tag:theconversation.com,2011:/global/topics/anti-competitiveness-13028/articlesAnti-competitiveness – The Conversation2022-07-21T05:21:24Ztag:theconversation.com,2011:article/1872792022-07-21T05:21:24Z2022-07-21T05:21:24ZANZ’s takeover of Suncorp will reduce bank competition – but will that be enough to block it?<p>Australia has one of the world’s most concentrated banking sectors, with its four biggest banks – Commonwealth Bank, National Australia Bank, Westpac and ANZ – holding more than about three-quarters of the market.</p>
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<p>It will become even more concentrated if ANZ – the “minnow” of the big four – completes its plan to buy the banking division of Queensland-based <a href="https://www.suncorp.com.au/">Suncorp</a> for A$4.9 billion. </p>
<p>Suncorp, which also has a large insurance division, is the second largest of Australia’s four major regional banks. It is a significant brand in Queensland, and known to the rest of Australia through the name of Brisbane’s rugby stadium.</p>
<p>This will be the largest consolidation in Australian banking since 2008, when Commonwealth Bank took over Perth-based Bankwest and Westpac acquired Sydney-based St George Bank. It will push ANZ from fourth to third place by loan value. </p>
<p>First though, it needs two regulatory approvals – from the <a href="https://www.accc.gov.au/">Australian Competition and Consumer Commission</a>, which can block any merger that “substantially lessens” competition in any market; and the federal treasurer, who has <a href="https://www.legislation.gov.au/Details/C2020C00315">specific powers</a> over the financial sector.</p>
<p>Approval is by no means guaranteed. </p>
<p>ANZ’s chief executive Shayne Elliott has argued the deal will “<a href="https://www.suncorpgroup.com.au/announcements-pdf/1684676">improve competition</a>”. But that’s probably true only for ANZ. </p>
<p>Every smaller competitor, and consumers, have good grounds to argue the competition watchdog, or federal treasurer Jim Chalmers, should be vetoing the deal.</p>
<h2>This isn’t 2008</h2>
<p>When the competition watchdog and then federal treasurer Wayne Swan approved the acquisitions of Bankwest and St George in 2008, it was feared the alternative was these banks collapsing in the wake of the global financial crisis.</p>
<p>Bankwest’s owner, the Bank of Scotland, was in dire financial straits (and in 2009 would itself be taken over, by Lloyds Bank). </p>
<p>St George was in trouble, having had to <a href="https://www.afr.com/politics/westpac-swoops-on-st-george-20080513-jkgo1">raise its interest rates</a> more than its rivals because it had borrowed so much money to expand its loans business. </p>
<h2>ANZ’s competition argument</h2>
<p>Suncorp is under no such existential threat. The ANZ chief executive’s argument about why the merger <a href="https://www.suncorpgroup.com.au/announcements-pdf/1684676">is good for competition</a> has instead been based overwhelmingly on what it means to ANZ:</p>
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<p>As the smallest of the major banks, we believe a stronger ANZ will be able to compete more effectively in Queensland offering better outcomes for customers.</p>
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<p>He told the Australian Financial Review: “Just as Suncorp probably feels dwarfed by ANZ, we feel dwarfed by CBA.”</p>
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<p>Absorbing Suncorp’s $45 billion of deposits and $58 billion in commercial and home loans to its books will push up ANZ’s <a href="https://www.apra.gov.au/monthly-authorised-deposit-taking-institution-statistics">share of the home-lending market</a> to about 15.4%, compared with Commonwealth Bank’s 25.9%, Westpac’s 21.5% and NAB’s 14.9%. </p>
<p>But for everyone else, including consumers, other banks and regulators, the deal will likely hinder competition. </p>
<h2>Concentration and competition</h2>
<p>High market concentration does not necessarily mean competition is weak or that community outcomes will be poor, as the Productivity Commission concluded following its <a href="https://www.pc.gov.au/inquiries/completed/financial-system/report">2018 inquiry</a> into the state of competition in Australian financial services. </p>
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<p>Rather, it is the way market participants gain, maintain and use their market power that may lead to poor consumer outcomes. </p>
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<p>However, the Productivity Commission also concluded Australia’s major banks had charged prices above competitive levels, offered inferior quality products, and had acted to inhibit the expansion of smaller competitors. </p>
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<p>All are indicators of the use of market power to the detriment of consumers. </p>
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<p>Bucketloads more evidence has come from the <a href="https://theconversation.com/banking-royal-commissions-damning-report-things-are-so-bad-that-new-laws-might-not-help-104058">banking royal commission</a>, which found evidence that all four big banks (and many other financial services companies) had committed illegal or unethical acts to maximise profits at their customers’ expense.</p>
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<h2>Tackling the ‘cosy olipoly’</h2>
<p>Following the publication of the royal commission’s final report in February 2019, the Australian Competition and Consumer Commission’s head, Rod Sims, <a href="https://aacs.org.au/rod-sims-australia-needs-a-law-against-unfair-behaviour-by-companies/">said</a></p>
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<p>A cosy banking oligopoly is surely at the heart of recent problems, so we must and will find ways to get more effective competition in banking.</p>
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<p>This mission is a work in progress. Some hopeful experiments, such as the “neobanks” (pure digital banks) are failing. Australia’s first neobank, Volt, which was granted its license to operate as a authorised deposit-taking institution in 2019, <a href="https://www.reuters.com/business/finance/australias-first-neobank-volt-shut-deposit-taking-business-return-licence-2022-06-29/">collapsed last month</a>. The second neobank, Xinja, quit the banking business back December 2020. </p>
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<p>Given this, it’s hard to argue that further concentration is good for competition. </p>
<p>For the competition watchdog to block the deal, however, it must be convinced of a “<a href="https://www.accc.gov.au/system/files/Merger%20guidelines%20-%20Final.PDF">substantial</a>” lessening of competition. That means ANZ gaining market power to “significantly and sustainably” increase its prices or profit margins.</p>
<p>By my reading this deal will certainly lessen competition – but it’s uncertain if it will do so according to the “substantial” test. </p>
<p>Either way, this will prove a major test for the new chair of the Competition and Consumer Commission <a href="https://theconversation.com/allan-fels-as-accc-chair-gina-cass-gottlieb-will-put-the-public-interest-first-despite-years-of-fighting-for-business-173736">Gina Cass-Gottlieb</a> and new treasurer Jim Chalmers.</p><img src="https://counter.theconversation.com/content/187279/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Angel Zhong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are good grounds to argue the competition watchdog, or federal treasurer Jim Chalmers, should be vetoing the deal.Angel Zhong, Associate Professor of Finance, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1479512020-11-06T17:33:36Z2020-11-06T17:33:36ZWhy anti-competitive probe into tech giants could spell trouble for Apple and its App Store<figure><img src="https://images.theconversation.com/files/367694/original/file-20201105-23-8y6ut2.jpg?ixlib=rb-1.1.0&rect=0%2C16%2C5573%2C2900&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/san-antonio-texas-april-12-2018-1070156219">Moab Republic/Shutterstock</a></span></figcaption></figure><p>If the coronavirus pandemic has shown us anything, it’s just how much people depend on a few large technology companies. The use of mobile apps and web services has <a href="https://techcrunch.com/2020/03/26/report-whatsapp-has-seen-a-40-increase-in-usage-due-to-covid-19-pandemic/?guccounter=1">increased significantly</a> in recent years, as people adapted to new ways to stay in touch.</p>
<p>At the same time though, <a href="https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws">antitrust</a> regulators in the <a href="https://www.theverge.com/21506682/google-apple-amazon-facebook-antitrust-report-house-judiciary">US</a> and <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073">Europe</a> have been taking a much closer look as part of a growing desire to investigate the dominance of some large players in the technology market.</p>
<p>One of the issues is the amount of control that platform operators have over significant parts of the economy, and their ability to act as “gatekeepers” to markets in an anti-competitive manner. The EU has recently introduced <a href="https://ec.europa.eu/digital-single-market/en/online-platforms-digital-single-market">new legislation</a> to cover online platforms.</p>
