Frederic Jenny ‘Changing the way we think: competition, platforms and ecosystems’ (2021) Journal of Antitrust Enforcement 9 1

Firms are supposed to operate on predefined markets for goods or services where they compete against similar firms that offer substitutable products or services. All economic agents are assumed to be profit-maximisers that will not sell below average variable costs. However, this is not how the digital economy operates. As a result, many of the traditional tools used by competition authorities to assess relevant markets, or the intensity of competition between firms, are difficult to use or inadequate to assess competition issues between ecosystems in the digital world. Further economic thinking, and an understanding of the business models of digital ecosystems, are needed to allow competition authorities to make informed decisions about competition on digital markets. This article, available here, reviews some of the challenges competition agencies face. Section 2 looks at digital markets. Digital markets differ from traditional markets in a number of ways. The digital world has low costs and no-distance, which means that the delivery of services…

Mark Lemley ‘The Contradictions of Platform Regulation’ (2021)

Everyone wants to regulate the big tech companies. Efforts to rein in big tech represent a confluence of many different factors, but most of all reflect the outsized influence these companies have come to have on almost all aspects of our lives. However, the political consensus around regulating the tech industry is illusory. While everyone wants to regulate big tech, it turns out that they want to do so in very different, indeed contradictory, ways. This paper, available here, identifies some of the contradictions of platform regulation, their implications, and whether there is a way forward. Part I explores the contradictions of platform regulation proposals. Everyone may want to regulate big tech, but there is no agreement on what government should require big tech to do (or forbid big tech from doing). Some proposals are plainly contradictory. For example, there are widespread proposals to make internet platforms responsible for content posted on them – but while some want to encourage…

Rob Nicholls on ‘Regtech as an antitrust enforcement tool’ (2021) Journal of Antitrust Enforcement 9 135

In its simplest form, Regtech can be described as ‘the use of technology, particularly information technology, in the context of regulatory monitoring, reporting and compliance’ enabling it to provide ‘technological solutions to regulatory processes’. Regulatory technology (Regtech) has emerged mainly in financial services as a tool for regulatory compliance. However, to define Regtech as a sub-set of Fintech fails to properly explain its capabilities. Since Regtech has the potential for continuous monitoring capacity with close to real-time insights of domestic and global markets through artificial intelligence filters, it can be proactive rather than reactive, looking to identify problems in advance rather than after the fact. Research on Regtech and competition law has thus far considered how Regtech could be used by competition authorities to monitor compliance with relevant laws and regulations has been explored using statistical approaches (particularly in respect of cartels) and—to a more limited extent—using machine learning. This article, available here, explores an approach to applying Regtech techniques…

Thibault Schrephel ‘Computational Antitrust: An Introduction and Research Agenda Stanford Computational Antitrust’(2021)

In the last decade, antitrust agencies have shifted their focus to deal with issues arising in the digital economy. While there are passionate discussions about the competitive effects of business practices implemented by digital players, the use of technological tools to address such practices remains very little debated. This disconnect between diagnosis and treatment is becoming problematic, as antitrust agencies struggle to remedy anticompetitive practices in increasingly complex and fast-paced markets. The present article, available here, pursues three goals. First, it introduces computational antitrust – a new domain of legal informatics which seeks to develop computational methods for the automation of antitrust procedures and the improvement of antitrust analysis. Second, it explores how agencies, policymakers, and market participants can benefit from computational antitrust. Lastly, it sets out a research agenda for the years ahead Section I explains what is computational antitrust. Computational law is a “branch of legal informatics concerned with the mechanisation of legal analysis (whether done by humans…

Antitrust Writing Awards (and a bit of self promotion)

This week, due to technical issues (and a bank holiday in France), I am unable to circulate any reviews. However, I would like to refer you to the papers selected by Concurrences for the Antitrust Writing Awards 2021 – they cover virtually all of current antitrust debates, and are typically very good. I say typically because I have a paper of my own nominated, and that may lower the level a bit – ‘The three body problem – Extraterritoriality, comity and cooperation in competition law‘, to be published in a coming book. I would of course appreciate it if you could vote for it, but, more importantly, this is a good occasion to suggest you may want to read it. All comments are welcome. And if anyone detects the science fiction reference, you have my respect. You can find the paper here. The abstract is as follows: Understanding the extraterritorial effect of competition law raises challenges akin to the three…

Elena Argentesi, Paolo Buccirossi, Emilio Calvano, Tomaso Duso, Alessia Marrazzo and Salvatore Nava ‘Merger Policy in Digital Markets: An Ex Post Assessment’ (2021) Journal of Competition Law & Economics 17(1) 95

This paper, available here, presents a broad retrospective evaluation of mergers and merger decisions in markets dominated by multisided digital platforms. It identifies almost 300 acquisitions carried out by three major tech companies— Amazon, Facebook, and Google—between 2008 and 2018, looks at the business logic behind these transactions, and explores the theories of harm that have been used or, alternatively, could have been formulated by authorities. The paper then retrospectively examines two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authority, as well as evidence on the evolution of the market after the transactions were approved. Section II looks at the wealth of mergers and acquisitions (M&A) carried out by key digital platforms between 2008 and 2018. Companies active in digital markets are remarkably active in M&A, constantly seeking out interesting start-ups and purchasing them. Between 2008 and 2018, Google acquired 168 companies, Facebook acquired 71 companies, and…

Andrew P McLean ‘A Financial Capitalism Perspective on Start-Up Acquisitions: Introducing the Economic Goodwill Test’ (2021) Journal of Competition Law & Economics 17(1) 141

In recent decades, major technology firms have acquired hundreds of nascent companies. Between 1987 and 2019, Google, Apple, Facebook, Amazon and Microsoft (GAFAM) acquired over 700 companies. There have been over 430 acquisitions in the last ten years alone. The acquisition of start-ups by major technology firms poses a significant anticompetitive threat, yet such transactions often escape competition scrutiny because they fail to trigger merger notification thresholds. This paper, available here, provides a financial analysis of historic acquisitions by Google, Apple, Facebook, Amazon and Microsoft. Acquisitions in the digital economy are typically characterised by astronomical transaction values relative to the stature of the acquired firm—targets are typically young, lacking in tangible assets and yet to earn significant revenues. Given this, the paper introduces a new merger notification threshold — the economic goodwill test. The economic goodwill test is a concerned with the value of a target’s net tangible assets as a proportion of total transaction value. The difference between these…