Presentation by Falk Schöning, Partner at international law firm Hogan Lovells Brussels, on antitrust / competition law aspects of blockchain, in particular regarding access to permission-based aka closed blockchains. These slides have been presented at the OECD Blockchain Conference on 5 September 2018 in Paris, France. All rights reserved.

1. 4-5 September 2018
Dr. Falk Schöning, Partner, Brussels
OECD Blockchain Conference, Paris
Blockchain for Governance & Enforcement
Consensus or Collusion?
Blockchain’s Impact on Competition
Access theories to permissioned/
closed blockchains

2. | 2Hogan Lovells
Discriminatory Access – Permission-based Blockchain
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Where does
responsibility
begin and
end?
Intermediaries
Refusal to deal?
Discriminatory access terms?
Excessive transaction
fees?
OECD Issues Paper on abuse of dominance: Might collaborations or consortia that set up
blockchains exclude or raise the costs of rivals outside of the consortium?

3. | 3Hogan Lovells
• Any abuse by one or more undertakings of a dominant position within the internal
market or in a substantial part of it shall be prohibited as incompatible with the internal
market in so far as it may affect trade between Member States.
• Which market?
– Blockchain is a technology concept, not a market
– Consider each use case
– Digital (and offline) competition, e.g. cryptocurrencies – online banking – retail banking
• Individual dominance or collective dominance of the members of a permission-
based blockchain?
• Considering the difficulty in defining the relevant market in nascent technology
areas, there is a significant importance of internal documents and whether there
is an overall "foreclosure strategy" of the companies using the blockchain
Market definition and abuse of dominance

4. | 4Hogan Lovells
"[…] the fact is, the competition rules are
designed to adapt. The principles they set out
are valid for every market, for the ones we
know today and the ones we’ll see in the future.
And that's why dealing with digital markets
isn't really about new rules. It's about
deepening our understanding of how those
markets work.
[…]
Knowing these markets is especially important
when they're changing so fast. When we need
to act just as quickly, so they don't develop in a
way that hurts consumers."
Digital markets: An enforcement priority
EU Commissioner Margrethe Vestager
9 March 2018
Fair markets in a digital world

5. | 5Hogan Lovells
Polish/Dutch Dawn Raids in the FinTech field (2017)
• The European Commission carried out unannounced inspections in a few
Member States (e.g. Dutch and Polish banking associations) concerning
online access to bank account information by competing service providers
• The Commission has concerns that the companies involved and/or the
associations representing them may have engaged in anti-competitive
practices in breach of EU antitrust rules that prohibit cartels and/or
abuse of dominant market positions
• These alleged anti-competitive practices are aimed at excluding non-bank
owned providers of financial services by preventing them from gaining
access to bank customers' account data, despite the fact that the
respective customers have given their consent to such access
Access claims – case study (1)

6. | 6Hogan Lovells
Microsoft/LinkedIn (cleared with remedies in 2016)
• Combination of Microsoft's operating system and Office package with a professional
social network raised several access theories of harm:
– Foreclosure of LinkedIn's social network competitors from access to Microsoft's APIs, which
they need to interoperate with Microsoft's products and to access user data stored in the
Microsoft cloud
– Foreclosure of Microsoft's Customer relationship management software solutions competitors
from access to the full LinkedIn database, thus preventing them from developing advanced
customer relationship management functionalities also through machine learning?
• Test: Is access to the full LinkedIn database "essential to compete on the market"?
• The Commission has approved the merger with remedies, in particular:
– Microsoft had to grant competing professional social network service providers
access to "Microsoft Graph", a gateway for software developers
Access claims – case study (2)

7. | 7Hogan Lovells
• Permissioned / closed / private blockchains do not per infringe antitrust law. However, they
increase the risk that third parties with denied access raise foreclosure theories
• Important governance issue to be dealt with upfront:
– Who takes decisions on membership?
– Which policies govern the membership?
– Which objective criteria should be used to decide about membership (examples: size, location,
industry, compliance with security rules or data privacy laws)
• Are the criteria applied in a non-discriminatory, objective way?
• How can this be demonstrated?  documentation is important
• Test question for blockchain members: "Could I be active on the market without access to
my closed blockchain"  is the access essential for market access?
Takeaways for blockchain members

8. | 8Hogan Lovells
• Who is responsible from a competition law perspective?
– Decentralized nature of the network
– Operators, software developers/coders, users at retail level, e.g. banks
– Commissioner Vestager "Companies can’t escape responsibility for collusion
by hiding behind a computer program."
• Enforceability: In global DLT networks, which competition law does
apply and which authority should handle the case?
• Access to data in blockchain networks for competition law authorities
(OECD discussion paper)
Discussion points

9. 4-5 September 2018
Dr. Falk Schöning, Partner, Brussels
OECD Blockchain Conference, Paris
Blockchain for Governance & Enforcement
Consensus or Collusion?
Blockchain’s Impact on Competition
Access theories to permissioned/
closed blockchains