The world’s most downloaded antitrust articles of 2019

As in previous years (see 201520162017, and 2018), here are the world’s most downloaded antitrust articles of 2019 on SSRN.


1. Collusion by Blockchain and Smart Contracts
by Thibault Schrepel
Harvard Journal of Law and Technology (3.473 downloads)

Blockchain may transform transactions the same way Internet altered the dissemination and nature of information. If that were to be the case, all relationships between companies would change, including prohibited ones such as collusive agreements. For that reason, the stakes are fundamental and the absence of academic studies entirely dedicated to the issue must be remedied. To this end, this article introduces the first taxonomy of collusion on blockchain. The discussion then moves on to explore their functioning, their robustness and their limits through the three fundamental stages of the existence of collusive agreements: their birth, life and death. The article further highlights how companies may use smart contracts and sophisticated algorithms to collude in the blockchain environment, thus contributing to the literature solely focused on algorithms. Using empirical studies, economic analyses and existing case law, we draw legal conclusions that we extend beyond the sole blockchain technology. Along the way, we propose methods of action for antitrust and competition agencies. 


2. The Antitrust Case Against Facebook
by Dina Srinivasan
Berkeley Business Law Journal (3.218 downloads)

The Facebook, Inc. (“Facebook”) social network, this era’s new communications service, plays an important role in the lives of 2+ billion people across the world. Though the market was highly competitive in the beginning, it has since consolidated in Facebook’s favor. Today, using Facebook means to accept a product linked to broad-scale commercial surveillance — a paradox in a democracy. This Paper argues that Facebook’s ability to extract this qualitative exchange from consumers is merely this titan’s form of monopoly rents. The history of early competition, Facebook’s market entry, and Facebook’s subsequent rise tells the story of Facebook’s monopoly power. However, the history which elucidates this firm’s dominance also presents a story of anticompetitive conduct. Facebook’s pattern of false statements and misleading conduct induced consumers to trust and choose Facebook, to the detriment of market competitors and consumers’ own welfare.


3. Antitrust Without Romance
by Thibault Schrepel
NYU Journal of Law & Liberty (1.327 downloads)

The romantics are taking over antitrust law. Building on populist rhetoric that pits the elites (often, the technological elite embodied by tech companies) against the people, they explain the need to sanction a minority who is presumably endangering the general interest. This approach creates an appeal for governmental action and gives room to antitrust authorities’ personnel to apply idealized solutions without ever questioning the possibility of governmental failures. It unties their hands and lets them pursue their own interests, whether it is to get votes, to be (re)elected, to be (re)appointed to key positions or to show themselves under a good political and moral angle.

In this article, we first assess the extent to which antitrust law public outreach instruments are being romanticized by top officials who are further pushed by part of the doctrine. We show that it results from institutional flaws which give room to individuals’ interests instead of containing them. We explain that these interests are maximized by way of demonizing the elites, thus reinforcing the opposition with the people and the need for antitrust authorities to moralize them. We then move on to explore the consequences of this moralization and show that it is driving antitrust authorities to become blind to specific issues and not to engage in the type of enforcement that would undermine their personnel’s interests. It also leads to the use of porous concepts such as “fairness” to moralize companies who must all together contribute to the making of a “better” world. In the end, one may have reasons to fear that the moralization of public discourses will soon reach the case law, thus jeopardizing decades of jurisprudence by taking antitrust away from the rule of law.

For that, the issue must be remedied. We propose several institutional and substantial reforms to this end, all based on public choice theory and aimed at ensuring that antitrust law benefits the highest number and not only a few. They entail refocusing antitrust authorities – here, the Federal Trade Commission, the Department of Justice’s Antitrust Division and the European Commission – on the economic objective for which they are qualified as well as using quantifiable and amoral concepts. Human flourishing should be enhanced by applying reason to antitrust law; not fears, not feelings, not sentiments, not intuitions. It implies taking romance out of antitrust.


