Italy’s Big Data Report

This is a report published by Italian competition authority, together with the telecommunications regulator and the data protection authority, on how to address big data. It is available here. In my analysis below, I will focus on the elements of the report that touch or focus on competition law. I would also emphasise that this is not the first competition authority in Europe to look at data – the joint Franco-German report in 2016 also looked at the intersection between competition and data. The decision to pursue an interdisciplinary study arose from a recognition that the characteristics of the digital economy are very often such that it touches on the competences of the three authorities. The relationship between competition, privacy and pluralism requires a particularly close coordination between different regulators, not only to ensure effective regulatory action but also to identify and reconcile possible trade-offs between the values protected by different regulatory schemes. Furthermore, joint action will allow a better understanding of…

UK Furman Report – Unlocking digital competition, Report of the Digital Competition Expert Panel,

This Report, which can be found here, follows a review ordered by the UK’s Treasury to make recommendations on changes to competition and pro-competition policy to help unlock the opportunities of the digital economy. The report’s recommendations build on a number of propositions, namely that: the digital economy is creating substantial benefits; that a number of digital markets are prone to tipping and being ‘winner-takes-all’; market concentration in these markets both creates benefits and incurs costs; but government policy and regulation have limitations. In the light of this, the report found that the standard tools of competition policy, evaluating whether mergers can proceed and whether antitrust action is warranted to remedy abuses by companies, could play a role in helping to promote competition and the associated better outcomes for consumers and innovation. To do so, competition policy will need to be updated to address the novel challenges posed by the digital economy. Some of these updates can happen within current powers,…

EU group of experts, ‘Competition Policy for the digital era’

This Report, which can be found here, explores how competition policy should evolve to continue to promote pro-consumer innovation in the digital age. It is structured as follows. Chapter 2 describes the digital world and markets. The report focuses on three key characteristics of the digital economy: extreme returns to scale, networks externalities and role of data. Regarding returns to scale, the cost of production of digital services is disproportionate to the number of customers served. While this aspect is not novel as such (bigger factories or retailers are often more efficient than smaller ones), the digital world pushes it to the extreme and this can result in a significant competitive advantage for incumbents. Concerning network externalities, the convenience of using a technology or a service increases with the number of users that adopt it. Consequently, it is not enough for a new entrant to offer better quality and/or a lower price than the incumbent does; it also has to…

Stigler Center (University of Chicago) Report on Digital Platforms

This Report, which can be found here, was written by a working group who came together to address specific problems arising from the digital platforms’ reach, scale, scope, and use of data. They examined concerns stemming from the market structure contemporary platforms have created, and to investigate their competitive behaviour, including the consequences of network effects that can create barriers to entry for new innovators and entrench incumbents. The theme that runs throughout the report is the difficulty of entry into digital platform businesses once an incumbent is established. Whether the entrant is vertical or horizontal, has succeeded to some degree, is nascent, is a potential entrant, or is a large platform in an adjacent space, market entry improves consumer welfare by either providing more choice, different features, and a chance of higher quality, or creating a threat that spurs the incumbent to provide lower prices, higher quality and innovation, and to do so more quickly. The Report is structured…

Daniel Sokol ‘Reinvigorating Criminal Antitrust?’ (2019) William & Mary Law Review 60 1545

A number of non-cartel antitrust infringements remain crimes under US law, even if they are not prosecuted in practice. This article, available here, deals with the implications of recent claims for increased antitrust enforcement for the application of such provisions.  A natural extension of enforcement would be to advocate the use of criminal sanctions for various antitrust violations outside of collusion which are “on the books” but have not been used in over a generation. The article argues that a return to the criminalisation of non-collusion related antitrust abuses is problematic not only as a matter of optimal deterrence, but also unconstitutional as a matter of law. Section one describes how antitrust criminalisation is a form of achieving deterrence. Antitrust enforcement builds on models of optimal deterrence. Under an optimal deterrence antitrust framework, a firm or individual will be deterred where the expected costs of illegal activity, taking into account the probability of detection and magnitude of the penalties, exceed…

Beatrice Stange on ‘Romano Pisciotti v Bundesrepublik Deutschland: Increased Risk of Extradition for EU Citizens after Involvement in US Cartels’ (2019) Journal of European Competition Law & Practice 10(2) 89

