In The Hidden Rules of a Modern Antitrust, Ramsi Woodcock argues that courts’ systematic use of the rule of reason, which underpins most of contemporary antitrust law, effectively amounts to an unwarranted blanket exemption from liability for potentially egregious practices. According to Woodcock, this is due to the interaction between the exorbitant cost of prosecuting cases under this standard (compared to the cost of enforcing per se rules), the courts’ increasing application of the rule of reason, and the shrinking budgets of antitrust enforcement agencies.

As this Response discusses, Woodcock’s bold claims ignore or misconstrue several critical aspects of the modern antitrust apparatus. Chief among these is the uncertainty that underpins antitrust enforcement, and the rule of reason’s role in decreasing this uncertainty. It takes time and experience for courts to form an opinion about the value of certain forms of business conduct, and rule of reason litigation increases the accuracy of all subsequent litigation—and the ability of both economic actors and antitrust enforcers to predict judicial outcomes and adjust their practices accordingly. This stands in stark contrast to Woodcock’s model, which assumes that courts are unable to differentiate between forms of ambiguous conduct (and yet simultaneously well informed enough about enforcers’ budget constraints to know whether they can “afford” to litigate under the rule of reason).

Winston Churchill famously quipped that “it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time . . . .”  Much of the same could be said about the rule of reason. While it is certainly not perfect, policymakers have yet to find another standard that provides the same flexibility to accommodate ever-evolving forms of conduct with initially ambiguous effects on consumer welfare. Woodcock’s paper underplays these important virtues, while his more pointed critiques often miss the mark.

Many people hope that data interoperability can increase competition, by making it easier for customers to switch and multi-home across different products. The UK’s Open Banking is the most important example of such a remedy imposed by a competition authority, but the experience demonstrates that such remedies are unlikely to be straightforward. The experience of Open Banking suggests that such remedies should be applied with focus and patience, may require ongoing regulatory oversight to work, and may be best suited to particular kinds of market where, like retail banking, the products are relatively homogeneous. But even then, they may not deliver the outcomes that many hopes for.

Data portability and interoperability tools allow customers to easily move their data between competing services, either on a one-off or an ongoing basis. Some see these tools as offering the potential to strengthen competition in digital markets; customers who feel locked in to services that they have provided data to might be more likely to switch to competitors if they could move that data more easily. This would be particularly true, advocates hope, where network effects grant existing services value that new rivals cannot emulate or where one of the barriers to switching services is the cost of re-entering personal data.

The UK’s Open Banking system is one of the most mature and important examples of this kind of policy in practice. As such, the UK’s experience to date may offer useful clues as to the potential for similar policies in other markets, for which the UK’s Furman Report has cited Open Banking as a model. But fans of interoperability sometimes gloss over the difficulties and limitations that Open Banking has faced, which are just as important as the potential benefits.

In this article, I argue that Open Banking provides lessons that should both give hope to optimists about data portability and interoperability, as well as temper some of the enthusiasm for applying it too broadly and readily.

I draw on my experiences as part of the team that produced the industry review “Open Banking: Preparing For Lift Off” in 2019. That report concluded that Open Banking, though promising, needed several additional reforms to succeed, a few of which I discuss in this piece. I was also the co-author of a white paper that argued for an Open Banking-like remedy in the UK’s retail electricity market, which I discuss briefly below. All views expressed here are my own.

I argue that there are three main lessons to draw from Open Banking for considerations of similar remedies in other markets:

1. Implementation is difficult and iterative, and probably requires de facto regulatory oversight if it is to be implemented effectively, with all the attendant costs and risks that entails.
2. The outcomes that interoperability produces may differ from those policymakers have in mind, and may not mean more switching of core services.
3. If Open Banking does succeed, it will be thanks to features of the UK banking market that may not be present in other markets where similar interoperability is being proposed.

I conclude that Open Banking has not yet led to noticeably stronger competition in the UK banking sector. Implementation challenges suggest that taking an equivalent approach to other markets would require more time, investment and effort than many advocates of interoperability requirements usually concede and may not deliver the anticipated benefits. To the extent that Open Banking is to be a model, it would be best applied as a focused approach in markets that bear particular characteristics and where the costs are outweighed by the benefits, rather than a blanket measure that can be applied to every market where customer data matters.

