Competition Agencies Research Articles

Legal and Practical Aspects of Cartel Detection and Prevent

The work deals with the practical aspects of cartels, both the legal regulation of actions restricting competition and their detection and prevention. Emphasis is placed on the role and importance of competition law in assessing the total economic damage caused by the disregard of competition law by economic agents in the relevant markets and the concerted actions of cartels. The discussion for horizontal (agreement/concerted action between competing economic agents operating in the same product market) and vertical (agreement/concerted action between non-competing economic agents operating in different product markets) cartels is carried out. It is also mentioned that the agreement between the competing economic agents, on the one hand, can reduce, eliminate, or strengthen the competition. However, on the other hand, individual agreements can increase the effectiveness of competition. As for vertical agreements, such an anti-competitive act may occur when a dominant producer/service economic agent offers products/services under preferential conditions to a participating seller/service-receiving economic agent, while discriminating against other economic agents. However, it is also a fact that such an action creates a risk of restriction of competition only if the parties to the agreement (separately or taken together) occupy a dominant position and have market power.In the research, an important place is given to international and local legal mechanisms for detecting cartels, and advanced foreign and Georgian practices are presented in this regard. Finally, the conclusion is made that, in order to detect and prevent concerted actions, the provisions included in the competition law in force in Georgia today (detection and prevention of cartels as actions restricting competition) are in full compliance with advanced international practice and, first of all, with similar norms of the EU countries. However, it is also clear that in the background of the development of contemporary digital technologies, when the specifics of the work of many companies are rapidly changing, which diversifies the ways of making concerted commercial strategic decisions - making the issues of detection and detection of concerted actions by competition agencies even more noteworthy. In this direction, the enforcement institutions of the competition of Georgia, as The Agency of Competition and Consumer Protection of Georgia as well as the supervisory bodies of the regulated sector (enforcing the competition legislation in the regulated sector) will have to make more efforts. Keywords: Cartel, Agreement, Terms of Trade, Restriction of Competition, Sanction, Pricing Algorithm, Agency, Regulated Sector, Business Environment

GEORGIAN COMPETITION LAW IN THE DIGITAL AGE – GEORGIAN PRACTICE AND EXISTING CHALLENGES

The article identifies, systematizes the decisions taken by the Georgian Competition and Consumer Agency regarding digital markets/competition and reviews the practices established by the Agency based on the said decisions. The introduction of the article highlights the significant challenge of modern competition law, which implies that competition law does not exist independently of era and context, and it is important that competition law and its enforcement mechanisms function effectively in the conditions of the modern digital economy. The article then defines the digital economy and describes two of its key features, (big) data and digital platforms. A number of theoretical problems are then mentioned which may hinder the effective enforcement of competition law in relation to similar economic agents/markets. The main part of the article will concern the review of the decisions made by the Competition Agency in relation to online markets and digital platforms. Since there are currently no special legislative or by-law norms necessary for the effective enforcement of competition law in the digital age, the Competition Agency is guided by the general legislative framework regulating competition law to resolve similar issues. The analysis of the decisions revealed that the practice of the Agency develops in the direction of only two: (I) unfair competition (II) agreements restricting competition, and currently there is no, for example, a decision of the Competition Agency regarding the abuse of a dominant position by digital platforms.

Assessing Comparators of the Trademarks before Confusion for Establishing Unfair Competition through the Social Network – Georgian Perspective

The Article aims to assess regulation of unfair competition through the social network in relation to the trademark by relevant Georgian and international legislation in force. In particular, the Article through comparative analyses describes distinctive matters in the practice of the Georgian National Competition Agency with contrast to best international practice, including case law of EU member states. The Article discuss false and inappropriate advertising using communication means regarding registered trademark and use of internet domain in the context of classifying unfair competition. Besides challenging issues mentioned above, the Article distributes comprehensive study on distinguishing “legal name" and "commercial name” of trademarks before confusion when using for advertising purposes. Accordingly, the Article examines rule of necessity of the cumulative presence of three established (visual, phonetic and semantic) comparators for determination of confusion between trademarks through the prism of unfair competion legislation.

Building Regulatory Capability of Competition Agencies in Developing Countries: The Competition Authority of Kenya

Building Regulatory Capability of Competition Agencies in Developing Countries: The Competition Authority of Kenya

Court–Government Interaction in the Context of Administrative Litigation and Competition Enforcement in China

Abstract: Widespread court–government interaction over the past 15 years challenges the conventional view that such interaction should be banned in the context of administrative litigation. Indeed, underpinning institutions enable courts and governments to coordinate and cooperate in law enforcement. In addition, first-hand litigation materials demonstrate that court–government interaction has yielded some benefits regarding law enforcement. To alleviate judicial unfairness and to realise an outcome whereby the pros outweigh the cons, ex parte communication should be prohibited, while other forms of court–government interaction should be maintained. Drawing on the lessons from court–government interaction in the context of administrative litigation in general, this article suggests that benign interaction between courts and competition agencies could enhance competition enforcement. The author deduces from the findings that China follows its own path on the rule of law, which exhibits its own characteristics.

