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De streel scientific seminar 2017

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How to integrate zero-price markets in antitrust analysis by Alexandre de Streel and Fernando Herrera-Gonzales

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De streel scientific seminar 2017

  1. 1. How to integrate zero-price markets in antitrust analysis Fernando Herrera-Gonzalez Alexandre de Streel 1
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  3. 3. Typology of transactions Real free goods Pseudo free goods Real paid goods Given for recognition, political power, pure altruism Paid with information (data), attention (brain time) monetised on another side of the market Paid with money Outside the scope of competition law Scope? Covered by competition (and internal market) law Covered by competition law Analytical tools? Standards analytical tools based on monetary prices 3
  4. 4. Literature review • Evans (2011), Gal and Rubinfeld (2016), Newman (2015 and 2016), Sousa Ferro (2015) • Multi-sided markets • ‘Follow the money’ and go on the monetized side • BUT Possible (and already done in some way) but difficult • Non-monetary indicators • SSNIC: Small but Significant Non-transitory Increase in Costs • BUT unit identification, customer evaluation, heterogeneity • SNNIQ: Small but Significant Non-transitory Increase in Quality 4
  5. 5. Simple basic idea • Economic transaction • Price is just the ratio between the exchanged goods or services which can be expressed • In monetary unit when the counterpart is money • In non-monetary unit when the counterpart is not money, such as information, attention • Zero (monetary) price - but not zero price - markets 5
  6. 6. Simple basic idea • Antitrust tools are based on prices • Often expressed in monetary units (e.g. 5-10% price increase in the SSNIP, market share in value in dominance assessment) • But could be also be used with non-monetary units • No problem of principle • Problems of implementation but not necessarily much more difficult than with monetary prices 6
  7. 7. Market power assessment • Market definition • All those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products' characteristics, their prices and their intended use • Use SSNIP test with non-monetary prices, close to SSNIC/SSNIQ • Dominance • Position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers • Calculation of market share in non-monetary units • Assessment of entry barriers 7
  8. 8. Theory of harm • Exploitation • Too high (non-monetary) prices • German Facebook case • Exclusionary • ‘anti-competitive foreclosure’ is used to describe a situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated as a result of the conduct of the dominant undertaking • Non-price based exclusionary abuses • Prices based exclusionary abuses, require a monetary conversion when a cost- price comparison is required 8
  9. 9. Difficulties • Identification of unit for the non-monetary prices • On the basis of the firm business models • Heterogeneity and subjectivity • But also for monetary units • Necessity of monetary conversion • Regulatory accounting methods used for current cost determination • Bottom-up: Pdata = Pservers + Pdatabases + Pbuildings + Putilities + Psalaries + … • Top-down: Pdata = Padvertisement - (Pdatabases + Pbuildings + Putilities + Psalaries + …) 9
  10. 10. Take-away • Not identify prices with monetary prices • (Pseudo) free goods, zero (monetary) prices markets • Competition policy tools are based on prices, but those prices can be expressed in different units: money, information, attention • Expressing in non monetary issues does not raise fundamental issues of principle, but implementation issues • Unit identification: depends on business models • Evaluation • Heterogeneity 10

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