Read the full white paper here.

Unlike many other trading blocs (most notably the EU), the ASEAN nations are yet to agree upon a common, unified set of competition law provisions. Nevertheless, recent years have seen the ASEAN members embark upon various initiatives that seek to harmonize their competition regimes (though these stop well short of common rules). In 2016, for instance, the member states adopted the ASEAN Competition Action Plan (“ACAP”). Among other things, the plan seeks to ensure that all ASEAN states implement competition regimes that meet a set of minimal standards, and eventually to harmonize competition policy across the ASEAN region.

These ongoing efforts to modernize and harmonize ASEAN competition laws do not arise in a vacuum. Rather, they take place amid a longstanding effort by both the European Union and the United States to export their respective competition laws throughout the world:

The EU and the US . . . want the rest of the world to follow their respective regulatory models. Both jurisdictions have actively promoted their competition laws as “best practices” abroad, urging developed and developing countries alike to adopt domestic competition laws and build institutions to enforce them. They promote their models through a specialized network of competition regulators—the International Competition Network (ICN)—and also more general bodies—notably the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD). They also employ bilateral tools in their promotion effort—including offering technical assistance to emerging competition law jurisdictions. In its trade agreements, the EU also explicitly conditions access to its markets on the adoption of a competition law, exporting its own law in the process, while the US relies primarily in its persuasive powers rather than on formal treaties in exporting its laws.

No doubt the EU and US competition regimes are the most developed and dominant exemplars; following the policies of one or both to some extent is virtually inevitable. But this raises a critical question: should the ASEAN countries attempt to mimic the competition regimes of other developed nations, notably those that are in force in the EU and the US? And, if so, which one of these regimes should they draw more inspiration from?

While we certainly do not purport to know what type of regime would best fit the idiosyncratic needs of the ASEAN countries, we seek to dispel the myth that the European model of competition enforcement would necessarily provide a superior blueprint. To the contrary, we show that the evolutionary, common-law-like regime that has emerged in the US has many strengths that are often overlooked by contemporary competition policy scholarship, and which might provide a particularly good fit for the economic and political realities of the ASEAN member states.

Our paper also falls squarely within a much broader debate. Over the past couple of years, there have been renewed calls for policymakers to reform existing competition regimes in order to better address the challenges that are, purportedly, posed by the emergence of the digital economy. This has notably resulted in a series of high-profile reports, papers, and draft legislation, concluding that more interventionist tools are required to effectively deal with competition issues in digital markets. The draft European Digital Markets Act, the US House Judiciary report on competition in digital markets, as well as the draft bill put forward by US Senator Amy Klobuchar all mark the culmination of this antitrust reform movement.

Although the connection is often implicit, these calls for reform ultimately seek to implement (and amplify) features that are currently at the forefront of European competition enforcement. Potential reforms thus include broadening the goals of competition policy, as well as relying more heavily on structural and behavioral presumptions (rather than outcome-oriented reasoning).

At times this desire to move closer to the EU model is more explicit. For example, writing in Vox, Matthew Yglesias ventured that “[o]ne idea [for remedying perceived problems with US antitrust] would be for the US to actually move to something more like the European system and abandon the consumer welfare standard.” In a similar vein, Bloomberg featured an article by economics writer Noah Smith heaping praise on the growing populist antitrust wave and its potential to roll back the consumer welfare standard. And, at least according to EU Commissioner Margrethe Vestager, the US executive branch agencies have expressed a “renewed deeper interest and curiosity as to what we are doing in Europe.”

In parallel to these calls for reform, scholars have also analyzed the evolution of competition legislation around the world (as well as regulation, more generally). These scholars observe that recent initiatives have tended to mimic the rules of the European Union, rather than the more laissez faire approach that is often associated with the US. This trend has been referred to as the “Brussels Effect.” Accordingly, these scholars predict a regulatory “race to the top”, where more stringent rules and regulations will become the norm. While ostensibly agnostic, this implicitly conveys a sense that “resistance is futile,” and that the European approach will inevitably continue to spread more rapidly than its US counterpart.

