Posted by Social Science Research Network
By Mark R. Patterson (Fordham University)
Abstract: Markets run on information. Buyers make decisions by relying on information about the products available, and sellers decide what to produce based on information about what buyers want. But the ways in which this market information is acquired has changed, as consumers increasingly turn to sources that act as intermediaries for information — companies like Yelp and Google. In addition, various sorts of informational standards and certifications are playing a greater role in determining what goods sellers produce; the LIBOR benchmark interest rate, for example, can be seen as such a standard.
Antitrust Law in the New Economy considers a range of competition problems that involve information in the marketplace. Sellers sometimes have the ability and motivation to distort the truth about their products when they make data available to intermediaries like Google and Yelp. The intermediaries themselves, in turn, may have their own incentives to skew the information they provide to buyers, both to benefit advertisers and to gain advantages over their competition. And sellers that agree on product standards may do so in circumstances in which the standards merely eliminate competition or may adopt standard-setting processes that do not prevent manipulation by individual sellers.
Broadly speaking, competitive harm in these instances arises primarily from the production of low-quality information. Yet consumer protection law is poorly suited to addressing the issues because the relevant information is often neither advertising nor “false” or “misleading.” Instead, the problems are better characterized as forms of exclusion or collusion in information markets. Those forms of conduct are normally addressed by antitrust law, though antitrust law has not traditionally focused on such conduct in these informational contexts. However, by treating information markets — markets for Google search results, Yelp reviews, and LIBOR rates — as markets that are themselves proper subjects of antitrust scrutiny, antitrust law can be adapted to these problems.
The book discusses a range of ways in which antitrust can be applied to the manipulation of information for competitive advantage and the exploitation of consumers, and it considers related informational issues such as “confusopoly” and sellers’ use of consumers’ personal information. It also addresses how intellectual property law and legal protections for freedom of speech can limit the application of antitrust law. The goal of the book is to show that just as antitrust law serves to prevent anticompetitive conduct that results in supracompetitive prices, it can also prevent competitive harm from low-quality information.