Viktoria Robertson on ‘Excessive Data Collection: Privacy Considerations and Abuse of Dominance in the Era of Big Data’ (2020) Common Market Law Review 57 161

It is debatable whether EU competition law already contains – or could and should potentially develop – antitrust theories of harm that apply to third-party tracking of personal user data on the web. Focusing on data gathering, this paper – available here – assesses two scenarios under which EU competition law may deem the vast amounts of data gathered by certain digital platforms excessive: excessive data “prices” and unfair data policies. In both cases, the competition law assessment is autonomous from other areas of the law: while a breach of data protection rules is not automatically a breach of competition law, a company adhering to data protection rules may still violate competition laws. The paper finds that EU competition law already possesses the necessary tools to address excessive data collection, while data protection rules provide much-needed context for this type of exploitative abuse. Section II discusses data gathering through third-party tracking. Tracking occurs both on the web and in applications (apps) for electronic…

Marco Botta and Klaus Wiedemann  ‘To Discriminate or not to Discriminate? Personalised Pricing in Online Markets as Exploitative Abuse of Dominance’ (2019) European Journal of Law and Economics 1

The advent of big data analytics has favoured the emergence of forms of price discrimination based on consumers’ profiles and their online behaviour (i.e. personalised pricing). This paper, available here, analyses this practice as a possible exploitative abuse by dominant online platforms. It concludes that such practices can have ambiguous welfare effects, and be subject to a case-by-case analysis. It also argues that competition law is more suitable than omnibus regulation – particularly data protection and consumer law – to tackle the negative effects of personalised pricing, particularly because competition authorities could negotiate with online platforms different kinds of behavioural commitments that could significantly tame the risks of personalised pricing. Section II looks at price discrimination in online markets. Economists typically distinguish between three different types of price discrimination. First-degree price discrimination takes place when a firm is able to discriminate perfectly among its customers. Second-degree price discrimination means that the firm discriminates between its customers by granting discounts once…

Daniele Condorelli and Jorge Padilla ‘Harnessing Platform Envelopment through Privacy Policy Tying’ (working paper)

Entry into platform markets subject to strong network effects and high switching costs can occur in two ways. First, by offering drastically new functionality (i.e. through Schumpeterian innovation). Second, through “platform envelopment” whereby a provider in one platform market – the origin market – enters another platform market – the target market – and combines its own functionality with that of the target in a multi-platform bundle that leverages shared user relationships and/or common components. Envelopers capture market share by foreclosing an incumbent’s access to users; in doing so, they harness the network effects that previously had protected the incumbent. This working paper, available here,  revisits the economics of “platform envelopment”, with a focus on data-related strategies. In particular, it analyses the logic and effects of “privacy policy tying”, a strategy whereby the enveloper requests the consumers’ consent to combining their data in both origin and target markets. This allows the enveloper to fund the services offered to all sides…

Nicolo Zingales ‘Antitrust intent in an age of algorithmic nudging’ (2019) Journal of Antitrust Enforcement 7 386

This article, available here, surveys EU case law on the role of anticompetitive intent in abuses of dominance, with the goal of understanding how intent can be relevant to the assignment of liability for anticompetitive algorithmic outcomes. The role of subjective intent in EU antitrust analysis remains controversial. Some argue that evidence of intent is an invaluable tool in the antitrust arsenal, allowing agencies and litigants to address anticompetitive conduct where facts are ambiguous or evidence of harm to competition inconclusive. Others warn against relying on intent. First, ‘sales talks’ encouraging employees to beat – and indeed eliminate – competitors is common and merely indicative of a (competitively desirable) aggressive business strategy. Secondly, banning any exhortation to compete aggressively would encourage firms to deploy more subtle forms of inducement when engaged in anticompetitive conduct, while favouring those with the resources to develop such strategies. The law seems to follow a middle path in this debate, suggesting that the notion of subjective…

Peter Georg Picht and Gaspare Tazio Loderer on ‘Framing Algorithms: Competition Law and (Other) Regulatory Tools’ (2019) World Competition 42(3) 391

Algorithmic market conduct, and intervene where algorithms risk distorting competition. In effect, the collusive potential of algorithms and algorithm-driven resale pricing have already been the subject of enforcement. However, it is still not clear whether competition law has, in its present form, the necessary tools and techniques adequately to control algorithms. This article, available here, looks at what other areas of the law, which are more advanced in this respect, can teach competition law. Its second section looks at how financial markets regulation and data protection law deal with algorithm-based market activity. Financial markets were among the first to deploy algorithms broadly and intensely. As a result, financial market regulation developed a comparatively detailed set of rules on algorithmic trading early on. European data protection law is another area that already has in place certain elements of a legal framework for algorithmic (market) activity. This includes the General Data Protection Regulation (GDPR) and the ePrivacy Regulation. These two regulatory regimes share…

Paolo Siciliani ‘Tackling Anticompetitive Parallel Conduct under Personalized Pricing’ (2019) World Competition 42(3) 377

From an economic standpoint, personalised pricing is not a novel (theoretical) concept. However, this practice has become topical thanks to digital technological developments that make it actually feasible, even if there is very little evidence that the feasibility of personalised pricing has led to its widespread implementation so far. The current debate explores the circumstances in which intervention under not only competition law, but also consumer law and data protection law, would be warranted. The focus is primarily on exploitative outcomes under imperfect competition, whereby firms with substantial market power charge consumers high prices that could be deemed excessive and/or unfair. There is a consensus that enforcement against such practices would be challenging. For example, it is not straightforward to establish under a consumer welfare standard that consumers are in aggregate worse-off under personalised pricing. This is because personalised pricing can entail lower prices for consumers who would otherwise not buy the product in question, thus leading to a welfare…

Friso Bostoen ‘Online Platforms and Pricing: Adapting abuse of dominance assessments to the economic reality of free products’ (2019) Computer Law and Security Review 35 263

What sets platforms apart is their possibility to effectively cross-subsidise between the different user groups that are party to a transaction. Platforms often treat one side as a profit centre and the other as a loss leader, or, at best, as financially neutral. As a result, platforms must choose not only a price level, but also a price structure for their service. Given this,  the present article, available here, explores how potentially abusive behaviour involving free products (both goods and services) can be assessed under competition law. Section II looks at different dimensions of offering free goods and services. Free online offerings have become ubiquitous. This reflects lower costs brought about by the existing digital infrastructure (e.g. processing power, bandwidth, storage). However, companies still want to make a profit. In practice, offering services for free has the potential to attract the critical mass of customers that will allow a company to maximise its profits across its various products. There are three…

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…

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…