With these policy debates in mind, our paper argues that ASEAN member states should not be too quick to embrace the European model of competition enforcement – be it by adopting more expansive competition laws or by regulating competition in digital markets. While the above-referenced scholars and advocates tend to assert that a more-expansive, EU-oriented approach would improve economic conditions, economic logic and the apparent reality from Europe strongly suggest otherwise.

Antitrust is an attractive regulatory tool for a number of reasons. The vague, terse language of most antitrust laws (including those in both the US and EU) readily lend themselves to “interpretation” imbuing them with virtually limitless scope. Indeed, the urge to treat antitrust as a legal Swiss Army knife capable of correcting all manner of social and economic ills is apparently difficult to resist. Conflating size with market power, and market power with political power, many recent calls for regulation of the tech industry are framed in antitrust terms, even though they are mostly rooted in nothing recognizable as modern, economically informed antitrust legal claims or analysis.

But that attraction is precisely why everyone—and emerging economies like ASEAN members in particular—should care about the scope, process, and economics of antitrust and the extent of its politicization. Antitrust in the US has largely resisted the relentless effort to politicize it. Despite being rooted in vague and potentially expansive statutory language, US antitrust is economically grounded, evolutionary, and limited to a set of achievable social welfare goals. In the EU, by contrast, these sorts of constraints are far weaker.

This conclusion is in no way altered by the fact that US antitrust law has become the “outlier” of global antitrust enforcement, compared to the EU’s more “consensual” approach. What matters is a policy’s actual results, not whether it is widely adopted; the world is full of debunked beliefs that were once widely shared. And it is far from certain that the widespread adoption of the EU model is in any way indicative of superior results. It is equally (or even more) plausible that this model has proliferated because it naturally accommodates politically useful populist narratives—such as “big is bad,” robin hood fallacies and robber baron myths—that are constrained by the US’s more evidence based and rational antitrust decision-making. America’s isolation might thus be a testament to its success rather than an emblem of its failure.

The EU’s more aggressive pursuit of technology platforms under its antitrust laws demonstrates many of the problems with its approach in general. Endorsing the European approach to antitrust, in a naïve attempt to bring high-profile cases against large internet platforms, would prioritize political expediency over the rule of law. It would open the floodgates of antitrust litigation and facilitate deleterious tendencies, such as non-economic decision-making, rent-seeking, regulatory capture, and politically motivated enforcement.

Bringing international antitrust enforcement in line with that of the EU would thus unlock a veritable Pandora’s box of concerns that might otherwise be kept in check. Chief among them is the use of antitrust laws to evade democratically and judicially established rules and legal precedent. When considering this question, it is important to see beyond any particular set of firms that enforcement officials and politicians may currently be targeting. An antitrust law expanded to consider the full scope of soft concerns that the EU aims at will not be employed against only politically disfavored companies, companies in other jurisdictions, or in order to expediently “solve” otherwise political problems. Once antitrust is expanded beyond its economic constraints and imbued with political content, it ceases to be a uniquely valuable tool for addressing real economic harms to consumers, and becomes a tool for routing around legislative and judicial constraints.

Our paper proceeds as follows. Section II analyzes the high-level differences between the American and European approaches to competition policy. Notably, this Section shows that these regimes pursue different goals, rely to varying degrees on economic insights to inform their decision-making, afford very different degrees of judicial deference to antitrust authorities, and exhibit different degrees of politization. Section III shows that the US and Europe also differ substantially in terms of the conduct that may constitute an infringement of competition law—the EU system being significantly more restrictive. Section IV turns to question of competition in digital platform markets. It argues that European competition enforcement in the digital industry provides a cautionary tale that cuts against both the adoption of ex ante regulation and a relaxation of existing antitrust standards (such as the “consumer welfare standard”). Section V posits that reducing economic concentration—sometimes cited as a byproduct of European-style competition enforcement—should not be a self-standing goal of antitrust policy. Finally, Section VI argues that many of the economic and political characteristics of the ASEAN economy cut in favor of using the US model of competition enforcement as a blueprint for further development and harmonization of ASEAN competition law.

Read the full white paper here.

