Other relevant digital platforms cases

gives a great market power to the merging company, a power measured not by the companies’

turnover but by their ability to exponentially grow thanks to network effects and develop economies of scale, and mostly by the amount of data the merger unit owns, that gives great value to it.

Moreover, online platform markets are dynamic and even if in the present situation, when the Commission made the decision, Facebook and WhatsApp were not direct competitors, in the future they could have been. WhatsApp could have grown, diversified and expanded in new market, becoming a direct competitor of tech giant platforms: Google and Facebook are direct competitors in the online advertising market even if at the beginning they were respectively only a search engine and a social network. By approving the merger, the Commission could have allowed Facebook to eliminate a potential future threat when it was still small.

Another concern that can be identified has something to do with privacy and data protection.

Facebook is the biggest social network of the world, with billion of users, and the company knows so many things about its users thanks to the data collected with them, that it would be able to rebuild its personalities, passions, potential behaviours better than these users’ friends. In addition to this, the Commission allowed to the company the acquisition of WhatsApp, a messaging system that billions of people use every day and that has practically replaced the SMS system. This is not a competition problem, as the Commission underlined when taking its decision: concern about data and privacy were raised during the investigation but they didn’t fall in the scope of EU competition law rules, rather in the one of EU data protection rules. Anyway, the Commission considered two possible outcomes of Facebook using personal data from WhatsApp that could harm competition (introduction of ads on WhatsApp and using WhatsApp data to improve targeting of Facebook ads), but judged them unlikely to materialise. However, with the introduction of the new GDPR (see section 4.2.3) we hope that the introduction of data portability will mitigate the competition problems caused by data collection.

avoiding free-ride: in fact, it would have been easy for a consumer to find an hotel on Booking.com platform and then check on the hotel’s website if the price offered was lower.

Finally, Booking.com offered its commitments: wide parity pricing clauses would be eliminated from the contracts, and the platform could not prevent hotels from offer discounted room prices via offline channels or to members of a loyalty scheme. The commitments were accepted by the three competition authorities and the Booking.com case was closed in France, Italy and Sweden. [56]

The case against Booking.com was also opened in Germany, but the decision was different: on 23 December 2015 the German national competition authority prohibited any use of MFN clauses to the platform, the narrow ones included.

4.9.2 Consumer electronic companies and vertical price fixing

In May 2015, the Commission opened a competition sector inquiry on e-commerce to identify possible competition concerns on this market. After the inquiry, in February 2017 the Commission opened three separated investigations into suspected anti-competitive practices that violate Article 101 TFEU in the e-commerce market. One of these investigation concerns consumer electronic market, in particular four manufacturer companies:Asus, Denon & Marantz, Philips and Pioneer.

The allegation is of restricting the ability of their online retailers to set their own prices for consumer electronic products like notebooks, kitchen appliances, and so on. They prevented retailers from setting prices lower than the one imposed by them and the result was that the average price of all consumer electronic products was higher, since lots of retailers use tools to adapt their prices to the one of other retailers. Moreover, the companies used software in order to monitor retailers’ prices and to intervene if they get lower. The total effect was, then, less competition between retailers and overall higher prices in the consumer electronic market.

The anti-competitive conduct was brought on by Asus with computer hardware and electronic products between 2011 and 2014 in France and Germany; by Denon & Marantz with audio and video consumer products between 2011 and 2015 in Germany and Netherlands; by Philips with a large range of consumer electronic product between 2011 and 2013 in France; by Pioneer with speakers and hi-fi products in 12 different European countries between 2011 and 2013.

The decision was reached on 24 July 2018: the Commission fined the four companies for a total amount of €111 million. The four companies collaborated with the Commission during the investigation and admit the violation of EU antitrust rules, so the total amount was reduced for collaboration, as we can see in Table 4.3. [57,58,59,60]

Table 4.7 Reduction for collaboration and fine amounts for the four manufacturer consumer electronic companies that violated antitrust rules. [57,58,59,60]

Company Reduction for collaboration Fine (€)

Asus 40% 63,552,000

Philips 40% 29,828,000

Pioneer 50% 10,173,000

4.9.3 Cases analysis : Most Favorite Nation clauses

The so-called Most Favorite Nation clause (MFN) is another name to call the price parity clause we discussed in section 4.9.1, often used in contracts between an online platform and its suppliers. As we said, it implicates that the latter can’t charge a lower price for its products on its website (narrow MFN clause) and in some cases also on another platform (in wide MFN clauses).

MFN clauses have anticompetitive effect because they can cause barriers to entry: if a new platform wants to enter in the market by accepting a lower fee from suppliers in order to offer lower prices to consumers, suppliers can’t take the deal because of the MFN clause; this is an harm to competition because prevent new entries in the market and also to consumers, that can’t benefit from an eventual lower price. MFN clauses could be seen also as fixed vertical price clauses (see section 4.9.2 as a case example), that occurs when there is a sort of collusion between suppliers to set the same prices on retailers’ platforms or websites. It is also true that MFN clauses prevent suppliers from using the free riding strategy: they could use the platform to get known by the consumers and offer a lower price in their website to drive them into buying the product or the service directly from them, without having to pay a fee to the platform. This is why most of the nations that investigated on Booking.com decided to leave the possibility to the platform of using narrow MFN clauses.

Talking about this, the different decisions underline a problem of uniformity: it is not easy for a platform like Booking.com having to apply different policies and structure depending on the EU country, EU should take a common decision on these matters.

Also Amazon e-books case (see section 4.6.1) involved MFN clauses, in this case the authority involved was EU Commission. The peculiarity was that the Commission didn’t use Article 101 TFEU to justify its conclusion, but Article 102 TFEU. This is because of the online platforms’

business model: in fact, according to Article 101 TFEU, agreements between undertakings are forbidden, but in the Amazon and Booking.com case we have an agreement between a platform and its supplier, where the price of the final product that the consumer will pay is set by the supplier, and the latter pays a fee to the platform for using it as a place to sell the products. The model described is an agency model, that does not fall inside Article 101, since the online platform is merely an intermediate; suppliers are taking all the risks and setting the prices so it is not correct to define as an agreement between undertakings the one the online platform has with its suppliers. [59]

This is way the Commission used Article 102 TFEU that was more appropriate; but, in order to use it, the Commission had to define the relevant market in which the company was dominant, prove its dominance in this market and prove that Amazon was abusing of it. This procedure took time and resources; in my opinion, it could have been easier to apply Article 101 TFEU, but it is not designed for cases like this that involves particular business model. The Article is directed more to avoid anticompetitive conducts like the one of section 4.9.2, where the supplier is guilty of the anticompetitive conduct rather than the online platform. The investigations took just a little more than a year to reach a decision and be closed. If, in this case, the online retailers would have been

the ones to force retailers to set the same prices in every platform, the Commission couldn’t have used Article 101 TFEU to come with a decision. [61]