<p>Recently there have been a number of <a href="https://www.theverge.com/2020/10/8/21506995/apple-forced-in-app-purchase-protonmail-ceo-wordpress-iap">significant stories</a> outlining a range of problems that developers have experienced with the Apple App Store in particular. This has led to developers forming a group called the <a href="https://appfairness.org/">Coalition for App Fairness</a>, which advocates for three key issues to be resolved in Apple’s App Store.</p>
<p><strong>1.</strong> <a href="https://appfairness.org/issues/anti-competition/">Anti-competitive policies and conflicts of interest</a>, where Apple is both the “gatekeeper” to the platform, admitting and setting the rules for third-party apps (such as Spotify), while also providing its own services (Apple Music, for example).</p>
<p><strong>2.</strong> <a href="https://appfairness.org/issues/30-app-tax/">Charging 30% transaction fees</a> on app sales and in-app purchases, and preventing developers from using or making users aware of other ways to pay with lower fees.</p>
<p><strong>3.</strong> <a href="https://appfairness.org/issues/no-consumer-freedom/">A lack of freedom</a> for users to exercise choice and buy from others, which would allow a free market to settle on transaction fees.</p>
<h2>Criticism and concern</h2>
<p>One of the most significant criticisms of the company’s approach to the App Store is that there is no course of appeal available for developers that doesn’t rest with Apple. Larger companies have been able to <a href="https://www.macrumors.com/2020/09/25/apple-no-facebook-fees-until-2021/">negotiate exceptions to the rules</a>, but in this case, the exception appears to apply only to <a href="https://www.vox.com/recode/2020/9/25/21455860/apple-facebook-airnbn-classpass-30-percent-app-store-antitrust">three large tech companies</a> (<a href="https://classpass.com/features">ClassPass</a>, Facebook and Airbnb), and not to other independent apps. This risks further exacerbating the concerns expressed by politicians on both sides of the Atlantic, around the dominance of large tech companies due to their influence and bargaining power.</p>
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<img alt="Apple's App Store button on an iPhone with a finger hovering above it." src="https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/367710/original/file-20201105-19-1xur6l3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Many app developers are afraid to challenge Apple as the only platform available to sell their creations is the company’s App Store.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/adelaide-australia-september-23-2013-clicking-250627222">YM German/Shutterstock</a></span>
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<p>An especially problematic situation arises where Apple is both “gatekeeping” apps, while also running its own competing app – Spotify has to <a href="https://www.fool.com/investing/2019/04/07/why-spotify-is-suing-apple.aspx">share</a> 30% of each first-year subscription with Apple via the App Store, and 15% of subscriptions after the first year – but Apple’s own competing music subscription service pays no such fee. Apple’s rules also <a href="https://developer.apple.com/app-store/review/guidelines/">prevent developers</a> from telling users that it is cheaper to subscribe outside of the App Store ecosystem.</p>
<p>Developers are often <a href="https://stratechery.com/2020/rethinking-the-app-store/">unwilling to speak publicly</a> about problems with Apple, as their business or livelihood depends on their apps being available on the App Store. Apple’s CEO, Tim Cook, recently assured the US House Judiciary Panel: “We do not retaliate or bully people. It’s strongly against our company culture.”</p>
<p>Still, <a href="https://www.epicgames.com/site/en-US/about">Epic Games</a>, maker of the phenomenally successful <a href="https://www.epicgames.com/fortnite/en-US/home">Fortnite</a> had its request for a restraining order against Apple <a href="https://www.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.48.0.pdf">granted in part</a>, as a result of what they argued to be wider retaliations against their actions.</p>
<p>In August of this year, Epic Games introduced a <a href="https://www.epicgames.com/fortnite/en-US/news/the-fortnite-mega-drop-permanent-discounts-up-to-20-percent">new way to pay</a> for virtual items directly, without Apple receiving a 30% cut of the sale. This meant users would pay less. Apple argued this breaks their developer agreement, and <a href="https://www.natlawreview.com/article/apple-allowed-to-continue-to-ban-epic-s-fortnite-store-may-not-retaliate-against">threatened to block</a> all of Epic Games’ developer accounts, including those for unrelated products.</p>
<p>While Apple definitely has an argument that the gaming company breached its developer agreement, Epic Games argues the terms are anti-competitive and thus illegal, as they deprive customers of choice, and raise prices. The court found that Epic Games was at risk of “irreparable harm” due to the some of the seemingly retaliatory measures being levelled at separate legal entities.</p>
<p>The problem is that most developers cannot afford to take this kind of costly legal action. The Epic Games case has encouraged more developers to speak up about concerns regarding Apple’s commercial App Store practices, with one developer even going so far as to liken some of their conditions to <a href="https://www.techspot.com/news/87043-protonmail-ceo-calls-apple-forced-app-purchases-mafia.html">“Mafia extortion”</a>.</p>
<p>Apple argues that its policies make sure apps “meet our high standards for privacy, performance, and security” to maintain consumer trust, and this certainly makes sense for some of their technical restrictions and rules which ensure apps don’t abuse users’ personal data or files.</p>
<p>But it’s clear that some of Apple’s restrictions go significantly beyond this, such as where apps are <a href="https://www.cnbc.com/2020/08/28/apple-rejects-facebook-app-that-says-apple-takes-30percent-cut.html">prevented</a> from notifying users of Apple’s 30% fee. In other cases, developers have <a href="https://mobile.twitter.com/downdogapp/status/1278048862746234883">complained</a> that Apple is trying to force them to make certain commercial decisions, such as auto-renewing free trial subscriptions, which they do not agree with, and don’t want to make. We asked Apple for a response to these issues but have yet to receive a reply.</p>
<h2>Monopoly game</h2>
<p>At the end of all of this, you’d be forgiven for thinking these developers should simply make their apps available elsewhere. The problem with the App Store is that there is no “elsewhere” – Apple prevents anyone from making a competing App Store, so the only way to get an app on an iPhone or iPad is via the App Store, with the 30% fee. A scathing report by the House Committee on the Judiciary on the <a href="https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf">impacts of monopoly power on the digital economy</a> has also pointed out the high cost and practical issues with switching away from Apple devices.</p>
<p>The report has also accused Apple of making up “unwritten rules when convenient”. It is perhaps therefore fitting that a company accused of acting as <a href="https://www.theverge.com/2020/10/8/21506995/apple-forced-in-app-purchase-protonmail-ceo-wordpress-iap">“judge, jury and executioner”</a> towards developers on its own platform looks increasingly likely to see its own future decided in a regular courtroom before a regular judge.</p><img src="https://counter.theconversation.com/content/147951/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Greig is a member of the UK 5G security group, and the UK Telecoms Data Taskforce, and is involved in the delivery of 5G Testbeds & Trials projects funded by DCMS.</span></em></p>App developers are increasingly unhappy with what they see as Apple’s anti-competitive practices. The problem is, when it comes to Apple devices, there’s nowhere else to go but the App Store.Greig Paul, Lead Mobile Networks and Security Engineer, University of Strathclyde Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1121792019-02-25T12:28:20Z2019-02-25T12:28:20ZAlgorithms are maximising profits for online retailers by colluding to keep prices high<figure><img src="https://images.theconversation.com/files/260416/original/file-20190222-195876-1054uxt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/portrait-angry-beautiful-young-woman-wearing-1279989073?src=L5O2zW8U5jBNTZG1MHcCcQ-1-27">Dean Drobot/Shutterstock</a></span></figcaption></figure><p>Have you ever searched for a product online in the morning and gone back to look at it again in the evening only to find the price has changed? In which case you may have been subject to the retailer’s pricing algorithm.</p>
<p>Traditionally when deciding the price of a product, marketers consider its value to the buyer and how much similar products cost, and establish if potential buyers are sensitive to changes in price. But in today’s technologically driven marketplace, things have changed. Pricing algorithms are most often conducting these activities and setting the price of products within the digital environment. What’s more, these algorithms may effectively be colluding in a way that’s bad for consumers.</p>