By

• Christian Dippon, Ph.D., NERA Economic Consulting*
• James Alleman, Ph.D., University of Colorado Boulder
• Teodosio Pérez Amaral, Ph.D., Universidad Complutense de Madrid
• Aniruddha Banerjee, Ph.D., Independent Consultant
• Gaël Campan, Ph.D., Montreal Economic Institute
• Jeffrey Church, Ph.D., University of Calgary
• Robert Crandall, Ph.D., Technology Policy Institute
• Eric Fruits, Ph.D., International Center for Law & Economics
• Bronwyn Howell, Ph.D., Victoria University of Wellington
• Jerry Hausman, Ph.D., Massachusetts Institute of Technology
• Justin (Gus) Hurwitz, J.D., University of Nebraska
• Mark Jamison, Ph.D., University of Florida
• Seongcheol Kim, Ph.D., Korea University
• Roslyn Layton, Ph.D., Aalborg University
• Stanford Levin, Ph.D., Southern Illinois University Edwardsville
• Daniel Lyons, JD, Boston College
• Geoffrey Manne, J.D., President, International Center for Law & Economics
• Petrus Potgieter, Ph.D., University of South Africa
• Paul Rappoport, Ph.D., Temple University
• Georg Serentschy, Ph.D., Serentschy Advisory Services
• Lester Taylor, Ph.D., University of Arizona
• Dennis Weisman, Ph.D., Kansas State University
• Jason Whalley, Ph.D., Northumbria University
• Xu Yan, Ph.D., Hong Kong University of Science and Technology

 

The dissemination of false information online has become a serious challenge. Adding to this problem are the false claims put forth by Rewheel.

The Internet is a fabulous means of communication. However, the Digital Fuel Monitor by Rewheel/research is a prime example of misinformation on the Internet.[1] To curb the spread of false information, social media platforms have started applying warning labels to content they believe the facts do not support. Still, far too many false claims have attracted attention because separating fact from fiction on the Internet often requires a specific expertise. In this paper, the authors apply their expertise about mobile wireless markets to expose the false claims put forth by Rewheel/research in the recent publication of its Digital Fuel Monitor. We find the Rewheel rankings to lack academic rigor owing to an unsuitable analytical concept, unrealistic assumptions, and the omission of marketplace realities. Counterintuitive results confirm the rankings’ ineptness.

Rewheel, a Finnish consultancy, periodically issues reports that it portrays as international competitiveness comparisons of retail prices for mobile wireless services across the globe; however, these comparisons are not accurate representations of the state of competition in the mobile wireless world. In these reports, Rewheel assigns providers and countries international ranks and various competitive labels. For example, Rewheel ranks a country with alleged high prices a laggardand considers itleast competitive. Conversely, countries that Rewheel views favorably obtain a most competitive ranking. As with much of the information on the Internet, Rewheel follows the freemiummodel. That is, it publishes attention grabbing headlines and some colorful charts for free, but anyone seeking to understand more about the derivation of the data must pay Rewheel’s fees for the full content.

Mirroring much of the free content on the Internet, Rewheel’s rankings are unscientific and erroneous. Unfortunately, this contributes to the spread of misinformation about the state of competition in mobile wireless markets. Rewheel should be subject to the same warning labels as those placed on other suspicious information. Before turning to the shortfalls of the Rewheel rankings, we highlight that valid inferences regarding the competitiveness of mobile wireless service provisioning in a country cannot be made from a simple, unadjusted ranking of international prices. Countries differ in many aspects including network quality, consumer preferences, income, regulatory and legal environment, factors of production costs, and market size. These and many other differences among jurisdictions contribute to price variations. A proper international comparison considers these factors and compares the value proposition not simply prices.

In its recent ranking exercise, Rewheel ranks providers and countries by purportedly averaging the retail prices of 10 retail service plans. The 10 plans include five smartphone plans on 4G or 5G networks with varying levels of voice allowances, data allowances, and download speeds. Rewheel also includes three mobile broadband data-only plans and two home broadband (fixed wireless) plans. This exercise finds an average of €109 (US$127) for Canadian mobile wireless providers TELUS, Bell, and Rogers. Rewheel sweepingly declares that these providers offer “the least competitive monthly prices.”[2] With an average price of €29 (US$34), Finnish provider Elisa wins Rewheel’s distinction of offering “the most competitive … monthly prices.”[3] The Rewheel story is easy to understand. It is also completely wrong.