This paper, available here , discusses the first deportation of an EU citizen to the US for competition law infringements. It focuses on a recent judgment by the Court of Justice of the European Union on this matter. A first section outlines the factual background of the case. In 2010, a US arrest warrant was issued for Italian businessman Romano Pisciotti on account of his involvement in the marine hoses cartel. In 2013, the German federal police arrested Mr. Pisciotti at Frankfurt Airport during a stopover of his flight from Nigeria to Italy. He was provisionally detained and, a few months later, the German authorities accepted the US request for extradition despite Mr. Pisciotti’s legal appeals, inter alia before the German Federal Constitutional Court. Other extradition requests from the US authorities had so far been unsuccessful, mainly because most international extradition agreements (including the Treaty between Germany and the US) require that the sanctioned conduct must be a crime in…

Chiara Muraca ‘Cultural and Political Forces in the Criminalisation of Cartels: A Case Study on the Chilean Experience’ (2018) World Competition 579

In addition to rising monetary fines against both companies and individuals, over the last ten years more than thirty countries have decided to criminalise cartel activities. At the same time, and despite the growing number of countries opting for a criminal enforcement, the implementation of such measures has been quite deficient outside the US. Many of these countries have encountered procedural and political obstacles to enforcing criminal provisions against anticompetitive conduct, including a lack of support from key players in the enforcement process. Among the main explanations for this state of affairs is a belief that criminalisation of cartels outside the US is often the product of a top-down process led by transnational enforcement interests rather than domestic bottom-up forces. The aim of this article, available here, is to test this explanation by conducting an empirical study of criminalisation efforts in Chile. The study involved interviews with the main stakeholders who took part in the criminalisation process in Chile, such…

Peter Whelan ‘Competition Law and Criminal Justice’ in The Intersections of Antitrust, Galloway (ed.), (Oxford University Press, forthcoming)

As opposed to other types of market conduct (such as, e.g., vertical distribution agreements or the unilateral use of market power), cartels are widely perceived to have few if any redeeming features. In recent years, one can clearly detect a firm commitment from antitrust enforcers around the globe to pursue rigorously the investigation, detection and prosecution of cartel activity. Aligned with this development is a growing tendency in a wide variety of jurisdictions to hold individuals accountable for the creation and implementation of cartels, including through use of criminal law. Unfortunately, the employment of criminal cartel sanctions is not without its problems. This paper, available here, seeks to evaluate some inherent problems associated with the use of criminal sanctions for cartel conduct to deter anticompetitive behaviour. It is structured as follows: Section B outlines the deterrence-based justification for criminal cartel sanctions. The primary rationale for the criminal cartel sanctions is economic deterrence. Unlike retribution, deterrence does not concern itself with…

Andreas Stephan ‘An empirical evaluation of the normative justifications for cartel criminalisation’ (2017) Legal Studies 37(4) 621

A growing number of jurisdictions treat ‘hard-core’ cartel conduct as crime, in the belief that the threat of incarceration is necessary for deterrence. For many years, the US was the only active criminal cartel enforcement regime in the world. Cartels were first prohibited under the US Sherman Act 1890 as misdemeanours, and became a felony in 1974. The US Department of Justice regularly secures convictions of firms and individuals – many of whom agree to serve custodial sentences under negotiated plea agreements – from around the world. In the past 20 years, there has been an international movement towards the US model. Around 25 jurisdictions have criminalised ‘hard-core’ cartel conduct, including the UK, France, Ireland and Australia – with many more having adopted criminal offences that relate only to bid-rigging in public procurement. Most of these jurisdictions have chosen to retain their civil enforcement powers in parallel, so as to use criminal enforcement selectively. However, there is still disagreement over…

Ariel Ezrachi and Maurice E. Stucke ‘Sustainable and Unchallenged Algorithmic Tacit Collusion’ Oxford Legal Studies Research Paper No. 16/2019

This piece is similar to last week’s papers in that if focuses on the challenges posed by algorithmic tacit collusion, but arguably goes further. In previous work, the authors outlined four scenarios where algorithms may be used to facilitate collusion. There is a consensus that their first two scenarios – Messenger, where algorithms help humans collude; and Hub and Spoke, where a common intermediary provides the algorithm and the pricing decision mechanism that could facilitate collusion – pose competition issues that should be addressed under existing rules. Their third and fourth scenarios have proved more controversial. Under the third scenario, called Tacit Collusion on Steroids – The Predictable Agent, companies could unilaterally use algorithms with the intent to facilitate conscious parallelism (also known as tacit collusion). Under the fourth scenario, called Artificial Intelligence, God View, and the Digital Eye, algorithms may arrive at this anticompetitive outcome on their own. Tacit collusion is beyond the reach of the competition laws of…