<p>Originally, online shopping was hailed as a benefit to consumers because it allowed them to easily compare prices. The increase in competition this would cause (along with the growing number of retailers) would also force prices down. But what are known as <a href="https://www.researchgate.net/publication/318596610_Pricing_and_Revenue_Management">revenue management pricing systems</a> have allowed online retailers to use market data to predict demand and set prices accordingly to maximise profit. </p>
<p>These systems have been exceptionally popular within the hospitality and tourism industry, particularly because hotels have fixed costs, perishable inventory (food that needs to be eaten before it goes off) and fluctuating levels of demand. In most cases, revenue management systems allow hotels to quickly and accurately calculate ideal room rates using sophisticated algorithms, past performance data and current market data. Room rates can then be easily adjusted everywhere <a href="https://www.revfine.com/important-online-distribution-channels-hotels/">they’re advertised</a>.</p>
<p>These revenue management systems have led to the term “<a href="https://link.springer.com/article/10.1057/s41272-018-0147-z">dynamic pricing</a>”. This refers to online providers ability to instantly alter the price of goods or services in response to the slightest shifts in supply and demand, whether it’s an unpopular product in a full warehouse or an Uber ride during a late-night surge. Accordingly, today’s consumers are becoming more comfortable with the idea that prices online can and do fluctuate, not just at sale time, but several times over the course of a single day.</p>
<p>However, new <a href="https://mislove.org/publications/Amazon-WWW.pdf">algorithmic pricing programmes</a> are becoming far more sophisticated than the original revenue management systems because of developments in artificial intelligence. Humans still played an important role in revenue management systems by analysing the collected data and making the final decision about prices. But algorithmic pricing systems largely work by themselves.</p>
<p>In the same way that in-home voice assistants like Amazon Echo <a href="https://www.sas.com/en_gb/insights/analytics/machine-learning.html">learn about their users</a> over time and change the way they operate accordingly, algorithmic pricing programmes learn through experience of the marketplace.</p>
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<img alt="" src="https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=431&fit=crop&dpr=1 600w, https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=431&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=431&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=541&fit=crop&dpr=1 754w, https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=541&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/260418/original/file-20190222-195879-1fgxine.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=541&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Pricing algorithms constantly watch other online shops.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/woman-shopping-clothes-online-731340991?src=R8prMHWFwoVBkoL_WEzAJw-1-19">Kaspar Grinvalds/Shutterstock</a></span>
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<p>The algorithms study the activity of online shops to learn the economic dynamics of the marketplace (how products are priced, normal consumption patterns, levels of supply and demand). But they can also unintentionally “talk” to other pricing programmes by constantly watching the price points of other sellers in order to learn what works in the <a href="https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13405">marketplace</a> </p>
<p>These algorithms are not necessarily programmed to monitor other algorithms in this way. But they learn that it’s the best thing to do to reach their goal of maximising profit. This results in an <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2591874.36">unintended collusion</a> of pricing, where prices are set within a very close boundary of each other. If one firm raises prices, competitor systems will immediately respond by raising theirs, creating a colluded non-competitive market. </p>
<p>Monitoring the prices of competitors and reacting to price changes is normal and legal activity for businesses. But algorithmic pricing systems can take things a step further by setting prices above where they would otherwise be in a <a href="https://arxiv.org/pdf/1802.08061.pdf">competitive market</a> because they are all operating in the same way to maximise profits.</p>
<p>This might be good from the perspective of companies but is a problem for consumers who have to pay the same everywhere they go, even if prices could be lower. Non-competitive markets also result in less innovation, <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/443448/Productivity_and_competition_report.pdf">lower productivity</a> and ultimately less economic growth. </p>
<h2>What can we do?</h2>
<p>This poses an intriguing question. If programmers have (unintentionally) failed to prevent this collusion from happening, what should happen? In most countries, tacit collusion (where companies don’t directly communicate with each other) isn’t currently seen as an illegal activity.</p>
<p>However, the companies and their developers could still be held responsible as these algorithms are programmed by humans and have the ability to learn how to communicate and exchange information with competitor algorithms. The <a href="http://europa.eu/rapid/press-release_IP-17-201_en.htm">European Commission</a> has warned that the widespread use of pricing algorithms in e-commerce could result in artificially high prices throughout the marketplace, and the software should be built in a way that doesn’t <a href="https://www.freshfields.com/globalassets/our-thinking/campaigns/digital/mediainternet/pdf/freshfields-digital---pricing-algorithms---the-digital-collusion-scenarios.pdf">allow it to collude</a>.</p>
<p>But as long as the algorithms are programmed to deliver the greatest profit possible, and can learn how to do this independently, it may not be possible for programmers to overcome this collusion. Even with some restrictions put in place, the algorithms may well learn ways to overcome them as they look for new ways to meet their objective.</p>
<p>Attempting to control the market environment to prevent conscious price monitoring or market transparency will also undoubtedly result in more questions and create new problems. With this in mind, we need to better understand this kind of machine learning and its capabilities before we bring in new regulations.</p><img src="https://counter.theconversation.com/content/112179/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Graeme McLean does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The AI behind retail websites has learnt the best strategy is to copy each other’s prices – and that can see them ‘collude’ to keep them high.Graeme McLean, Lecturer in Marketing, University of Strathclyde Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1014622018-08-21T13:44:25Z2018-08-21T13:44:25ZInquiry sets out how parts of the private health care sector in South Africa can be fixed<figure><img src="https://images.theconversation.com/files/232462/original/file-20180817-165943-p5tvvc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>A <a href="http://www.compcom.co.za/healthcare-inquiry">Health Market Inquiry</a> into South Africa’s private health care sector has established that the market is dominated by a few players. In such an environment, non-competitive behaviour such as collusion and excessive pricing tends to <a href="https://theconversation.com/why-the-dominance-of-big-players-is-bad-for-south-africas-economy-92058">thrive</a>. These dominant firms withhold key information which leaves consumers disempowered and at the mercy of monopolistic enterprises.</p>
<p>South Africa’s medical schemes market reflects acute domination by a few players. A few examples illustrate this. Among a total of 22 medical schemes open to the public, one scheme, Discovery Health Medical Scheme, is home to 55% of all medical scheme beneficiaries. Among the administrators contracted by medical schemes to manage and administer medical insurance, two companies – Discovery Health and Medscheme – account for 76% of total gross contribution income. And as much as 83% of private hospital beds are owned by the three large hospital groups: Netcare, Mediclinic and Life.</p>
<p>On top of this a handful of big corporations have controlling stakes in the few players that dominate the private health care industry, with some individuals serving as directors on the boards of multiple companies. </p>
<p>The report argues that the lack of competitive pressure feeds high prices for medical goods and services. The situation is made worse by information asymmetry – customers know much less than the companies offering the services – which makes for uninformed consumers. </p>
<h2>Closing the gap</h2>
<p>The report makes recommendations to close this information gap under five broad themes:</p>
<p>Standard benefit packages: Medical schemes should be required to offer a similar standard benefit package. This will allow those purchasing medical insurance to make better informed choices based on value-for-money.