Rewheel bases its rankings on a meaningless concept that offers no economic market insights.

Comparing the prices of a collection of products (baskets) is not new. Prior to the introduction of the Internet, analysts used basket prices to compare supermarket prices. That is, they compared the costs of identically filled shopping carts across supermarkets. However, Rewheel’s application of the basket method is not appropriate for comparing prices of different mobile wireless services. Rewheel created its own version of the basket method that includes the calculation of meaningless averages, random combinations of different services, improper assumptions, and factual errors. Not surprisingly, as evidenced by the results derived by Rewheel, the rankings are incorrect and counterintuitive. We find Rewheel’s rankings are of no value in comparing prices and assessing the level of competition in wireless markets.

Comparing total grocery bills for two identical shopping carts from two different supermarkets might be a rational approach. However, knowing the average price of the items in the shopping cart clearly is useless especially when including a wide range of items. Nevertheless, Rewheel does just that – it compares average prices across varying items (in this case services). Knowing that the average price of a certain T-Mobile USA smartphone, tablet, and home Internet plan is €106 (US$125) is about as useless as knowing that the average price per item in a shopping basket containing a six-pack of beer, a dozen eggs, and a pound of oranges is US$10.

Rewheel’s assumptions are unsupported and create distorted rankings. Rewheel mixes prices from different providers and ignores market realities.

Rewheel does not explain why it would make sense to take the average of five smartphone plans, three data-only plans, and two wireless home Internet plans. Grocery bills are the sum of all items purchased at the supermarket. Presumably, consumers need all these items in their daily life. As such, the total grocery bill measures the household expenditure for food. Rewheel’s basket, however, does not represent anything. It does not represent an individual’s spending for mobile wireless services because subscribers do not need five smartphone plans. Subscribers also do not rely heavily on wireless home Internet access. Instead, the more prevalent means to access the Internet is through fixed broadband services offered by landline telephone and cable TV companies. Yet, fixed broadband services are missing from Rewheel’s basket. Thus, the average of Rewheel’s eclectic mix of services is meaningless. It certainly does not represent a consumer’s wireless spending, and it does not represent the average price of a particular service. Rather, the Rewheel basket is a mix of substitute and complementary items. Moreover, Rewheel’s basket overlooks an important item (fixed broadband) on a consumer’s shopping list. 

The must-carry assumption. Rewheel assumes that in order for markets to be competitive all providers in the world mustoffer all 10 service plans in its basket. If a provider does not offer a specific plan, then that provider is “assigned the highest monthly price among all 168 operators.”[4] For example, per Rewheel, Vodafone in India does not offer a fixed wireless broadband plan with at least 1,000 GB of data and download speeds of 100 Mbps or faster. Therefore, under the must-carry assumption, Rewheel artificially increases Vodafone India’s price average by loading it with the highest observed international value for this plan. In this case, the highest monthly price that Rewheel found belongs to a provider in the United Kingdom by the name of EE Limited (formerly Everything Everywhere). Thus, Vodafone India’s average includes a plan price from the United Kingdom. Rewheel applies this exact price to no less than 133 of the 168 providers (79 percent) in its ranking.

Rewheel’s irrational assumption is akin to imputing that the price of buffalo meat in a vegetarian supermarket is the same as the price of the most expensive buffalo meat vendor in the world. There is no economic or statistical support for this approach. In fact, in some countries, Rewheel’s must-carry plans cannot even be offered because the regulator has yet to release 5G spectrum. Rewheel’s baseless assumption renders the comparison useless because the average price by which providers and countries are ranked is not composed of retail prices faced by subscribers in the respective markets.

The non-specialization assumption. Rewheel’s ranking unrealistically assumes that for a provider (and thus the market) to be competitive it must not specialize but must offer and compete on all plan levels selected by Rewheel. This assumption is counter to basic economic principles.

A rational business enterprise introduces service plans for the express purpose of earning positive economic profit. Based on this objective, an enterprise derives a strategy that determines its retail offerings. Unlike Rewheel’s assumption, this does not mean that all competing enterprises offer the same services. Quite the contrary, competitors seek to distinguish themselves from their peers through price and non-price service attributes and by offering new and innovative services to gain a competitive advantage.