Regulating digital platforms: why, how, and why now

Abstract Like many competition agencies and governments around the world, the Australian Competition and Consumer Commission has formed the view that ex ante regulation is a necessary complement to address the competition (and consumer) harms posed by digital platforms. Our existing laws are not sufficient to address the anti-competitive conduct and corresponding harms we have observed in relation to digital platforms and the markets in which they operate. This paper explains our recommended model for regulatory reform and how it will address the competition harms that we have identified. Collaboration with international agencies has influenced our thinking in this space and continues to be important to ensure international coordination and alignment in regulatory reform. This paper concludes by looking ahead to the remainder of 2023 and beyond, as there is much work that remains to be done.

Dark clouds gather – The development of cloud gaming, and competition agencies’ efforts to enable it on mobile app stores

Abstract Cloud gaming represents a new model of video game distribution. It involves playing games that are streamed from a remote server (the cloud), and has the potential to revolutionize gaming as it is, at least in theory, device-agnostic, allowing high-end or ‘AAA’ games to be played on any device with a connection to the internet. However, Apple blocks the emergence of cloud gaming apps on its Apple App Store, and Google, although not completely blocking them, still imposes restrictions on them. Apple’s prevention of cloud gaming apps has led the UK Competition and Markets Authority to make a Market Investigation Reference, which could lead to remedies being imposed on Apple. However, Apple subsequently successfully appealed the decision to make the Reference. This article provides an introduction to cloud gaming and explains why it is an important development that offers huge potential for competition and innovation in digital markets. It then discusses Apple’s prevention of cloud gaming apps and examines Apple’s stated rationale for this policy, after which it also touches on Google’s approach. This is followed by a section that sets out other reasons why it may be in Apple’s commercial interest to block the emergence of cloud gaming apps, looking in particular at whether this may be linked to a desire to protect its position in the distribution of apps on iOS devices and its revenues from the sale of hardware. After this, the article discusses how these restrictions have led to the UK Market Investigation Reference, and how they may be treated under the forthcoming EU Digital Markets Act.

ANALYSIS AND COMPARISON ON PREDATORY PRICING

Predatory pricing is an anti-competitive technique used by predators to prevent new players from entering the market or to drive existing ones out in order to get a larger part of the market and increase their profits as a result of their dominating position. It has been questioned by economists, and several theories have emerged as to why and how predation is possible. Additional criteria and tests based on these theories have been added to the economics canon so that predation can be better assessed in the future. Several companies have been accused of charging predatory prices since the early 1900s. In light of the suggested criteria and tests, competition authorities in various nations have dealt with these charges and assessed instances. United States and European Union demonstrations were each notable in their own right. In making its rulings, the United States' competition authority may have learned more heavily on classical economic theory considerations than the European Union Commission. A detailed examination of predatory pricing theory and instances from the US, EU and Turkey is presented in this paper. Competition agencies in these nations will be compared to see how they deal with situations of exploitative pricing.

Using market inquiries: A sharper tool for competition authorities?

The emergence of new markets, especially in the digital sector where business models are complex and innovation is constantly changing the competition landscape, has brought about new regulatory challenges for competition agencies across the world. These challenges may require a departure from the traditional tools of enforcement and the development of a somewhat new regulatory approach. In middle-income countries, the need for the adjustment of enforcement tools is further necessitated by persistent and stubbornly high levels of concentration in key sectors that have a potential to contribute to the realisation of an inclusive and growing economy. For example, in South Africa, the Competition Commission of South Africa (CCSA) has recorded unquestionable successes in cartel enforcement in the past two decades, with hefty fines imposed against those found to have participated in cartel conduct. However, the application of traditional tools of enforcement in abuse of dominance cases has borne little success and, as a result, key industries such as steel and agriculture remain highly concentrated. This has prompted government, through the Department of Trade, Industry and Competition, to strengthen the powers of the CCSA by, among other things, adding to its toolbox the power to conduct market inquiries. This article examines whether market inquiries are best suited, and a more effective enforcement tool used to address market concentration challenges in South Africa. The article draws from market inquiries conducted by the CCSA in banking, data, and digital sectors. It also critiques the CCSA’s powers to conduct market inquiries.

