Online Platforms, Agency, and Competition Law: Mind the Gap

Abstract

Many of the world’s most valuable companies adopt the online
platform business model to bring together different groups of
customers—suppliers and customers—seeking to transact with one
another. This Article aims to establish the correct legal
characterization of these platforms and the implications thereof for
competition law purposes. To do so, it explores two related questions:
first, whether platforms are agents of their suppliers; and, second,
whether the competition law prohibition of anticompetitive agreements
should apply to agreements between platforms and suppliers, which
restrict competition on the relevant market for the products/services
regarding which the platform facilitates a transaction. The first
question arises because the platform business model resembles an
agency arrangement more than any other, and many platforms selfproclaim
to be agents of their suppliers. Yet, the decisional practice
and commentary have developed on the premise that they are not
agents. The second question arises due to the “agency rule” under the
“single economic entity doctrine,” according to which restrictive
agreements between an agent and a principal take place within the
same “undertaking” and are consequently immune from the
competition law prohibition of anticompetitive agreements between
separate undertakings. After applying concepts of agency and similar
delegation models found in different areas of law to the standard
contracts of six major platforms—Amazon Marketplace, Apple App
Store, Uber, eBay, Booking.com, and, Airbnb—this Article finds that,
as a matter of positive law, all of these platforms are agents of their
suppliers. Consequently, platforms’ agreements with their suppliers
that restrict competition on the relevant products/services market
cannot be scrutinized due to the agency rule under the “single
economic entity doctrine” as currently conceived. This represents a
significant “platform gap” in the application of competition law in
digital markets. Following these findings, this Article conducts a
normative assessment to demonstrate that in the context of platforms
that not only intermediate transactions for, but also compete with their
suppliers on the relevant market, the “single economic entity doctrine”
should be (re)interpreted. The “agency rule” should not apply to
agreements of such platforms and suppliers that contain restrictions of
competition on the relevant market. This is because the conflict of
commercial and competitive interests between a “principal” (supplier)
and an “agent” (platform) that competes with its principal
fundamentally violates the principles of agency and the reasoning
underlying the single economic entity doctrine. This Article develops a
“competitive neutrality” principle to inform and underlie this proposed
(re)interpretation of the “single economic entity doctrine.” This
(re)interpretation fills the “platform gap” identified in this Article by
subjecting the agreements of platforms that are not in a competitively
neutral position with their suppliers to the full application of the
prohibition of anticompetitive agreements.

Keywords: Online Platforms, Digital Economy, Competition Law, Antitrust, Intra-Enterprise Conspiracy, Sharing Economy, Agency, Single Economic Entity Doctrine, Vertical Restraints, Competitive Neutrality, Undertaking, Sharing Economy, Uber, Amazon Marketplace, Apple App Store, Airbnb, eBay, Booking.com

JEL Classification: K21, L14, L42, L44, K12