure. In Ohio v American Express, the majority held that only one market should be defined in two-sided transaction markets. Because there is a single relevant market, cognisable harm must refer to net harm across merchants and cardholders. Even demonstrating that the benefits…

Nicholas Banasevic ‘The European Commission’s Android Decision and Broader Lessons for Article 102 Enforcement’ CPI Antitrust Chronicle December 2018

The aim of this article, which can be found here, is to analyse some of the main issues that arose in the European Commission’s Google Android decision, and to place these issues in the context of hotly debated broader themes relating to antitrust enforcement in hi-tech markets. The author is head of unit at the European Commission, so his analysis may be more authoritative than other ones, at least until the full decision is published.  The piece is structured as follows: Section II provides an overview of the Commission’s decision. Android is an open-source smart mobile operating system. Google started providing the core version of Android commercially to smartphone and tablet manufacturers (“OEMs”) for free, but included a range of contractual requirements relating to the terms for obtaining Google’s associated proprietary apps (e.g. Google’s search app) and services. The free and open-source provision of Android was a key part of getting all major OEMs signed up, which led (by 2011) to Google…

Randal Picker ‘Google Android Antitrust: Dominance Pivots and a Business Model Clash in Brussels’ CPI Antitrust Chronicle December 2018,

This paper, which can be found here,  argues that the Android decision is an exercise in platform engineering by European antitrust authorities. The decision makes a statement about acceptable entry paths for firms dominant in one market into another by demanding that a successful firm pivot away from the practices that consumers found valuable, and that indeed led to the emergence of dominance in the first place. In doing so, the Commission appears to undervalue the virtues of business model competition. The paper is structured as follows: Section II describes the European Commission’s interactions with Google. Google’s core business consists of organic horizontal search results matched with ads paid for by third parties. This, of course, is the classic business model of media markets offering consumers content – sometimes for a fee, sometimes for free – and charging advertisers that want to reach those consumers. So-called vertical search competitors, on the other hand, offered specialised search results. On November 30,…

John Yun on ‘Understanding Google’s Search Platform And The Implications For Antitrust Analyses’ (2018) Journal of Competition Law & Economics 14(2) 311

The paper, which can be found here, seeks to describe the precise nature of the various anticompetitive claims against Google, and to develop an economic framework and empirical test to assess these claims. In particular, the paper seeks to develop a conceptual framework to assess claims of leveraging monopoly power and foreclosure of vertical search competitors that could be empirically tested and applied in other jurisdictions or future investigations in platform-settings with related allegations. The paper is structured as follows: Section II describes the precise nature of the antitrust claims against Google. Google operates a multisided platform that offers users free access to its content. In turn, it sells access to those users to advertisers who wish to convert those users to purchasers. Advertising platforms must compete for both users and advertisers. These platforms attract users through quality content, more relevant and less intrusive ads, and lower prices (typically, at free or highly subsidised prices). Ad platforms attract advertisers by having users,…

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…

Marco Botta and Klaus Wiedemann ‘EU Competition Law Enforcement vis-à-vis Exploitative Conducts in the Data Economy’ Max Planck Institute for Innovation & Competition Research Paper No. 18-08

This long paper (90 pages), which can be found here, seeks to understand how traditional principles of EU law – particularly those related to exploitative abuses and respective remedies – apply to new business models that mainly rely on processing large amounts of users’ data. The analysis does not extend to the US because, following Trinko, the authors consider that antitrust law there does not extend to exploitative practices, even if the FTC has powers under the Sherman Act to pursue such practices under consumer and unfair practices law. I am afraid the review is rather long, because this paper’s contents are the equivalent of multiple articles. The paper is structured as follows: Section 2 provides an overview of European case law vis-à-vis exploitative abuses. Art. 102 TFEU lists a number of exploitative abuses. Nevertheless, the European Commission has long focused on investigating exclusionary, rather than exploitative abuses. While this has led to limited case law on exploitative abuses, the authors identify…

Ariel Ezrachi on ‘EU Competition Law Goals and The Digital Economy’ (2018) Report for BEUC – The European Consumer Organisation

This paper  can be found here. I have already reviewed it in an earlier post. At the time, I focused on the article’s overview of the goals of EU competition law. However, the article also contained a detailed discussion of the impact that the digital economy may have on these goals. I was unable to review this discussion then, so I propose to do it here. Competition policy is one of several instruments used to advance the goals of the European Treaties. According to the European Commission, competition on the market is protected as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. This notwithstanding, EU competition law has also consistently been held to protect ‘not only the interests of competitors or of consumers, but also the structure of the market and, in so doing, competition as such.’ Moreover, a genuinely indigenous objective is worthy of note, namely that of promoting European market integration. In addition…

Jorge Padilla and John Davies ‘Another look at the economics of the UK CMA’s Phenytoin case’ in Excessive Pricing and Competition Law Enforcement (ed. Yannis Katsoulacos and Frédéric Jenny, 2018, Springer)

In this book chapter, the authors criticise the CMA for relying on the same evidence of a gap between prices and costs in its assessment of each of market definition, dominance and abuse. When coupled with the absence of analysis of comparator prices – which, the authors argue, the CMA replaced with a failed search for justifications for a price-cost gap when finding that the price was ‘unfair in itself’ – this could serve as a precedent for a fragile and unreliable approach to assessing excessive pricing. The paper is structured as follows: Section 2 describes the framework for assessing excessive pricing under European law (and its British equivalent). The paper builds on United Brands‘ two-step test, and particularly the requirement that am excessive price must exceed the “economic value” of the product to such an extent that the price bears “no reasonable relation” with that value. The legal test set out by the ECJ is as follows. First, the test…

Margherita Colangelo and Claudia Desogus ‘Antitrust Scrutiny of Excessive Prices in the Pharmaceutical Sector: A Comparative Study of the Italian and UK Experiences’ (2018) World Competition 41(2) 225

This article, which can be found here,  pursues a comparative analysis of the recent case law on excessive pricing in the pharmaceutical sector, examining in particular the Italian and UK experience. The paper is structured as follows: Section 2 begins with a brief review of the existing literature on excessive prices in the EU. This section reviews the arguments for and against competition authorities intervening when prices are too high. On the one hand, it is argued that high prices should not be the subject of competition law intervention because such intervention may affect innovation incentives and dynamic efficiency; because high prices will attract competitors and, hence, will tend to self-correct; because there are high probabilities and costs of mistaken intervention; and because this is a task that should be left to specialised regulators. On the other hand, it is argued that correcting high prices directly increases consumer welfare, which is the goal of competition law; that high prices are not…

Sophie Lawrance and Edwin Bond on ‘Reverse-payment’ patent settlement agreements: non-cash value transfers are not immune from competition law scrutiny’ (2018) Journal of Intellectual Property Law & Practice 13(7) 552

This article – which can be found here – argues that a non-cash value transfer – particularly commitments by the producer of a branded drug not to launch a generic version of its drug – is able to bring a pay-for-delay agreement within the scope of the antitrust prohibition of reverse-payment patent settlement agreements. It does so as follows: The paper first looks at the law in the US as regards non-cash value transfer settlements. In its landmark 2013 FTC v, Actavis decision, the US Supreme Court held that pharmaceutical patent settlements which involve ‘large’ and ‘unexplained’ reverse payments may breach the antitrust rules. However, and as a result of the Supreme Court’s lack of detailed guidance, the lower US courts have in the last few years found themselves considering a fairly basic question: what constitutes a ‘payment’? While a couple of US district courts concluded that patent settlements that do not involve a cash transfer could not constitute unlawful…