Vertical Restraints in a Digital World
Evans David S., Allan Fels, and Catherine Tucker, eds., The Evolution of Antitrust in the Digital Era: Essays on Competition Policy (Boston: Competition Policy International, 2020, Forthcoming).
35 Pages Posted: 8 Apr 2020
Date Written: March 24, 2020
The subject of vertical restraints is well-trod territory in antitrust. Most of the cases, and economic literature, have focused, however, on the physical world of manufacturers and distributors. This paper considers what’s new and different about the digital world that matters for the antitrust analysis of vertical restraints. Cases and economic learning from the physical world remain highly relevant. What makes the digital world different is the prominence of intermediaries, most of which are multisided platforms, and the implications of the Internet and other information technologies for these intermediaries and the businesses that rely on them. After describing key features — including critical mass, multi-homing, and platform governance regimes — this paper considers important aspects of analyzing vertical restraints in the digital world. It then considers several applications involving platform rules, exclusive contracts, and MFNs for digital intermediaries.
Keywords: vertical restraints, multisided platforms, digital economy, foreclosure, critical mass, network effects, most favored nation agreements, platform governance systems
JEL Classification: L12, L22, L4, L42, L41, L86, K21
Suggested Citation: Suggested Citation