Abstract
This chapter illustrates the changes digitisation brought with respect to the digital economy and digital markets. It will be shown why markets online differ from markets offline and why established classical economic theory and models might need to be revised and adapted to the novelties related to digitisation and a digital economy. Whether or not markets function similarly or not is crucial in particular for the context analysis necessary for the establishment of an object infringement of competition. Hence, whether a measure offline is, with respect to its potential detrimental impact on competition, to be assessed equally or differently as the very same practice in an online environment depends a lot on whether we can conclude that the context of digital markets is or is not to be equated with (market) mechanisms known from the analogue world. As mentioned initially, a fact one could arguably doubt. Hence, the changing economic environment, that is, economic trends and phenomena evolving due to digitisation (such as, for example, platforms in any form whatsoever) are particularly interesting and crucial when trying to define a coherent approach for the meaning and role of effects in competition law cases.
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Notes
- 1.
As mentioned above, e.g. the role of digital markets, FAANG as multi-sided platforms etc.
- 2.
Kuttner (1998).
- 3.
Ibid.
- 4.
Anderson (1997).
- 5.
Explained by collecting data and low marginal costs.
- 6.
For example, Report of the Committee for the Study of Digital Platforms, Market Structure and Antitrust Subcommittee Report dated 1 July 2019, George J. Stigler Center for the Study of the Economy and the State, The University of Chicago Booth School of Business, available at <https://research.chicagobooth.edu/-/media/research/stigler/pdfs/market-structure-report.pdf?la=en&hash=E08C7C9AA7367F2D612DE24F814074BA43CAED8C> accessed 6 February 2023 (‘Market Structure and Antitrust Subcommittee Report’); OECD, Maintaining competitive conditions in the era of digitalisation – OECD report to G-20 finance Ministers and Central Bank Governors, July 2018, available at <http://www.oecd.org/g20/Maintaining-competitive-conditions-in-era-of-digitalisation-OECD.pdf> accessed 6 February 2023 (‘OECD Digitisation Report’).
- 7.
Arguing similarly Precht (2018).
- 8.
Ezrachi and Stucke (2018), p. 39.
- 9.
This explains why the online environment is prone to lead to an increase of the free rider problem.
- 10.
Petropoulus (2018), para 5.
- 11.
Ibid.
- 12.
For example, the changes the invention of the automobile brought, such as new laws and regulations to safeguard the functioning of traffic.
- 13.
Market Structure and Antitrust Subcommittee Report (n 6) 4.
- 14.
The invisible hand according to Adam Smith leading to a self-regulation of markets.
- 15.
Report of the Committee for the Study of Digital Platforms, Media Subcommittee Report dated 1 July 2019, George J. Stigler Center for the Study of the Economy and the State The University of Chicago Booth School of Business, available at <https://research.chicagobooth.edu/-/media/research/stigler/pdfs/media%2D%2D-report.pdf?la=en&hash=B9C175BCDBF29606704740B23D290CD447D1F3BA> accessed 6 February 2023 (‘Media Subcommittee Report’).
- 16.
To name only a few examples, University institutions and centres (for example, the Stigler Center for the Study of the Economy and the State) the OECD, the EU, national competition authorities (e.g. UK, Australia, Germany), the German Federal Ministry for Economic Affairs and Energy and the German Monopolies Commission, etc.
- 17.
Market Structure and Antitrust Subcommittee Report (n 6) 4.
- 18.
Report of the Committee for the Study of Digital Platforms, Politics Subcommittee Report dated July 2019, George J. Stigler Center for the Study of the Economy and the State The University of Chicago Booth School of Business, available at <https://research.chicagobooth.edu/-/media/research/stigler/pdfs/politics%2D%2D-report.pdf?la=en&hash=79EBF1EB16FFDF1316F7A1F907BD4F0A543AC402> accessed 6 February 2023 (‘Politics Subcommittee Report’).
- 19.
Media Subcommittee Report (n 15).
- 20.
Market Structure and Antitrust Subcommittee Report (n 6), p. 5.
- 21.
Market Structure and Antitrust Subcommittee Report (n 6), p. 4.
- 22.
OECD Digitisation Report (n 6), para 9.
- 23.
Ibid.
- 24.
Commission, ‘Report from the Commission to the Council and the European Parliament – Final report on the E-commerce Sector Inquiry’, COM(2017) 229 final (E-Commerce Sector Inquiry Report).
- 25.
Posner (2000), p. 2.
- 26.
E-Commerce Sector Inquiry Report (n 24), para 16.
- 27.
Robertson (2020), pp. 161–190.
- 28.
For example, Communication from the Commission, Online Platforms and the Digital Single Market – Opportunities and Challenges for Europe, COM(2016) 288 final (‘Online Platform Communication’).
