As the title indicates: ‘This contribution (which can be found here) considers the potential application of competition law—specifically, the ‘antitrust’ rules governing anticompetitive unilateral or coordinated conduct—within the sharing economy.’
The sharing economy is described as a sector marked by recurrent characteristics, such as: (i) its underlying economic rationale is the under-utilisation of durable goods or other assets, which generates excess capacity that can be rented out; (ii) sharing economy businesses provide classic examples of ‘disruptive’ innovation, which originates outside a value network and displaces it; (iii) the innovations that underpin the sharing economy are rooted in the internet and mobile technologies; (iv) sharing economy businesses are often platforms in multi-sided markets; (v) sharing economy firms frequently conflict with regulatory regimes that control and limit the activities of competitors, resulting in recurrent critiques that such competition is inherently ‘unfair’.
The paper is structured as follows:
Section II examines how prohibitions against anticompetitive unilateral conduct may apply to the sharing economy. It begins by noticing the difficulty of defining the relevant markets. To illustrate this, she reviews the recent debate about what the actual activities of Uber are – whether Uber is a mere intermediary or a transportation services provider. This may prove critical to determine whether a platform is dominant and, thus, whether it may be liable for its unilateral conduct. In this regard, she also emphasises the importance of network effects for the creation of dominance in the digital sector.
She then reviews the basics of anticompetitive unilateral conduct, before establishing that is unlikely that exploitative abuses based on price will take place in this sector of the economy (but – in a very LSE move which is reflected in some national enforcement actions – she then argues that a framework akin to the prohibition of excessive pricing may be appropriate to curb requests for excessive private data by dominant online platforms). As regards exclusionary abuses, however, several prospective abuses have been pursued by agencies or in court. These include cases of single homing obligations (which are similar to exclusive dealing obligations), ‘most-favoured-nation’ (MFN) clauses, and practices that raise rivals’ costs by identifying providers that multi-home and offering them inducements to favour the dominant platform. Furthermore, where a platform acquires ‘essential facility’ status the operator may be required to provide access to intermediation on reasonable terms.
Section III changes the focus to coordinated conduct. A first example provided is of a US case accusing UBER and its drivers of horizontal price collusion as regards price surging (which included a challenge to vertical price restraints said to be akin to resale price maintenance provisions). A second example is the use of platforms as hubs in ‘hub and spoke’ conspiracies (e.g. as in the Apple E-books case, or as alleged in the ETURAS case in Europe).
Section IV subsequently considers the notion of unfair competition and the limits of antitrust more generally, exploring reasons both for the abundance of apparent competition problems in the sharing economy and for the relative ineffectiveness of competition law in this context. Her argument is ultimately quite simple: not all cases of unfairness are about competition law. Instead, competition law is about increasing efficiency, which sharing economy businesses do even if they may be perceived as treating some people unfairly.
A more interesting issue is ‘whether asymmetric regulatory burdens might constitute an unfair advantage that merits antitrust scrutiny. Many critics of the sharing economy argue that its competitive advantage thus arises primarily, not from enhanced efficiency, but by exploiting loopholes to avoid conventional regulation.’ Two main concerns are raised by this criticism: that the sharing economy evades the protections set out in – and hence damages the goods protected by – regulation; and that sharing economy business models lead to the imposition of differentiated state-imposed burdens on business. To these concerns she has no answer. While sharing economy businesses may be said to more effectively address the concerns that regulation is aimed at, this may not always be the case (and this is without taking into account topics such as labour and tax law); and ‘an unthinking levelling-up of regulatory burdens is likely to have significant negative impacts for consumers, who will see access to services reduced or made more expensive.’
Ultimately (and unsurprisingly), the answer provided is that competition law should only be concerned with competition harms; and that other, better suited regulatory tools should be adopted to deal with other regulatory concerns.
I have to admit to a certain queasiness about the title / topic of the paper – I have read enough papers on the sharing economy to know how fluid this concept is. Having said that, this is a chapter in a book about the sharing economy, so I’m sure the author – who is someone I enjoy following – had no choice on the matter. Ultimately, this is a good intro to the main issues (and cases) found at the intersection of competition law and the ‘sharing economy’ (whatever this may be).