Francisco Beneke and Mark-Oliver Mackenrodt ‘Artificial Intelligence and Collusion’ (2019) International Review of Intellectual Property and Competition Law 50 109

Current technological developments in the field of artificial intelligence (AI) have added further complexity to the discussion of whether, in the absence of overt communications, mere tacit coordination between competitors should be outlawed. Whereas some commentators argue that the dangers posed by AI should tip the balance towards making tacit coordination illegal, there are others who are either not entirely persuaded of the plausibility of such dangers or who point out that a competition rule focusing on mere inter-firm interdependence is not administrable. This paper, available here, reviews this debate with a view to establishing whether successful price coordination achieved by self-learning algorithms should be punishable under EU competition law, and whether the current regulatory framework is suitable. Section 2 explains how AI relates to antitrust. AI is expected to arise from certain types of software algorithms. An algorithm is merely a specified sequence of steps for producing a solution to a problem. Software is a composition of individual algorithms…

Albert Sanchez-Graells ‘Competition and Public Procurement’ (2018) Journal of European Competition Law & Practice 9(8) 55

This piece, available here, surveys the interaction between competition and public procurement law in Europe. It is structured as follows: Section II looks at recent examples of competition enforcement against bid rigging. Competition law enforcement in public procurement settings remains a top enforcement priority for competition authorities in Europe. This is not only clear in the practice of the European Commission, but is also demonstrated by a continuous string of cases brought all over Europe. Recent examples of this can be found in Poland (car towing and parking services), Belgium (railway infrastructure), Latvia (security services, distribution of professional stage equipment), Ireland (retail distribution), Greece (construction), Italy (consulting services), Lithuania (construction), Denmark (construction, passenger transportation), Romania (electricity consumption equipment), or Spain (advertising services). A continued focus on competition enforcement against bid-rigging seems adequate, given the continued trend towards less competitive tenders for public contracts over the last decade or so—in part, as a result of procurement aggregation strategies, but also as a result…

David Imhof, Yavuz Karagök and Samuel Rutz on ‘Screening For Bid Rigging—Does It Work?’ (2018) Journal of Competition Law & Economics 14(2) 235

The title of this paper, available here, is a bit misleading, since individuals who developed a screening tool for the Swiss competition authority wrote it, and the paper is devoted to describing how the method works and how successful it has been in practice. To summarise, the paper proposes a method to detect bid rigging that is particularly suited to address the problem of partial collusion, i.e. collusion that does not involve all firms and/or all contracts in a specific dataset. It explains how the authors applied mutually reinforcing screens to a Swiss road construction procurement dataset in which no prior information about collusion was available, and how this method succeeded in isolating a group of “suspicious” firms. It further describes how the screen led the Swiss Competition Commission (COMCO) to opening an investigation and sanctioning the identified “suspicious” firms for bid rigging. The paper is structured as follows: Section II presents literature on screening methods. The growing literature on cartel…

The Blockchain (R)evolution and the Role of Antitrust

This piece, available here, explores a number of (EU) antitrust issues that may arise in the context of blockchains. It is structured as follows: The paper starts by explaining what the blockchain is and what it can do. The blockchain is a technology that uses a software protocol based on cryptography to keep exchanges secure. It allows anybody in the chain to see all transactions on it, removes the need for trusted intermediaries keeping a transaction ledger, and ensures that the transaction ledger is immutable and very hard to tamper with. Blockchains can be divided into open and permissioned networks. Open (i.e. public) networks are accessible to anyone, so that the database is truly public information. This is the case of the blockchains underlying Bitcoin and Ethereum. Permissioned (i.e. private) networks make access conditional upon authorisation by the owner or owners of the network. An example of a permissioned network is Corda, a distributed ledger platform designed specifically for financial institutions to…

Sebastian Louven and David Saive ‘Antitrust by Design – The Prohibition of Anti-Competitive Coordination and the Consensus Mechanism of the Blockchain’ ZRI Working Paper

