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European Commission Consultation on Ex Ante Regulation of Online Platforms: Is Change Coming?

In parallel to a public consultation to seek feedback from the public regarding the New Competition Tool, the European Commission (Commission) is consulting on a proposal for an ex ante regulatory instrument that would ensure that “online platform ecosystems controlled by large online platforms that benefit from significant network effects remain fair and contestable, in particular in situations where such platforms may act as gatekeepers”. This proposal stems from a range of concerns which, according to the Commission, could lead to large-scale unfair trading practices, less innovation and reduced consumer choice. Feedback on the Commission’s inception impact assessment was due on 30 June (85 opinions were collected). The period for stakeholders from public and private sectors to contribute to the Commission’s public consultation (via online questionnaires) ends on 8 September 2020. Identified Need to Regulate Large Online Platforms In its inception impact...

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European Commission Initiates Consultation on Possible New Competition Investigation Tool

On 2 June 2020, the European Commission (the Commission) published its inception impact assessment (or roadmap) on the possible adoption of regulation that would introduce a new market investigation tool. This assessment was immediately followed by the launch of a public consultation to seek views and feedback from the public regarding such a tool. The new tool would enable the Commission to investigate and impose behavioural and/or structural remedies on businesses with significant market power, whether dominant or not - and without any prior finding of a competition law infringement. As such, this new tool could present a significant risk and potential burden for companies with market power. On the other hand, it offers potential benefits to market participants, such as new entrants, who might otherwise see their access to markets foreclosed. Enforcement Gap As digitalization evolves and spreads across sectors rapidly, the Commission has come to understand...

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THE LATEST: Tenth Circuit Sides with Defendants in $200 Million Sutures Bundling Case

In an antitrust case involving bundled discount on sutures, the United States Court of Appeals for the Tenth Circuit affirmed a lower court decision granting summary judgment in favor of defendants Cardinal Health 200, LLC and Owens & Micro Distribution, Inc.  The Tenth Circuit held that Plaintiff-Appellant Suture Express, Inc. could not prove that the defendants individually possessed market power and that it had not demonstrated that defendants caused substantial adverse effects on competition. WHAT HAPPENED: Suture Express, a distributor focused on the sale of sutures, sued Cardinal Health and Owens & Micro, which are national distributors of a broad array of medical-surgical products, claiming that they had engaged in illegal tying through their practice of bundling sutures with other medical-surgical products in a manner that penalized customers that purchased sutures from other suppliers. The parties filed cross motions for summary judgment and...

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Federal Court Finds Amex’s “Anti-Steering” Merchant Rules Anticompetitive

After a seven-week bench trial in an enforcement action by the U.S. Department of Justice (DOJ) and 17 state attorneys general, U.S. District Judge Garaufis (Eastern District of New York) held that American Express Co.’s (Amex’s) “anti-steering” rules (Non-Discrimination Provisions or NDPs) are an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act.  The NDPs in Amex’s agreements with merchants prevent merchants from attempting “to induce or ‘steer’ a customer” from paying with non-AmEx credit cards by, for instance, offering discounts or incentives to customers paying with other cards, even though “the cost of [such] transaction[s] [would likely] be lower for the merchant.”  At bottom, the court’s holding centered on its conclusion that “these NDPs create an environment in which there is nothing to offset [Amex’s incentive] to charge merchants inflated prices [to process transactions, which] results in higher costs to all...

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Despite Potential Market Manipulation, FERC Declines to Reject Power Auction Results

The Federal Energy Regulatory Commission (FERC or the Commission) recently opted not to take action to set aside the results of a power auction that was allegedly manipulated.  In the face of significant public complaints, the Commission ordered revisions to tariff provisions governing future auctions.  While it opted not to take action here, the opinions of the commissioners effectively gave notice to capacity owners that rate increases alone may be a sufficient basis for investigating auction results, even if the auction is conducted pursuant to tariff. The matter involved the impacts of actions taken by an energy provider that altered the outcome of a competitive auction.  Energy Capital Partners, a private equity firm, allegedly exercised and abused market power by announcing the impending shutdown of its coal-fired plant just prior to the auction and after the deadline for new resources to participate (thereby leaving a significant power deficit,...

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German Federal Cartel Office Launches Sector Enquiry into Food and Luxury Food Retail Market

by Martina Maier and Philipp Werner The German Federal Cartel Office (FCO) announced yesterday that it has launched a sector inquiry into food retailers.  The FCO will focus its study on foodstuffs and luxury foodstuffs without explicitly naming particular goods in its press release but broadly stating that the enquiry will only focus on “selected product groups”.  According to the official statement from the FCO, which is only available in German, the authority seeks to improve its “understanding” of the relationship between retailers and suppliers.  The FCO plans to have a close look into the market power of the large retailers.  The assessment will also focus on “whether and to what degree the leading retailers enjoy a purchasing advantage over their competitors”. The retailer market in Germany is very concentrated, with only four large retailers holding about 85 percent of the market.  The...

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