M. Husovec, here.
Wednesday, April 30, 2014
Resale Price Maintenance: A Review and Call for Research
AAI Working Paper (Authors: G. Grundlach, K. Manning, J. Cannon), here.
I couldn't agree more: we still know comparatively little about the economic effects of RPM, and additional research beyond orthodox economics is needed (the evolutionary economics research paper written together with Wolfgang Kerber in 2004, and quoted by the AAI Working Paper, hinted exactly at this; BTW, I authored also a rather voluminous piece on vertical restraints from an evolutionary perspective - much shorter here).
I couldn't agree more: we still know comparatively little about the economic effects of RPM, and additional research beyond orthodox economics is needed (the evolutionary economics research paper written together with Wolfgang Kerber in 2004, and quoted by the AAI Working Paper, hinted exactly at this; BTW, I authored also a rather voluminous piece on vertical restraints from an evolutionary perspective - much shorter here).
Tuesday, April 29, 2014
SCOTUS on the legal standard for shifting attorney's fees in patent litigation
Octane Fitness v. Icon Health and Fitness, here.
"We crafted the Noerr-Pennington doctrine—and carved out only a narrow exception for “sham” litigation—to avoid chilling the exercise of the First Amendment right to petition the government for the redress of grievances...But to the extent that patent suits are similarly protected as acts of petitioning, it is not clear why the shifting of fees in an “exceptional” case would diminish that right. The threat of antitrust liability (and the attendant treble damages, 15 U. S. C. §15) far more significantly chills the exercise of the right to petition than does the mere shifting of attorney’s fees. In the Noerr-Pennington context, defendants seek immunity from a judicial declaration that their filing of a lawsuit was actually unlawful; here, they seek immunity from a far less onerous declaration that they should bear the costs of that lawsuit in exceptional cases."
Existing EU legal framework applicable to lifestyle and wellbeing apps
EC Staff Working Document, here.
Comparative Analysis of National Approaches on Voluntary Copyright Relinquishment
WIPO Study, prepared by A. Guadamuz, here.
Monday, April 28, 2014
Un taxi pour l'avenir, des emplois pour la France
T. Thévenoud, Mission de concertation Taxis - VTC, ici.
New Developments in the COMESA Merger Control Regime – On the Path to Maturity
Kluwercompetitionlawblog, here.
Thursday, April 17, 2014
Wednesday, April 16, 2014
Tuesday, April 15, 2014
Declaration on Patent Protection - Regulatory Sovereignty under TRIPs
Max Planck Institute for Innovation and Competition, here.
Monday, April 14, 2014
Friday, April 11, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector/5
(All Episodes here).
To the extent that the exercise of the newly granted discounting freedoms might be prevented by retail MFN clauses stipulated between IHG, Expedia, and Booking.com, the Final Commitments require the parties to the OFT’s investigation to amend those provisions. Moreover, the investigated parties must use “reasonable endeavours” to ensure that their current arrangements with other OTAs and other hotels do not contain provisions hampering those discounting freedoms, and are prevented from including such provisions in new arrangements. This means that retail MFN clauses should not be enforced against hotels in a way that prevents OTAs and the hotels themselves from offering discounts to their respective closed groups as covered by the Final Commitments. Those retail MFN provisions could still be enforced, however, in respect either of the offering of discounts to non-members or the publication of the details of such discounts outside of the closed group.
In sum, the Final Commitments would seem to endorse a level of minimum “retail” price fixing in the vertical relationship between hotels and OTAs to the extent that the room rates set by the hotels apply to the general public. Reductions off the headline room rates are reserved to “closed groups” under the terms of the settlement. It is also notable that only closed group members will be provided with detailed information concerning the specific level or extent of reductions offered by OTAs and hotels. Thus, for instance, consumers will be unlikely to find up-to-date, reliable information about the specific level of discounts offered by OTAs and hotels via price comparison websites or meta-search sites. In order to access that information consumers will have to join a number of “closed groups.” Furthermore, to be eligible for the discount, the consumer is required to have previously made an undiscounted booking with the same OTA or hotel.
(To be continued).
Study on the legal framework of text and data mining (TDM)
J.-P.Triaille, J. de Meeûs d’Argenteuil, A. de Francque for the European Commission, here.
Public Consultation on the review of the EU copyright rules: Contributions Posted
Three rather large zip files, here (text mining tools would be quite handy).
Thursday, April 10, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector/4
(All Episodes here).
