ANTITRUST: ANTITRUST LAW & POLICY eJOURNAL

"Artificial Intelligence & Collusion: When Computers Inhibit Competition" Free Download

ARIEL EZRACHI, University of Oxford - Faculty of Law
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MAURICE E. STUCKE, University of Tennessee College of Law
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One may find it hard to imagine life without the power of computers. Indeed, all areas of our livelihood are affected and have benefited from technological development and an increasingly powerful computerised environment. In line with these developments, recent years have witnessed an ever increasing reliance on big data and big analytics and investment in the development of ‘smart’, ‘self-learning’ machines. These complex machines are set to assist in decision making, prediction, planning, trade, and logistics. They are also predicted to further enhance our more immediate living environment - the way we commute, shop and communicate.

Not surprisingly, the prospect of Artificial Intelligence (AI) has long fueled human imagination. The development of self-learning and independent computers raises challenging questions as to the future of the human race and the control, or lack of it, humans would exert over machines.

Interestingly, these developments and the challenges raised by them are also relevant to the area of antitrust enforcement. Sophisticated computers are central to the competitiveness of present and future markets. With the accelerating development of AI, they are set to change the competitive landscape and the nature of competition restraints, which enforcement agencies will need to tackle.

This paper addresses these developments and considers the application of competition law to an advanced ‘computerised trade environment.’ Questions raised and discussed are neither futuristic nor speculative. The Department of Justice, for example, charged in 2015 a price-fixing scheme involving posters sold in the United States through Amazon Marketplace. To implement their agreements, the conspirators, according to the DOJ, “adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.?

With the present usage of computers and anticipated technological advancements, more prosecutions involving pricing algorithms are likely. Thus the questions raised in these cases are central to our current thinking on antitrust enforcement and technological developments. Such questions concern, for example, the concept of agreement and intent in a computer dominated environment, the boundaries of legality and collusion, the antitrust liability of algorithms’ creators and users, the ability to constrain AI, the relationship between humans and computers, and the possibility of creating ethical, law abiding, machines.

After discussing in Part I the way in which computerised technology is changing the competitive landscape, we explore in Part II possible ways in which computerised agents may be involved in anticompetitive collusion. We consider varying levels of technological development, which differ in the enforcement challenges they raise. Finally, Part III reviews the antitrust policy challenges raised by advanced computers and artificial intelligence.

"Excessive Pricing: A View from Chile" Free Download
The University of Oxford Centre for Competition Law and Policy. Working Paper CCLP (L) 41.

OMAR PATRICIO V?SQUEZ DUQUE, University of Chile - School of Law
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Excessive pricing is one of the most controversial topics in competition law. Notwithstanding excessive pricing being one of the most blatant forms of abuse, a non-intervention policy tends to be the prevalent choice worldwide. Such a “hands-off? approach is based on the grounds that excessive prices self-correct, as well as practical difficulties in measuring a competitive benchmark and identifying excessiveness, and the fear of distorting ex ante incentives to innovate and invest. This article aims at providing a more balanced approach, which might be particularly useful for small economies, since market failures tend to linger for a longer time in small markets. Accordingly, it reviews the literature concerning the merit of antitrust intervention and the tests proposed to determine when intervention should take place. Then it illustrates the Chilean experience, which shows challenges concerning the scope of competition law; its goals; and principally the identity of a jurisdiction influenced by both the American and the European systems. This work concludes, on a policy level, that antitrust law might have a role to play in excessive pricing cases; and points out that even if hard enforcement is not considered appropriate, soft-enforcement strategies might also be advisable to address excessive prices. On a practical level, this article concludes that jurisdictions where excessive pricing provisions already exist should prefer tests aimed at defining a workable application of such provisions. This paper provides guidelines to determine their enforcement.

"Theories of Self-Preferencing Under Article 102 TFEU: A Reply to Bo Vesterdorf" Free Download

NICOLAS PETIT, University of Liege - School of Law
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In a 2015 paper, Bo Vesterdorf argues that there is no legal basis for the decisional implementation of theories of abusive self-preferencing under Article 102 TFEU. His paper comes in the context of the headline-grabbing Google search investigation in the EU. In Vesterdorf's view, the sole legal avenue that may be used to order a dominant firm "not to favour" its own services is the essential facilities doctrine. Vesterdorf goes on to make a very restrictive description of the scope and conditions of application of the essential facilities doctrine in EU competition law.