This should cover prescribed minimum benefits as well as cost-effective out-of-hospital care and primary and preventive health care.</p>
<p>In this way, consumers can easily compare the prices of the basic option offered by different schemes and make decisions based on value-for-money. The coverage offered under this package will be exempt from co-payments to medical schemes or additional billing by providers. </p>
<p>Reimbursement and pay for performance: Doctors and specialists are currently paid for every individual service provided to the patient on a reimbursement basis, called fee-for-service payment. This often results in overuse and over-prescription, known as supply-induced demand. The problem of supply-induced demand is worsened by the fact that the prices of medical services are unregulated.</p>
<p>This needs to change and alternative ways to reimburse doctors and specialists needs to be found that links the service they offer to how they perform. </p>
<p>Medical brokers: The position and role of brokers in the South African medical aid industry has been <a href="https://theconversation.com/why-south-africa-needs-to-discipline-the-private-healthcare-industry-100410">precarious</a>. For one, its not clear whose side they’re on as they are often paid by and working for only one specific scheme which dilutes their objectivity.</p>
<p>And the fact that the majority of consumers are allocated a broker by default, through a practice called opt out, is highly problematic.</p>
<p>The report recommends that the opt out practice should be changed to one that allows people to opt in. Scheme members will be able to exercise their choice of making use of the services of a medical broker – or not – on an annual basis. </p>
<p>Clients without brokers will pay proportionally lower scheme membership fees. They will also be able to directly engage with medical schemes rather than through brokers, including applying for membership.</p>
<p>Disclosure of information: The report recommends that customers must be given far more information than is currently the case. This should include, for example, details on the costs of particular care. And, as a matter of course, service providers should declare their interests in facilities being used. For example, a service provider should provide the patient with information on their shareholding in the facility where the service is being provided. They must also declare their financial interest in any product they use, dispense or prescribe.</p>
<p>Another recommendation is that all fee-for-service tariffs should be published and displayed at each place where patients make contact with the health care system. This includes the consulting rooms of doctors and specialists as well as hospital reception areas. Other information of interest and value to the clients of private medical schemes should also be put in the public domain. This could include information on the results and value of adopting alternative methods to pay health care providers.</p>
<p>Information on administrative costs and income from broker fees should also be published by the Council for Medical Schemes on an annual basis.</p>
<p>Voice and participation: The report calls for consumer activism. This includes attendance by scheme members of their insurer’s Annual General Meeting. </p>
<p>The report also calls for activism by civil society organisations. These can make representations to the proposed forum responsible for setting fee-for-service tariffs.</p>
<h2>The long road ahead</h2>
<p>A number of factors will determine how fast, and how far, change takes place.</p>
<p>Certainly, the legislative changes needed to make it possible for the inquiry’s recommendations to be implemented will take time. And the success of many of the initiatives will ultimately depend on buy-in from medical schemes, scheme administrators, and medical practitioners. </p>
<p>Equally critical will be the capacity to effectively manage and to hold accountable new institutions – such as a Supply-Side Regulator – as proposed in the report.</p><img src="https://counter.theconversation.com/content/101462/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frederik Booysen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Findings from South Africa’s Health Market Inquiry makes recommendations to close the information gap between service providers and consumers.Frederik Booysen, Professor of Economics: School of Economic and Business Sciences Frederik Booysen, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1006972018-08-16T13:51:16Z2018-08-16T13:51:16ZMarket concentration is plaguing South Africa’s private health care market<figure><img src="https://images.theconversation.com/files/231911/original/file-20180814-2906-swdjqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The preliminary findings of a recent inquiry into South Africa’s private <a href="http://www.compcom.co.za/healthcare-inquiry/">health care sector</a> shows worrying trends. Key among the inquiry’s revelations are high concentration levels in the market. </p>
<p>For example, the report shows that 70% of the open medical schemes market is controlled by two players – Discovery Health Medical Scheme and Bonitas. The market for restricted medical aid schemes is dominated by the Government Employees Medical Scheme, with a 47% market share. The medical scheme administrators market is controlled by three players, Discovery Health, MMI Holdings and Medscheme. These three have a 70% combined market share. </p>
<p>The situation is no better in the market for private hospitals. Three hospital groups – Netcare, Mediclinic and Life Healthcare – hold 83% of the national market. </p>
<p>The concentration problem in the private health care sector is further compounded by integration. Two of the largest medical scheme administrators, Discovery Health and MMI Holdings Limited, and one of the largest hospital groups, Mediclinic, have common ownership. </p>
<p>A market dominated by few players creates an environment in which collusion, abuse of dominance and other anti-competitive conduct <a href="https://theconversation.com/why-the-dominance-of-big-players-is-bad-for-south-africas-economy-92058">can thrive</a>. To remedy the problems identified by the inquiry, addressing the problem of concentration is key. This is because it’s the root cause of other problems affecting the sector.</p>
<p>But sadly there isn’t much that competition authorities can do. The Competition Act empowers competition authorities to take effective remedial actions in cases involving mergers, collusion and abuse of dominance. But not when it comes to concentration. This means under the current law the health care market inquiry won’t result in any effective remedial steps being taken.</p>
<p>But there’s hope. If amendments to the country’s <a href="https://pmg.org.za/call-for-comment/629/">competition law</a> are passed by parliament the law relating to market inquiries will be strengthened. The Bill will empower competition authorities to impose more radical remedies, such as divestiture, to address the problem of concentration. Divestiture would involve, for example, a dominant firm being ordered to sell or dispose of its shares or assets to free up the market.</p>
<h2>Can divestiture work?</h2>
<p>Divestiture can be a drastic and sometimes controversial remedy. Because of this there’s an acceptance that it be used sparingly and as a last resort. It works best when other remedies have failed. </p>
<p>That’s not to deny divestiture its place in competition law enforcement. </p>
<p>Divestiture orders have been part of competition law enforcement for almost 130 years dating back to 1890 when the world’s first competition statute, the Sherman Act, <a href="http://shodhganga.inflibnet.ac.in/bitstream/10603/100395/10/10_chapter%202.pdf">was passed in the US</a>. Ever since the US has used divestiture to prevent monopolies from happening as well as to loosen the unhealthy grip of one or few firms on the market. </p>
<p>In the 1911 <a href="https://supreme.justia.com/cases/federal/us/221/1/">world famous case</a> of Standard Oil Co of New Jersey v United States, the American Supreme Court ordered that Standard Oil be broken up into 34 independent corporations. Standard Oil had monopolised the entire American oil sector. </p>
<p>Another <a href="https://law.justia.com/cases/federal/appellate-courts/F2/148/416/1503668/">prominent case</a> in which the Supreme Court ordered divestiture is United States v Aluminium Company of America . Here the Supreme Court’s remarks about monopoly were more telling:</p>
<blockquote>
<p>Possession of unchallenged economic power invariably killed initiative and discouraged thrift.</p>
</blockquote>
<p>In United States v Columbia Steel Co, <a href="https://supreme.justia.com/cases/federal/us/334/495/">another case</a> of historic significance, the Supreme Court also ordered divestiture. The court found that monopoly was an “industrial menace”, because of the firm’s ability to create inequalities in relation to its competitors. Monopoly was also found to be a “social menace”, because of the firm’s ability to control prices. </p>
<p>Recently, in 2000, information technology giant, Microsoft, also received a divestiture order. In <a href="https://law.justia.com/cases/federal/district-courts/FSupp2/87/30/2307082/">that case</a>, United States v. Microsoft Corp, a Judge ruled that Microsoft established an unlawful monopoly and abused its dominance. The Judge ordered that Microsoft must be broken down into two separate units, one to produce computer operating systems and the other software components. </p>
<p>This decision was later overturned on appeal. But <a href="https://www.brookings.edu/wp-content/uploads/2016/06/05_microsoft_litan.pdf">some observers</a> still believe that divestiture was an appropriate remedy because where anti-competitive conduct is made possible by market power, divestiture may be a suitable remedy. </p>