OFT’s investigation centred
on the arrangement restricting the online travel agents’ (OTAs) ability to discount “retail”
hotel rates to consumers. Expedia and Booking.com, in the context of the
proceedings, are described as being vertical distribution channels providing
hotel room booking services. More specifically, both Booking.com and Expedia
intermediate hotel accommodation bookings on a room-only basis, i.e. not as part of
a package including other travel products such as airline flights. Whereas
Booking.com operates under the same “commission based” model already analysed
by the German Competition Authority, Expedia utilises predominantly the “merchant
model.” Under this model, OTA’s revenue consists in the difference between the
‘net rate’ the OTA paid to the hotel and the room rate paid by the customer, either
at the moment the booking was made or upon check-out at the hotel. Expedia,
however, does not take title to the hotel rooms it offers.
Both Expedia and Booking.com
agreed to offer IHG’s hotel rooms at a rate set by the hotel group and not at a
lower rate, and the OFT provisionally indicated that the vertical price
agreement had as its object the prevention, restriction or distortion of
competition in breach of Article 101 TFEU. According to the British Competition
Authority, the arrangement restricts intra-brand price competition between the OTAs
and between the OTAs and the hotels’ direct online offerings via their own
websites, because OTAs cannot voluntarily sacrifice some of their commissions
or margins in order to offer discounted hotel rates to price sensitive consumers.
Moreover, due to the discounting restrictions, new entrants with potentially
more innovative or efficient business models are unable to display lower hotel rates
and, by doing that, achieve the scale necessary in order to establish
themselves and grow. Finally, the alleged anticompetitive effect is likely
to be amplified by the widespread adoption of similar discounting restrictions in
the market.
While the British investigation
focused on the alleged resale price maintenance, the OFT noted that vertical
agreements incorporating discount restrictions may also include a retail MFN
clause. As seen above, under the retail MFN provision it is the hotel that agrees
to offer its rooms via a specific platform at a booking rate which is no higher
than the rate displayed by other distribution channels. If the scope of the
obligation extends to all other distribution channels, both on- and offline,
including the hotel’s own website and physical desk, the effect is perfect “rate parity:” nowhere
the price sensitive and highly motivated consumer will be able to find a cheaper price than the one
displayed by the platform for that exact room. At first sight, however, a discounting restriction on top of a wide retail MFN clause would not make much sense. First of all, the
retail MFN clause would seem incompatible with Expedia’s “merchant model,” where
the booking rate is decided by the OTA itself and not by the hotel, alleged vertical price fixing aside. More importantly, under
the “commission based” model a platform is practically unable to sacrifice part
of the commission and obtain a cheaper rate from a hotel if that hotel has a binding, broad retail MFN in place with other distribution channels, because the price discount
will have to be extended to all these other distribution channels as well. If,
however, the provision has a much more limited scope, such as an “own-website
MFN” according to which the room rate made available on the platform will not be higher
than the price displayed on the hotel’s website, the discounting restriction would clearly affect "downstream" price competition between OTAs.
(To be continued).
CJEU: The amount of the levy payable for making private copies of a protected work may not take unlawful reproductions into account
Case C-435/12
ACI Adam BV and Others v Stichting de Thuiskopie, Stichting
Onderhandelingen Thuiskopie vergoeding, Press release here.
ACI Adam BV and Others v Stichting de Thuiskopie, Stichting
Onderhandelingen Thuiskopie vergoeding, Press release here.
Wednesday, April 09, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector/3
(All Episodes here).
Whereas the German investigation specifically focuses on HRS’ contracts with its hotel partners, retail MFNs clauses are employed also by Booking.com and Expedia, the other two significant competitors in the hotel booking platform market. Not only the combined market share of the three platforms is around 90%, but most hotels “multihome”, i.e. make their offers available on more than one platform. The German Competition Authority considers that the broad adoption of similar rate parity policies by the three platforms amplifies the negative effects on competition seen above.
Second,
according to the German competition watchdog, the existence of the retail MFN clause enforced by HRS leads
to foreclosure. Due to the already mentioned indirect network effects, a hotel booking platform entering the market must attract a critical mass of both
hotels and hotel customers (chicken-egg
problem) if it wants to succeed. The retail MFN adopted by HRS makes it
practically impossible for a competing online hotel booking operator to
adopt an aggressive, low-price commercial strategy in order to acquire
customers, because hotels cannot charge lower prices on its platform.
Moreover, the existence
of the MFN clause prevents sellers from rewarding more innovative
platforms by agreeing on a different pricing model, thus reducing the incentives for
incumbents and entrants to innovate. For instance, a specific platform could be
in a position to offer cost-savings or other quality-based innovations to
hotels, and this
would justify a lower price for consumers using that platform than if they used
another platform. This
sort of innovation has the potential to offer customer benefits through lower
hotel prices, with the prospect of generating more sales for the platform. Without
MFN constraints, such innovation would lead to the seller offering lower hotel
prices through that platform, reflecting the cost savings and the other
benefits to the hotel due to the platform’s innovation. However, if the hotels
cannot offer cheaper hotel rooms via innovative platforms because of the
existence of retail MFN obligations with well-established platforms, this would
reduce the incentive for a platform to innovate as the platform could not
receive a greater market share from offering cheaper hotel rooms relative to its
competitors. Hotels could still reward innovative platforms with higher
commission fees in exchange for a better quality, but
this would not lead to increased trade volumes and a higher platform’s market
share. Put differently, the benefits of the platform’s innovation could be passed
to the hotel partners but not to the users on the other side of the market, i.e. the consumers.
