UN Special Rapporteur's concerns regarding Italy's online copyright enforcement

F. La Rue, here (Word file), p.13 f.

"The issue of intellectual property (...) was discussed during the visit and a number of concerns were raised regarding the adoption of additional measures for the protection of copyright at the expense of freedom of expression. For the Special Rapporteur, the establishment of norms protecting intellectual property should remain exclusively within the purview of the Parliament.

The Special Rapporteur also underlines that, although AGCOM may by law apply some limitations on online content, the removal of online content should be decided by the Court on a case-by-case basis."

Amazon on Hachette's Business Interruption


Learned Society attitudes towards Open Access

EDP Sciences, prepared by TBI Communications, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/19

(Previous installments here)

From a more evolutionary perspective, it is also noteworthy that in an era of big data firms at the different levels of the value chain have the potential to constantly gain better market insights. Based on the results of data analysis, both producers and intermediaries may experiment by way of fine tuning their marketing practices. In some respect, the uninterrupted and abundant flow of real-time, potentially insightful data makes it imperative for every market participant to continually experiment and adapt.

Facebook Asks Europe To Review Its $19B WhatsApp Buy In Bid To Head Off Local Opposition

TechCrunch, here.

Montebourg vole au secours des hôtels en assignant Booking en justice

Numerama.com, ici

Why Germany Dominates the U.S. in Innovation

Bloomberg.com, here

A Cable Merger Too Far

NYTimes.com, here

Are Google, Facebook, Twitter, and Amazon "data brokers" according to the FTC?

Not very clear, see here.

Data Brokers: A Call for Transparency and Accountability

FTC Report, here. Statement of Commissioner J. Brill, here

Amazon Strategy Raises Hackles in Germany

NYTimes, here

The right to be forgotten and open data

OKF blog, here.

Old friends in new frocks? MFN clauses in the online hotel booking sector/18

(Previous installments here)

Finally, and more generally, it would be unreasonable to turn a blind eye to the fact that the economic value extracted from consumers’ personal data is essential to many Internet entrepreneurs. Safeguarding competition in an era of big data requires a detailed understanding of how exactly user information fits into these firms’ business models.

Antitrust Damage Actions in Europe: Race to the Middle?

J. Delgado, here.

Das grosse Feindbild Google

Nzz.ch, hier

Making Your Privacy Practices Public

K. Harris, Attorney General, California Department of Justice, here.

Does Google want to own the online travel-booking market?

TheEconomist, here.

This is the comment I left on the Economist's website: "As possible game changers, also worth mentioning are the investigations and decisions by competition authorities in the online hotel booking sector.They could make advertising in Google less crucial..."

AG Cruz Villalon says that certain parodies may be prohibited if against fundamental values of society

IPKat, here

Interview with Pam Samuelson, one of the founders of the Authors' Alliance

PublishersWeekly, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/17

(Previous installments here)

This and other anticompetitive potentials of retail-price MFNs may be strengthened in the presence of a network of such clauses. Thus, the German Competition Authority found that the vast majority of hotels in Germany was under a retail MFN obligation with at least one of the three most popular hotel booking platforms, and this made practically impossible for an entrant platform to pursue a “consumers’ side” initiation/growth strategy based on commission-cuts and lower display prices.

Four things we’ve learned from the EU Google judgment

Iconewsblog, here

Nespresso s'engage : le droit de la concurrence l'emporte-t-il ? Pas vraiment !

C. Bialès, M. Bechini, F.-X. Boudy, M. Carbonnel,G. de Boiscuillé, T. Schrepel, ici

Top-grossing mobile games: How do they make money (Apple platform)?

BusinessInsider, here.

Case comment: Google Spain SL, Google Inc v Agencia Espanola de Proteccion de Datos, Mario Costeja González

Eutopialaw.com, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/16

(Previous installments here)

The danger of anticompetitive foreclosure just mentioned should deserve a high level of attention by competition policy enforcers dealing with these and other practices involving online platforms. In fact, the successful market entry and expansion of this type of Internet entrepreneurs critically depend on their ability to attract two sufficiently sizeable groups of customers.