<p>South Africa should follow the American example by using divestiture to free up concentrated markets when circumstances require.</p><img src="https://counter.theconversation.com/content/100697/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phumudzo S. Munyai does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Domination of key South African markets by a few players, as displayed in the healthcare market inquiry, may require authorities to consider breaking up monopolies.Phumudzo S. Munyai, Associate Professor, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1006072018-07-29T20:17:56Z2018-07-29T20:17:56ZLessons for Australia in the EU’s algorithmic price war that ripped off consumers<figure><img src="https://images.theconversation.com/files/229567/original/file-20180727-106514-si0b8l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">"Resale price maintenance" is illegal in most countries that have competition law.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/asian-young-woman-hands-holding-credit-613377434?src=DXwJV-36tNyAxiL6xLa9gQ-1-0">Shutterstock</a></span></figcaption></figure><p>The European Commission imposed fines of more than <a href="http://europa.eu/rapid/press-release_IP-18-4601_en.htm">€110 million</a> (AU$170 million) on Asus, Denon & Marantz, Philips and Pioneer this month. These consumer electronics manufacturers had prevented online retailers from selling below the recommended retail price of their products, threatening to block supply if they did so. </p>
<p>This anti-competitive conduct is called “resale price maintenance”. It’s illegal in most countries that have competition law because it effectively rips off consumers.</p>
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Read more:
<a href="https://theconversation.com/explainer-the-good-the-bad-and-the-ugly-of-algorithmic-trading-68477">Explainer: the good, the bad, and the ugly of algorithmic trading</a>
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<p>What’s interesting about this case is the central role played by algorithms in the dispute. Manufacturers were using algorithmic price monitoring to figure out when retailers were discounting prices, while the same retailers were using algorithms to increase the competitiveness of their pricing.</p>
<p>So we have suppliers using algorithms (and threats) to increase prices, and retailers using algorithms to reduce prices. And it’s likely that both the retailers and the manufacturers were using the same application programming interface to monitor prices. The key thing is that the sales were all online.</p>
<h2>Pricing algorithms operate via APIs</h2>
<p>The purpose of an application programming interface or API is to provide “hooks” by which one application’s software can call for information from other software. The API means that the application’s software does not need to “look under the hood”. </p>
<p>Instead, a provider gives access to multiple systems that use the API for different applications. This is set out in the diagram below.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=515&fit=crop&dpr=1 600w, https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=515&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=515&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=647&fit=crop&dpr=1 754w, https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=647&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/229545/original/file-20180727-106521-rww37h.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=647&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Application programming interface.</span>
<span class="attribution"><span class="source">Rob Nicholls</span></span>
</figcaption>
</figure>
<p>Traditionally, APIs have been used to allow one application to interface to another application – typically an operating system. For example, applications can be coded in a variety of programming languages but still operate on the Windows operating system. </p>
<p>This works because Microsoft specifies the API in such a way that multiple different programming language types can use that interface. A more recent approach to APIs is to provide access to large data sets. In many cases these data sets can be “live”.</p>
<p>In the online retail world, selling platform providers such as <a href="https://developer.ebay.com">eBay</a> and <a href="https://developer.amazonservices.com">Amazon Marketplace</a> provide application programming interfaces or APIs for their merchants.</p>
<h2>Algorithms used by the retailers</h2>
<p>In principle, a retailer or merchant could use the API provided by the platform to manage their pricing. </p>
<p>Research at <a href="https://mislove.org/publications/Amazon-WWW.pdf">Northeastern University</a> has shown that merchants on Amazon Marketplace that use algorithmic pricing have greater sales. However, merchants may not have algorithm design as a core skill. This was illustrated when a biology textbook was advertised on Amazon Marketplace for over <a href="https://www.wired.com/2011/04/amazon-flies-24-million/">US$23 million</a>. </p>
<p>As a result, there are a significant number of intermediary firms that offer “repricing” software designed to provide competitive pricing and ensure that their clients’ products are promoted by the platform. </p>
<p>For example, in the case of Amazon Marketplace, it’s important that the product is in the “BuyBox”. Although there are several such intermediaries, the practical effect is that only a very limited number of algorithms are used by many merchants on the most popular platforms. </p>
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<strong>
Read more:
<a href="https://theconversation.com/heres-how-we-can-protect-ourselves-from-the-hidden-algorithms-that-influence-our-lives-70674">Here's how we can protect ourselves from the hidden algorithms that influence our lives</a>
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<p>The purpose of the repricing tools is to create a competitive offering from the merchant. Essentially it also acts as tool to discover rivals’ costs on the basis that the minimum acceptable margin for merchants is likely to be comparable. </p>
<p>The effect of the use of algorithms in a selling space where the products are identical is that the best consumer price is based on the private value of the second most competitive seller.</p>
<p>This results in that pricing that reflects both costs and acceptable margins.</p>
<h2>Algorithms used by the manufacturers</h2>
<p>In this case, the manufacturers were either using the same API as the retailers, or “screen scraping” the platform’s consumer website. Screen scraping is simply gathering data from a web page, rather than using the more efficient API. </p>
<p>Once the manufacturers had identified retailers that were selling below the recommended retail price, they asked them to change that price. If the change was not immediate, then the manufacturers threatened to cease supply.</p>
<p>The European Commission was particularly worried that if retailers followed the direction of the manufacturer, the algorithm-driven discounting would evaporate. This would leave consumers with a “take it or leave” recommended retail price.</p>
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Read more:
<a href="https://theconversation.com/fear-not-shoppers-amazons-australian-geoblock-wont-cramp-your-style-97612">Fear not, shoppers: Amazon's Australian geoblock won't cramp your style</a>
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<p>For example, if you wanted to buy a Pioneer AVH-1300NEX car entertainment system on Amazon in the United States, you would find prices ranging from US$276 to US$494.95, including US shipping. The order of the offers from Amazon is “Prime” first. </p>
<p>Most of the Prime offers are at US$279.95. The merchant offering US$276 has algorithmically priced to encourage the buyers to ignore the Prime benefits as well as fulfilment by Amazon. The recommended retail price from Pioneer is US$400. If the resale price maintenance was still going on, you would have no offers lower than US$400.</p>
<h2>What about Australia?</h2>
<p>Resale price maintenance is prohibited in Australia. </p>
<p>The Australian Competition and Consumer Commission or <a href="https://www.accc.gov.au/business/anti-competitive-behaviour/imposing-minimum-resale-prices">ACCC</a> summarises this as: </p>
<blockquote>
<p>A supplier may recommend that resellers charge an appropriate price for particular goods or services but may not stop resellers charging or advertising below that price. </p>
</blockquote>
<p>The <a href="https://www.accc.gov.au/publications/advertising-selling/advertising-and-selling-guide/competition-and-anti-competitive-behaviour/resale-price-maintenance">ACCC</a> also recommends that small businesses complain to the Commission if they receive threats about their pricing.</p>
<p>In a world where the technology is used to enforce regulation in the financial services sector (called RegTech), there is also an opportunity for the ACCC to use algorithmic-based tools detect anti-competitive conduct. </p>
<p>Perhaps the online call should be both “buyer beware” and “wholesaler beware”.</p><img src="https://counter.theconversation.com/content/100607/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Nicholls does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Four major consumer electronics manufacturers, including Philips and Pioneer, have been fined $170 million by the European Commission for anti competitive conduct.Rob Nicholls, Senior lecturer in Business Law, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/583012016-04-29T09:45:32Z2016-04-29T09:45:32ZWhat is the European Commission’s problem with Google and Android?<figure><img src="https://images.theconversation.com/files/120663/original/image-20160429-10512-dc41xi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Yeamake/Shutterstock.com</span></span></figcaption></figure><p>Google has been dragged over the coals by the European Union’s competition watchdog, culminating in the European Commission <a href="http://europa.eu/rapid/press-release_IP-16-1492_en.htm">formally charging Google with abusing the dominant position</a> of its Android mobile phone operating system, having launched an investigation in April 2015.</p>
