The article reveals the main problems of antitrust law caused by the widespread use of digital technologies. The greatest challenge brought by the proliferation of digital technology and data is the emergence of new forms of pricing, which do not fit well with our traditional approach to the market definition or with our traditional assessment of the likely effect of mergers on prices. Digital sellers have the ability not only to recognize previous buyers more effectively but also to collect, store and exploit information about this buyer’s past behaviour in order to display products and prices aimed at maximising the seller’s profits given the available buyer profile. Individualised pricing enabled by digitalisation raises issues relative to market definition. In a world where digital sales enable customised pricing, the market is much more liable to segmentation. As a result, one must pay close attention to whether the merging parties are or not “especially close competitors” not only in terms of products but also in terms of consumer information. The authors conclude that AI-based algorithms could be used to facilitate tacit collusion between rivals. Coordination between independent parties is easier to achieve and maintain if the parties can agree on a common price, can detect any deviation from this agreement quickly and precisely and can react to such deviations quickly. Establishing this type of infringement would likely require expertise not currently available to most competition authorities. The article identifies several mechanisms through which the emergence of digital conglomerates, and hence the approval of digital conglomerate mergers, can affect competition adversely. The platform’s “market power” now depends on its ability to retain users within its own ecology and to use this to restrict the supply of advertising, leading to higher prices for both advertising and the corresponding products. This ability is increased by any acquisition which helps populate this ecology. Traditional measures of concentration can therefore easily understate, or even miss entirely, this type of merger-specific increase in market power.
Market Definition and Market Power in Data: The Case of Online Platforms
