vertical agreement

Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking

Recent case law concerning intermediation activity in digital markets shows that one of the key concerns of competition authorities is the use by online platforms of a type of agreement generally traced to the category of Most Favoured Nation clause (MFN), typically included in B2B long-term contracts, where the supplier undertakes to guarantee the best price conditions to the intermediary concerned as compared with any other dealer. The competitive assessment of such clauses (also known as parity clauses) is controversial in both traditional and digital markets. At first sight, they appear to offer potential benefits to consumers, at least in terms of price transparency and reduction of transaction costs; however, they also give rise to competition concerns, as they may serve to acquire or strengthen monopoly pricing. Their recurrence in the digital environment has revitalized an ongoing debate on the likely effects of these clauses on competition. The article first analyzes the business models adopted by intermediaries in e-commerce and the concerns that have arisen under competition law, with particular regard to the increasing use of some forms of MFN clauses. The analysis is conducted in the light of several cases in the field of online hotel booking brought before national competition authorities (NCAs) for alleged violation of competition rules. The article then questions the theories of harm and the main critical issues deriving from such case law, highlighting the difficulties hidden in the adoption of a generalized approach in the competitive assessment of the clauses at issue.
Reference :

M. Colangelo, Parity Clauses and Competition Law in Digital Marketplaces: The Case of Online Hotel Booking, (2017) 8 (1) Journal of European Competition Law & Practice 3-14 (published online on 27/07/2016)

Antitrust Appraisal of Vertical Agreements in the ASEAN Economic Community: Proposals for a More Harmonised Approach

In spite of the ASEAN goal of harmonising national competition policies and laws, the ASEAN Member States (AMSs) adopt an array of different approaches towards a number of procedural and substantive competition law issues, including the substantive appraisal of vertical agreements. The question of whether, and if so how, analysis of vertical agreements under the competition laws of the AMSs should be aligned has, to date, received little attention from ASEAN competition agencies. This paper notes that this is, nonetheless, a matter of considerable importance. Not only do the differences in approach adopted undermine ASEAN’s stated objectives, but they are likely to be damaging competition and efficiency and inhibiting market integration. The paper draws on practice and experience in the US and EU to consider whether, and if so how, the approach to vertical agreements under the competition law systems of the AMSs should be reformed or developed to ensure a more coherent policy which is optimal for achieving ASEAN’s objectives. One issue considered is whether the EU policy towards resale price maintenance and restraints on cross-border trade should be emulated. In particular, whether a hardline approach should be adopted against vertical restraints which enable firms to partition the ASEAN market along national lines and perpetuate price differences in the AMSs, thereby undermining its single market objective. The paper concludes that although greater harmonisation of policies towards vertical agreements might be desirable, it will be difficult to achieve within the existing national systems without some legislative changes and significant cooperation between the ASEAN competition authorities. Given the different perspectives that the separate legislative regimes reflect, debate will be required to build consensus around a more uniform approach that can effectively be implemented within each of the national systems.
Reference :

B. Ong (ed), The Regionalisation of Competition Law and Policy in ASEAN, (Cambridge University Press, Forthcoming) TLI Think! Paper 48/2016 King's College London Law School Research Paper No. 2017-01

Identifying Anticompetitive Agreements in the United States and the European Union: Developing a Coherent Antitrust Analytical Framework

Commentary in both the US and the EU has repeatedly debated whether, and when, it is more efficient to use “rules” or “standards” to determine the legality of conduct subject to the antitrust laws and how such rules or standards should be formulated. This paper concentrates principally on the question of how this debate impacts on the analytical framework for identifying infringing agreements in the US and EU. It sets out the view that the question of how agreements are to be assessed under both the US and the EU jurisprudence is unduly opaque. Confusion as to, in particular, the role and scope of per se rules, the role and scope of ancillary restraint doctrines, and how competing anti- and procompetitive effects of mixed agreements are to be balanced against each other have led to excessive complexity in the system. The paper considers what factors might shape development of a coherent and optimal framework for antitrust analysis in a jurisdiction. Once these factors have been set out, it examines how US and EU competition law have approached the issues identified in relation to the appraisal of agreements and what features of each system have moulded the developments there. It concludes that both systems require some development to create more intelligible frameworks based on common concepts rather than historical categories of antitrust analysis and, further, that competition agencies could play an important part as catalysts in this progress.
Reference :