<p>Powerful firms are prohibited from engaging in anti-competitive behaviour under <a href="http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E102">Article 102 of the Treaty on the Functioning of the European Union</a>, or TFEU. European law calls this an abuse of dominant position, but really it can be seen simply as <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2163690">bullying</a>. The EU courts have long recognised that dominant firms have “<a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A61981CJ0322">a special responsibility not to allow [their] conduct to impair genuine undistorted competition</a>”. </p>
<p>To violate EU competition law a firm must be dominant in a particular market – just having a large market share indicates dominance, but isn’t sufficient. Other factors need to be studied, such as barriers to market entry and exit, or switching costs. A market that is easy to enter despite one firm having a large share of it may still be contestable by newcomers.</p>
<p>The conduct of firms with dominant positions is subject to particular scrutiny for evidence of abusive conduct, such as that aimed at eliminating actual or potential competitors or exploiting consumers. If any abusive behaviour is found, the European Commission has the power to demand changes to contracts and impose fines of up to 10% of the firm’s annual turnover. In the case of Google, this would be an eye-watering US$7 billion, based on its <a href="http://www.androidcentral.com/google-releases-q4-and-full-2015-earnings">2015 revenues</a>. Any such sanctions are subject to review by the EU courts.</p>
<h2>What are the allegations?</h2>
<p>The European Commission considers that Google is dominant in three markets: general internet search, licensable mobile operating systems as used on smartphones and tablet computers, and stores for Android apps. It considers that Google controls more than 90% of each market. </p>
<p>It’s important to understand that Android is essentially composed of two parts. The first is the open source operating system core, which everyone can use, alter, change, repackage and re-release as their own. The other is proprietary, which is closed source and belongs to Google, which keeps it to itself. This means that a firm manufacturing mobile phones must buy a licence from Google to use the proprietary part of Android, even though the rest of it is open source and free.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/120601/original/image-20160428-28029-pg1k4m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How the European Commission sees Google’s anticompetitive behaviour.</span>
<span class="attribution"><span class="source">European Commission</span></span>
</figcaption>
</figure>
<p>Google, the commission argues, violated EU rules by requiring manufacturers to pre-install Google Search and its Chrome browser and obliging them to make Google Search a default search service as a condition of being granted a license for Google’s proprietary apps, particularly the Play Store app which is the key marketplace for Android-compatible apps. </p>
<p>Google also prevents manufacturers from selling devices running on any non-standard variations of the Android operating system (known as “forks”) – and offers financial incentives to manufacturers and mobile phone networks if they exclusively pre-install Google Search on their devices.</p>
<p>This behaviour has an essentially foreclosing effect – it makes it difficult for other firms to compete with Google, and reinforces Google’s dominance in general search – its most profitable business area. It may also harm consumers by denying them access to devices run on competing Android forks, thereby stifling innovation. </p>
<h2>Is Google the new Microsoft (legally speaking)?</h2>
<p>These are serious charges. They resemble <a href="http://europa.eu/rapid/press-release_IP-04-382_en.htm">similar anti-competitive charges brought against Microsoft</a> 20 years ago for bundling a media player and web browser with its Windows operating system. One difference lies in the fact that Microsoft built its products into each other, technologically, whereas Google bound them together contractually. </p>
<p>However, manufacturers can use the open source Android, but they cannot pre-install the proprietary Google apps, including the Play Store, which as the main Android app marketplace is seen as critical. There are other app stores available for Android, for example <a href="http://www.amazon.co.uk/gp/feature.html?docId=1000644603">Amazon Appstore</a>, but none has a comparable library of apps. What’s more, Google’s approach is all-or-nothing: installing the Play Store means installing all the other Google apps in the bundle, such as Google Search, the Chrome browser, or Gmail app. The effect is that Google’s own apps are given unparalleled presence and visibility, leveraging and strengthening Google’s dominant position. </p>
<p>In its <a href="http://googlepolicyeurope.blogspot.co.uk/2016/04/androids-model-of-open-innovation.html">first response</a>, Google underlined the voluntary character of the agreements and the open source nature of Android. It argued that Android was designed “in a way that’s good for competition and for consumers”. </p>
<p>Google has 12 weeks to formally respond and show that any such restrictions are legitimate. <a href="http://foreignpolicy.com/2016/04/26/europes-misguided-anti-google-crusade/">Some</a>, particularly in the US, argue that the European Commission is obsessed with scrutinising US tech firms. But the US Federal Trade Commission <a href="http://www.reuters.com/article/us-google-antitrust-idUSKCN0RP0WR20150925">recently opened a similar investigation</a>, so it is not, as some have suggested, anti-US sentiment. But with <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2242085">differences between EU and US law</a>, where US law tends to be more lenient with larger firms, it’s not clear that the two bodies will come to the same conclusions.</p><img src="https://counter.theconversation.com/content/58301/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marek Martyniszyn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>European Commission fires a broadside at Google for using Android to enforce its dominant position.Marek Martyniszyn, Lecturer in Law, Queen's University BelfastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/408612015-04-30T08:52:59Z2015-04-30T08:52:59ZAfter years of talk, a regulator is willing to take on Google<figure><img src="https://images.theconversation.com/files/79827/original/image-20150429-6271-1qvywuc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In Monopol-e-Commerce, who plays the hat, and who gets the boot?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/danielbroche/2258988806">danielbroche</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The European Commission’s decision to charge Google with abuse of its dominant market position in the search business in order to favour its own services has been criticised as <a href="http://www.theguardian.com/technology/2015/apr/15/europes-targeting-google-under-antitrust-laws-missing-bigger-picture">too narrow</a> in focus, <a href="http://www.theguardian.com/technology/20%60%6015/apr/22/can-anything-curb-dominance-of-internet-big-guns-amazon-google">too superficial</a> for not dealing with the bigger problem of digital competition, <a href="http://www.politico.eu/article/eu-google-hunt-ill-conceived/">ill-conceived</a> for messing with the market, or <a href="http://www.theguardian.com/technology/2015/apr/19/google-dominates-search-real-problem-monopoly-data">not focused on the real problem</a> of who owns our personal data.</p>
<p>While these are valid criticisms in their own way, they miss the most important point – that legal action has been taken at all. Whatever the result, this is a seismic and seminal move.</p>
<p>The US Federal Trade Commission (FTC) flirted with legal action in 2012 but withdrew, despite the conclusions of an <a href="http://www.wsj.com/articles/inside-the-u-s-antitrust-probe-of-google-1426793274">leaked internal investigation</a> that found that Google had “unlawfully maintained its monopoly over general search and search advertising”.</p>
<p>The European Commission worked closely with the FTC on its investigation and, like the FTC, decided against launching action by 2013. Joaquin Almunia, head of the European Competition Commission between 2010 and 2014, tried and failed to reach acceptable negotiated settlements with Google on three occasions. But his successor, Margrethe Vestager, has chosen action over discussion.</p>
<p>When the FTC launched an antitrust case against Microsoft in 1998 it dragged on for years, cost the organisation huge amounts of money and effort, and arguably opened up the space for Google to expand and eat much of Microsoft’s lunch. As journalist Charles Arthur writes in his book <a href="http://www.koganpage.com/product/digital-wars-9780749472030">Digital Wars</a>, the FTC’s action had a devastating impact on Microsoft’s self-esteem and “reached into the company’s soul”.</p>
<p>The case against Microsoft also shows why the FTC and the commission were reticent to launch a case against Google. It was legally and technologically complex, with courts struggling to apply 19th century antitrust law to the digital 21st century. Many people ended up dissatisfied with the result.</p>
<h2>Hurdles could trip up either side</h2>
