As children across the country file and then refile an amended version of their Christmas list, their thoughts will naturally turn to whether these wishes will be dismissed or denied. As is well known, successful certification of a Christmas list depends crucially on whether the author is located on the naughty or nice list. We therefore take this opportunity to speculate on who can expect to be smiling on Christmas morning, and who may be facing the dreaded piece of coal in their Christmas stocking…
- The first of those sure to receive a piece of coal this year will surely be those within the UK government and the department of health who inexplicably decided to set up the world’s most dysfunctional and badly designed market to add exploitation to the list of indignities suffered by the population of the UK this year. The market for COVID-19 travel tests was incomprehensible and deeply ineffective. The prices quoted on the government comparison website were often inaccurate, unreliable, and excessive. No effort was made to provide quality information on speed or reliability. Moreover, the government chose not to take advantage of its immense buyer power to negotiate better value prices from the 6-7 labs that supplied the 400+ resellers that the government authorised.
- On the bench, US judges have failed to push back against the relentless drive by Silicon Valley to entrench their digital market monopolies. In attempting to split the difference between Apple and Epic, Judge Gonzalez recognised that Apple held market power and was using that anticompetitively to block developers from using cheaper payment processors, and even went as far as applying what might prove to be effective remedies. However, the fact that an anticompetitive abuse of market power (as opposed to monopoly power) is not a federal antitrust offence in the US allowed Apple to claim a win and will continue to complicate actions against big tech. In particular, the Judge surprisingly followed Apple’s unlikely line that a 5% change in the price of gaming apps on the apple app store would shift so many consumers into purchasing Android smartphones that such a price increase would be unprofitable. Fortunately, the Judge left the door open for another plaintiff to revisit this question in future complaints.
- At its best, economic reasoning is a tool to simplify and make sense of the intractable – however those using economic jargon to confuse and obscure at the behest of the powerful should not be surprised to find themselves on the naughty list once again this year. Those may well include the consultancies that Tommaso Valletti highlights in his wonderful diatribe as spending their time and considerable expertise hijacking economics in order to advocate and obstruct on behalf of those that are willing to pay. As Tommaso flags, these are aided and abetted in this task by industry funded Research Centres who muddy the waters until non-specialist judges and legislators throw their hands up and announce a plague on both houses. A special mention here is also due to those seeking to represent exploited plaintiffs while at the same time actively working to help monopolists find ex post explanations for exclusionary conduct and anticompetitive mergers that exploit other such plaintiffs.
- We expect that Santa’s elves will recognise the work of legislators in Europe to develop the digital markets act. The act is not perfect, and for example, we hope that the European Parliament is successful in extending the interoperability requirements beyond operating systems, and into social media and messaging services. However, in a year that started with Facebook challenging the authority of a sovereign nation, the legislation does at least provide hope that 2022 will be the year in which agencies finally get a grip on the untamed anticompetitive behaviour of big tech. In the UK too, good progress has been made by the CMA in developing their proposals for a new ex-ante digital regulator, though the government commissioned proposals from John Penrose MP for strengthening competition law as a whole were disappointingly thin, and certainly create a big opportunity for the opposition to outflank them.
- Amongst the regulators the FCA’s competition team deserve credit for being the first and thus far only ones to effectively address the UK’s endemic loyalty penalty. They have done so by developing non-discrimination rules that allow firms to continue to offer a choice of products and plans, whilst cracking down on their exploitation of the millions of consumers that don’t have the time to keep a close eye on the annual ratcheting up of their subscription fees.
- Christmas came early this year for the anti-monopoly movement with the nominations and appointments for Lina Khan, Jonathan Kantar and Tim Wu, three wise magi who are following the guiding star of revitalizing the US government’s role in combating the ongoing consolidation of digital markets. They have come bearing gifts in the form of executive orders, and lawsuits including a long-time-coming monopsony-based merger challenge.
We wish them well and we wish you all, both naughty and nice, a very merry Christmas.
Chris joined Fideres in 2021. Chris holds a PhD, an MA and BA in Economics from the University of East Anglia. Before joining Fideres, Chris worked as a Competition Expert for the OECD where he led the economic thinking on antitrust and regulation within digital markets, as well the role for competition law & policy in delivering inclusivity. He also led a working party of the OECD Competition Committee in developing a new international standard on competitive neutrality and a revision of the standard on competitive assessment (in light of the digitalization of the economy). Prior to the OECD, Chris advised the UK government’s Department of Trade & Industry on the benefits of competition policy, and the UK Competition Commission (predecessor to the Competition and Markets Authority) on digital mergers, retail market investigations and competition cases. He was an advisor to the Co-operation and Competition Panel, where he advised on mergers, market studies and antitrust in publicly-funded healthcare markets, and later became Director of Competition Economics at the UK Healthcare Regulator.
Chris is a founding member of the Centre for Competition Policy of the University of East Anglia. He remains an associate of the Centre, a member of various advisory boards at non-profit making organizations, and peer reviews papers for the Journal of Competition Law and Economics & the Journal of Antitrust Enforcement.