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  • Series: ASCOLA Competition Law series x
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Edited by Björn Lundqvist and Michal S. Gal

The digital economy is gradually gaining traction through a variety of recent technological developments, including the introduction of the Internet of things, artificial intelligence and markets for data. This innovative book contains contributions from leading competition law scholars who map out and investigate the anti-competitive effects that are developing in the digital economy.
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Edited by Paul Nihoul and Pieter Van Cleynenbreugel

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Edited by Paul Nihoul and Pieter Van Cleynenbreugel

This content is available to you

Edited by Paul Nihoul and Pieter Van Cleynenbreugel

This content is available to you

Pieter Van Cleynenbreugel

This chapter identifies and distinguishes four different types of scholarship and policymaking on the relationship between competition law and innovation. Scholarship varies to the extent that it considers innovation to be an exogenous or external value to the competition law protection framework and conversely an endogenous or internal value. In addition, different scholars frame innovation either as a positive or a negative value that needs to be addressed by (competition) law. Distinguishing those different kinds of scholarship, the chapter offers a framework in which the different chapters throughout the volume can be understood better.

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John Kwoka

Many mergers that now come before competition agencies raise questions about their effects on innovation instead of, or in addition to, standard antitrust concerns about prices and quantities of existing products. However, economic analysis of questions about innovation, and analysis of the effectiveness of competition policy directed at innovation, are less well informed and developed. This chapter analyzes new sources of data and other information about mergers and merger control in innovation-based sectors of the economy. The intent is to assist in developing good policy toward mergers in such industries by exploiting existing evidence about the effects of innovation-driven mergers and any trade-offs against standard concerns. The chapter first reports on a comprehensive analysis of known effects of actual mergers on innovation. This information would be derived from the growing number of so-called merger retrospectives – carefully controlled economic studies of the outcomes of mergers (mostly in the US). Next, the chapter develops and analyzes information about the policy responses of the antitrust agencies toward these same innovation-based mergers. This will cast light on the further questions of whether the agencies are successful in identifying mergers that adversely affect innovation, what kind of actions and remedies they employ in these cases, and whether the remedies prevent harms with respect to innovation. Finally, the chapter examines the US pharmaceutical sector, which is an important innovation-based industry that is being transformed by numerous recent mergers. Drawing on new information on approximately 25 mergers in the US industry since 2000, the chapter addresses in greater detail questions about the effects of mergers and the nature and effectiveness of policy responses in this key industry, before concluding with some observations about the trade-offs between innovation objectives and standard considerations in merger policy.

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Francisco Marcos

Innovation is key for dynamic efficiency and one of the best recipes to increase long-term businesses’ profits and, at the same time, enhance consumer welfare. Modern high-technology markets offer a perfect account of the importance of innovation for business success: either firms keep apace innovating, or rivals will overcome them and they will be left aside by consumers. History shows many examples of firms that have failed to sustain the innovation game and have faded away. At the same time it also demonstrates how many successful businesses have gained a powerful position in the market in a very short period of time by offering good innovative products or services to consumers at competitive prices. Nevertheless, by being successful, firms have attained a dominant position in the market and that may have meaningful implications from the perspective of antitrust or competition law. In that situation, the experience in many countries shows that innovation decisions by dominant market players can be second-guessed by competition authorities in search of anticompetitive behavior. This chapter assesses the limits and dangers competition law enforcers face in their investigations and sanctioning antitrust proceedings in the assessment of anticompetitive unilateral conduct by innovating firms.

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Katharina Voss

The European Commission, when deciding how to resolve an infringement of Articles 101 or 102 TFEU, increasingly chooses to resolve these cases in a consensual manner. This raises the question when the Commission should choose a prohibition decision over a consensual case resolution, using cases from the digital economy as an example. The chapter first introduces the different case resolution mechanisms and considers their advantages and disadvantages. Second, it discusses factors that must be considered when deciding what case resolution to utilize. It argues that three criteria should be considered: (1) the availability of the case resolution mechanism for the type of infringement and the willingness of the undertaking in question to engage in a consensual solution; (2) the remedies that can be achieved; and (3) the novelty of the infringement. To illustrate the application of these criteria, cases regarding territorial restraints, self-preferencing and MFN clauses are assessed.

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Stavros Makris

This chapter examines the potential for commitments-centred antitrust intervention in the digital economy. Despite the urges for a minimal antitrust when it comes to innovative, fast-moving markets (the ‘hands-off approach’), there is a rising awareness that digital markets cannot always deliver optimal results without antitrust. Commitments are sensitive to the institutional concerns of the hands-off approach, while simultaneously allowing for a precise, swift and effective intervention in digital markets. However, before opting for commitments, a two-fold question should be tackled: do commitments obscure the law or enhance legal clarity? Could commitments give rise to differential treatment of similar cases, and undermine legal certainty? Legal clarity and legal certainty set a ‘threshold challenge’ to commitments and serve as a benchmark for assessing their use. I investigate the relationship between commitments and legal clarity by focusing on the Samsung commitments. By unravelling the Booking.com saga, I explore whether commitments lead to divergences that impair legal certainty. The analysis concludes by noting that commitments meet the threshold challenge, and, thus, might prove a useful tool for antitrust governance of digital markets.

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Juha Vesala

A considerable share of the unilateral practices that have attracted antitrust enforcer attention in the EU and US has only minor exclusionary aspects. Instead, concerns about innovation and consumer welfare being harmed appear to arise significantly under other theories of harm, such as distortion of rewards for innovation. When concerns based on exclusion from the market are absent or do not meet the general standards for exclusionary conduct (e.g. exclusionary abuses or monopolization), practices need to be addressed using other methods (e.g. as forms of exploitative abuses or unfair methods of competition). Examples of reliance on unfairness powers to address innovation concerns include investigations into alleged abuses of standards-essential patents and grant-backs, or cross-licensing imposed on licensees. Some investigations into internet platforms (e.g. Google investigations in the EU and US), essentially appear to concern alleged unfairness of conditions imposed on other firms or consumer deception, rather than pure theories of exclusion. While allowing certain potentially problematic practices beyond exclusionary conduct to be remedied, the exercise of such unfairness powers raises questions about the identity, limits and general standards of antitrust. This chapter examines the theories exploring which innovation and ultimately consumer welfare may be harmed absent exclusion, and the antitrust standards under which such concerns could be addressed in a way amenable to innovation and consumer welfare.