<p>The case against Google has the potential to be even more complex and legally challenging. To demonstrate Google has abused its dominance the commission may need to call upon economists, engineers, investigative journalists and perhaps even sociologists.</p>
<p>It will need to define the markets in which Google acts. General search may be a relatively established market, but what about <a href="http://www.theguardian.com/technology/2013/nov/19/google-european-commission-row-vertical-search">vertical search</a>, or social search? It will need to translate competition law to a digital environment, to understand how algorithms work, and the extent to which Google’s algorithms favour the company, and to show evidence of abuse. It will also need to establish whether Google’s actions have damaged “consumer welfare”.</p>
<p>The European Commission will need to do all this while being intensively lobbied by some of the world’s largest and most powerful corporations, for example through the Microsoft-sponsored Initiative for a Competitive Online Marketplace (<a href="http://www.i-comp.org/">ICOMP</a>).</p>
<p>It’s not a great surprise, therefore, that the commission is charging Google on narrow grounds, in this case on favouring its own comparison shopping product. Shopping ought to be relatively low-hanging fruit: a reasonably well-defined market that Google has tried (unsuccessfully) to enter on more than one occasion with previous products Froogle, Google Product Search, and Google Shopping. There are a number of <a href="http://www.v3.co.uk/v3-uk/news/2406017/google-antitrust-case-19-complainants-named-including-microsoft">vocal, disgruntled competitors</a> such as Yelp, Expedia and TripAdvisor. And there is evidence upon which to build a case, compiled by the commission and the FTC since 2010.</p>
<p>The commission hopes that by narrowly focusing its action in the first instance it can create a precedent from which to build. It has already signalled where it may go next, <a href="https://theconversation.com/google-and-android-in-the-firing-line-as-eu-pulls-trigger-on-competition-inquiry-40291">having announced a formal investigation</a> into Android, Google’s mobile operating system, on the same day. Concerns over Google’s web content scraping and its exclusivity agreements with advertising partners have also been <a href="http://europa.eu/rapid/press-release_STATEMENT-15-4785_en.htm">highlighted as potential areas of inquiry</a>.</p>
<h2>Legal ramifications</h2>
<p>Whichever way the result falls, the repercussions will be pivotal. If the commission wins it will create a precedent with which the commission may choose to take on the dominance of other digital giants such as Amazon and Facebook. It may also trigger action by other governments and private actions. For Google it could lead to a crisis of confidence and loss of market lead similar to that experienced by Microsoft.</p>
<p>The consequences could be even more significant if the commission loses. Some will see it as evidence of the unchallengeable power of the global tech titans. Some will see it as confirmation that the legal action was merely European anger at US tech success. Few other democratic governments will be likely to take up cudgels and follow the commission’s lead.</p>
<p>However, the most likely result is that Google will settle. Though, as has been pointed out <a href="http://www.ft.com/cms/s/0/7b6010e2-e36c-11e4-9a82-00144feab7de.html">in reference to previous attempts</a> to negotiate with the firm Google, settlements could create a precedent too, which could make it difficult in the future to pursue Google for anti-competitive behaviour in one field having settled for the same in another.</p>
<p>In his landmark book <a href="http://www.nytimes.com/2010/12/12/books/review/Leonhardt-t.html?_r=0">The Master Switch</a>, Tim Wu outlined the stages of each information cycle. First a period of openness characterised by innovation, entrepreneurship and relative confusion. Then consolidation, in which a small number of organisations grow dominant. And finally monopolisation of markets – and often subsequent government intervention. For the web, the commission’s antitrust action against Google may well signify the start of the final stage of the cycle.</p><img src="https://counter.theconversation.com/content/40861/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martin Moore is also director of the Media Standards Trust and a visiting senior research fellow at King's College London.</span></em></p>Legal moves against Google are a major step, with implications that will stretch across the industry.Martin Moore, Research Associate, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/402912015-04-16T13:34:45Z2015-04-16T13:34:45ZGoogle and Android in the firing line as EU pulls trigger on competition inquiry<figure><img src="https://images.theconversation.com/files/78221/original/image-20150416-5622-1w5ny1e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Offers of candy won't prevent the European Commission's scrutiny now.</span> <span class="attribution"><span class="source">Google by Asif Islam/Shutterstock.com</span></span></figcaption></figure><p>There are some specific words that are not particularly popular with the European Commission: “hi-tech”, “anti-competitive” and “bundling”, to name a few. Throw “US firms” into the mix, and the result is as many expected: Google has been <a href="http://www.theverge.com/2015/4/15/8419605/google-europe-android-antitrust-investigation">accused of anti-competitive practices in Europe</a>.</p>
<p>The culmination of a three-year investigation, the commission will now examine not only the prominence of Google’s own services in its search results, but also launches <a href="http://europa.eu/rapid/press-release_MEMO-15-4782_en.htm">an inquiry into Android</a>, Google’s mobile phone operating system.</p>
<p>The European Commission’s competition chiefs have sent a Statement of Objections to Google, requiring the search giant to respond to allegations of anti-competitive behaviour in online shopping, where “Shop with Google” links – paid for by advertisers – are promoted over other search results.</p>
<p>Concerns of anti-competitive behaviour will similarly form the heart of the commission’s investigation into Android, which is expected to focus on Google’s agreements with tablet and smartphone manufacturers which might fall under <a href="http://euwiki.org/TFEU#TITLE_VII_-_-_COMMON_RULES_ON_COMPETITION.2CTAXATION_AND_APPROXIMATION_OF_LAWS">Article 101</a> of the Treaty of the Functioning of the European Union (TFEU).</p>
<p>These sorts of contractual arrangements include exclusivity agreements, such as where manufacturers are required to pre-install Google’s applications and services exclusively in their tablets and phones – for example, apps such as Google Maps, Gmail, Play, Music, Search and the other elements of the Google-branded ecosystem. They also include agreements whereby manufacturers are restricted from developing and marketing rival products to those Google offers.</p>
<p>The commission will also investigate Google’s practice of bundling its applications and services. Tying and bundling occurs when the supplier requires that two or more products are purchased together, even though they might have not been requested. This practice can be equated to abuse of dominance, especially when the supplier is a market giant the size of Google – and particularly in Europe where its dominance in search is greater than in the US and other markets. </p>
<p>This anti-competitive behaviour is likely to trigger <a href="http://euwiki.org/TFEU#Article_102">Article 102 TFEU</a>, which prohibits the abuse of a dominant position due to its likelihood to prevent or restrict competition. Similar issues have dogged Microsoft, which was dragged through the European courts for anti-competitive practices involving, among other things, software bundling and designing its products in such a way that it was difficult for third parties to create compatible products.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=602&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=602&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78222/original/image-20150416-5622-4s1tx3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=602&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Bundling Google’s many products is one bone of contention.</span>
<span class="attribution"><span class="source">logos by Yeamake/Shutterstock.com</span></span>
</figcaption>
</figure>
<h2>Google comes out fighting</h2>
<p>In anticipation of the investigation, Google issued a <a href="http://recode.net/2015/04/14/here-is-googles-internal-response-to-the-imminent-e-u-charges-memo/">memo</a> presenting its basic argument against the commission’s allegations and aiming to reinforce its brand as a promoter of innovation and an investor in new ideas. </p>
<p>Google points to the open-source nature of the Android system, the pricing of its products, as well as the existence of a vibrant competing market for apps and services – worth US$7 billion in revenue for developers and content publishers last year alone. The point Google is trying to make is that in a market where innovation thrives and consumers have wide choice characterised by low prices, there cannot be a negative or anti-competitive effect on trade.</p>
<p>Practically speaking, this investigation is likely to lead to a highly protracted court case – the EU case against Microsoft <a href="https://fsfe.org/activities/ms-vs-eu/timeline.en.html">took 16 years</a>. If and when Google is charged with breach of EU Competition Laws, the firm could face fines up to US$6 billion. But the bigger problem for a company the size of Google is the legal costs such a protracted case will incur. Distracted by arguing its case against the European Commission, Google risks falling behind in its highly competitive and fast-moving industry.</p>