[2017] Antitrust Bulletin, Forthcoming TLI Think! Paper 57/2017 GWU Law School Public Law Research Paper No. 2017-12 GWU Legal Studies Research Paper No. 2017-12 King's College London Law School Research Paper No. 2017-17

Vertical Agreements Under EU Competition Law: Proposals for Pushing Article 101 Analysis, and the Modernization Process, to a Logical Conclusion

This paper examines how vertical agreements are analysed under Article 101 of the Treaty on the Functioning of the European Union. It observes that, in spite of modernization and the Commission’s promise to adopt a more ‘effects-based’ approach towards vertical agreements, Article 101 analysis has not evolved as might have been anticipated. Rather, it argues that the legal system still fails adequately to reflect, and is out of kilter with, the economic logic of vertical restraints. Not only does it continue to rely heavily on broad presumptions of illegality which are not justified by economic theory or experience (creating a risk of Type I errors), but the dearth of decided cases has meant that a transparent structure for analysing and balancing the competitive harms and benefits of vertical arrangements (especially new online distribution practices) has not developed. This uncertainty has been compounded by the disparities in approach to enforcement emerging at the national level. The paper considers how best to align EU law with mainstream economic thinking and proposes an approach which focuses more closely on the concepts underpinning the rules than the historic categories of analysis that have, to date, been relied upon. It also suggests how these changes might be effected and an administrable system governing vertical restraints put in place. It argues that, in order to achieve this change, the Commission should publish some carefully selected decisions in relation to vertical agreements, especially more complex effects cases. Such decisions will provide the opportunity for scrutiny of the Commission’s policy by the EU courts and ensure that the law in this important area is elucidated, particularly as distribution practices adapt to the challenges presented by the online environment and growth of e-commerce. These decisions, along with the information gathered in the course of the Commission’s e-commerce sector inquiry, may provide the crucial foundations for a necessary review and revision of the current regime and guidelines governing vertical agreements in the EU.
Reference :

D Healey and M Jacbos (eds), Handbook of Research Methods of Competition Law (Edward Elgar, Forthcoming)

Aggregate Concentration Concerns: Competition Law Solutions?

Competition law is generally focused on competition in a market. Yet, as recent economic studies have clearly indicated, one of the main sources of competition concerns of jurisdictions around the world is the impact of high levels of aggregate concentration in their markets, when a small group of economic entities controls a large part of the economic activity through holdings in many markets. High levels of aggregate concentration can significantly impact competition and welfare. On the one hand, conglomerates' substantial resources and varied experiences, as well as their economies of scale and scope, often enable them to enter markets more readily than other firms, especially when entry barriers are high. On the other hand, high levels of aggregate concentration raise significant competitive concerns. Most importantly, oligopolistic coordination in and across markets as well as entry barriers into markets might be increased. These effects, in turn, might lead to stagnation and poor utilization of resources, which adversely affect growth and welfare. Another major concern is a political economy one: given their size and economic heft, large conglomerates may attempt to translate their economic power into political power in order to create, protect and entrench their privileged positions. Given these effects, the paper attempts to explore the weight given- if at all- to aggregate concentration in the application of competition laws around the world. The analysis is based, inter alia, on the experiences of 35 different jurisdictions in dealing with aggregate concentration through competition law, based on a survey performed with the assistance of the UN Conference on Trade and Development.
Reference :

35. Michal S. Gal and Thomas Cheng, "Aggregate Concentration Concerns: Competition Law Solutions?" Journal of Antitrust Enforcement (2016)