- 29.
Green Paper on Digital Platforms, German Federal Ministry for Economic Affairs and Energy (May 2016) 23, available at <https://www.bmwi.de/Redaktion/EN/Publikationen/green-paper-digital-platforms.pdf?__blob=publicationFile&v=4> accessed 6 February 2023 (‘Green Paper on Digital Platforms’) 4.
- 30.
Ibid.
- 31.
Cremer et al. (2019), p. 112; Furman et al. (2019), p. 75; Australian Competition & Consumer Commission, ‘Digital Platforms Inquiry: Preliminary Report’ (December 2018), available at <https://www.accc.gov.au/focus-areas/inquiries-finalised/digital-platforms-inquiry-0/preliminary-report> accessed 6 February 2023, p. 35; Heike Schweitzer et al, German Federal Ministry for Economic Affairs and Energy, ‘Modernising the law on abuse of market power – Summary of the report’s recommendations’ (4 September 2018), available at <https://www.bmwk.de/Redaktion/DE/Downloads/Studien/modernisierung-der-missbrauchsaufsicht-fuer-marktmaechtige-unternehmen-zusammenfassung-englisch.pdf?__blob=publicationFile&v=3> accessed 6 February 2023, p. 2.
- 32.
Market Structure and Antitrust Subcommittee Report (n 6), p. 8.
- 33.
Linklaters contribution ahead of the conference ‘Shaping competition policy in the era of digitisation’ hosted by the European Commission on 17 January 2019 (30 September 2018) available at <https://ec.europa.eu/competition/information/digitisation_2018/contributions/linklaters.pdf> accessed 6 February 2023, p. 1.
- 34.
See to this effect, for example, the Digital Markets Act: Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) [2022] OJ L265/1.
- 35.
See, for example, Nazzini (2018); Filistrucchi et al. (2013); OECD, ‘Maintaining competitive conditions in the era of digitalisation – OECD report to G-20 finance Ministers and Central Bank Governors’ (July 2018), available at <http://www.oecd.org/g20/Maintaining-competitive-conditions-in-era-of-digitalisation-OECD.pdf> accessed 6 February 2023.
- 36.
Competition Policy: The challenge of digital markets, Special Report by the Monopolies Commission pursuant to section 44(1)(4) of the Act Against Restraints on Competition (2015), available at <https://www.monopolkommission.de/images/PDF/SG/s68_fulltext_eng.pdf> accessed 6 February 2023 (Monopolies Commission Report), paras 16–33.
- 37.
Market Structure and Antitrust Subcommittee Report (n 6), p. 11.
- 38.
Green Paper on Digital Platforms (n 29), p. 26.
- 39.
Monopolies Commission Report (n 36), para 54.
- 40.
Green Paper on Digital Platforms (n 29), p. 26.
- 41.
Online Platform Communication (n 28), p. 2.
- 42.
Facebook, Amazon, Apple, Netflix and Google (acronym).
- 43.
Uber, Tinder, Airbnb, Tripadvisor, eBay etc.
- 44.
Market Structure and Antitrust Subcommittee Report (n 6), p. 11.
- 45.
Federal Cartel Office (BKartA), B6-113/15, ‘Working Paper – The Market Power of Platforms and Networks – Executive Summary’ (June 2016), available at <https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Berichte/Think-Tank-Bericht-Zusammenfassung.pdf?__blob=publicationFile&v=4> accessed 6 February 2023, 9 (Federal Cartel Office Working Paper).
- 46.
Monopolies Commission Report (n 36), para 36.
- 47.
Market Structure and Antitrust Subcommittee Report (n 6), p. 17.
- 48.
Haucap and Heimeshoff (2013), p. 3.
- 49.
Market Structure and Antitrust Subcommittee Report (n 6), p. 15.
- 50.
Haucap and Heimeshoff (2013), p. 3.
- 51.
Frishammara et al. (2008), p. 35 (‘Shopping Mall Case Study’).
- 52.
Ibid.
- 53.
Shopping Mall Case Study (n 51), p. 4.
- 54.
Monopolies Commission Report (n 36), para 42.
- 55.
Monopolies Commission Report (n 36), paras 39–40.
- 56.
Monopolies Commission Report (n 36), para 35.
- 57.
Haucap and Heimeshoff (2013), p. 5, see also Monopolies Commission Report (n 36), para 42.
- 58.
Ibid.
- 59.
Monopolies Commission Report (n 36), para 42.
- 60.
Monopolies Commission Report (n 36), para 43.
- 61.
Despite cost savings as there is no need to duplicate fixed costs.
- 62.
