Online Platforms, Agency, and Competition Law: Mind the Gap
93 Pages Posted: 15 Jul 2019 Last revised: 18 Jul 2019
Date Written: July 12, 2019
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 characterisation 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 self-proclaim 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 scrutinised 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, the 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. The 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 the article by subjecting the agreements of platforms that are not in a competitively neutral position with regard to 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
Suggested Citation: Suggested Citation