C. Scott Hemphill and Nancy L. Rose on ‘Mergers that Harm Sellers’ (2018) Yale Law Journal 127(1) 2078

In typical mergers, the main concern is that the parties will be able to raise the prices they charge purchasers. Some mergers, however, reduce competition among competing buyers, thereby reducing the prices that sellers receive for their products and services. These adverse “buy-side” effects may harm a wide variety of sellers, including workers.  This paper, available here, examines the antitrust treatment of mergers that harm sellers. Its central claim is that harm to sellers in an input market is sufficient to support antitrust liability. Part I considers mergers that increase classical monopsony power. Monopsony is used here as the mirror image of monopoly, i.e. market power susceptible of affecting the price of inputs. Monopsony is a frequent concern in labour and agricultural markets. As with lawfully acquired monopoly power, antitrust law does not prohibit the exercise of lawfully acquired monopsony power, despite its economic costs. Yet antitrust problems do arise when buyers increase their monopsony power by combining forces. Agreements…

Michal Gal ‘The Case for Limiting Private Litigation of Excessive Pricing’ (2020) Journal of Competition Law and Economics 15(2-3) 298

Excessive pricing raises strong concerns for private competition litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair in order to calculate damages; and (3) the institutional features of general courts in EU member states. Given that private litigation of competition law violations is only beginning to develop in the EU, and collective redress mechanisms are still viewed with caution by many member states, this is exactly the time to ensure that, as private litigation expands, it will increase welfare. This is the purpose of this paper, which is available here. Section 2 addresses the inherent difficulty of determining when a price becomes unfair. The excessive pricing prohibition, though longstanding, suffers from serious and inherent difficulties in its implementation. In particular, it lacks clear and workable criteria. The challenges can be summarised as follows: to decide…

OECD papers on the implications of the pandemic for competition law – merger control, cooperation agreements and exploitative pricing

This post reviews three OECD papers on the implications of the pandemic for competition law. Each paper focuses on a different topic. A first paper focuses on merger control in the time of COVID-19. In times of acute crisis, such as the one provoked by COVID-19, many firms may need to leave the market, which may trigger increased merger activity. Without thorough merger review, there is a serious risk that the economic crisis would result in higher market concentration and market power in several sectors. At the same time, the unparalleled economic uncertainty we are living through means that competition authorities face a number of challenges in the exercise of their merger control powers. A first challenge relates to how to conduct forward-looking competitive assessments in turbulent market conditions. Merger reviews assess the effects of transactions by comparison to the circumstances that would have prevailed without the transaction (i.e. a counterfactual). In most cases, the counterfactual starts from the competitive…

Herbert Hovenkamp ‘Apple vs. Pepper: Rationalizing Antitrust’s Indirect Purchaser Rule’ (2020) Columbia Law Review Forum 120(1) 14

The simplest measure of loss caused by an antitrust infringement is the amount of the overcharge caused by a conduct. However, customers of the infringing party may be able to pass on this overcharge to their own customers, which means that indirect purchasers may also suffer loss. The US – unlike other countries – typically limits the ability to claim damages to direct purchasers for the amount of the relevant overcharge (typically trebled). In Apple Inc. v. Pepper, the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s App Store because of an antitrust violation could sue Apple for damages because they were “direct purchasers”. The paper, available here, argues that, working within the context of applicable rules, the majority reached the right conclusion. At the same time, and while this judgment eliminates some of the irrationalities of the indirect purchaser rule as it has been applied, it hardly adopts a definite solution to the…

Felipe Irarrázabal ‘Competition and the plague’ (‘La libre competencia y la peste)

This piece is available here, but only in Spanish. The summary below reflects my own translation of the piece. Emergencies – such as wars and natural disasters – undermine the assumptions underpinning competition law and policy. Competition enforcement against cartels builds on the premise that fierce competition is highly beneficial for society, whereas firm cooperation will only create benefits in much more restricted situations. Competition enforcement also relies on legal procedures, which are by nature slow and lend themselves to sophisticated disputes. Covid-19 has forced authorities to enact exceptional regimes and pressured them to take urgent and even drastic measures. The coming economic recession will likely require similar measures. The main competition agencies in the world have started to react to this negative scenario. Several of them have declared that they will be alert to any possible violation of competition law. Others have specified that they will not accept excessive prices as a result of the crisis (although this legal…

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,…

Francisco Costa-Cabral, Leigh Hancher, Giorgio Monti and Alexandre Ruiz Feases ‘EU Competition Law and Covid-10’

This paper, which is from the whole of Tilburg’s competition department, as far as I can tell, is available here. It explores how EU competition enforcement might be affected by the COVID-19 pandemic. The authors recommend that competition authorities should be watchful of excessive prices and price discrimination, and rely on interim measures if necessary. Collusion should remain an enforcement priority, but a procedural pathway to review agreements that may be in the public interest should be adopted. In merger control, the Commission’s strict interpretation of the failing firm defence is appropriate but, in general, a more sceptical attitude towards mergers may be warranted during this period. Advocacy will play a key role: competition agencies can both point to existing regulations that limit competition and monitor proposed emergency legislation that would harm competition for no good reason. A first section provides an overview of the nature of competition law in the midst of a crisis. Competition law is a political enterprise,…

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…