Asda Stores Ld & Ors v MasterCard 2017 EWHC 93 (Comm)

This decision – available here – concerns a standalone claim for damages against MasterCard brought before the English courts. As some of you will know, disputes over the legality of Multilateral Interchange Fees (MIFs) and various payment card-schemes has been ongoing for well over a decade.  In the US, it included a decision on the legality of the American Express System which has found its way to the Supreme Court docket. In this case, which follows a decision by the European Commission – but is not a follow on claim since the practices in question, while similar, are not the same ones that were subject to the Commission’s decision – the English courts had to decide whether the level at which MasterCard set its MIFs was illegal, and hence whether damages are due. You may be pleased to hear that the decision is long and complicated – if nothing else, because it conducts an in-depth effects based assessment that hinges…

Massimo Motta and Chiara Fumagalli ‘On the use of price-cost tests in loyalty discounts and exclusive dealing arrangements: Which implications from economic theory should be drawn?;

You can find this paper in (2017) Antitrust Law Journal, 81(2): 537–85. The paper looks at  loyalty rebates and the use of price cost tests. It begins by describing recent European and American case law on the matter, and highlights differences in the judicial approaches on both sides of the Atlantic (i.e. the classic distinction between European formalism and American effects-based tests). The authors then distinguish between economic tests of predation and exclusionary rebates, while noting that both include common economic mechanisms that can involve sacrificing profits.In the last and most important section, they argue that rebates and contracts containing conditions regarding how much buyers purchase from rival suppliers can raise serious anti-competitive concerns. From this point of view, a stricter treatment of exclusive contracts and some loyalty discounts might be justified – which may imply that evidence of above-cost prices may work as a safe harbour for predation, but not for exclusive dealing and loyalty rebates. Overall, I think…

Elisabeth de Ghellinck ‘The As-Efficient-Competitor Test

This paper, published in the Journal of European Competition Law & Practice and available at https://academic.oup.com/jeclap/article-abstract/7/8/544/2194480, looks at the as efficient competitor test (known as AEC by its acquaintances) – the economic test that refuses to come to life (and God knows that some have tried to breathe life into it). After the European Commission tried to make this test the cornerstone of its enforcement activities on abusive practices (in its Guidance on Enforcement Priorities for Exclusionary Practices), and the European Courts first dismissed the relevance of the test in virtually all scenarios (Post Danmark II) before saying that it may actually be useful under certain circumstances (Intel), we have this piece is by an economist trying to identify when the test can be useful. A number of conclusions are reached, in particular:  it is sensible to decide that an AEC test is not a prerequisite for establishing the abusive character of a retroactive rebate scheme, since such a test can only…

Frederic Jenny ‘Abuse of dominance by firms charging excessive or unfair prices: an assessment’

This is a paper by Fred Jenny  for the Israeli competition authority on excessive pricing – the competition law infraction that refuses to die, and is arguably making a comeback. The paper can be found at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2880382. It reviews the debate that has taken place among economists on what the definition of excessive prices could be and whether the control of excessive prices by competition authorities would in fact promote or discourage competition. The paper is structured as follows: Section I takes stock of the enforcement activities of competition authorities against high prices (or the lack of enforcement) in a number of countries; Section II analyses the general arguments in favour or against the enforcement of provisions sanctioning excessive pricing abuses by dominant companies or monopolies; Section III examines the risks associated with wrongful decisions by competition authorities in this area and the cost of such errors; Section IV analyses the economic screens which have been proposed by various economists to…

Michal S. Gal and Niva Elkin-Koren ‘Algorithmic Consumers’

This paper, published in the Harvard Journal of Law and Technology and available at https://jolt.law.harvard.edu/assets/articlePDFs/v30/30HarvJLTech309.pdf, focuses on the use of algorithms by consumers to orient and even take decisions regarding their purchases. The basic argument is that, with the Internet of Things, systems will move from merely making recommendations to making and executing decisions for the consumer by directly communicating with other systems through the internet. As rightly pointed out in the article, this is not unheard of: in some industries, such as stock trading, algorithms already automatically translate their results into buying decisions; there is even a washing machine that makes autonomous orders and payments (e.g., buying detergent) and updates the owner via a smartphone. The paper usefully contains a literature review on algorithmic competition (which, it must be said, is still rather limited). It also makes some valuable points, such as: algorithmic consumers may submit suppliers to increased competitive pressures and change the parameters of competition (since they will be able…