Big Bad Banks: Bid Rigging and Multilateral Market Manipulation

J. Connor, here

Network Industries

R. Picker, Spring 2014 Course Slides (1264, pptx download), here

Old friends in new frocks? MFN clauses in the online hotel booking sector/15

(Previous installments here)

First, we have seen that there are “spillover” effects from retail MFNs for other platforms and channels. In a context of seller-imposed retail prices, or “agency” model, a single wide MFN clause between a seller and a platform effectively prevents any other platform from displaying prices lower than the MFN’d price (e.g. cheaper hotel room rates, lower insurance premiums, etc.), thus creating a floor – or minimum - price.

By contrast, agency pricing as such is not necessarily conducive to rate parity, or price fixing, since it could well be in the seller’s interest to display different prices on different platforms. Thus, for instance, the mobile game Hundreds is priced  CHF5.00 on iTunes and CHF4.75 on Google Play, while the price of the racing game Impossible Road is the same on both platforms.

Actually, competition authorities in the UK and Germany have expressed serious concerns exactly because retail MFN clauses prevent expansion and entry strategies by platforms based on “selective” lower hotel prices and insurance premiums. In fact, due to the spillover effects of wide MFNs, an online retailer cannot use its ability to compete on commissions (or margins) in order to enter the market and try to achieve the critical mass necessary for the platform to survive and, possibly, to thrive. Instead, still under agency but without retail MFNs, the same retailer could pursue a strategy of lowering the commission rate applied to the seller with the expectation that the seller would then display lower prices on the more cost-effective platform. 

(To be continued)

UK Competition Tribunal rejects attempt to dismiss Skoosh's intervention (online hotel booking)

France: proposition de loi visant à encadrer les méthodes pratiquées par les agences de réservation en ligne


Euro interest rate derivatives cartel: EC sends Statement of Objections to Crédit Agricole, HSBC and JPMorgan

Press Release, here

Economics in the design and implementation of competition policy

J. Fingleton, Abstract and Audio here.

Open Internet Project Manifesto - Paris Declaration of May 15, 2014

Economic Rationales of Exclusive Dealing; Empirical Evidence from the French Distribution Networks

M. Fadairo, J. Yu, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/14

(Previous installments here)

In conclusion, and based on the above reflections, some tentative answers to the central question of this serial: What is really new about retail MFN clauses?

For years already, competition/antitrust circles have discussed whether anticompetitive motives and efficiency justifications underlying the adoption of vertical restraints in the off-line world equally applied to on-line sales. Thus, for instance, most participants in an OECD roundtable on vertical restraints for on-line sales agreed that “a new economic and regulatory framework was not needed to assess the competitive implications of vertical restraints” in the Internet economy. After all, as recently argued by Alexander Italiener, the EC Director-General for Competition, some of the actual issues emerging from e-commerce, such as how to deal with on-line resellers accused of free-riding on others’ promotional efforts, are hardly a novelty. Differences in scale and speed notwithstanding, mail order companies in the pre-Internet time were accused of doing broadly the same.

With regard specifically to retail MFN clauses as used by multi-sided platforms, before asking questions about the suitability of our current economic and regulatory framework in order assess them, it should be noted that this type of vertical restraint might raise some "original" competition concerns.

(To be continued)

The ten things that define you

J. Zittrain, here

Leveraging Market Power Through Tying and Bundling: Does Google Behave Anti-Competitively?

B. Edelman, here

The Audience in Intellectual Property Infringement

J. Fromer, M. Lemley, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/13

(Previous installments here)

Notwithstanding, the Competition Commission validly argues that narrow MFNs are much less a cause for concern than wide MFNs. Generally, under narrow MFNs, competition between PCWs is not critically restricted, since PMI providers can quote different premiums on different PCWs. Nor is entry to the PCW market substantially hampered, since insurers can pass through to lower prices the smaller CPA fees required by new entrants. Moreover, an innovative PCW can still be “rewarded” by the insurer by quoting a lower price on the PCW’s platform.

