CLIP of the month: House Judiciary Inquiry into Competition in Digital Markets: Statement

05.06.2020

This month’s CLIP is a response by Herb Hovenkamp to the American House Judiciary Committee’s investigation into competition in digital markets.  The focus of the investigation has been perceived online market power, and whether existing tools are adequate to tackle any issues that are identified.  The Committee has particularly sought to engage with Amazon, Facebook, Google, and Amazon through document requests and oral hearings.  More recently, it sent out requests for views, to which respected academics, attorneys, and economists have responded.

The response takes the view there has been under-enforcement of antitrust laws over the past 20 or 30 years, stemming from narrow judicial interpretation, or an anti-enforcement bias resulting from factors such as a belief in the ability of markets to ‘self-correct’.  Professor Hovenkamp highlights a number of areas that he believes need addressing, with solutions that include better use of econometric techniques (when estimating market power), more aggressive enforcement and utilisation of existing tools (when tackling refusals to deal or contract practices), or new regulation (when trying to protect the FRAND licensing system).  Professor Hovenkamp’s view is that the outcome of the Qualcomm litigation (currently on appeal) is crucial to the future of cooperative FRAND licensing.

When considering the breakup of large digital platforms, Hovencamp cautions against doing so when there is little assurance of improvement for consumers – it is important to remember that size itself is not the issue.  Meanwhile, the risk of killer acquisitions could be significantly mitigated not by prohibiting them per se, but by requiring technology licences to be non-exclusive.

This is an interesting and doubtless influential opinion from a respected US professor of law.   While European approaches do not escape criticism (notably in respect of FRAND where Professor Hovenkamp perceives greater problems than in the US), in some respects, Professor Hovenkamp appears to be calling for a more European levels of intervention, with consumer benefit as the goal.

Aimee Brookes

Author