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,…

OECD work on Competition and the Financial Crisis (2009)

This paper can be found here. Systemic crises reopen the question of what is the role of competition policy in such scenarios. The main issues are whether competition is desirable at all in times of systemic crises, and how to limit potential negative effects of state intervention on competition in the medium and long term. The paper investigates these questions, and is particularly interesting because it was written while the aftershocks of the crisis were still being felt. It notes that while the crisis started in the financial sector, it had an important impact on the real economy. Nonetheless, the paper focused mostly on interventions in the financial sphere, which are – at least at present – of limited interest to us. As such, I will focus on the sections of the paper that are likely to prove more relevant to us going forward. Section II provides an overview of the relationship between the financial sector and competition law. Most of…

OECD work on Excessive Pricing (2011), looking also at price gouging

The OECD has ever written anything on competition law and price gouging. It has, however, asked Prof. Frank Maier-Rigaud to write a paper exceeding 80 pages on Excessive Pricing in 2011 (see here). Despite its title, the paper seeks to provide a framework for all exploitative practices. This is well beyond my focus today, so I will review those sections of the paper relevant for sudden price increases and exploitative practices following sudden shocks. The first and second sections discuss ideas of fair prices and economic value, and whether intervention against excessive pricing is justified. The idea of a just, fair or natural price, and with it the concept of economic value and rudimentary equilibrium notions, can be traced back to ancient Greece. They have occupied political philosophers and economists for well over 2000 years. Despite this longstanding debate, the fundamental question of the appropriate benchmark for assessing whether prices are unfair, unjust or excessive remains unresolved to this day….

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…

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….

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…

Jay Matthew Strader ‘Google, Monopolization, Refusing to Deal and the Duty to Promote Economic Activity’ (2019) International Review of Intellectual Property and Competition Law 50(5) 559

Almost no consumers have the resources to assess the quality of information online. Search engines seek to remedy asymmetries in information, effectively providing a quality certification service to consumers. Google claims to rank organic results ‘‘scientifically’,’ based strictly on relevance and the quality of the listings. Ninety two percent of all Google search traffic occurs on the first page, encompassing the top ten organic results and paid ads, which reflects high levels of consumer trust.   This paper, available here, argues that Google’s search engine is indispensable for innumerable companies, which cannot compete effectively when Google fails to rank organic results according to relevance. However, Google’s ad-based business model creates incentives for it to promote paying advertisers or its own business, in particular by lowering the rank of more relevant results. This leads to lower quality in the search market, to lower output in downstream markets and, ultimately, to lower consumer welfare – independently of whether Google operates downstream or…

John Ratliff ‘Unilateral conduct in the energy sector: An overview of EU and national case law’ (2019) Concurrences Special Issue Energy & Dominance

This paper, available here, provides an overview of European Commission (“EC”) and European national competition authorities’ (“NCAs”) practice as regards the application of competition rules to unilateral conduct in the energy sector. It covers more than 120 cases, including national court judgments and investigations up to June 2019. While the article divides the various practices into 19 different sections, I will do so as follows: In the introduction, the author summarises European and national approaches, as well as recent developments. The 2007 EU Energy Sector Inquiry prompted much enforcement of Art. 102 TFEU in the energy sector. Most of enforcement concerned traditional foreclosure practices in relation to infrastructure capacity, access to the infrastructure, capacity hoarding and withholding of generation capacity. Other cases have dealt with new types of abuse, such as strategic underinvestment and market manipulation, and there have also been cases on excessive pricing. Energy markets remain a priority for the European Commission. Recent developments include closing investigations against…