The Relation Between EU Competition Policy and Consumers in Online Multi-Sided Platform Market: An Analysis Based on Consumer Welfare Standard

The Relation Between EU Competition Policy and Consumers in Online Multi-Sided Platform Market: An Analysis Based on Consumer Welfare Standard Dr. Erman EKİNGEN Table of Contents Abstract................................................................................................v Acknowledgements.............................................................................vi Table of Contents............................................................................. vii Table of Figures............................................................................... xiii Table of Legislation...........................................................................xv Table of Cases...................................................................................xix The List of Abbreviations............................................................. xxiii CHAPTER 1 INTRODUCTION, METHODOLOGY AND STRUCTURE OF THE BOOK 1.1.The Issue .....................................................................................1 1.2.Research Questions .....................................................................4 1.3 Structure of the Book ..................................................................5 1.4 Research Methodology................................................................7 1.4.1 Doctrinal Legal Research Methodology............................8 1.4.1.2 The Concept of ‘Consumer Welfare'..................10 CHAPTER 2 THE APPEARANCE OF THE ONLINE MULTI-SIDED PLATFORM MARKETS IN EU COMPETITION LAW 2.1 Current Status of the Digital Markets in EU Competition Law and Their General Features.......................................................18 2.2 Online Multi-Sided Platforms in General .................................24 2.2.1 Detailed Points on Online Multi-Sided Platforms...........30 2.2.1.1 Differences Between Online Multi-Sided Platforms and Retailers.......................................30 2.2.1.2 Difference Between Business to Business and Business to Consumer Relations in terms of Online Multi-Sided Platforms.............................33 viii 2.2.2 Importance of Consumers in Online Multi-Sided Platforms .........................................................................34 2.3 Main Features of Online Multi-Sided Platform Relationships..37 2.3.1 Existence of More Than One Customer Group with Different Demand Structures ..........................................38 2.3.2 Existence of Indirect Networks Effects...........................38 2.3.3 Existence of a Platform That Creates Inter-Group Relationships...................................................................40 2.3.4 Existence of Downstream-Actors-Oriented Consumer Concept............................................................................40 2.4 Different Types of Online Multi-Sided Platforms ....................51 2.4.1 Consumer Transaction Platforms ....................................54 2.4.2 Consumer Info Platforms.................................................56 2.5 Reasons to Evaluate Online Multi-Sided Platform Markets Differently.................................................................................59 2.5.1 Market Definition ............................................................59 2.5.2 Market Power...................................................................60 2.5.3 Chicken-Egg Problem......................................................62 2.5.4 Cartel Activities...............................................................62 2.5.5 Pricing Strategies and Price Discrimination ....................63 2.5.6 Externalities and Skewed Pricing ....................................64 2.6 Conclusion.................................................................................67 CHAPTER 3 GEO-BLOCKING IN EU COMPETITION LAW 3.1 Geo-Blocking in General ..........................................................72 3.1.1 Methods of Geo-Blocking ...............................................73 3.1.2 Distinction Between Justified and Unjustified GeoBlocking ..........................................................................76 3.1.3 The Circumvention of Geo-Blocking ..............................77 3.2 Geo-Blocking as Part of European Digital Single Market Strategy.....................................................................................79 3.2.1 The Validity of Geo-Blocking Practices in EU Cometition Law...............................................................80 3.2.1.1 Articles 101 and 102 TFEU ................................80 ix 3.2.1.2 EU Sources Related to Geo-Blocking Before the Launch of the EU Digital Single Market Strategy ...............................................................81 3.2.1.3 EU Sources Related to Geo-Blocking After the Launch of the European Digital Single Market Strategy ...............................................................82 3.2.1.4 The Regulation on Unjustified Geo-Blocking ....85 3.3 Geo-Blocking for Copyrighted Content: Competition vs. Copyright ..................................................................................87 3.3.1 Sides of Online Multi-Sided Platforms which Include Copyrighted Works as Content .......................................90 3.3.1.1 Consumer Definition in these Platform Relationships.......................................................92 3.3.2 Reasons Why Geo-Blocking