Alexandre de Streel and Pierre Larrouche on ‘The integration of wide and narrow market investigations in EU economic law’ in Motta, Peitz, Schweitzer (eds) Market Investigations: A New Competition Tool for Europe? (Cambridge University Press, 2021) Chapter 4

In 2020, the European Commission embarked on a major reflection and consultation exercise aimed at adapting EU economic law to contemporary challenges, in particular to the competition issues raised by the deployment of digital technologies. One option that was considered was the adoption of a New Competition Tool to deal with structural competition problems which could not be addressed adequately by existing instruments. Two main models were considered: a wide version, applicable to all sectors of the economy, similar to market studies; and a narrow version applicable to the digital sector (or platforms) only. In December 2020, the Commission opted for the narrow version in its proposal for a Digital Markets Act (DMA), a sector-specific instrument applicable to “gatekeepers” of “core platform services”, which includes three types of what is termed “market investigation”. This chapter analyses how to integrate both types of market studies/investigations within EU economic law. Section II deals with the characteristics of competition law and sectoral regulation…

Heike Schweitzer on ‘The Art to Make Gatekeeper Positions Contestable and the Challenge to Know What is Fair: A Discussion of the Digital Markets Act Proposal’ (Forthcoming, ZEuP, 2021, Issue 3)

Legislators around the world are currently struggling to adequately respond to the new risks that accompany innovative platform-based and data-driven business models. These risks include many problems of economic power – the traditional subject of competition law. However, according to a widely shared perception, a case-by-case enforcement of competition rules will not suffice. This triggered a number of studies, leading ultimately to the adoption of a number of legislative proposals. These include the EU’s Digital Markets Act (DMA) proposal to regulate digital gatekeepers; Germany’s reform of its competition law to endow the Bundeskartellamt with the competence to impose special rules of conduct on undertakings which have been found to be of paramount cross-market significance; and the regulatory regime for digital platforms with strategic market status recently proposed by the UK Digital Markets Taskforce. On the surface, much of the debate appears to be about legislative technique. Just beneath the surface, fundamental conceptual questions lurk. The most prominent among these questions…

Simonetta Vezzoso ‘Competition Policy in Transition: Exploring Data Portability’s Roles’ (2021) Journal of European Competition Law & Practice 12(5)

Several reform proposals circulated in the last two years recognise that data portability should play an increasingly important role in the digital economy. This paper, available here, explores data portability from an EU competition policy perspective. It points out that data portability can play three distinct roles, namely: (i) enabling switching, (ii) enabling data fluidity (iii) enhancing consumer empowerment and data sovereignty. These different roles are analysed against the background of (a) traditional competition law, (b) a market investigation regime, and (c) an ex-ante regulatory framework targeting large online platforms with gatekeeping power. Section II looks at the regulation of data portability, particularly non-personal data. Data can be either personal or non-personal. Personal data portability is a right under the GDPR. The data portability of non-personal data is foreseen by the EU Regulation on the Free Flow of Non-Personal Data in the European Union (Free Flow Regulation, or FFNPDR, in the following), which entered into force in May 2019. Besides…

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…

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…

Magali Eben and Viktoria Robertson ‘The Relevant Market Concept in Competition Law and Its Application to Digital Markets: A Comparative Analysis of the EU, US, and Brazil’ (2021) Graz Law Working Paper No 01-2021

Market definition is a core analytical tool that helps in the assessment of anti-competitive agreements, unilateral conduct and mergers. However, the difficulty of delineating a relevant market with the required predictability in digital markets has led some to question whether market definition can continue to fulfil its traditional functions in these dynamic market environments. The present contribution, available here, first surveys the general approach to market delineation in the EU, the US and Brazil. Against this background, it then embarks on a discussion of market definition in digital markets in each of these jurisdictions, with a particular focus on multi-sided markets, zero-price services and the concept of digital ecosystems. Section 2 surveys the general approach to market delineation in the EU, US and Brazil. The main parameters of market definition are strikingly similar in the EU, the US and Brazil. All these competition laws heavily rely on the relevant market as an analytical tool. However, while market definition is mainly…

Herbert Hovenkamp ‘Digital Cluster Markets’ (2021)

Many antitrust violations require proof of market power. Historically, the way antitrust litigants and courts have estimated power is by determining a market share of a properly defined “relevant market” of substitutable products. However, many firms sell more than a single product and, frequently, sell non-competing products. The possibility of aggregating noncompeting products or services leads to the creation of “cluster markets” consisting of noncompeting goods. Antitrust claims are often made regarding such clusters. It then becomes important to ask when it is sensible to locate power in the cluster itself, rather than in the simple presence of any particular item. This paper, available here, argues that clustering noncompeting products into a single market for purposes of antitrust analysis can be valuable, provided that the limitations of such an approach are understood. Clustering contributes to market power only when it is found, cumulatively, that: (1) many customers need or at least prefer the convenience of receiving the defendant’s grouping of…

Özlem Bedre-Defolie and Rainer Nitsche ‘When Do Markets Tip? An Overview and Some Insights for Policy’ (2020) Journal of European Competition Law & Practice 11(10) 610

Competition authorities are increasingly concerned that their tools are not fit to deal with digital multi-sided platforms, which operate in markets that have a tendency to ‘tip’. However, the academic literature does not yet provide guidance on how to identify the likelihood of tipping in a market. Instead, the literature identifies a number of factors that might foster or mitigate tipping under certain circumstances. This paper, available here, reviews the literature and identifies the key market characteristics that facilitate tipping and those that mitigate it. It also advances four key questions to guide policy makers in the development of methods to identify the likelihood of tipping. Section 2 discusses factors that facilitate market tipping. The authors identify six key factors that foster tipping in markets with multisided platforms: positive network effects, single-homing and switching costs, free services, data-enabled learning, trust, and platforms’ complementary offerings. Markets with multisided platforms typically also exhibit classical factors that foster concentration, like economies of scale…