Consider, for instance, Freedom Mobile Inc., a Canadian regional mobile wireless provider owned by Shaw Communications, a Canadian cable provider. Freedom does not offer fixed wireless broadband services. Rewheel incorrectly deduces from this observation that Freedom’s offerings are not competitive. Freedom is a profit-maximizing firm; therefore, its decision not to offer fixed wireless services is simply an indication that the service does not align with the company’s strategic blueprint. Freedom finds that it can best compete by specializing in offering mobile wireless services in select regions of Canada. Rewheel’s approach also overlooks service providers that mainly specialize in fixed wireless broadband, like Xplornet, which is not listed among Canada’s providers.

The standalone assumption. Rewheel incorrectly assumes that consumers demand and are supplied with standalone only plans. In Rewheel’s ranking system, there is no demand for bundled service plans where a consumer purchases mobile wireless service along with TV, fixed Internet, or fixed telephony services. However, in reality, many subscribers bundle their services and thereby receive discounts on mobile wireless and broadband services. Relatedly, mobile wireless providers offer bundled services to competitively distinguish themselves. For instance, AT&T offers free HBO Max subscriptions to some of its customers.[5] By ignoring bundled offerings and discounts, Rewheel overstates actual consumer expenditures.

The no-sharing assumption.The Rewheel ranking exercise also contains the untenable assumption that the increment of demand is always one mobile phone line and never more, which is false. For instance, AT&T offers unlimited plans starting at US$30 “when you get 5 lines.”[6] Rewheel ignores this US$30 price point. Instead, it uses a US$65 price point, which is AT&T’s lowest price for an unlimited plan with a single line.[7] Yet, as of 2015, an estimated 68 percent of US subscribers were part of a shared or family plan.[8] By ignoring the fact that subscribers purchase in increments of more than one line, Rewheel significantly overstates US prices.

Specifically, instead of the US$65 price assumed by Rewheel, the average price of AT&T’s cheapest unlimited plan is closer to US$41.[9] For this example alone, Rewheel’s assumption results in an overstatement of prices by 58 percent. The popularity of shared plans in the United States is not the exception. In Canada, approximately half of mobile wireless subscribers purchase a plan shared with others.

The price-only assumption.Rewheel’s incorrect ranking assumes that consumers only care about price and not what they get in exchange for their money. In building its average, Rewheel looks for the price of the cheapest plan that meets or exceeds its selection criteria.[10] The plans offered by different providers exceed the selection criteria by different amounts. Yet, Rewheel ignores this fact and creates an apples-to-oranges comparison where consumers do not care about anything but price. Omitting the value of additional minutes, data allowances, or faster download speeds is not realistic.

A real-world example illustrates the consequences of this baseless assumption. Koodo is a mobile wireless provider in Canada that is part of the TELUS family of brands. The cheapest Koodo plan that meets Rewheel’s criteria for its first plan (i.e., Smartphone: 4G&5G, 100 mins, 1 GB, 1 Mbps) is a plan priced at US$22.[11] Now, consider the Irish mobile wireless provider called 3 whose plan meets or exceeds the same Rewheel criteria and is priced at US$17.[12] Rewheel heralds 3 as a cheap provider and labels TELUS as “least competitive.”[13] Table 1 provides the details of these two plans.

As the table reveals, for an additional US$5 per month (not withstanding other differences), Koodo offers download speeds that exceed those offered by 3 by a factor of over four. By ignoring non-price service attributes, Rewheel assigns a least competitive label on Koodo and a most competitivelabel on 3, thereby incorrectly assuming that consumers do not care about network quality and that they would not be willing to pay for a higher speed. Presumably, Rewheel would also argue that consumers are not willing to pay more for high-grade Japanese wagyu beef than they would pay for a cheaper cut of beef.

The cost-equality assumption.Rewheel also ignores that building a network costs money. Rewheel unrealistically assumes that building a network in Finland (which Rewheel highlights as a competitive market) costs the same as building a network in Canada (which Rewheel highlights as a noncompetitive market) even though Finland has a population one-sixth the size of Canada and a landmass one twenty-ninth the size of Canada. Finnish mobile wireless providers also pay about 90 percent less for radio spectrum relative to their Canadian peers.[14] For a business enterprise to remain viable, it must recover its costs and earn a competitive return. Because all providers face buildout and spectrum costs, they are reflected in the retail prices for mobile wireless services. Yet, in Rewheel’s utopian world, all providers face the same costs.