Finally,
HRS’ retail MFN clause restricts competition among hotels. As already
mentioned, lower commission fees are not passed through to consumers in the
shape of lower hotel room prices and, more generally, hotels cannot engage in
price differentiation strategies. Not only are hotels constrained by rate
parity with regard to all of their online offerings, with the inclusion of their
own website, but this obligation extends to the offline distribution of hotel
rooms as well.
Interestingly, the
Office of Fair Trading (OFT), one of UK’s Competition Authorities recently absorbed
by the Competition and Markets Authority (CMA), has been investigating the same
pricing policies practiced by online hotel booking platforms since 2010 as
well. A small hotel reservation platform complained to the OFT that hotels prevented her from offering hotel rooms at discounted prices. Instead of assessing the anti- and procompetitive effects of retail MFN
clauses, however, the OFT focused on whether
an online hotel booking platform allowing hotels to set the room prices
sold through that platform was engaging in resale price maintenance. The
parties investigated are the InterContinental Hotels Groups (IHG), the largest international hotel chain measured by room numbers (675, 982 rooms world-wide, 41,340 in the UK), and two online travel agents,
Expedia and Booking.com. According to the OFT, in separate arrangements with
IHG it was stipulated that Expedia and Booking.com were prevented from discounting
hotel rates set by IHG and displayed to customers via the platforms. The OFT provisionally concluded that such
arrangements were potentially in breach of Article 101(1) TFEU. As a result, the parties gave commitments in order to remove the alleged anticompetitive
effects, which the OFT accepted on January 31, 2014.
(To be continued)
Tuesday, April 08, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector/2
(All Episodes here).
Following a three-year long investigation, the German Competition Authority concluded that the retail MFN clause practiced by HRS in its contracts with hotels was a vertical agreement restricting competition in the sense of Article 101(1) TFEU, and that neither the Vertical Block Exemption Regulation applied, nor there were reasons to justify an individual exemption. The theory of harm put forth in the German decision is fourfold. First, in the absence of MFN clauses, hotel booking platforms are likely to compete with one another on the commission fees they charge to hotels. A hotel booking platform could thus decide to offer lower commission fees to its hotel partners, in the hope that hotels will be offering lower hotel room prices to consumers, and, as a consequence, the platform will grow its trade volume. Moreover, a platform is likely to be constrained in the commission fee it charges to hotels by the fear that a higher fee would lead to higher hotel room prices on that platform and therefore to a loss of market share. A retail MFN clause, however, lifts the competitive constraints on the inflation of commission fees paid by hotels. In fact, a platform wishing to gain sales has hardly any incentive to do so by lowering the commission fee charged to hotels, because the hotels are not in a position to lower hotel rooms prices offered to consumers (i.e. to "invest back" the commission saved into lower prices charged on that platform). Moreover, a platform with a retail MFN which is considering a rise in the commission fee will not have to worry that such a rise will make its offering less attractive to consumers, since any pass-through of the rise in commission fees will need to be applied to all other distribution channels covered by the retail MFN clause. In other words, the platform’s fear of the negative consequences of higher hotel room prices in terms of market shares and revenue is substantially reduced, since the platform knows that it will always be at least as competitive as any distribution channel included in the scope of the MFN (other web based platforms, hotel own-website, direct sale to customers at the hotel’s physical desk). Overall, competition among platforms is softened: there is less incentive to reduce commission fees, as there is less incentive not to raise them. The likely result are higher commission fees and, if these higher fees are passed through by hotels, higher hotel room prices available to customers.
(To be continued).
Monday, April 07, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector/1
Most-favoured-nation (MFN) provisions are found in vertical arrangements and stipulate some sort of preferential treatment in favour of specific market participants. Thus, an MFN clause widely used in industry and commonly analysed by competition authorities and courts imposes on a seller the contractual obligation to treat a customer that is party to the agreement no worse than all other customers. In this respect, the MFN clause at issue embodies the seller’s promise to treat a specific buyer as the seller treats her most-favoured customer (also called most-favoured-customer clauses - MFCs). Typically, these MFNs are employed in markets for intermediate goods, and ensure that the buyer at some stage of the supply chain will pay a specific input no more than the other customers of the same supplier. Some MFN clauses that have attracted the attention of competition policy enforcers concerned the sale of turbine generators, of lead-based anti-knock gasoline additives, of synthetic substances belonging to groups of vitamins, the distribution of digital music, of gas, and were found also in dental plan contracts between dental care service providers and dental practices and in healthcare contracts between a health insurance provider and hospitals.
