A case announced in the US earlier this month could have been designed to tick as many ‘topical’ boxes as possible, ranging as it does over the financial sector, big data and the possibly anti-competitive use of technology. As reported here, the Department of Justice investigation concerns so-called high speed stock trading, where traders use specialised technology to beat other investors to deals, raising prices for those other investors and making a cut for themselves in the process.
Not all of the reports mention the possibility of an antitrust investigation at all, many referring only to possible breach of the insider trading rules. But if antitrust is in play, how will it deal with an issue which seems, at heart, to be about the design and use of a doubtless clever and innovative technology, which also happens to hurt people?
I’m not a US antitrust lawyer, but it seems that US law to date has been robust on this issue – in cases such as Eastman Kodak and Allied Orthopedic, the US Courts have rejected the idea that there is any duty to curtail product innovation just because it may harm others – indeed, innovation is regarded as the essence of competitive conduct.
From an EU perspective, the concept of ‘predatory technological development’ is sometimes discussed (e.g. on Kevin Coates’ excellent 21st Century Competition blog, in an article ruminating on the compelling concept of ‘exploding bananas’) but has little reflection in the case law – aside from a few paragraphs in a solitary Commission decision of some 25 years ago. Racal Decca concerned the exclusionary launch of a product upgrade by the incumbent manufacturer of a radio navigation system used in ships around Denmark and elsewhere. The Commission took the view that Racal Decca’s conduct was “beyond normal competitive behaviour” and was “intended to exclude” competitors. It therefore reached a decision that it had infringed Article 86 (as was). In effect, this was a case of sham innovation, where it was held that there was no purpose to the technical change apart from the exclusion of competitors.
Cases where the motivation is more mixed may be more difficult to decide, at least without falling back on evidence of intention as the key factor (which is not how Article 102 cases should be decided). It is possible, alternatively, that a proportionality test may be applied, as propounded by AG Kirchner in his opinion in Tetra Pak I. Such a test would have the advantage of allowing the actual impact on the market (and not just individual competitors) to be taken into account, and would thus be in line with the eminently sensible Post Danmark ruling (no doubt soon to be referred to as Post Danmark I, since another case on the same company is in the pipeline) of a couple of summers ago.
Of course, the US high speed trading case may turn out not to involve antitrust at all, or it may end up focussing on collusion. But if any of the issues touched on above are in play, it should be a fascinating one to watch.