Sustainability Agreements and Social Norms

Abstract Spurred by recent publications of National Competition Agencies, there is an ongoing debate on whether and, if so, how competition law and its enforcement shall give due consideration to concerns of sustainability, notably environmental sustainability. With respect to horizontal agreements, we define circumstances where sustainability concerns may indeed warrant a somewhat modified approach for the assessment of consumer welfare implications of a market related measure. We posit a feedback-effect on the willingness-to-pay for more sustainable products when a horizontal agreement leads other consumers to change their behavior. The underlying reason for this stems from the non-use value associated with sustainability and from its relation to social norms. In such scenarios, there can be a first-mover disadvantage for a firm who would unilaterally introduce a more sustainable product, which may justify horizontal cooperation. More generally, we argue that the construction of counterfactuals, in particular over a longer time horizon, may prove particularly challenging in a competitive assessment of sustainability claims. We also document the feedback effect arising from other consumers’ behavior with data that the Dutch Competition Authority gathered for its “Chicken of Tomorrow” case.

What can be Expected from Mergers After Deregulation? The Case of the Long-Distance Bus Industry in France.

This study estimates the competitive effects of horizontal mergers in the French long-distance bus industry. We examine the two mergers that followed the 2015 Deregulation Act (the Macron Law); we use an exclusive and exhaustive dataset that covers eight consecutive quarters. We analyze the merger effects by comparing bus links that were affected by mergers with those that were unaffected; we use difference-in-differences estimations. We find that the two mergers are associated with price increases of about 13.5% immediately that then moderate to 5.3%; and with the frequency decreases from − 21.5 to − 25.7%; we observe no effects on load factors. These findings show evidence of short-run anticompetitive effects, while the mergers under study were not scrutinized by the French competition agency, as they were below the notification thresholds.

National Development Antitrust Enforcement against Tech Companies in Italy: Novel Developments and Implications

Tech companies have lately become the target of vigorous antitrust enforcement in Italy. In the course of 2021 alone, the Italian Competition Authority (‘ICA’) conducted four antitrust investigations, three of which ended up with findings of anticompetitive behaviour and heavy fines (i.e. Google/Enel, Amazon/Apple, Amazon Logistics)1, and one with a referral to the European Commission (‘EC’) (i.e. Google Advertising). In this article, we briefly review these decisions and the underlying theories of harm as well as discuss the wider implications. We argue that these decisions may have far-reaching implications going beyond the local regulatory risk, for they further stretch the fashionable theories of harm the Commission has been lately enforcing against tech companies and lower the threshold for intervention in the IT space; they are inspiring other national competition agencies (‘NCA’) across the European Union (‘EU’), and, last but not least, they contribute to a worrisome, ever increasing fragmentation trend in the enforcement of competition rules against tech companies.

The South African competition agency response to COVID19

Abstract South Africa, as with the rest of the world, faced an unexpected crisis on many levels with the onslaught of the Covid-19 virus. In addition to the human casualties, South Africa experienced a sharp rise in prices for essential goods, such as masks and sanitisers, threatening an economic crisis for South Africa's poor and unemployed. The South African Competition Commission chose to intervene using the regulatory tools available in competition law to tackle excessive pricing. This resulted in the investigation and prosecution of several companies for charging excessive prices for a range of goods and services such as masks, sanitisers and Covid-19 testing services.

Facebook enforcement “saga”: How to enforce competition, consumer, and data protection laws in the digital economy

The digital economy has brought new challenges to the enforcement of consumer, competition, and data protection laws as certain market practices (in particular, data practices) can simultaneously infringe all these three areas of law. However, the interdependence between consumer, competition, and data protection laws in the digital economy has so far been rarely reflected in their enforcement by national agencies. As evidenced by the Facebook enforcement “saga”, uncoordinated enforcement efforts by competition, consumer, and data protection agencies, which act in silos and focus only on national perspective, pose a threat to the effective protection of consumer welfare and data subject (consumer) rights in the EU. Therefore, it is proposed to introduce cooperation mechanisms between different agencies, both at the EU and national level, in cases involving practices that may potentially infringe all three areas of law and present a risk to sustainable development of the digital economy. It is argued that only a coordinated, cross-institutional, and multi-disciplinary enforcement can provide an effective response to such practices applied by digital giants, such as Facebook, Google, Amazon or Apple, and ensure that consumer welfare and data subject (consumer) rights are not compromised.