The Commission also recognizes that, under specific circumstances, there might still be some tangible anticompetitive effects. However, as seen above, the Commission maintains that, at present, narrow MFNs impose significant network effects only in very few instances, and, therefore, their overall impact on the market is much limited. The Commission’s reasoning is not totally convincing, though. In particular, the widespread use of retail MFN clauses in the MPI industry could have hampered the development of the insurer’s direct sales channel. This means that it cannot be excluded that, once any type of MFN clause banned, the insurer will have more incentives to invest in making her own direct online channel grow.

At any rate, when a narrow MFN clause produces anticompetitive effects, it might still be possible to demonstrate the occurrence of specific efficiencies outweighing the harm to competition. Thus, it could be alleged that narrow MFNs prevent the insurer from free-riding on PCW’s investments. However, there might be alternative, less restrictive mechanisms than a narrow MFN clause to prevent this from occurring. For instance, consumers that use the PCW’s facilities for search and then purchase on the insurer’s website are rather easily identifiable by way of cookies or other means, and the contract between the insurer and the PCW can require that also in this case a fee must be paid to the latter.

(To be continued)

FAZ: Ausgewogener Journalismus oder persönliche Kampagne gegen Google?

14. Mai 2014

Europäischer Gerichtshof bekräftigt "Recht auf Vergessenwerden" , S. 1:
Die Welt ist keine Google, S. 1;
Im Netz verweht, S. 2;
Strassburger Applaus, S. 2;
Ehrverletzende Vorschläge, S. 2;
Leben, um es auch wieder vergessen zu können, S. 9;
Internetnutzer können persönliche Daten löschen lassen, S. 15;
Daten wie Wasser, S. 15.

Are APIs Patent or Copyright Subject Matter?

P. Samuelson, here

Outils opérationnels de prévention et de lutte contre la contrefaçon en ligne

Rapport Dutheillet de Lamothe, ici.

Datenschutz im Auto

Deutsche Bundesregierung, hier

Old friends in new frocks? MFN clauses in the online hotel booking sector/12

(Previous installments here)

It can be argued, however, whether the Competition Commission’s strong concern with PCWs’ survival in the interest of consumers, and supporting the defense of narrow MFN clauses, is really warranted.  First, and contrary to the Commission’s allegation, it would seem that PCWs can thrive also without narrow MFNs, as the experience in other industries shows. Thus, for instance, PCWs in the air travel sector exist and prosper despite the fact that the prices of flight tickets advertised on the airlines’ own websites are often lower than the rates displayed on some PCWs.

Furthermore, investing in PCWs despite potential “consumer leakage” to the insurers' websites could still be worthwhile because of the economic value of personal data.  Typically, a consumer visiting a PCW in search of a PMI policy has to answer a long list of rather detailed questions which in particular aim at identifying the consumer’s risk profile. Thus, in the process of searching and comparing the most suitable offers, even if consumers do not “click through” to the insurers’ websites to finalize the purchase, PCWs gather information, also in aggregated form, that can be of substantial economic value to insurers and other market participants.

Third, shifting the focus from the price to other elements of the offer could actually be in the interest of consumers. Economists have long recognized that boundedly rational consumers facing decisions on complex products and services might find it so difficult to compare the different offers available to them that they tend to inertia. The suppliers of products and services can reinforce consumers’ behavioural biases through the strategic adoption of over-complexity in pricing and/or qualitative characteristics of their offers, and may even try to hamper the development of new business models designed to overcome consumer inertia. However, there are products and services that are inherently difficult to compare, such as, possibly, insurance products. If the comparison website focuses on price, the offer at the top of the list, i.e. the cheapest insurance product, could well turn out to be of lower value to the consumer when the whole deal is taken into account.

