CPI (10)2

Autumn 2014, Volume 10 Number 2

In this issue:

This Autumn/Winter 2014 issue completes the tenth year of Competition Policy International. During this time the CPI Journal has published 303 articles and our companion publication, CPI’s Antitrust Chronicle, has published another 1,138. Taken together, CPI’s complete works demonstrate—perhaps more effectively than anywhere else—the vibrancy, diversity, and increasing importance that antitrust issues have assumed in global legal, political, scholarly, and cultural arenas.

Letter From the Editor
  1. David Evans, Jan 30, 2015

    Letter from the Editor - Autumn 2014

    Jean Tirole, who has been a regular contributor to CPI over the years, both begins our issue, with an article on payment card regulation co-authored with Helene Bourguignon and Renato Gomes, and ends our issue with the classic. Richard Schmalensee, who taught Tirole when he getting his Ph.D. at MIT, provides an overview of the importance of Rochet and Tirole’s work on multi-sided platforms to industrial organization generally and antitrust specifically. Between these bookends we present a diverse selection of articles on the law and economics of multi-sided platforms by key contributors in the area. Our next section benefits from the fact that 2014 was a watershed year for court decisions on multi-sided platforms.

    A Symposium on Antitrust Economics of Multi-Sided Platforms
    1. Helene Bourguignon, Renato Gomes, Jean Tirole, Jan 30, 2015

      Card Surcharges and Cash Discounts: Simple Economics and Regulatory Lessons

      The role of payment cards in modern economies can hardly be underrated. In 2013, debit and credit card transactions represented roughly half of all consumer payment transactions in Western Europe, and accounted for more than 45% of all payment transactions in the United States. The payment card industry has faced intense antitrust scrutiny on both sides of the Atlantic, partly in response to the merchants’ recurrent complaints about high transaction fees.

      • Glen Weyl, Alexander White, Jan 30, 2015

        Let the Right “One” Win: Policy Lessons from the New Economics of Platforms

        Many of the leading controversies in competition policy in the last two decades, especially those surrounding the Microsoft case, reflect the challenges posed by platform industries. Unfortunately, too often economists and policymakers have drawn the wrong lessons when thinking about such industries.

        • Dennis Carlton, Ralph Winter, Jan 30, 2015

          Competition Policy and Regulation in Credit Card Markets: Insights from Single-sided Market Analysis

          This paper reexamines the economics of two common features of credit card networks: the interchange fee paid by merchant banks, or acquirers, to cardholder banks, or issuers; and the restraint commonly placed on merchants against surcharging for credit card transactions.

          • David Evans, Jan 30, 2015

            The Antitrust Analysis of Rules and Standards for Software Platforms

            Software platforms usually impose rules and standards and often exclude participants that harm others in the community, and reward participants that benefit others in the community. Competition policy should presume that these governance systems, and the restrictions they place on platform participants—including their possible expulsion from the platform—are efficient and pro-competitive. Software platforms could, however, employ governance systems to foreclose competition.

            • Benjamin Edelman, Julian Wright, Jan 30, 2015

              Price Restrictions in Multi-sided Platforms: Practices and Responses

              In connecting buyers to sellers, some two-sided platforms require that sellers offer their lowest prices through the platform, disallowing lower prices for direct sales or sales through competing platforms. In this article, we explore the various contexts where such restrictions have arisen, then consider effects on competition, entry, and efficiency.

              • Robert Levinson, Michael Salinger, Jan 30, 2015

                Economic Considerations Raised by the Federal Trade Commission’s Investigation of Google’s Search Practices

                In January 2013, the Federal Trade Commission closed its nineteen-month antitrust investigation into Google’s search practices. The FTC’s investigation and its resolution raised interesting antitrust issues, some of which were novel, and some of which were fundamental to sound antitrust enforcement.

                Cases on Multi-Sided Platforms
                1. Alan Sykes, Jan 30, 2015

                  Antitrust Issues in Two-Sided Network Markets: Lessons from In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation

                  In 2013, I served as a court-appointed expert in consolidated class and individual plaintiff antitrust litigation against Visa and Mastercard in the Eastern District of New York. The litigation involved a challenge to default interchange fees established by Visa and Mastercard, and to certain network rules imposed on affiliated merchants. Although it was not my task to adjudicate the dispute, an evaluation of the reasonableness of the eventual settlement from an economic perspective inevitably entails a comparison between what the plaintiffs received in the proposed settlement and the expected returns to the plaintiffs
                  of litigating the case to conclusion.

