Before antitrust watchdogs consider attacking the business practices or tie-ups of companies operating online or in other high technology sectors, they should consider – and perhaps defer to – claims that dynamism will outweigh any concerns about competition, several antitrust lawyers and economists have said. Ron Knox at GCR Live Singapore
Over two separate conversations at a GCR Live conference today, economists and lawyers fell back on what such companies and their advisors preach to enforcers and courts: that high-tech, online markets often change too quickly for enforcement to be effective.
Their advice to enforcers was nearly uniform: Move faster when possible, and operate under the assumption that online and emerging, technology-based markets are going to change faster than enforcement can keep up. Even the most well-intended antitrust cases won’t reach the result for which enforcers hoped, the panellists said.
“New facts are important to the speed of enforcement,” said Derek Ritzmann, a senior vice president at economics consultancy Compass Lexecon. “The speed of these markets has implications for how enforcement ought to operate.”
Ritzmann, who spent years at enforcement agencies before moving to Compass, made his comments largely while discussing two-sided markets. Such markets are not entirely new – they date back at least to newspapers supported by advertising – but the term describes many technology platforms.
He cautioned enforcers against looking only at the harm a company causes on one side of a market – merchants that pay to sell their goods on a platform, for example – without examining the effect a company’s behaviour might have on the consumers on the other side of the market. “If you don’t understand how business models work, enforcement makes errors,” Ritzmann said.
This debate is currently before the US Supreme Court in the American Express case, in which the credit card company defends its restrictions on merchants by saying they are necessary to provide benefits to cardholders.
Speaking on a later panel, Matthew Readings from Shearman & Sterling in Brussels said multi-sided markets can indeed complicate an enforcer’s job – muddying market definition, for example, or aiming enforcers’ investigations on harms outside price increases.
Market share can be particularly tricky to pin down in dynamic, high-tech markets, Readings said. New entrants can take market share from incumbents very quickly, while, in some cases, strong network effects can help shield incumbents from challenges even in industries that appear ripe for disruption, he said.
“The real challenge is that everything is moving so quickly, no one really knows what’s going to happen next. That’s the real joy of the space we’re in,” Readings said.
Readings and others cited at least anecdotal evidence that such online platform markets can shift with ease and speed, and that enforcers are becoming better at recognising those elements in the market.
Kala Anandarajah, from Rajah and Tann in Singapore, cited a market study by the Competition Commission of Singapore that identified potential for new entrants to disrupt the online food delivery market. Such competitors entered the just months after the study was complete.
“What it’s all leading to is competition law needing to be dynamic in the way that it’s applied,” Anandarajah said.
Ritzmann, Readings and Anandarajah spoke as part of GCR Live’s 7th Annual Asia-Pacific Law Leaders Forum, held in Singapore. The conference continues tomorrow.