This paper is a reply to Bo Vesterdorf's paper. It shows that the Vesterdorf paper does not withstand a comprehensive positive law analyzis. The case-law provides several legal basis for the promotion of theories of abusive self-preferencing under Article 102 TFEU. Moreover, in positive EU competition law, the essential facilities doctrine is not the narrow theory of liability described in Vesterdorf's paper. Finally, the concept of "competition on the merits" is of limited help to redeem a dominant firm's abusive conduct.

"TNK-BP, Party Autonomy, and Third-Country Mandatory Rules" 
Northwestern Journal of International Law & Business, Vol. 35, No. 2A, 2015

DELPHINE NOUGAYRÈDE, DLA Piper, Columbia University - Law School
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This article looks at a recent dispute between British oil major BP plc and its Russian partners in a Russian joint-venture, TNK-BP, which had become the third largest Russian oil company. The dispute was about the alleged breach by BP of a noncompete (or exclusivity) clause in a shareholder agreement that had been signed between offshore legal entities and was governed by English law. Although the clause was arguably contrary to Russian competition law, it was upheld by a tribunal formed under the rules of the arbitration institute of the Stockholm Chamber of Commerce. The turmoil set off by the dispute ultimately led to the full acquisition of TNK-BP by Rosneft, the state-controlled Russian oil company, for approximately $55bn, and a significant expansion of Russian state control over the oil &gas sector. The article comments on the persistent lack of effect of third-country mandatory rules in transnational contractual practice and the eviction of national laws through cross-border corporate and contractual planning . It calls for increased transparency in systemically important transactions, through publication of court injunctions and large scale arbitral awards (at least in part).

"A View of the Macrocosm of International Cartel Enforcement: How the Boomerang of Cross-Border Disclosure Springs Back to its Domestic Context" 
(2015) 43 ABLR 27

LAURA GUTTUSO, University of Queensland -TC Beirne School of Law
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This article aims to explore Australia's role on an international cartel enforcement stage increasingly characterised by cross-border disclosure challenges in both public and private cartel proceedings. The task will be approached from a number of perspectives, including that of claimants and leniency applicants, either of domestic or foreign origin, finding their way into the Australian courts and disclosure processes. The practice in other jurisdictions, such as the European Union and the United States, will be set against the Australian experience, again viewed through the international lens. This multi-layered inquiry provides useful insights into what are ultimately the challenges of how best to accommodate the wider interplay between public and private enforcement. This inevitably raises the question whether the response provided to these challenges at national enforcement level in Australia is still adequate. Now, given the backdrop of the current Harper Review, might be a good time to consider that question.

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About this eJournal

This eJournal distributes working and accepted paper abstracts dealing with all aspects of antitrust and competition policy, including mergers, cartels, monopolies, and price discrimination.

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Directors

ANTITRUST & REGULATED INDUSTRIES EJOURNALS

BERNARD S. BLACK
Northwestern University - School of Law, Northwestern University - Kellogg School of Management, European Corporate Governance Institute (ECGI)
Email: bblack@northwestern.edu

RONALD J. GILSON
Stanford Law School, Columbia Law School, European Corporate Governance Institute (ECGI)
Email: rgilson@leland.stanford.edu

Please contact us at the above addresses with your comments, questions or suggestions for LSN-Sub.

Advisory Board

Antitrust: Antitrust Law & Policy eJournal

JAMES R. ATWOOD
Covington & Burling

JONATHAN B. BAKER
Professor of Law, American University - Washington College of Law

MAXWELL M. BLECHER
Attorney at Law, Blecher and Collins

DENNIS W. CARLTON
Professor, University of Chicago - Booth School of Business, National Bureau of Economic Research (NBER)

FRANK H. EASTERBROOK
Senior Lecturer, University of Chicago Law School

NICHOLAS ECONOMIDES
Executive Director, Networks, Electronic Commerce, and Telecommunications Institute, Professor of Economics, New York University - Leonard N. Stern School of Business - Department of Economics

EINER R. ELHAUGE
Professor of Law, Harvard Law School

ELEANOR M. FOX
Professor of Law, New York University School of Law

HERBERT J. HOVENKAMP
Professor, University of Iowa - College of Law

LOUIS KAPLOW
Professor of Law, Harvard Law School, National Bureau of Economic Research (NBER)

DANIEL L. RUBINFELD
Professor, University of California at Berkeley - School of Law, National Bureau of Economic Research (NBER), NYU Law School

CARL SHAPIRO
University of California, Berkeley - Haas School of Business