Rewheel’s results are counterintuitive and confirm that a flawed concept and unreasoned assumptions guarantee incorrect findings.

The counterintuitive results.Two simple examinations demonstrate that Rewheel’s results are incorrect and offer no economic insight. First, we retraced Rewheel’s construction of the ranking average for one mobile wireless provider, that is, TELUS, a mobile wireless provider in Canada, which offers three brands – TELUS, Koodo, and Public Mobile. Examining the websites of the TELUS family of brands reveals that across the three brands TELUS only offers two of the 10 specific plans that Rewheel uses for its average. Specifically, as shown in Table 2, Koodo offers a plan at US$22.33 that meets and exceeds the first Rewheel plan (i.e., Smartphone, 4G&5G, 100 minutes, 1 GB, 1 Mbps). Koodo also offers a plan at US$55.81 that meets and exceeds the second Rewheel plan (i.e., Smartphone, 4G&5G, 1000 minutes, 10 GB, 10 Mbps). The TELUS brands do not offer any of Rewheel’s other eight specific plans although TELUS offers many other plans.

Rewheel ignores the fact that it misses 80 percent of the sample and simply substitutes the missing data points with “the highest monthly price among 168 operators.”[15] The data provided by Rewheel in its free Public Version on the Internet does not disclose what prices it used in every instance where a provider did not offer a plan. However, it is possible to ascertain that for the ninth plan (i.e., fixed wireless broadband plans with at least 1,000 gigabytes and 100 Mbit/s peak speed) Rewheel used US$88.37, which is the price for the most expensive plan that Rewheel found for this plan type. EE Limited in the United Kingdom supposedly offers this plan. For the sixth sample plan, Rewheel blends a price point of US$116.28 from Rogers, another Canadian mobile wireless provider, into TELUS’ average.

As the TELUS example demonstrates, Rewheel’s ranking is pure fiction. Aside from its theoretical failings and the fact that it misses the plans purchased by 50 percent of Canadians, Rewheel observes only two data points for TELUS, which average €34 (US$39). Based on Rewheel’s ranking, an average of €34 would put TELUS in third place out of 168 providers, which would appear to make it one of the most competitive mobile wireless providers in the world. However, Rewheel reports TELUS’ average at €109 (US$127), which is purely an artifact of Rewheel’s methodology that assigns TELUS the highest price for eight out of 10 sample plans – plans that TELUS does not even offer.

Second, in Rewheel’s world where only price matters, one would not expect providers with the most competitive monthly prices to be in the same market as providers with the least competitive prices. The reason for this is simple. Like any other rational economic agent, subscribers would not select a more expensive plan over an identical but less expensive plan. However, the myriad of unreasonable assumptions in Rewheel’s ranking produces this counterintuitive result.

Consider the case of Romania where Rewheel calculates average prices of US$69, US$70, US$122, and US$123 for Orange, Vodafone, RCS-RDS, and T-Mobile, respectively. In the same order, per Rewheel, these prices would rank the four providers as 23, 25, 141, and 146. This ranking presumably offers Orange and Vodafone a label of most competitive, whereas RCS-RDS and T-Mobile are least competitive. If the Rewheel price-only world were accurate, RCS-RDS and T-Mobile would not have sustainable business cases because Orange and Vodafone allegedly offer better prices and thus would attract all market demand. Nevertheless, the actual market shares in Romania tell a different story. RCS-RDS and T-Mobile have market shares of 12.6 percent and 18.7 percent, respectively.[16] It is counterintuitive that two alleged highly uncompetitive providers would attract about one-third of the country’s subscribers. We observed similar anomalies in other countries, including Finland, Switzerland, the United States, and the UK. These economic anomalies are prima facie evidence that Rewheel’s results are incorrect.

Rewheel’s Digital Fuel Monitor needs a warning label.

The warning label. Given the many theoretical and practical flaws and errors contained in the Rewheel study, we find it of no value when comparing prices internationally or establishing the level of competition in a country. A warning label informing readers about the lack of intellectual rigor and the misleading and incorrect nature of the Rewheel study’s results is appropriate and recommended.

