Your Weekly Digest | Issue 252

The EFTA Surveillance Authority (ESA) has today delivered a reasoned opinion to Iceland for breaching EEA rules on the freedom of establishment in the taxi sector.  The current legal framework in Iceland limits the number of taxi licenses available in certain districts, making it difficult or even impossible for new operators to enter the market. The current legislation also requires... Read more. 

The General Court’s judgment in Google Shopping (available here) is finally out. There is much to unpack, and much that will be debated in the coming days and weeks. In this regard: the Journ… Read more. 

Google is being fined €2.4 billion (£2.1 billion) for hindering competition in the EU after a 2017 decision has been upheld on appeal by the general court of the European Union. This is a saga dating back over 15 years, in which the European Commission has been accusing the tech giant of using its search results to give preferential treatment to its comparison shopping service over those of competitors. Read more.

On Wednesday, the US labor department announced that the consumer price index – a basket of products ranging from gasoline and health care to groceries and rents – rose 6.2% from a year ago. That’s the nation’s highest annual inflation rate since November 1990. Read more.

A series of academic studies in recent years highlighted the fact that labor markets are often highly concentrated and that employers use anticompetitive methods to suppress wages. Since then, antitrust law has taken some steps to fix its labor market problem. But a question remains whether the courts, so far the biggest impediment to any... Read more.

Judge Douglas Ginsburg was invited to respond to the Beesley Lecture given by Andrea Coscelli, chief executive of the U.K. Competition and Markets Authority (CMA). Both the lecture and Judge Ginsburg’s response were broadcast by the BBC on Oct. 28, 2021. Read more.

Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson & Shruthi Venkatesh
There is an ongoing merger wave in the US hospital industry, but it remains an open question how hospital mergers change, or fail to change, hospital behavior, performance, and outcomes. In this research, we open the “black box” of practices within hospitals in the context of a mega-merger between two large for-profit chains. Benchmarking the effects of the merger against the acquirer’s stated aims, we show that they achieved some of their goals: they harmonized their electronic medical records and sent managers to target hospitals; after the acquisition, managerial processes were similar across hospitals in the merged chain. However, these interventions failed to drive detectable gains in profitability or patient outcomes. Our findings demonstrate the importance of hospital organizations and internal processes for merger research and policy in health care and the economy more generally. Read more.

Steven C. Salop, Daniel Francis, Lauren Sillman and Michaela Spero
Now that the immediate fallout from Amex has cooled, this Article aims to give a first draft of its place in antitrust history and to offer a roadmap for the next stage of the evolution of platform antitrust analysis. We focus on several issues that have not been fully analyzed in the literature. First, we argue that the Court should have permitted multi-market balancing of effects across the separate markets in which the platform was active, thereby preserving the fundamental doctrine that relevant markets must be defined on the basis of demand substitution. Second, we propose standards to implement such balancing in a principled manner and explain how these standards could have been applied to the facts in Amex. Read more.

Pablo Ibáñez Colomo
This paper considers the interpretation of the substantive test laid down in Article 2 of Regulation 139/2004. It focuses on horizontal mergers in the so-called ‘gap’ cases, which would not result in the creation or the strengthening of a (single or collective) dominant position. In its practice and soft law instruments, the Commission has construed Article 2 in such a way that virtually any transaction involving actual or potential competitors could lead to a finding of a significant impediment to effective competition. Under this approach, the substantive test would be fulfilled, in principle, in every horizontal merger. In CK Telecoms, the General Court crafted an alternative framework that is capable of meaningfully constraining administrative action and ensures that judicial review in EU merger control remains effective. Read more.

Franco Mariuzzo and Peter L. Ormosi
One of the central tenets of industrial organisation is that increasing/decreasing market concentration is likely to lead to increased/reduced markups. But does this affect every consumer to the same extent? Previous literature agrees that there can be significant price dispersion even in the case of homogeneous goods, which is at least partially due to the heterogeneity in how much consumers engage with the market. We link this heterogeneity to the impact of changing market concentration on markups. For this purpose, we employ a combination of 18 years of station-level motor fuel price data from Western Australia and a rich set of information on local market concentration. We summon a non-parametric causal forest approach to explore the heterogeneity in the effect of market exit/entry. The paper offers evidence of the distributional effect of changing market concentration. Areas with lower income experience a larger increase in petrol stations' price margin as a result of market exit. On the other hand, entry does not benefit the same low-income areas with a larger reduction in the margin than in high-income areas. We argue that these findings are due to differences in how much consumers in different demographic groups engage with the market. Our findings give support to the argument that antitrust could help address inequality while staying true to its mission of promoting competition, provided that priorities are given to not only fixing supply-side problems but also to exploring demand-side remedies. Read more.