Dear Readers,
The January 2022 CPI Antitrust Chronicle® includes articles based on presentations from the Special Policy Sessions (“SPS”) organized by CRESSE in collaboration with CPI in September 3-5, 2021. The contributions here include articles by a number of prominent economists and legal experts. The 2021 SPSs focused on the following topics:
Policy Design in Digital Ecosystems
Digital Disruption in Banking
Digital Markets: Big Data, Privacy Protection and AI
Systematically incorporating innovation in Competition Law Enforcement
Competition Policy Enforcement in Digital Markets: the case of BRICS
Screens, Presumption and Efficiencies in Merger Review
Digital Ecosystems: issues related to vertical relations
Enforcing Against Anticompetitive Behaviour in Labor Market
Algorithms and Competition Policy
CRESSE (www.cresse.info), is an international network of academics and other professionals, with an interest in competition policy and sectoral regulation. Every year, CRESSE organizes an international conference in Greece that is now widely recognized as one of the leading academic conferences in the economics of competition policy and regulation worldwide. CRESSE conferences offer an unparalleled breadth of academic insight, combined with topical policy discussions and insights into the most recent enforcement developments and challenges in the main jurisdictions around the world. The insights offered are relevant to enforcers, practitioners and academics alike. The issues discussed in CRESSE SPSs are examined by invited academics (economists and lawyers), policymakers, corporate representatives and relevant practitioners.
In July 1-3, 2021, CRESSE organized its 16th International Conference on “Advances in the Analysis of Competition Policy and Regulation” in Crete, Greece. Keynotes feature the Competition Policy Lecture by Jean Tirole (Toulouse School of Economics), the J-J Laffont Lecture by John Sutton (London School of Economics) and the Lawyers’ Lecture by Einer Elhauge (Harvard University).
Below, we provide brief descriptions of the articles that are included in this volume.
Steering Digital Markets Towards Development
By Tembinkosi Bonakele
On May 19, 2021, the South African Competition Commission (“CCSA”) launched its market inquiry into digital markets. While several competition agencies the world over have launched inquiries into digital markets, the CCSA’s inquiry differs in two material respects: (1) it seeks to optimize market conditions for the growth of small businesses and firms owned by historically disadvantaged persons (or HDPs); and (2) its scope is limited to online intermediation platforms. As I write, the inquiry is conducting its first round of public hearings which are set to end on November 19, 2021. So far, the inquiry has received 134 written submissions from market participants and heard 51 oral submissions to date.
Is loss of privacy the price that consumers pay for otherwise free online services?
By Keith Waehrer
The intersection of online privacy policy regulation and antitrust enforcement has received significant attention recently. Commentators approaching this subject discuss it from at least three different angles. Keith Weahrer argues that competition over quality can be analyzed in similar ways as competition over price, despite the fact that measurement might be more difficult. He seeks to skewer a number of myths that appear to get in the way of antitrust enforcement relating to privacy and analyzing competitive effects on the consumer side of these services where the price appears to be free. In answer to the question of the title, in many ways competitive effects on privacy can be analyzed in ways that are quite similar to price, but generally equating the loss of privacy to a price risks losing some important differences between the two.
Proposals for digital regulation in the UK: Some trade-offs and challenges
By Adam Cellan-Jones & Dr. Jenny Haydock
Digital markets are unquestionably a hot topic in competition policy globally. In the UK, the CMA has a wide-ranging portfolio of work in the digital space, reflecting its stated priority to foster effective competition in digital markets. This portfolio of work is designed to use the CMA’s existing tools effectively to tackle potential problems in digital markets, while also deepening its knowledge of those markets. But it is also serving another purpose – to help the CMA establish what to prioritize if and when new powers are introduced for ex ante regulation of the most powerful digital firms. At present, the CMA houses a “shadow” digital regulator, the Digital Markets Unit (“DMU”) – the hope is that this will gain formal powers in due course. Proposals for these new powers are currently being considered by the UK government, which has just completed a public consultation on the matter.
The proposals the government considered drew heavily on the advice of the “Digital Markets Taskforce,” which was established in March 2020, led by the CMA. The Taskforce advice recommended that a regulatory regime be established, focused on the most powerful digital firms – those firms with Strategic Market Status (“SMS”). The key motive behind the Taskforce’s recommendations was to achieve ongoing and proactive oversight of most powerful digital firms. It seems clear that this means shaping firm conduct in advance – preventing harm, rather than just identifying and remedying specific examples of poor conduct after they have occurred. However, while the regime should be able to move quickly to act where necessary, it should also offer predictability and legal certainty for stakeholders. The Taskforce was also clear that the regime should be evidence-based, proportionate, and targeted. The authors of this paper discuss some more specific ways in which that aim might be realized.
Limited development of Big Tech firms in credit activity: lack of incentives or barrier to entry?
By Frederic Palomino & Miguel de la Mano
Digital-technology-based developments have matured to the point whereby a dramatic change in banking and other financial services is possible. Such developments explain the involvement of Big Tech firms in the financial service industry. However, the expansion of Big Tech firms into other financial industry sectors such as credit intermediation, deposit-taking activities, asset management or insurance is highly heterogeneous. For example, in Asia, companies such as Alibaba and Tencent cover the whole spectrum of activities. Ant Group (part of Alibaba), through its online bank subsidiary MYbank, grants credit to SMEs that sell on Alibaba’s Taobao market platform. However, outside China, and more generally outside Asia, Big Tech firms are not particularly active as credit providers. The article discusses the limited expansion of Big Tech into retail banking activities in the EU (and the US) which is, at first sight, a puzzle.
Competition Policy response to digital based business expansion in Brazil
By Eduardo Pontual Ribeiro, Svetlana Golovanova, Camila Pires-Alves & Marcos Puccioni de Oliveira Lyra
The investigation of business practices of digital platforms in merger and antitrust investigations requires the adoption of new economic analysis tools. They should consider multi-sidedness, cross-platform network effects, the role of relative prices, information-based technologies effects, dynamic efficiency, and other considerations. So-called “younger” jurisdictions have now also started incorporating two-sided logic in their analysis of merger and abuse of dominance cases. In particular, the report of the BRICS Working Group on the Digital Economy presented at the fourth BRICS Competition Conference in Moscow, 2019, marked the authorities’ view on the challenges competition agencies face due to the digitalization of the world economy. This note discusses recent developments at the Brazilian Antitrust Authority – CADE – on handling digital markets and platform cases. It provides a brief overview of the Authority’s opinions based on available documents and jurisprudence, and offers a perspective on specific topics of interest as they are likely to develop in coming years.
Data, privacy, and competition: theories of harm and data mobility
By Ana Sofia Rodrigues & Rafael Longo
The dynamics of competition in data-powered ecosystems are motivated by user-related network effects; and are centered around users. Incumbent platforms thus have incentives to build strategies to protect their market, aimed at shielding their user base from contestability by rivals. This includes users from related markets, which may serve as an entry point to the core market of the ecosystem, especially when related markets are data rich. Fostering contestability in ecosystems protected by data-driven network effects and switching costs is intrinsically linked to data portability and interoperability. In implementing such measures, there is scope to learn from past experience in financial services, as incumbents may have incentives to compromise the effectiveness of data mobility regulations.
As always, many thanks to our great panel of authors.
Yannis Katsoulacos
CRESSE Coordinator.