While traditional MFNs ensure that one party to the agreement gets terms at least as favourable as any other party in an analogous position, a so called retail (price) MFN requires the seller to sell a good or service via a specific intermediary at a price that is not higher than the price the seller charges via other intermediaries (and/or direct). In this case, the end-buyer of the good or service is not a party to the agreement, as was always the case with the more traditional MFNs previously mentioned, and she may not even be aware that such an agreement exists between the seller and the intermediary. It follows that the buyer has no right to obtain redress if the seller does not satisfy the terms of the retail MFN clause.
Recently, adherence to retail MFN clauses has emerged as a popular pricing policy in the online world. Specifically, the seller undertakes not to charge on a specific electronic trade platform a price that is higher than the price that she charges on other platforms, creating “price parity” across platforms (Across-Platform Parity Agreement – APPA). National competition authorities in various countries have opened investigations into the price parity agreements commonly found in the online hotel booking sector. In December 2013, the German Competition Authority (German Federal Cartel Authority, Bundeskartellamt) issued a decision prohibiting HRS, leader in the German market for hotel bookings, from applying a retail MFN clause in its relationships with providers of hotel services, and ordered HRS to delete this clause from its terms and conditions. The clause investigated in the context of the German proceedings obliged providers of hotel services to offer their lowest room prices and other conditions, e.g. relating to cancellation policy, also through HRS’ platform. Moreover, the clause prevented hotels offering cheaper hotel rates and better conditions via their own websites - and even to customers directly at hotel receptions. Prior to the German Competition Authority’s decision, in February 2012, the Düsseldorf District Court of Appeal had already enjoined HRS from enforcing the retail MFN clause.
(To be continued).
While traditional MFNs ensure that one party to the agreement gets terms at least as favourable as any other party in an analogous position, a so called retail (price) MFN requires the seller to sell a good or service via a specific intermediary at a price that is not higher than the price the seller charges via other intermediaries (and/or direct). In this case, the end-buyer of the good or service is not a party to the agreement, as was always the case with the more traditional MFNs previously mentioned, and she may not even be aware that such an agreement exists between the seller and the intermediary. It follows that the buyer has no right to obtain redress if the seller does not satisfy the terms of the retail MFN clause.
Recently, adherence to retail MFN clauses has emerged as a popular pricing policy in the online world. Specifically, the seller undertakes not to charge on a specific electronic trade platform a price that is higher than the price that she charges on other platforms, creating “price parity” across platforms (Across-Platform Parity Agreement – APPA). National competition authorities in various countries have opened investigations into the price parity agreements commonly found in the online hotel booking sector. In December 2013, the German Competition Authority (German Federal Cartel Authority, Bundeskartellamt) issued a decision prohibiting HRS, leader in the German market for hotel bookings, from applying a retail MFN clause in its relationships with providers of hotel services, and ordered HRS to delete this clause from its terms and conditions. The clause investigated in the context of the German proceedings obliged providers of hotel services to offer their lowest room prices and other conditions, e.g. relating to cancellation policy, also through HRS’ platform. Moreover, the clause prevented hotels offering cheaper hotel rates and better conditions via their own websites - and even to customers directly at hotel receptions. Prior to the German Competition Authority’s decision, in February 2012, the Düsseldorf District Court of Appeal had already enjoined HRS from enforcing the retail MFN clause.
(To be continued).
Friday, April 04, 2014
Old friends in new frocks? MFN clauses in the online hotel booking sector
New WavesBlog serialized research effort starting on Monday!
Text and Data Mining
Report from the Expert Group, EC Directorate-General for Research and Innovation, here.
Thursday, April 03, 2014
Wednesday, April 02, 2014
Tuesday, April 01, 2014
Privacy and competitiveness in the age of big data:The interplay between data protection, competition law and consumer protection in the Digital Economy
European Data Protection Supervisor Preliminary Opinion, here
Procedural fairness in competition proceedings + Workshop on Competition Policy
2014 ASCOLA Conference, Warsaw, Preliminary Programme here (Docx download)
Graf interviewing Wright: "Can antitrust authorities contribute to fixing the dysfunctional patent system?"
New Frontiers of Antitrust 2014 Conference, here.
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Centre for a Digital Society , Video here . These are my very rough talking points on pay or okay in full length (more than I actually had...
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LG Frankfurt am Main, 2-06 O 172/09 (verkündet am 13.05.2009). Lesenswertes aus der Begründung (meine Hervorhebungen): "Vorstellbare ...
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Stratechery, here .
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Here (thanks to Netzpolitik).
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Public Knowledge, here .