4. An EU Competition law Analysis of Online Display Advertising in the Programmatic Age
by Damien Geradin & Dimitrios Katsifis
European Competition Journal (786 downloads)

Online display advertising, whereby publishers display visual-based advertisements (e.g. texts, images or videos) on their website against remuneration, represents a large source of revenues for publishers, large and small, offering valuable content to Internet users. But for online display advertising, many such publishers would not subsist, and the Internet would be impoverished. Display advertising is also critical to advertisers, in particular when they seek to raise “brand awareness” among consumers. Because of its vital importance to advertisers and publishers, healthy competition in the advertising ecosystem is desirable. Yet, despite the spectacular growth of online display advertising, the picture is not entirely rosy. In the “programmatic” era, where ad inventory is sold through computerized decision-making processes managed by “ad tech” intermediaries, the online display advertising sector is characterized by a high degree of opacity, and publishers and advertisers have expressed concerns about the so-called “ad tech tax”, i.e. the large and opaque fees applied by various intermediaries. Moreover, while the ad tech sector comprises a wide variety of intermediaries, its main segments are dominated by Google, with concerns being expressed that it may engage in both exploitative and exclusionary strategies.


5. Are ‘FANGs’ Monopolies? A Theory of Competition under Uncertainty
by Nicolas Petit
Big Tech and the Digital Economy: The Moligopoly Hypothesis, OUP 2020 (616 downloads)

This paper lays down the rudiments of a descriptive theory of competition among the digital tech platforms known as “FANGs” (Facebook, Amazon, Netflix and Google), amidst rising academic and policy polarization over the answer to what seems to be – at least at the formulation level – a simple question: are FANGs monopolies? With an open mind, this paper looks at whether the textbook monopoly model is the appropriate framework to analyze digital markets. It finds that observed average tendencies of FANGs expose the limitations of the textbook monopoly model (I), proposes an alternative theory of competition with uncertainty (II), and considers competition law and policy implications (III). This paper builds on draft sections of a forthcoming book on tech giants and public policy (OUP, 2020).


6. Antitrust As Allocator of Coordination Rights
by Sanjukta Paul
UCLA Law Review (570 downloads)

It is conventionally understood that the purpose of antitrust law is to promote competition. Much more fundamentally, however, antitrust law allocates coordination rights. In particular, our current antitrust framework authorizes large, powerful firms as the primary mechanisms of economic and market coordination. Still, the notion that antitrust exists to promote competition has been critical for maintaining its particular allocation of coordination rights. The pro-competition norm has been deployed to purge other normative benchmarks from antitrust analysis, which would if revived pose challenges to the status quo allocation. And of course, the pro-competition norm has served to undermine other coordination mechanisms—such as workers’ organizations, “cartels,” and the public coordination of markets.

Yet for its preferred coordination mechanism—the business firm—the current antitrust framework relies upon reasons that have nothing to do with promoting competition, even as it bars the consideration of similarly extrinsic reasons for any other form of economic coordination. This paper traces the appearance of this legal preference, reveals its logical content, and argues that its justification is far less certain than assumed. In particular, I explain why antitrust’s “firm exemption” is a specific policy choice that cannot be derived from corporate law, nor from contracts, nor even from property.


7. Concealed Data Practices and Competition Law: Why Privacy Matters
by Katharine Kemp
UNSW Law Research Paper No. 19-53 (530 downloads)

This paper argues that the degradation of consumer data privacy in the digital environment causes objective detriment to consumers and undermines the competitive process, and should therefore be of critical concern to competition law. Consumers are frequently unaware of the extent to which their personal data is collected, the purposes for which it is used, and the extent to which it is disclosed to others, particularly in digital markets. Researchers and regulators have observed that this is not simply a matter of consumer apathy, but that firms often understate and obscure their actual data practices, preventing consumers from making informed choices.

