On November 12, 2019, Jenna Ward and Justine Reisler attended the Global Competition Review's 3rd Annual Women in Antitrust Conference in Washington, D.C. with over 100 female delegates from around the world. During this conference, female thought leaders discussed a variety of topics, including (i) big tech; (ii) killer acquisitions; (iii) information sharing; and (iv) the potential impact of elections on antitrust.
Where are we Today with Enforcement against Big Tech?
The panelists explored concerns about market power in digital markets as discussed in numerous reports commissioned by antitrust agencies from around the world. The panelists also discussed calls for new 'Digital Authorities' in the reports coming from the United Kingdom, Australia and the United States.
The panelists emphasized that economists already have the tools needed to assess antitrust concerns in the context of big tech, but noted that the application of these tools may need to be re-thought in certain specific areas, such as when considering non-price effects. For example, large technology companies often offer free products to consumers on one platform and profit from selling different products on another complementary platform, which leads to winner-take-all markets where it appears difficult for new competitors to enter. That being said, panelists acknowledged that technology markets may be contestable – Facebook was a popular example.
Data, referred to as the new "oil", was another key topic for the panelists. However, the panelists aptly noted that data has its limits as a competitive advantage, being non-rivalrous and often less valuable with age (i.e. data can become stale). The panelists expressed reservations about the promise of data portability to resolve the problem of winner-take-all markets in big tech. While it was acknowledged as a 'nice to have' for consumers, there are challenges to be addressed in terms of balancing data portability with privacy laws.
The panelists reminded attendees that the notion that existing antitrust laws are insufficient to handle the modern technology of our time is nothing new (i.e. oil and railroads). However, a key takeaway is that regulators and the international competition bar will need to be more creative in fashioning remedies to address competition concerns in this new era of big tech.
The panelists took the time to define "killer acquisitions", also known as "strategic acquisitions", depending on your perspective, which are acquisitions by a large company of an innovative nascent company that may have no, or a very small, market share. The panel was quick to emphasize that such acquisitions represent only a handful of hundreds of thousands of transactions. It also cautioned against injecting hyperbolic language into antitrust policy discussions to invoke a sense of morality, as if a merger review decision was one of life and death. The panelists agreed that regardless of what we call such acquisitions, the analytical framework for evaluating them already exists. Moreover, enforcement agencies already analyze the rationale for a transaction and assess whether there is an anti-competitive purpose or effect.
The panelists acknowledged that many start-ups are created with the intent of ultimately being purchased by a larger market participant. In this regard, the panelists recognized the potential risk of chilling innovation in light of increased scrutiny of "killer" or "strategic" acquisitions in the tech space.
The highly speculative nature of post-closing discussions of what would have happened had a certain merger been blocked was emphasized by the panelists. Even with the benefit of hindsight, we will never know what would have happened if the merger review decision went the other way. Questions surrounding the probability of a new product developing into a viable alternative or whether a target could have survived without the acquisition are ones which are very difficult for regulators to assess. Furthermore, if a product survives in a killer acquisition, and continues to be available in a market but customers are not choosing it over the dominant product, does that mean the acquirer under-invested or is it because the product is inferior? The suggestion of re-opening merger decisions was not popular; panelists prefer to see stricter enforcement of existing abuse of dominance provisions.
When Conversation becomes Collusion
The panelists discussed the point at which the exchange of information becomes anticompetitive conduct – or worst of all, a cartel. All agreed that the line between lawful information exchanges and collusion is hard to pin down, in part because there is a lack of clarity both in the guidelines within jurisdictions and because of the differences between the guidelines provided by different jurisdictions. This makes information sharing particularly tricky for multinational corporations operating across jurisdictions. The panelists agreed that it would be useful to see more coordination between competition enforcement agencies in developing common guidelines on this topic.
The panelists noted that trade association meetings are particularly high risk. They recommended that companies have competition counsel present during these meetings in order to minimize the risk of competition concerns arising.
The following practical tips arose from this panel discussion:
- Limit the information exchanged to historical – rather than future – information.
- Disseminate aggregated – rather than disaggregated – information.
- Prohibit sales and marketing personnel from receiving competitively sensitive information, if such information is shared at all.
- Always seek advice from competition counsel.
For more practical advice about information sharing, see Mitigating the Risk of Pre-Closing Information Exchanges.
The conference closed with a lively and interactive discussion concerning the impact of the upcoming U.S. presidential and European parliamentary elections on competition law. The consensus seemed to be that politics matters less in antitrust than people may think because there is a bipartisan understanding that antitrust is about economics and that regulators need to pick cases they can win in court.
Thank you to the conference chairs, moderators, panelists, sponsors and GCR for organizing an event that brings together women from the global antitrust community.
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