CROSS-MARKET IMPACT OF PLATFORMS’ ACTIVITIES: A SECONDARY RELEVANT MARKET APPROACH

Abstract As platform industries prosper, games are becoming more and more like a team competition rather than an individual sport. Literature on platform envelopment and ecosystems competition shed light on the increasing need to consider cross-market effects of platforms’ activities in competitive analysis. Some established legal principles consider cross-market effects of platforms activities. However, they apply under strict conditions and may not be easily extended to cover the wide variety of platforms’ activities. Thus, this article proposes to introduce a secondary relevant market approach, whereby courts and competition agencies should be obliged to define a secondary relevant market and consider pro- and anticompetitive factors in that market, which significantly affect competition in a primary (original) relevant market. By applying the approach, we could address the increasing need to consider cross-market effect of platforms’ activities, without interrupting the keynote of traditional market definition, which focuses on close substitutes. It also enables us to fairly distribute the burden of proof among the parties. The approach can be applied in various contexts, such as platform market definition, nascent acquisition, platform envelopment, and ecosystems competition. It could also help legislators to pursue better targeted regulatory intervention.

Predation or Competition: Demystifying the Dilemma in Platform Markets

Predatory pricing, as an instrument of abuse of dominance, has always been a conundrum for antitrust regulators, academia, and businesses alike. Starting from the very rationality of predatory pricing strategy to various tests that form part of the assessment framework adopted by competition agencies and courts, there has hardly been a consensus. This paper starts by highlighting how frictions and dilemmas have been further intensified in digital economy markets and highlights how, faced with “hyper-competition,” and riding on network effects and big data, deep discounting and abysmally low pricing is the most widely adopted pricing strategy. This calls for a revised assessment framework to ensure that competition authorities do not end up penalising efficient low pricing. To this end, the paper highlights myths associated with low pricing strategies which may not merit antitrust intervention, while also pointing out fallacies of the existing assessment framework. The paper further suggests an alternative dominance assessment and pitches for developing novel theories of harm that factor in the characteristic features of digital markets.

Who’s Afraid of Conglomerate Mergers?

Conglomerate merger control went out of fashion in the United States and the European Union several decades ago. Both jurisdictions embraced the premise that nonhorizontal mergers should normally be considered benign because exclusionary theories of harm are economically implausible, and nonhorizontal mergers are almost always certain to result in significant efficiency effects that the merged entity can be expected to pass on to consumers. Conglomerate effects analysis subsequently all but disappeared from the enforcement practice. However, the emergence of a handful of powerful digital platforms with vast global ecosystems of interconnected services is currently causing competition agencies a great deal of concern. Their growth has not been entirely internal. Collectively, Alphabet, Meta, Apple, Amazon, and Apple have acquired over eight hundred companies. Many of their targets were innovative start-ups operating in complementary markets. This contribution compares and critically assesses how this development has affected the U.S., EU, and U.K. competition agencies’ approach to conglomerate merger control. It finds that, as a reaction to the advent of Big Tech, conglomerate effects analysis has made a significant comeback in EU merger control. While the U.S. and U.K. authorities have not yet intervened against any conglomerate acquisitions in practice, evidence suggests that they are also more open to nonhorizontal theories of harm again.

Metaverse Competition Agency: White Paper

Metaverse Competition Agency: White Paper

The Berendsen (Elis)/Kings Laundry transaction: an ex post assessment of the contract divestment remedy

An article published in 2020 in the Competition Law Journal argued that, on an ex ante basis, the contract divestment remedy package agreed by Ireland’s competition agency in the Berendsen (Elis)/Kings Laundry transaction would be unlikely to mitigate the agency’s competition concerns. In particular, the remedy package would not lead to successful entry into the supply of flat linen rental services for hospitals. This article is an ex post assessment of that remedy. Given the remedy’s fix-it-first nature, the agency was satisfied that entry was both likely and timely. However, the evidence to date – more than 12 months after the entrant took title to the contracts – suggests that entry has not been sufficient. Indeed, the entrant is conspicuous by its absence from the supply of flat linen rental services for hospitals. Such an outcome is consistent with the incentives of the merged entity to select a weak competitor, reinforced by the excessively narrow set of assets that constituted the contract remedy package. Prohibition or a strengthened contract divestment package would have been better alternatives. Such an apparent relaxation of merger control suggests that Ireland’s competition agency needs to reassess its approach to problematic mergers that are likely to damage consumer welfare.

Understanding competition in digital markets: new perspectives on old practices

Around the world, competition agencies and academics alike have raised concerns that the existing suite of policy tools and economic theory fail to capture all of the harms that can arise in digital markets. At the same time, other academics and practitioners consider that competition policy and industrial organization is unable to account for many of the benefits that online platforms and digital ecosystems can bring. As a range of new interventions – ranging from strengthened ex-post enforcement tools to new ex-ante regulations – are being proposed, we ask which view is right? Are the business practices observed in digital markets and targeted by these reforms so obviously harmful that they are deserving of a return to form-based prohibitions in place of effects-based analysis? Or does this represent an unhelpful regression, based on a misunderstanding of how these new types of markets function?