(To be continued)

Oracle v. Google

US Court of Appeals, May 9, 2014, here.

My short paper here for some background.  

Braille e-books: Why can't you buy a budget e-reader?

Bbc.com, here


Secondary Legislation Scrutiny Committee, Report and Transcript

What Apple is really buying with Beats

TheVerge.com, here

Regulation for Competition

A. Fletcher, Presentation here

Hachette Says Amazon Is Delaying Delivery of Some Books

NYTimes.com, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/11

(Previous installments here)

Because of convincing evidence that interbrand competition, here competition between insurance brands measured by the rate of consumers’ price-based switching, is very effective when exercised on PCWs, the Competition Commission can be legitimately concerned not to hamper the attractiveness of these platforms’ business model. However, while the direct anticompetitive effects of narrow MFN clauses may appear limited, their cumulative, or “network” effect could still have momentous consequences for competition in the PMI market. 

Once wide MFNs are prohibited, an insurer is able to agree different PMI premiums with different PCWs. If a PCW retains, or introduces, a narrow MFN, the insurer will be constrained not to offer on its own website a premium lower than the price agreed with that PCW. When the same insurer agrees on a narrow MFN clause with a number of PCWs, the cumulative effect is that the insurer's directly offered price cannot be lower than the price it offers on any of its partner PCWs’ websites. The end result is that the price displayed by the insurer on its own website would be the same as the least competitive partner PCW.

Therefore, one unintended consequence of the cumulative effect of narrow MFNs could be that the PMI providers with significant and high-profit direct sales would still prefer charging the same price through all PCWs in order to maintain the attractiveness of their own channel, so that the narrow MFN clause becomes a de facto wide MFN clause. Of course, this in turn will depend on a number of factors, such as the strength of the PMI’s brand and the presence of alternative channels to efficiently market PMI policies, which make direct sales less attractive to the PMI.

While the Competition Commission acknowledges that also narrow MFNs, because of the alleged network effect, can restrict competition, she maintains that these effects would be confined to a limited number of PMI brands, not affecting the functioning of the PMI market as a whole. In particular, having empirically examined the importance of direct sales to PMIs, the Competition Commission found that insurers whose direct sales were dominant relative to alternative channels already did not appear on PCWs. There were only four brands for which there was significant competition between the direct channel and the PCW, but those four brands together only accounted for a small proportion of the policies sold through PCWs. The Commission thus concludes that “in the vast majority of cases, narrow MFNs do not impose significant network effects.”

(To be continued)

Europe's creative sector highlights dangers of proposed new WIPO treaty: Letter to Barroso

International Publishers Association, here.

Ebooks and Copyright Issues

ALA, here.

Possible delay to new UK private copying and parody rights

Out-law.com, here.

U.S. judge: Government's antitrust suit vs AmEx may proceed

Reuters.com, here

EFTA case on charging under Article 6 PSI directive

Lapsi-project.eu, here.

Four Facets of Privacy and Intellectual Freedom in Licensing Contracts for Electronic Journals

A. Rubel, M. Zhang, here

Diffusing New Technology Without Dissipating Rents: Some Historical Case Studies of Knowledge Sharing

J. Bessen, A. Nuvolari, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/10

(Previous installments here)

The Competition Commission, as part of its investigation into the PMI industry, found that retail MFN provisions were present in the contracts between platforms and PMI providers covering the vast majority of policies sold in 2012 via the four largest PCWs in the UK. In this sector, a retail MFN clause aims at avoiding that, based on an identical consumer proposition and risk profile, either an insurer can provide a lower price on any other online sales channel than it is advertised on the PCW’s website, so called wide (or online-sales) MFNs, or the insurer can provide a lower price on its own website than it is advertised on the PCW’s website, so called narrow (or own website) MFNs.