This paper, available here , argues that important competition concerns arise from the use of consensus mechanisms in blockchains. Under such mechanisms, new information is only added to the database if the majority of network participants, the ‘nodes’, agree to do so. This requires coordination between the various network participants, which raises questions regarding whether and to what extent this voting behaviour is anticompetitive. The paper also discusses what type of measures may be adopted to ensure that a blockchain complains with competition law by design. It is structured as follows: Its second section provides the legal background for concerns about the functioning of consensus mechanisms. Information may be exchanged between competitors in a blockchain that would otherwise have remained undisclosed to the participating companies or the public. In some cases, public disclosure or selective disclosure of certain information may have procompetitive effects, e.g. when information is aggregated and contributes to greater price transparency so that customers can make more informed decisions, thus…

Falk Schöning and Myrto Tagara ‘Blockchain: Lessons learnt from the net neutrality debate and competition law related aspects’ (2018) Concurrences N° 3-2018

The paper, which can be found here, identifies a number of areas where competition law may intervene in the blockchain sphere, and discusses what the best approach to problems in this area are. One of the authors spoke at the OECD on the blockchain – you can see the video here.   The paper is structured as follows: It begins with a short introduction to the blockchain technology. The paper reviewed above provides a much more detailed intro into the topic than this paper, so I am not going to repeat it here. Section III then looks at the interplay between blockchain and competition law. It starts by recalling that competition law provisions apply to undertakings. From a competition law perspective, the blockchain landscape of today is analogous to that of search engines, e-commerce platforms and algorithms in the 1990s. Ten years ago, no one thought that competition law authorities would focus their enforcement priorities on these applications, triggering investigations…

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…

Sainsbury v MasterCard, Asda et al. v MasterCard and Sainsbury v Visa [2018] EWCA 1536 (Civ)

This is a UK judgment by the Court of Appeal concerning the correct approach to payment cards’ interchange fees. The decision was issued on appeal from three different lower court judgments that focused on whether the setting of default multilateral interchange fees (“MIFs”) within the MasterCard and Visa payment card systems amounted to an anticompetitive collusive practice. It is important to begin by describing the factual background of all these cases. Unlike American Express, or the card system at stake in the US Supreme Court judgment discussed above, MasterCard and Visa are four-party card schemes. Such schemes work as follows: a merchant accepts certain credit and debit cards pursuant to an agreement with an “Acquirer”, i.e. a bank or financial institution belonging to the MasterCard or VISA scheme. The card will have been issued by another bank belonging to the scheme (the ‘Issuer’). The Acquirer will charge a fee to the Merchant for the services it provided in respect of a…

Andres Caro ‘Leveraging market power online: the Google Shopping case’ (2018) Competition Law Journal 17(1) 49

The Google Shopping case raises many important questions, such as: how do we deal with the leveraging of market power in digital markets? How do we weigh the benefits to consumers against the potential harm to competition? And, lastly, what are the appropriate remedies for this type of behaviour? In addressing these questions, this paper is structured as follows: A first section describes the background to the Google Shopping decision by the European Commission. Google aggregates, sorts, displays and provides direct access to retailers’ webpages in exchange for a fee through Google Shopping. Other online platforms, including Nextag, Foundem and Shopzilla, offer similar services. However, until early 2018 ‘while competing comparison shopping services can appear only as generic search results and are prone to the ranking of their web pages in generic search results on Google’s general search results pages being reduced (‘demoted’) by certain algorithms, Google’s own comparison shopping service is prominently positioned, displayed in rich format and is…

Edward Iacobucci and Francesco Ducci ‘The Google Search Case In Europe: Tying and the Single Monopoly Profit Theorem in Two-Sided Markets’ (2018) European Journal of Law and Economics 47 15

According to the authors, the European Commission in its Google Shopping case did not outline which theory of foreclosure justified its finding of infringement. Likewise, there is no consensus in the literature about which theory of harm may best justify the decision. In the light of this, the authors seek to develop such an economic and legal theory of harm in this paper, which can be found here. They argue that, by tying its search and shopping platforms, Google became able to serve customers with whom it would have not dealt otherwise. However, this may divert trade from potentially more efficient vertical platforms. By tying its shopping search to its general search service through visual prominence, Google can attract additional advertisers on its search platform that would otherwise have possibly advertised on competing search platforms. Thus, the effect of tying is a restriction on competition in vertical search that deserves antitrust scrutiny. The paper is structured as follows: Section 2 reviews the…