Applying Two-Sided Markets Theory: The MasterCard and American Express Decisions

Journal of Competition Law & Economics 2018 (Forthcoming)

25 Pages Posted: 2 Oct 2017 Last revised: 19 Feb 2018

See all articles by Giuseppe Colangelo

Giuseppe Colangelo

University of Basilicata, Department of Mathematics, Computer Science and Economics; Stanford Law School; LUISS Guido Carli, Department of Business and Management; Bocconi University - Department of Law

Mariateresa Maggiolino

Bocconi University - Department of Legal Studies; Ask Research Center

Date Written: September 30, 2017

Abstract

Since the seminal papers by Rochet and Tirole, the payment card industry has represented an elected field of study for the economic features of multi-sided markets and their effects on both regulation and antitrust analysis. The recent judgments of the UK High Court of Justice in MasterCard and of the US Court of Appeals for the Second Circuit in American Express are particularly relevant since they are the first to concretely apply the economic theory of multi-sided markets to the payment card industry. In particular, given the peculiarities of multi-sided markets, the coexistence of different business models, and the twofold competitive interpretation of the conduct once studied in its own context, courts have emphasised the need to articulate a judgment around counterfactual hypotheses. This is a way to measure the actual impact on competition, testing the realistic scenario that would occur if the investigated conduct was absent, so as to give appropriate consideration to the business model of the single platform, in which competition law should intervene. The same reasoning that makes us consider advantageous a flexible antitrust approach (meaning a case-by-case analysis) forces us to be critical of the current US and EU regulation of payment systems.

Keywords: payment cards; two-sided markets; antitrust

JEL Classification: K21; L40; L84

Suggested Citation

Colangelo, Giuseppe and Maggiolino, Mariateresa, Applying Two-Sided Markets Theory: The MasterCard and American Express Decisions (September 30, 2017). Journal of Competition Law & Economics 2018 (Forthcoming). Available at SSRN: https://ssrn.com/abstract=3045778 or http://dx.doi.org/10.2139/ssrn.3045778

Giuseppe Colangelo (Contact Author)

University of Basilicata, Department of Mathematics, Computer Science and Economics ( email )

Via dell'Ateneo Lucano 10
Potenza
Italy

HOME PAGE: http://https://sites.google.com/site/giuseppecolangelouni/

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

HOME PAGE: http://https://law.stanford.edu/transatlantic-technology-law-forum/

LUISS Guido Carli, Department of Business and Management ( email )

Viale Romania 32
Rome, Roma 00197
Italy

HOME PAGE: http://https://sites.google.com/site/giuseppecolangelouni/

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, 20136
Italy

Mariateresa Maggiolino

Bocconi University - Department of Legal Studies ( email )

Via Roentgen, 1
Milan, 20136
Italy

Ask Research Center ( email )

via Roentgen 1
Milan, 20136
Italy

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