While narrow MFNs are slightly more widespread than wide MFNs in the PMI sector, the Competition Commission maintained that wide MFN clauses have a very significant impact because of what the Commission called a “network effect:” when a PMI policy sold through PCWs is covered by at least one wide MFN clause with one PCW, this stops any other PCW offering cheaper premiums for that policy. In other words, a wide retail MFN clause with a single PCW constrains the pricing of the insurance policy at issue on all PCWs. Significantly, the Competition Commission also noted that most of the policies sold through PCWs are covered by at least one wide MFN clause with one PCW.

Much in line with the Bundeskartellamt’s competition assessment of retail MFN clauses in the hotel online booking case briefly outlined above, the Competition Commission, in the provisional findings published last December, found that wide MFN clauses reduce competition and lead to higher premiums. Among the possible remedies, the Commission envisaged a prohibition on wide MFN clauses on price comparison websites. Narrow MFN clauses, however, according to the Competition Commission should not be banned, because their anticompetitive effects are much limited. Apparently, the Competition Commission took in some consideration the main argument put forth by platforms in defense of narrow MFN clauses. Without some form of MFN, the PCWs maintained that the end consumer would go to a price comparison site for search, but then switch to the insurer in order to make the actual purchase, on the premise that the insurer would be willing to pass on to the end consumer at least part of the CPA fee. In the short term, the end consumer is better off because she saves a small amount on her insurance policy premium. Longer term, however, the tangible benefits brought to consumers by PCWs would likely evaporate.

(To be continued)

Economists disagree on net neutrality. What else?

IGMCHicago.com, here.

Opinion on Anonymisation Techniques

Article 29 Data Protection Working Party, here

Can economics be evidence-based?

M. Joffe, here

Google Maps intègre Uber

Numerama.com, ici

Those who steal movies are also happy to pay

Port.ac.uk, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/9

(Previous installments here).

It is not difficult to predict a growing attention by competition enforcers towards vertical restraints involving online platforms active in other industries. In the UK, the Competition Commission found that retail MFNs are very common also in the motor insurance sector, where buying policies online through price comparison websites (PCWs) is increasingly popular. The first PCWs gathered prices visiting private motor insurance (PMI) providers’ websites and extracting information from those pages algorithmically (so called screen-scraping), also despite insurers’ widespread opposition to the practice. With time, PCWs were able to develop stable commercial relationships with PMI providers, who now make available directly to the PCWs detailed information concerning actual premiums and policies.

In order to be survive, PCWs must be attractive to both customers and insurers. To consumers, PCWs offer tools to compare premiums and policies; to insurers, also to niche ones, PCWs offer an appealing shop window where to present their products. In order to attract customers to their platforms, PCWs spend substantial amounts of money in TV advertising, in adverts to Google, etc. When a customer finds a PMI policy which she wishes to buy, she clicks through to the insurer’s website and purchases the desired product. Typically, the PMI provider pays the PCW a fee for every policy purchased (so called cost per acquisition – CPA - fee), which is not based on the actual premium paid by the consumer.

Arguably, thanks to PCWs, consumers face lower search costs, with more switching between PMI providers and more potential savings on insurance premiums. As an OFT study into PCWs indicates, these platforms have been effective in promoting price competition among sellers. Along the same lines, the Competition Commission found that PMI providers are five to ten times more price sensitive when they are selling through PCWs than through different channels. According to recent UK market estimates, about 55 to 60 per cent of new business (i.e. first-time motor insurance purchasers or consumers switching from their previous providers) comes through PCWs, while renewals account for about 59 per cent of all PMI policies sold - which does not mean, however, that in the latter case consumers have not used a PCW: often consumers refer to the price comparison results in order to obtain a cheaper renewal premium from their current providers.

(To be continued)

Open Letter to European Commission: Stop DRM in HTML5

Free Software Foundation Europe, here.

Retail Price MFNs: Are they RPM ‘at its worst’?

A. Fletcher, M. Hviid, here.

Or, possibly, even worse than the worst RPM?

