Frederic Jenny ‘Economic Resilience, Globalization and Market Governance: Facing the Covid-19 Test’

Globalisation contributed to the rapid spread of COVID to all corners of the globe. The economic cost of fighting the virus froze a number of economies and disrupted global value chains, and is likely to be followed by several years of an economic depression that will dwarf the cost of the 2008 financial and economic crisis. The dramatic events of the first quarter of 2020 challenge some of the implicit assumptions underlying the design of our economic systems, and should make us think about some of the dilemmas and trade-offs that this crisis has foisted upon us. This piece, available as a working paper here,  is not mainly about competition – instead, it is a piece that thinks widely about the implications of this pandemic for the economic architecture underpinning globalisation, which also touches on competition. This is because, in the grand scheme of things, competition law and policy plays a relatively limited role when markets are not in equilibrium,…

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…

Wolfgang Kerber ‘Data Sharing In IoT (Internet of Things’) Ecosystems And Competition Law: The Example Of Connected Cars’ (2019) Journal of Competition Law & Economics (forthcoming)

In Internet of Things (IoT) ecosystems, one firm often has exclusive control over the data produced by a smart device, as well as of the technical means of access to this device. Such a gatekeeper position can empower firms to eliminate competition for aftermarket and other complementary services in these ecosystems. This paper, available here, analyses whether competition law can help address problems concerning access to data and interoperability in this context, by reference to connected vehicles. In short, it argues that, while competition offers some solutions to these data access problems, on its own it is insufficient to fully address these problems. As such, additional solutions such as data portability requirements, data access rights or sector-specific regulation might also be needed. Section II provides a brief overview of the economics of digital ecosystems and of data interoperability. Data tends to be non-rivalrous in use. It follows that data should be used as much as possible to maximise its value….

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…

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…

Ariel Ezrachi and Viktoria Robertson ‘Competition, Market Power and Third-Party Tracking’ (2019) World Competition 42(1) 5

Trackers on our websites and apps enable multi-sourced data gathering. While numerous operators engage in tracking, a small number of data giants controls the majority of these trackers. This article, available here, considers the rise and growth of this industry, the power it has bestowed on a handful of platforms, and the possible implications for consumer welfare and competition. Section 2 describes the pervasiveness of third-party tracking. Third-party tracking is a mechanism through which a company (the third-party tracker) hooks onto another (first-party) website or application and collects identifiable data about users, enabling the tracker to build a comprehensive profile about these users. Tracking may occur both actively and passively. It may offer generic information on usage and webpage visits, or combined and analysed information which enables the identification of the individual. The gathering of personalised data – through third-party tracking or otherwise – is primarily relied upon for four purposes in the digital realm: to provide data-based (i.e. individualized or targeted)…

The Common Understanding of G7 Competition Authorities on “Competition and the Digital Economy”

While adopted on 5 June, this communique was embargoed until yesterday. It can now be found here. As it says on the tin, this document reflects the common position that the competition authorities in the G7 countries (namely, the Autoritá Garante della Concorrenza e del Mercato (Italy), the Autorité de la Concurrence (France), the Bundeskartellamt (Germany), the Competition Bureau (Canada), the Competition and Markets Authority (United Kingdom), the Department of Justice (United States of America), the Directorate General for Competition (European Commission), the Federal Trade Commission (United States of America) and the Japan Fair Trade Commission (Japan)) have reached on the digital economy. It may come as no surprise that the level of agreement is relatively thin, and that the document does not go into the most controversial topics addressed in the reports reviewed last week and further below. The common understanding begins with the mandatory section on the benefits of the digital economy. Investment and innovation in the digital…

UK CMA’s Digital Market Strategy

The CMA’s Digital Market Strategy, available here, could be said to be a reaction to the Furman Report reviewed last week,  even if the official reaction took the form of a shorter and earlier letter to Government which can be found here. The paper begins by describing why digital markets are different and how the CMA sees its role in their respect. The underlying features of digital markets include substantial network effects, economies of scale and scope, the role of data and the computing power to use it, scope for personalisation, and market concentration. Most of these are not new individually, but in combination they are novel. Combined with the pace of change, it can be hard for both consumers and public authorities to keep up. Some of these features, or their effects, raise questions, including: firms’ use of people’s data; the market power or ‘gatekeeper’ status of certain platforms; use of increasingly sophisticated technology to target advertising; or the risk of so-called ‘killer acquisitions’. The…