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Your Weekly Digest | Issue 223

Valur Thrainsson
5 min read

Good morning,

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

Enjoy :)

Regulators in Brussels are struggling to gather enough evidence to bring antitrust charges against Amazon, despite working on the landmark case for nearly two years, according to people with direct knowledge of the matter. Read more.
Biden picks 2 antitrust crusaders. But his biggest choices come next. | POLITICO
The president's selection of Silicon Valley critics for key posts at the White House and the Federal Trade Commission could be a sign of a new direction — or a sop to progressives.
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Facebook asks judge to throw out FTC anti-trust lawsuit | BBC
The charges allege Facebook bought up its rivals to maintain a monopoly. The Federal Trade Commission (FTC) and 45 other states sued Facebook for alleged anti-competitive behaviour in December. The lawsuit requested the breaking up of the company, which also owns Instagram and WhatsApp. On Wednesday, Facebook described the complaint as "nonsensical" and asked the judge to throw the case out.
Read More
The Digital Regulation Cooperation Forum (DRCF) today outlined its priorities for the coming year, marking a step-change in coordination of regulation across digital and online services. The Competition and Markets Authority (CMA), the Information Commissioner’s Office (ICO) and the Office of Communications (Ofcom) formed the DRCF in July 2020. Building on the strong working relationships between these organisations, the forum was established to ensure a greater level of cooperation, given the unique challenges posed by regulation of online platforms. Read more.
The ACCC has accepted a court-enforceable undertaking from Visa AP (Australia) Pty Ltd and Visa Worldwide Pte Limited (together, Visa) in relation to concerns that Visa may have limited competition in relation to debit card acceptance through its dealings with large merchants. Read more.
The Federal Government of Nigeria inaugurates the Federal Competition & Consumer Protection Commission (“FCCPC”) and the Competition & Consumer Protection Commission Tribunal (“CCPT”). Read more.
The ECN+ Directive requires all EU Member States to confer upon their national competition authorities certain enforcement and sanctioning powers. The Danish implementing act, no. L 116 (link only available in Danish), was passed by the Danish Parliament on 9 February 2021. Although the ECN+ Directive was adopted on 11 December 2018, and therefore well-known... Read more.
Marc Ivaldi and Jiekai Zhang
The empirical analysis of media platforms economics has often neglected the multi-homing behaviour of advertisers. Assuming away the cross-substitutability and/or complementarity between the advertising slots of different platforms could damage the quality and the robustness of counterfactual analysis. To evaluate the consequence of such an abstraction, we compare the simulation results of hypothetical platform mergers when the demand on the advertising side is derived from a Translog cost model which allows for multi-homing, and when it is approximated by using a simple log-linear inverse demand model that ignores the differentiation among media platforms’ advertising slots. Ignoring the existence of substitutes or complements on the advertising side would result in overpredicting the losses of the viewers’ surplus and in underpredicting the gains in platforms’ revenues. Read more.
Pauline Affeldt, Tomaso Duso, Klaus Gugler and Joanna Piechucka
An increasing body of empirical evidence is documenting trends toward rising concentration, profits, and markups in many industries around the world since the 1980s. Two major criticisms of these studies is that concentration and market shares are poorly measured at the national industry level while firm level revenues are a poor indicator of product sales. We use a novel database that identifies over 20,000 product/geographic antitrust markets affected by over 2,000 mergers scrutinized by the European Commission between 1995 and 2014. We show that concentration, as measured by the market-specific post-merger HHI, is larger than reported in the extant literature (at least) by a factor of ten. We also show that concentration has increased over time on average. Yet, there is a great deal of heterogeneity across geographic markets and within broader industries. In a regression analysis that exploits this within-industry variation, we show that barriers to entry are unambiguously positively related to concentration irrespective of time periods, sectors of activity, and geographical market dimension analyzed. Strict past merger enforcement negatively correlates with concentration. Yet, this effect is stronger in the earlier decade (1995-2004) than subsequently. Intangibility of investments consistently displays positive correlation with concentration only for EU wide and worldwide services markets. In contrast, the correlation is negative in national markets. This underscores the importance of the large heterogeneity present in concentration developments across markets. Read more.
Joshua D. Wright and Alexander Krzepicki
Foreclosure is a prominent concept in the antitrust laws and across economics. In the world of exclusionary conduct—foreclosure is the concept. But, despite its prominence in antitrust law and economics—including taking center stage in the Department of Justice’s complaint against Google—it is still a relatively unsettled area of the law. Foreclosure does not enjoy a commonly understood definition. There is no agreed upon method for measuring it. And there is no well-settled threshold at which antitrust concerns are triggered. In short, foreclosure analysis is a mess. As the last major law-defining case on exclusive dealing, Tampa Electric, nears its sixtieth birthday, the black letter law of naive foreclosure has an increasingly unbearable disconnect with modern economic antitrust methods. Courts are left with relatively little guidance as to how to understand the competitive effects of a world with and without the contracts being challenged—and the naïve approach is precisely of zero help on that question. Courts have adapted on their own to bridge the gap between the foreclosure analysis in the early cases—built from discredited foreclosure theory—and modern economics by adopting process-based foreclosure inquiries. This is the future of foreclosure, and the sooner we get there, the better. Read more.
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Kind regards, Valur Þráinsson, Founder of CompetitionFeed.com. Email: valur@competitionfeed.com
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