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…

Daniel Mandrescu ‘Applying (EU) Competition Law to Online Platforms: Reflections on the Definition of the Relevant Market(s)’ (2018) World Competition 41(3) 453

Online platforms cater their services to at least two separate customer groups by facilitating an interaction. Accordingly, when assessing the market power of an online platform, it is essential to establish whether those customer groups are part of a single relevant market or multiple relevant markets. The purpose of this article, available here, is to provide practical guidance on the market definition process for online platforms in light of their distinctive characteristics. It does so through three sections: The first section shortly discusses the importance of the market definition for the application of Article 102 TFEU in practice. Findings of dominance rely on an adequate measurement of economic market power. Whether economic market power amounts to legal dominance is a determination that depends on a properly defined relevant market. Market definition is also required for evaluating any possible efficiency arguments that would justify the prima facie anticompetitive practices of the concerned undertaking. The second section develops an approach to market definition…

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…

Makam Delrahim (Assistant Attorney General, Antitrust Division, U.S. DoJ) ‘Antitrust Enforcement in the Digital Era’

In these remarks, hich can be found here, AAG Delrahim defends the ‘broad antitrust consensus that still reigns today’ and considers how it might apply to the digital sphere. He begins by outlining the two key components of the current antitrust consensus. The first is the consumer welfare standard, which requires that some business practices should be condemned as unlawful only where they harm competition in such a way that consumers suffer. The second component is “evidence-based enforcement”. Outside the realm of naked horizontal restraints such as price fixing, bid rigging, and market allocation, antitrust demands evidence of harm or likely harm to competition, often weighed against efficiencies or procompetitive justifications. Evidence-based enforcement also requires a readiness to adapt our existing antitrust framework and tools to new or emerging threats to competition. One such threat comes from digital platforms and the increased market concentration they give rise to. AGG Delrahim considers that the antitrust consensus approach is flexible to new business…

How to define two-sided markets? Ohio v American Express

A recent US Supreme Court decision is  likely to have an impact on antitrust practice: Ohio v American Express 585 U. S. [to be determined] (2018), available here. In short, the case is about the correct antitrust treatment of anti-steering provisions introduced by American Express (Amex) into its contracts with merchants. The United States and several States (collectively, the plaintiffs) sued Amex, claiming that its anti-steering provisions violate §1 of the Sherman Act. The District Court agreed, finding that the credit-card market should be treated as two separate markets—one for merchants and one for cardholders—and that Amex’s anti-steering provisions are anticompetitive because they prevent competition in the merchant side of the market and results in higher merchant fees. The Second Circuit reversed; it determined that the credit-card market is a single market, not two separate ones; and that Amex’s anti-steering provisions did not infringe the Sherman Act. You may remember that I reviewed the Circuit court decision almost two years…