Frontier discusses how to carry out market definition in two-sided platform markets

Frontier discusses how to carry out market definition in two-sided platform markets

Mette Alfter, a Director in Frontier’s competition practice and head of our Brussels office, spoke at a conference organised by the ‘Studienvereinigung Kartellrecht’ in Düsseldorf, Germany, on 25 June, on the Bundeskartellamt decision in the Facebook case.

Mette gave an economic perspective on the Facebook decision. She noted that, although there is very little economics in the decision, there is one economic angle that is highly relevant for future cases in the digital sector; the definition of the relevant market. She pointed out the shortcomings of the characteristics-based approach to market definition (that recent policy papers suggest as a way forward in digital platform markets) where the ‘typical’ approach cannot be applied easily, and which the Bundeskartellamt had applied.

While the suggested shift in focus, away from market definition (to theories of harm that some of these papers put forward) might work in merger cases, this is not an option in abuse cases where the definition of the relevant market is an important first step in the analysis. Instead, Mette highlighted the need for a comprehensive approach to market definition in digital platform markets and drew out two key elements:

 

  1. You cannot just look at one side of the market and ignore the effects on the other side(s). Instead you need to take into account the interactions between the different sides of the market in the analysis.
  2. Given that the relevant market is defined as a group of products or services that can profitably be monopolised, you need to identify the monetary constraints on the platform, and therefore “follow the money”.

 

Frontier regularly works on competition issues in digital markets and has recently advised online platforms JustEat and Hungryhouse, whose merger was subsequently cleared unconditionally by the CMA.

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