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Your Weekly Digest | Issue 234

Valur Thrainsson
7 min read

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Here below, you find the most recent and relevant competition and anti-trust news, blogs and journal publications over the last week.

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District of Columbia Attorney General Karl Racine launched a lawsuit against Amazon on Tuesday over allegations that the e-commerce giant is stifling competition by fixing prices on its online marketplace, a move that escalates the tech behemoth's legal threats in the U.S.
Unpacking the complaint: The lawsuit, filed in D.C. Superior Court, alleges that Amazon has used anti-competitive agreements and policies to force third-party vendors to incorporate artificially high fees when they operate on its platform. Read more.
Alphabet Inc's Google (GOOGL.O) is close to settling an antitrust investigation in France over allegations it abused its power in online advertising, the Wall Street Journal reported on Thursday, citing people familiar with the matter. Read more.
Amazon Buys MGM, Studio Behind James Bond, for $8.45 Billion - Variety
James Bond has a new home: Amazon and MGM announced a definitive merger agreement under which Amazon will acquire MGM for $8.45 billion. MGM, founded in 1924, complements Amazon Studios, which has...
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Germany's top property group Vonovia has announced plans for a €19 billion merger with rival Deutsche Wohnen to form a giant in the sector. Read more.
The CMA has published a notice of its decision not to make a market investigation reference, and a brief update on its electric vehicle charging market study. Read more.
On the local markets for the collection of live poultry for slaughter, the Authority noted that the operation leads to an overlap of activity in the departments of Morbihan, Landes and Ain. It was able to exclude the risks of harm to competition in Morbihan and Landes, given the existence of other slaughterhouses, which constitute alternative outlets for breeders. Concerning Ain, the operation leads to the strengthening of the position of LDC, which was already a major buyer in the area, thus depriving the breeders of alternative outlets in the area. In order to remedy this risk, the LDC group has entered into structural commitments for the sale of slaughterhouses and a cutting plant. Read more.
A debate summed up both sides’ arguments — and the judge’s issues with them. Read more.
The European Commission recently issued a formal Statement of Objections (SO) in which it charges Apple with antitrust breach. In a nutshell, the commission argues that Apple prevents app developers—in this case, Spotify—from using alternative in-app purchase systems (IAPs) other than Apple’s own, or steering them towards other, cheaper payment methods on another site. Read more.
Earlier this month, the Italian Competition Authority (AGCM) adopted a remarkable decision, which deserves close attention, in a dispute involving Enel (the Italian incumbent in the electricity sec… Read more.
Jan Eeckhout explains how market power brings down wages, even if dominant companies treat their own workers well. Read more.
C. Lanier Benkard, Ali Yurukoglu & Anthony Lee Zhang
This paper uses new data to reexamine trends in concentration in U.S. markets from 1994 to 2019. The paper's main contribution is to construct concentration measures that reflect narrowly defined consumption-based product markets, as would be defined in an antitrust setting, while accounting for cross-brand ownership, and to do so over a broad range of consumer goods and services. Our findings differ substantially from well established results using production data.  Read more.
Richard Gilbert and A. Douglas Melamed
Antitrust cases, including recent complaints filed against dominant technology platforms, have alleged conduct that harms innovation. Courts, however, have little experience adjudicating such allegations. This article concludes that Section 2 of the Sherman Act is sufficiently broad to address conduct that harms innovation and describes various ways in which innovation might affect the determination of antitrust liability or provide a defense against anticompetitive conduct. The article briefly reviews the economics literature relating the effects of market power on innovation incentives and identifies circumstances in which structural conditions warrant a presumption that anticompetitive conduct by a dominant firm is likely to harm or promote innovation.
Read more.
D. Daniel Sokol and Feng Zhu
Apple’s iOS 14 update represents an anti-competitive strategy disguised as a privacy-protecting measure. Apple now prohibits non-Apple apps from using information essential to providing relevant, personalized advertising, without explicit user opt-in. And users may opt-in only after they are shown an ominous and misleading prompt about “tracking,” one that Apple’s own apps and services need not display, because consumers are automatically “opted in” to Apple’s own tracking. Apple’s policy will have the pernicious effects of enhancing the dominance of iOS among mobile operating systems and the dominance of its own apps and services within the iOS ecosystem, while reducing consumer choice and devastating the free-app ecosystem.

This paper explains: (i) Apple’s dominance in mobile OSs and the competitive dynamics in the industry, including the critical role that personalized advertising plays in today’s mobile app ecosystem; (ii) how Apple’s iOS 14 updates dramatically alter today’s mobile OS ecosystem, wrongfully preference Apple’s own products and services, and help Apple protect and augment its dominance over iOS and more broadly over mobile OSs; and (iii) why such actions harm competition, and by extension, iOS users and consumers more broadly.
Read more.
Tomaso Duso, Mattia Nardotto and Jo Seldeslachts
We provide an evaluation of the impact of public subsidy schemes that aimed to support the development of basic broadband infrastructure in rural areas of Germany. Such subsidies are subject to state aid control by the European Commission (EC). While the EC increasingly recognises the role of economic analysis in controlling public aid to companies, there are to date no full retrospective studies performed on state aid control, especially assessing the so-called balancing test. In this study, we do not only analyse whether the aid was effective in solving a market failure – low broadband coverage in rural areas – but also study its impact on competitive outcomes, on both rival firms and consumers. We adopt a difference-in-differences framework after using a matching procedure to account for selection on observables. We find that the aid significantly increased broadband coverage. More importantly, we find that the number of internet providers has significantly increased in the municipalities receiving aid. This additional entry decreased average prices. Therefore, the subsidies complied with EU state aid rules, both in terms of effectiveness and competition.
Read more.
Tracy Miller and Trace Mitchell
This paper provides a critical analysis of the antitrust report from the Subcommittee on Antitrust, Commercial, and Administrative Law of the House Committee on the Judiciary, based on the consumer welfare standard, which has governed antitrust policy since the late 1970s. It also proposes a theoretical framework for refutation of the report’s allegations about anticompetitive conduct of the big four tech companies that we hope will be useful for future empirical work. Using this framework, we find that the report likely overstates the market power held by these tech companies and the extent to which their conduct is actually harmful to consumers. In addition, our framework leads us to hypothesize that the reforms advocated in the report may actually make consumers worse off by interfering with market dynamism and slowing innovation.
Read more.
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Kind regards, Valur Þráinsson, Founder of CompetitionFeed.com. Email: valur@competitionfeed.com
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