Premier League fans in Europe worse off after Murphy judgment

Kluwer Competition Law Blog, here

Case C-74/14, Eturas – computerised cartels and limits on price discounts for travel package tours

Eulawradar.com, here.

Official English version now available.

1. Should Article 101(1) of the Treaty on the Functioning of the European Union be interpreted as meaning that, in a situation in which economic operators participate in a common computerised information system of the type described in this case and the Competition Council has proved that a system notice on the restriction of discounts and a technical restriction on discount rate entry were introduced into that system, it can be assumed that those economic operators were aware, or must have been aware, of the system notice introduced into the computerised information system and, by failing to oppose the application of such a discount restriction, expressed their tacit approval of the price discount restriction and for that reason may be held liable for engaging in concerted practices under Article 101(1) TFEU?

2. If the first question is answered in the negative, what factors should be taken into account in the determination as to whether economic operators participating in a common computerised information system, in circumstances such as those in the main proceedings, have engaged in concerted practices within the meaning of Article 101(1) TFEU?

EC Report on Competition Policy 2013

Here. Commission Staff Working Document here

Does Europe hate libraries?

Policyreview.info, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/8

(Previous installments here

The German competition authority also noted that there are alternative ways to achieve some of the benefits HRS ascribes to the retail MFN clause which do not carry the same serious anti-competitive consequences, such as, by way of example, monthly listing fees, or cookie-based marketing fees, paid directly by the hotels to the OTAs. These alternative business models would ensure HRS a direct financial reward for the services it provides to hotels, irrespective of the actual sales it generates. Another possibility would be combine a fixed rate, such as a listing fee, with a variable look-to-book conversion rate.

At any rate, the Bundeskartellamt expects that, once the conditions for healthy competition in the industry are redressed, business models will develop that are attuned to the modified market conditions and demands. Interestingly, the “natural experiment” conducted since April 2012, when HRS pledged not to enforce the retail MFN clause in its contracts with hotels, would seem to demonstrate that OTAs are not doomed to develop into financially unsustainable “hotel search engines.” In fact, despite the demise of the retail MFN provision, HRS was able to safeguard its position as a leading OTA in the German market. However, this can also depend on the consumers’ tendency not to switch between OTAs (“singlehoming”), an attitude reinforced by the best price guarantee still dominant in the hotel industry.

Possibly, given the German competition authority’s focus on the retail MFN clause, it was not deemed necessary to assess whether the vertical price fixing provision contained in the “agency” agreement was by itself anticompetitive, or whether it could be justified due to the efficiency benefits ascribed to it.  While European competition law generally permits a hotel to harmonize its distribution networks to avoid “free-riding” and to stimulate interbrand competition, even if this might tend to eliminate intrabrand price competition, in the on-line travel case investigated by the German competition authority there is clear evidence that the retail price MFN was actually requested by HRS, thus dictating to the hotels an essential element of their pricing policy.

(To be continued)

Four Privacy Myths

N. Richards, here

When Does Sharing Make Sense?: Antitrust & Risk Evaluation and Mitigation Strategies

J. Rybnicek, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/7

(Previous episodes here

Still, the protection of sunk and fixed cost investments, a generally accepted benefit of many vertical restrictions, could potentially apply also to retail MFN clauses. In the hotel online booking decision, the German competition authority discussed at length whether the MFN clause employed by HRS, the investigated OTA, aimed at protecting the investments required for a high-quality online booking offering, such as a fruitful search experience, and the provision of extensive, and reliable, information sources, by that promoting quality competition among OTAs. HRS made the case that it invested heavily in producing a good-quality service in order to attract customers, and that the employed retail-price MFN limited the diversion of consumers from HRS’ platform to the hotels’ own websites and to other OTAs. If consumers discovered that they could find cheaper hotel rates elsewhere, they might still use the hotel search and other facilities developed by HRS but not book the room through the HRS platform, by that undermining HRS’ and other OTAs incentives to invest in quality competition among platforms.