This paper defines, and provides examples of, a set of “concealed data practices”. These concealed data practices create objective costs and detriments for consumers, making them more susceptible to criminal activity, discrimination, exclusion, manipulation and humiliation. This paper argues that these practices are not only problematic in terms of consumer protection and privacy regulation. Concealed data practices should also be of concern to competition policy due to their role in chilling competition on privacy; preserving substantial market power by means other than superior efficiency; and deepening information asymmetries and imbalances in bargaining power. The paper concludes by outlining four ways in which these factors should be taken into account by competition authorities.


8. ‘Trust Me, I’m Fair’: Analysing Google’s Latest Practices in Ad Tech From the Perspective of EU Competition Law
by Damien Geradin & Dimitrios Katsifis
TILEC Discussion Paper No. DP 2019-029 (488 downloads)

In a first paper released in January 2019, we explained the mechanics of online display advertising and real-time bidding with a focus on the tools and technologies comprising the ad tech market. We identified Google as the leading, and most likely dominant player across the ad tech value chain and expressed the concern that it engages in prima facie anticompetitive conduct, in that it uses its leading ad server to favor its ad intermediation business and exclude competitors. We also explained how the lack of competition across the ad tech value chain enables Google to exploit advertisers and publishers by charging hidden fees for ad intermediation on top of its disclosed commissions. In March 2019, Google announced that it would switch to a first-price unified auction by the end of 2019, arguing that its move would help create a fair and transparent market for everyone. Meanwhile, online advertising has attracted significant regulatory interest in the EU, the USA and Australia.

In this new paper, we analyse whether Google’s switch to a unified auction has addressed the concerns we expressed in our first paper. We conclude that this is not the case. Google’s latest switch does nothing to increase auction transparency. Worse, it seems to strengthen Google’s ability to extract hidden margins from its customers, while undermining the competitive pressure exercised by header bidding. If substantiated, Google’s conduct could result in significant welfare losses for publishers, advertisers and ultimately consumers. We conclude our paper by suggesting various structural and behavioral remedies that could help restore competition in ad tech should our concerns be substantiated.


9. The Causal Mechanisms of Horizontal Shareholding
by Einer Elhauge
SSRN (479 downloads)

Although empirical studies show that common shareholding affects corporate conduct and that common horizontal shareholding lessens competition, critics have argued that the law should not take any action until we have clearer proof on the causal mechanisms. I show that we actually have ample proof on causal mechanisms, but that antitrust enforcement should focus on anticompetitive market structures, rather than on causal mechanisms. I debunk claims that every type of causal mechanism that might produce anticompetitive effects is either empirically untested or implausible. I also show that critics are wrong in claiming that common shareholders lack incentives to influence corporations to increase portfolio value by lessening competition. Finally, I show that preventing anticompetitive horizontal shareholding need not restrict diversification or discourage desirable institutional investor influence on corporate conduct.


10. Antitrust and Innovation: Welcoming and Protecting Disruption
by Giulio Federico, Fiona M. Scott Morton & Carl Shapiro
NBER, Innovation Policy and the Economy, 2019 (474 downloads)

The goal of antitrust policy is to protect and promote a vigorous competitive process. Effective rivalry spurs firms to introduce new and innovative products, as they seek to capture profitable sales from their competitors and to protect their existing sales from future challengers. In this fundamental way, competition promotes innovation. We apply this basic insight to the antitrust treatment of horizontal mergers and of exclusionary conduct by dominant firms. A merger between rivals internalizes business-stealing effects arising from their parallel innovation efforts and thus tends to depress innovation incentives. Merger-specific synergies, such as the internalization of involuntary spillovers or an increase in the productivity of R&D, may offset the adverse effect of a merger on innovation. We describe the possible effects of a merger on innovation by developing a taxonomy of cases, with reference to recent U.S. and E.U. examples. A dominant firm may engage in exclusionary conduct to eliminate the threat from disruptive firms. This suppresses innovation by foreclosing disruptive rivals and by reducing the pressure to innovative on the incumbent. We apply this broad principle to possible exclusionary strategies by dominant firms.

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