                  • Frederic Pradelles, Andreas Scordamaglia-Tousis, Jan 30, 2015

                    The Two Sides of the Cartes Bancaires Ruling: Assessment of the Two-Sided Nature of Card Payment Systems Under Article 101(1) TFEU and Full Judicial Scrutiny of Underlying Economic Analysis

                    The European Court of Justice recently delivered two seminal rulings in Groupement des Cartes Bancaires v Commission and MasterCard v Commission. These two judgments brought much awaited clarification to the application of Article 101 of the Treaty on the Functioning of the European Union in two important areas. of litigating the case to conclusion.

                    • Renato Nazzini, Ali Nikpay, Jan 30, 2015

                      Object Restrictions and Two-sided Markets in EU Competition Law after Cartes Bancaires

                      On September 11, 2014, the Court of Justice overturned the judgment of the General Court upholding the European Commission’s decision in Groupement des Cartes Bancaires. This paper contends that the Court of Justice’s judgment is significant in two respects.

                      The Classic
                      1. Richard Schmalensee, Jan 30, 2015

                        An Instant Classic: Rochet & Tirole, Platform Competition in Two-Sided Markets

                        The press release announcing that Jean Tirole had been awarded the 2014 Nobel Prize in Economic Sciences noted that he had “made important theoretical research contributions in a number of areas.” One of his most important contributions was the discovery and pioneering analysis of multi-sided platforms in his 2003 paper with Jean-Charles Rochet, Platform Competition in Two-Sided Markets.

                        • Jean-Charles Rochet, Jean Tirole, Jan 30, 2015

                          Platform Competition in Two-Sided Markets

                          Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of the market on board.”

                          1. Jan 30, 2015

                            CPI Autumn 2014 eBook

                            View, download, and print the CPI Autumn 2014 eBook (PDF).


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                            In The News

                            About the CPI Journal

                            Competition Policy International is a peer-reviewed, academic journal that covers competition law, economics, and policy. Issues are published twice a year in the Spring and Autumn and in both print and online forms (print ISSN 1554-0189; online ISSN 1554-6853).

                            Past Issues



                            Founder and Publisher
                            David S. Evans
                            University of Chicago, Chicago, IL, and 
                            University College London, London, U.K.

                            Elisa V. Mariscal
                            Centro de Investigación y Docencia Económicas (CIDE), and 
                            Instituto Tecnológico Autónomo de México (ITAM), Mexico

                            Mark Armstrong
                            University College London
                            London, U.K.

                            Antonio Bavasso
                            University College London and
                            Allen & Overy, London, U.K.

                            Keith N. Hylton
                            Boston University School of Law
                            Boston, MA, U.S.A.

                            R. Ian McEwin
                            National University of Singapore

                            Susan Ning
                            King & Wood
                            Beijing, China

                            Michael A. Salinger
                            Boston University School of Management
                            Boston, MA, U.S.A.

                            Editorial Board Chairman

                            Richard Schmalensee
                            MIT Sloan School of Management 
                            Cambridge, MA, U.S.A.

                            Editorial Board
                            Joseph Angland
                            White & Case
                            New York, NY, U.S.A.

                            Christopher Bellamy
                            London, U.K.

                            Dennis W. Carlton
                            University of Chicago
                            Chicago, IL, U.S.A.

                            Frank H. Easterbrook
                            U.S. Court of Appeals for the 7th Circuit
                            Chicago, IL, U.S.A.

                            Einer R. Elhauge
                            Harvard Law School
                            Cambridge, MA, U.S.A.

                            John Fingleton
                            U.K. Office of Fair Trading
                            London, U.K.

                            Nicholas J. Forwood
                            General Court of the European Union
                            Luxembourg. Lux.

                            Douglas H. Ginsburg
                            U.S. Court of Appeals for the DC Circuit
                            Washington, DC, U.S.A.

                            Herbert Hovenkamp
                            University of Iowa College of Law
                            Iowa City, IA, U.S.A.

                            William J. Kolasky
                            New York, NY, U.S.A.

                            Valentine Korah
                            University College London
                            London, U.K.

                            Bruno Lasserre
                            Autorité de la Concurrence
                            Paris, France

                            Mario Monti
                            Bocconi University
                            Milan, Italy

                            Timothy J. Muris
                            George Mason University School of Law
                            Arlington, VA, U.S.A.

                            Eduardo Pérez-Motta
                            Federal Competition Commission
                            Mexico City, Mexico

                            Richard Posner
                            U.S. Court of Appeals for the 7th Circuit
                            Chicago, IL, U.S.A.

                            Patrick Rey
                            IDEI and University of Toulouse
                            Toulouse, France

                            Vivien Rose
                            Competition Appeal Tribunal
                            London, U.K.

                            Bo Vesterdorf
                            University College London, London, U.K. and
                            Plesner, Copenhagen, Denmark