Market tipping describes markets where the increase in a firm’s market share dominance is caused by indirect network effects.
- 63.
Market Structure and Antitrust Subcommittee Report (n 6), p. 17.
- 64.
Monopolies Commission Report (n 36), para 46.
- 65.
Market Structure and Antitrust Subcommittee Report (n 6), p. 13.
- 66.
Monopolies Commission Report (n 36), para 49.
- 67.
Federal Cartel Office Working Paper (n 45), p. 14.
- 68.
Haucap and Heimeshoff (2013), p. 7, see also Monopolies Commission Report (n 36) para 49.
- 69.
Haucap and Heimeshoff (2013), p. 7.
- 70.
Ibid.
- 71.
Haucap and Heimeshoff (2013), p. 8.
- 72.
Haucap and Heimeshoff (2013), p. 9.
- 73.
Monopolies Commission Report (n 36), paras 198–220.
- 74.
Haucap and Heimeshoff (2013), p. 9.
- 75.
Federal Cartel Office Working Paper (n 45), p. 14.
- 76.
Federal Cartel Office Working Paper (n 45), p. 16.
- 77.
Federal Cartel Office Working Paper (n 45), p. 15.
- 78.
There is a vast body of literature on the topic of data, privacy and competition law considering different angles. To this effect see the following excerpt: Robertson (2020); Majcher and Robertson (2022), pp. 622–646; Kemp (2020), pp. 628–672; Volmar and Helmdach (2018), pp. 195–215; Townley et al. (2017), pp. 638–748; Kerber (2016), pp. 856–866.
- 79.
Federal Cartel Office, Competition Law and Data (Report 10th May, 2016) available at <https://www.bundeskartellamt.de/SharedDocs/Publikation/DE/Berichte/Big%20Data%20Papier.pdf?__blob=publicationFile&v=2> accessed 6 February 2023, 8 (Competition Law and Data Report).
- 80.
Haucap and Heimeshoff (2013), p. 8.
- 81.
Competition Law and Data Report (n 79), p. 11.
- 82.
Monopolies Commission Report (n 36), para 72.
- 83.
Ibid.
- 84.
Competition Law and Data Report (n 79), p. 9.
- 85.
Market Structure and Antitrust Subcommittee Report (n 6), p. 17.
- 86.
Some online platform businesses do have marginal or distribution costs such as ‘a piece of hardware, ecommerce warehouses, or maintenance of scooters for example’ (Market Structure and Antitrust Subcommittee Report [n 6], p. 17).
- 87.
Market Structure and Antitrust Subcommittee Report (n 6) 17.
- 88.
Petropoulus (2018), para 8.
- 89.
Ibid.
- 90.
Mandrescu (2017), pp. 353–365.
- 91.
E-Commerce Sector Inquiry Report (n 24), paras 14–15.
- 92.
E-Commerce Sector Inquiry Report (n 24), para 16.
- 93.
Petropoulus (2018), para 2.
- 94.
Ibid.
- 95.
European Commission, ‘Sector inquiry into e-commerce’ available at <https://ec.europa.eu/competition-policy/sectors/ict/sector-inquiry-e-commerce_en> accessed 6 February 2023; Commerce Sector Inquiry Report (n 24), para 9.
- 96.
Akman and Sokol (2017), p. 137.
- 97.
Akman and Sokol (2017), p. 137.
- 98.
Zelger (2018), p. 451.
- 99.
Ibid.
- 100.
Akman and Sokol (2017), p. 137.
- 101.
Furthermore, RPM would also address such problem by eliminating the possibility of undercutting the price of the product by determining or guaranteeing the retailers a certain margin. However, although there are voices pleading for an effect-based approach of RPM (Ioannidou and Nowag 2015) tendencies to actually shift this view and align it with the US approach seem rather unlikely (for more details see above under Sect. 3.1.3).
- 102.
To name a few examples, ist transparency, ist fast-changing and dynamic nature, low or no marginal cost, platforms and two-sided markets, global reach, etc.
- 103.
- 104.
Posner (2000), p. 2; Monopolkommission, ‘Wettbewerbspolitik: Herausforderung digitale Märkte – Sondergutachten der Monopolkommission gemäß § 44 Abs. 1 Satz 4 GWB – Kurzfassung’, available at <https://www.monopolkommission.de/images/PDF/SG/SG68/S68_Kurzfassung.pdf> accessed 6 February 2023 (Monopolies Commission Report Summary), para K50.
- 105.
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Zelger, B. (2023). Particularities of the Digital Economy. In: Restrictions of EU Competition Law in the Digital Age. Studies in European Economic Law and Regulation, vol 25. Springer, Cham. https://doi.org/10.1007/978-3-031-31339-4_5
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