Economic Power and New Business Models in Competition Law and Economics: Ontology and New Metrics

Abstract

The digital economy has brought new business models that rely on zero-price markets and multi-sided platforms that exploit broad business ecosystems. The traditional concept of market power used by competition authorities cannot engage with this new reality, which is more multidimensional than the usual focus on price (and output). A number of jurisdictions also try to grapple with the broader concern over the bargaining power of large digital platforms and the rise of gatekeepers in the digital economy. These developments have culminated in the recent calls for a more multidimensional concept of (economic) power, in particular in the context of competition law enforcement against unilateral conduct and suggestions over new concepts of power triggering antitrust/regulatory intervention, such as “strategic market status”, “conglomerate market power, “intermediation power”, “structuring digital platforms”, or “gatekeepers” to complete, or even substitute, the archetypical concept of market or monopoly power in competition law.

The multiplication of new concepts of power signals the creativity and flexibility of the competition law enterprise as it seeks to take into account new economic realities. However, what is crucially missing is an overall theoretical framework for this multi-dimensional concept of power, taking into account this new reality arising out of the use of new business models in ecosystems. We aim to fill this gap in our conceptual understanding by putting forward an ontology of (economic) power which integrates these new dimensions. This is completed with a more ‘empirical’ perspective exploring the various ways these new dimensions of power can be measured. We thus recognize the importance of culminating this concept-building approach with the more practical undertaking of developing adequate new metrics that guide and, by the same, limit administrative discretion in enforcing competition or regulatory law.

Keywords: economic power, market power, ecosystems, value chain, digital, dominant position, gatekeeper, power metrics

JEL Classification: K21, L1, L12, L4, L41, L5, L86, L88, M21