Following detailed analysis, the Bundeskartellamt was unconvinced by HRS' argument about the seriousness of the free-rider problem. First, the German competition authority noted that only a very small amount of HRS’ investments goes into the promotion of single hotels offerings; the largest part of HRS’ investments is devoted to the promotion and the enhancement of the platform itself. In case consumers booked hotel rooms directly via the hotels’ websites, the platform-specific investments would not be significantly discouraged. The prohibition of retail MFN clauses notwithstanding, the OTAs would continue investing in the quality of their services.

Moreover, the so-called billboard effect (i.e. the additional reservations made through the hotel’s website after inclusion in the OTA’s listing) is limited, especially due to the structure of the hotel industry in Germany, where there are many small and medium operators whose websites normally do not offer the same booking functionalities and comfort available to consumers without charge on the HRS' platform (e.g. immediate booking). The billboard effect in favour of the major hotel chains in the German market is also bound to be relatively insignificant, in particular because consumers already tend to seek out brand hotel chains’ websites directly.

Investigation into the combining of personal data by Google

Dutch Data Protection Authority, here.

Supermarkets are using science to turn ordinary shopping habits into bigger profits

TheVerge, here.

Advancing National Intellectual Property Policies in a Transnational Context

M. Trimble, here

The Marrakesh Puzzle

M. Trimble, here

SCCR27: Library and Archive joint statement on orphan works

IFLA.org, here

Old friends in new frocks? MFN clauses in the online hotel booking sector/6

(Previous installments here

Allegedly, between the investigated parties there is a “traditional” RPM clause in place, providing that the hotels would establish the room-only rate. Booking.com and Expedia are obliged to use the published rates when offering the hotels' rooms to consumers. Basically, what the former British competition agency declined to analyse was the related restrictive clause in the agreement between hotels and OTAs, i.e. the hotels' obligation that the published rates offered by Booking.com and Expedia would be as favourable as the rates offered to any competing OTA and the rates operated by the hotels themselves.

Tentatively, one of reasons explaining the OFT’s focus on the vertical price fixing element of the investigated practices could be that retail-price MFN clauses stand for largely uncharted terrain, both in economic and legal terms. Another, more consequential reason could be that the effective operation of a retail-price MFN under certain circumstances is predicated on the ability of the supplier, here the hotel, to control prices. If an OTA imposes a retail-price MFN clause on a hotel, the latter has to make sure that the “favoured” OTA is not undercut by the latter's competitors, or otherwise match the lower retail-price. The hotel may  then be willing to resort to minimum resale prices with a view to ensuring that nobody offers lower room-only rates than the ones displayed on the website of the OTA imposing the retail-price MFN clause. In this case, it would be the retail-price MFN that leads to RPM.

An important consequence of the “MFN explanation” for the operation of RPM is that it might become even more difficult to rationalize (and exempt) the latter by pointing to commonly alleged efficiency reasons, such as safeguarding retailers (here, OTAs) against free-riding. Moreover, this would mean that only when the possibility of “transmission” between the retail-price MFN clause and RPM is explicitly ruled out, it would perhaps make sense to focus exclusively on the latter. Conversely, when it can be demonstrated that, in the context of a specific case, RPM provides a mechanism to ensure the effective operation of a retail-price MFN clause, the question arises whether efficiency benefits exempting the latter could also redeem RPM’s “own” anticompetitive effects.

Admittedly, this and a number of equally important questions are difficult to answer, at least for the time being. For once, the potential efficiency explanations for retail-price MFNs are still to be thoroughly analysed. Recently, economists writing in support of Apple’s appeal against a US District Court’s ruling finding that Apple and some book publishers had conspired to raise the prices of e-books, maintained that the MFN clause, a crucial element of the alleged conspiracy, under certain circumstances can facilitate entry.

Algorithms and competition

M. Vestager, here . Large friendly letters? "It's true that the idea of automated systems getting together and reaching a...