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[*] NERA Economic Consulting received financial support from TELUS Communications Corporation for the research and initial drafting of this paper. No other authors received compensation. All views expressed are those of the authors.

[1] See Rewheel/research, “4G&5G connectivity competitiveness 2020,” Digital Fuel Monitor, Rewheel research PRO study (Public Version), November 2020 (hereinafter Rewheel).

[2] Ibid, p. 1.

[3] Ibid.

[4] Ibid.

[5] See AT&T “Stream HBO Max with some AT&T unlimited plans,” https://www.att.com/support/article/wireless/KM1261921/.

[6] See AT&T Wireless Plans, https://www.att.com/plans/wireless/.

[7] Ibid.

[8] See Pew Research Center, “U.S. Smartphone Use in 2015, Chapter One: A Portrait of Smartphone Ownership,” p. 2.

[9] 30*0.68+65*0.32 = 41.20.

[10] For example, Rewheel collected “4G&5G mobile broadband plans with at least 100 gigabytes and 50Mbit/s peak speed” plans. (Rewheel, p. 3, (emphasis added).)

[11] See Koodo Prepaid Plans, https://www.koodomobile.com/prepaid-plans?INTCMP=KMNew_NavMenu_Shop_PrepaidPlans. Rewheel 2H 2020 State of Broadband Pricing, October 2020, p. 18.

[12] See 3 Prepay Plans, https://www.three.ie/buy/prepay.html#prepay-phone-plans; see also Rewheel 2H 2020 State of Broadband Pricing, October 2020, p. 18.

[13] Rewheel, p. 1.

[14] See Richard Marsden, Dr. Bruno Soria, and Hans-Martin Ihle, “Effective Spectrum Pricing: Supporting better quality and more affordable mobile services,” GSMA, February 2017, Figure 13.

[15] Rewheel, p. 11.

[16] Shares are for third quarter 2019 just prior to Rewheel’s data collection. (See TeleGeography, Country Profile, Romania, as of November 9, 2020, p. 32).

Abstract

Antitrust enforcement in digital and high-tech markets is not disconnected from traditional antitrust theory or practice. Yet, unique features of firms operating in digital and other high-tech markets can necessitate modification of doctrine. For example, modern antitrust enforcement in digital markets needs to take seriously the presence of network effects in two-sided markets and the procompetitive justifications for various kinds of product design decisions that may otherwise appear to harm competitors under older models of antitrust enforcement. The goal, however, remains enforcement of the consumer welfare standard, even if enforcers and courts must be sensitive to features particular to digital markets.

This chapter takes the 2001 D.C. Circuit opinion in Microsoft as an inflection point in digital antitrust enforcement. With that case we can first clearly see all of the various threads pulled together that run through modern antitrust enforcement in high tech cases. This chapter begins with a brief overview of the precursor cases that informed enforcement up until the late 1990s before devoting attention to Microsoft and the subsequent cases that shape modern antitrust enforcement in digital markets.

Abstract

There is growing academic, regulatory, and legislative interest in “dark patterns” – digital design practices that influence user behavior in ways that may not align with users’ interests. For instance, websites may present information in ways that influence user decisions, or use design elements that make it easier for users to engage in one behavior (e.g., purchasing the items in a shopping cart) than another (e.g., reviewing the items in that shopping cart). The general thrust of this interest is that dark patterns are problematic and require regulatory or legislative action.

While acknowledging that many concerns about dark patterns are legitimate, this Article discusses the more nuanced reality about “patterns”: that design is, simply, hard. All design influences user behavior, sometimes in positive ways, sometimes in negative; sometimes deliberately, sometimes not. This Article argues for a more cautionary approach to addressing the concerns of dark patterns. The most problematic uses of dark patterns almost certainly run afoul of existing consumer protection law. That authority – not new, broader rules – should be our first recourse to addressing these concerns. Beyond that, this is an area where we should both allow the marketplace – including the design professionals working to improve User Interface and User Experience design practices – should be allowed to continue to develop, but with the understanding that Congress and regulators have a keen interest in ensuring that consumer interests are reflected in those practices.