Should be Eliminated for Copyrighted Content from an EU Competition Law Perspective in Light of the Consumer Welfare Standard 93 3.3.2.1 Price.....................................................................97 3.3.2.2 Quality and Choice............................................101 3.3.2.4 Innovation..........................................................110 3.4 Language as a Natural Barrier for Cross-Border Trade of Copyrighted Content...............................................................112 3.5 Conclusion...............................................................................114 CHAPTER 4 TYING AND BUNDLING IN EU COMPETITION LAW 4.1 Tying and Bundling in General...............................................119 4.1.1 Methods of Tying and Bundling Practices ....................120 4.1.2 Impacts of Tying and Bundling Practices: Anticompetitive vs Procompetitive...............................121 4.1.3 Main Criteria of Tying and Bundling ............................124 4.1.3.1 Difference Between Tying and Tied Goods or Services.............................................................124 4.1.3.2 The Existence of the Dominant Position of an Undertaking in the Market ................................125 4.1.3.3 The Existence of Compulsion or Coercion against Consumers.........................................................126 x 4.1.3.4 Foreclosure of Competition in the Market ........126 4.1.3.5 No Legal Justification for the Practice..............127 4.2 Tying and Bundling in Online Multi-Sided Platform Markets...................................................................................127 4.2.1 Sides of Online Multi-Sided Platforms which Apply Tying and Bundling Practices.......................................128 4.2.1.1 Consumer Definition in these Platform Relationships.....................................................131 4.2.2 The Consumer Welfare Standard in Online Multi-Sided Platforms which Apply Tying and Bundling Practice ..133 4.2.2.1 Price...................................................................135 4.2.2.2 Quality and Choice............................................139 4.2.2.3 Innovation..........................................................144 4.3 The Need for Effect-Based Approach to Analyse Tying and Bundling Practices in Online Multi-Sided Platforms.............146 4.4 Conclusion...............................................................................149 CHAPTER 5 MOST-FAVOURED-NATION CLAUSES IN EU COMPETITION LAW* 5.1 MFN Clauses in General .........................................................153 5.1.1 Impacts of MFN Clauses: Anticompetitive vs Procompetitive ..............................................................154 5.1.2 The Difference Between Traditional MFN Clauses and Platform MFN Clauses..................................................157 5.1.2.1 The Distinct Types of Platform MFN Clauses..158 5.2 The Validity of MFN Clauses in EU Competition Law..........159 5.3 MFN Clauses in Online Multi-Sided Platforms......................165 5.3.1 Sides of Online Multi-Sided Platforms which Include MFN Clauses.................................................................165 5.3.1.1 Consumer Definition in these Platform Relations ...........................................................168 5.3.2 The Consumer Welfare Standard in Online Multi-Sided Platforms which Include MFNs ....................................169 5.3.2.1 Price...................................................................173 5.3.2.2 Quality and Choice............................................179 5.3.2.3 Innovation..........................................................183 xi 5.4 A Discussion on Whether the Free-Riding Defence Can be Used to Justify MFNs ......................................................................184 5.5 Conclusion...............................................................................188 CHAPTER 6 THE NEED FOR NEW RULES AND TOOLS, AND THE PROPOSED DMA AS A NEW INSTRUMENT IN EU COMPETITION LAW 6.1 Consumer Welfare Oriented Competition Analysis in Online Multi-Sided Platform Markets................................................193 6.2 The Need for New Rules and Tools for the Application of Competition Law to Online Multi-Sided Platform Markets...195 6.2.1 New Approach to EU Competition Policy in Applying EU Competition Law to Online Multi-Sided Platform Markets..........................................................................201 6.2.1.1 Online MSP is a Distinct Business Model ........201 6.2.1.2 End-Users Should be Treated as Consumers in Online MSP Relationships................................202 6.2.1.3 Case-by-Case Analysis of Practices of Online MSPs is Needed ................................................203 6.2.1.4 The Practices and Behaviour of Not Only Dominant Undertakings but Also Other Undertakings Should be Considered.................203 6.2.2 The General Characteristics of the Proposed Digital Services Act and Digital Markets Act and The Place of the Consumer Welfare Standard Therein ......................205 6.2.2.1 Geo-Blocking in the DMA................................211 6.2.2.2 Tying and Bundling in the DMA ......................212 6.2.2.3 MFN Clauses in the DMA ................................213 6.3 Conclusion...............................................................................214 CHAPTER 7 FINAL CONCLUSION BIBLIOGRAPHY ...........................................................................223