<h2>Proceed with caution</h2>
<p>A lesson from the Microsoft saga is the importance of timing – Microsoft was ultimately forced to unbundle software such as its media player from Windows many, many years after the case was brought – at a time when it no longer mattered. The pace of technological progresses far outstrips the European Commission’s ability to keep pace, and the grounds for a lengthy investigation launched in 2015 may no longer be relevant a few years from now. Markets can change overnight, something of which the European Commission is well aware.</p>
<p>Ultimately, the technology industry and associated markets have unique characteristics in respect of competition law – the pace of innovation means no one can be sure today what tomorrow’s big products will be. Consequently a dominant firm today may be last in line tomorrow. Competition specialists have long identified this fact and called for caution when intervening, as competition in the field of innovation takes place not in today’s markets, but for the markets of tomorrow.</p><img src="https://counter.theconversation.com/content/40291/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Evgenia Kanellopoulou does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>First search, then shopping, now Android – European Commission sets out to take Google to task.Evgenia Kanellopoulou, Lecturer in Law, University of SalfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/331352014-10-20T19:13:42Z2014-10-20T19:13:42ZColes v ACCC: finding the balance between fair trading and competition<figure><img src="https://images.theconversation.com/files/62222/original/vj9rpr3c-1413784302.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We like competition that leads to low prices, but Australians also want fairness.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/theenmoy/10483354033/in/photolist-o6vVbZ-gYnVVk-bW8Dxv-7TaUZQ-f2BPHy-cUyGjb-e2JyvM-bU15Rg-59pveF-bX9jn1-hAtyD6-atpbAH-nB8zYb-8nyfx2-9fvD4a-dmRHHt-d9TiHj-6FDvSj-5Z4MS4-mzYyJ">Flickr/Theen Moy</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>In the space of just six months, the Australian Competition and Consumer Commission has launched two major cases against supermarket giant Coles for alleged unconscionable conduct against its suppliers. </p>
<p>The cases involve allegations of various forms of unfair treatment of suppliers, including harsh and oppressive tactics directed at extracting supplier rebates for claimed supply chain savings, pursuit of payments to cover “profit gaps”, payments to cover “waste” beyond the supplier’s control and penalties for short or late deliveries. </p>
<p>The basis for the actions is essentially that such behaviour oversteps the mark in what would be regarded as legitimate or fair trading relations. </p>
<p>These actions are to be applauded. That is not intended as a comment on their likely success. Coles has said that it will vigorously defend the allegations and it goes without saying that the ultimate outcomes are highly uncertain. It should also be acknowledged that since the conduct alleged in these cases took place, Coles has been party to drafting of a code of conduct relating to retailer-supplier relations, and has developed its own supplier charter.</p>
<p>The ACCC’s cases do not involve allegations that Coles acted anti-competitively or, more specifically, that the conduct involved a misuse of market power. This is significant. Much of the debate surrounding the retail grocery sector in recent years has been focused on its competitiveness. </p>
<h2>Competition at any cost?</h2>
<p>Yet the “experts” keep telling us that the market is workably competitive and that consumers are benefiting – pointing to staples such as milk and bread prices. The ACCC reached this conclusion in its 2008 inquiry into the sector and the recently released Harper Review appears to share this view.</p>
<p>Essentially, the issue raised by the ACCC’s allegations is whether we want competition at any cost. Do we prize lower prices at the expense of other interests or values?</p>
<p>Social research indicates while we welcome productivity measures that increase competition and lower prices, we also feel uncertain about the extent to which free markets guarantee us an overall improvement in our quality of life. </p>
<p>We are concerned about the threat from competition to other interests that we value, like income equality, environmental sustainability and opportunities for domestic employment. Less tangibly, but as importantly, there is a sense that unbridled competition threatens our traditional attachment to the land, the iconic image of the ‘Aussie battler" and our cultural ethos of a “fair go”.</p>
<p>This general tension is played out vividly in the context of supermarkets. Consumer patronage of chains at the expense of smaller retail outlets has risen over the last decade, due to lower prices on a wider range of products, shopping convenience and flexible hours. But consumers have a “love/hate” relationship with Coles and Woolworths. They feel resentful and distrustful of the very shops that they patronise, often because they see the chains as undermining the character and amenity of their communities. </p>
<p>These sentiments are consistent with the evidence of general public mistrust of “big business”, a concern that large companies have excessive power and scepticism of the relationship between government and business. </p>
<p>In spite of demands by business to “cut red tape”, the public expects that economic activity will operate within a framework of rules, and strongly supports government intervention to protect consumers, communities, the environment and workers.</p>
<p>Competition is seen as being by its nature a brutal process, but we are not prepared to accept brutality and destruction in other spheres of social interaction. Nor should we in the context of market dynamics. In my opinion, there is a legitimate role for fairness in the way in which businesses deal with each other – as competitors, customers and suppliers.</p>
<p>It is worth remembering that despite its name, the Competition and Consumer Act is not just directed at providing for consumer protection and promoting competition. Section 2 makes it clear that it is intended to enhance the welfare of Australians, including through provision for fair trading. “Welfare” is not defined in the statute and while the contemporary pre-occupation of theorists in this field is with “consumer welfare”, there is not a compelling justification for defining it so narrowly. </p>
<p>Instead, “welfare” in this context could be associated instead with the more encompassing concept of “wellbeing”. After all, there is no shortage of evidence from the economic happiness literature that self interest and wealth maximisation (the premises of competition policy, narrowly conceived) are not necessarily a guarantee of greater happiness, or wellbeing in a holistic sense.</p>
<h2>Fairness and competition</h2>
<p>Outside of the purview of fairness for consumers, “fair trading” has been the sleeper in the last 40 years of development in our trade practices law. It has been largely missing from the policy debate and appears to have been a low enforcement priority. I am pleased to say that there are signs that this is changing. </p>
<p>The government has not just a productivity policy, where competition is the central tenet, but also a small business policy, which speaks of “the vital contribution that the [small business] sector makes to our economy and our communities”. </p>
<p>Small Business Minister Bruce Billson MP proposes to extend unfair contract protections to small business (explicitly acknowledging the need to recognise an “ethical norm of fairness” in business dealings). This sits along with the proposed code of conduct governing contractual relations between supermarkets and suppliers and includes a proposed requirement of “good faith”. </p>
<p>The ACCC’s recent enforcement actions reflect its annual statement of enforcement priorities and demonstrates commitment to exploring the bounds of the prohibition on “unconscionability” as it applies to business-to-businesss transactions in the legislation. In its media release accompanying the latest Coles action, ACCC Chairman, Rod Sims, said: </p>
<blockquote>
<p>“The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers.”</p>
</blockquote>
<p>But clearly there is still much work to be done, including tackling the big questions - such as what is “fairness”? In interpreting the unconscionability laws, the courts speak of “conduct against conscience”; conduct assessed against “moral and normative standards, broadly cast”. But how are those standards defined? They need to be given more content, no matter how daunting that task may seem. </p>
<p>The ACCC cases against Coles will not address all of the concerns that surround supermarkets in this country. But in bringing this litigation the ACCC is making a substantial contribution to an informed debate about what value should imbue business dealings.</p>
<p>Is it possible to reconcile the potential conflict between the inherently unfair process of competition and fairness in business dealings? Can we realistically have both? And, if so, when is one to be prized above the other? For example, would consumers accept higher grocery prices if it meant that farmers and suppliers could be treated more “fairly”? When and how do policymakers and the ACCC strike the right balance between these two concerns?</p>
<h2>Whose responsibility?</h2>
<p>Should, for instance, government be responsible for fostering and protecting fairness in business dealings, or should we expect our business leaders to also take some responsibility? This expectation would recognise businesses not just as economic but as social and political actors in our society and place expectations on them accordingly. </p>
<p>It appears that some in the business sector recognise and embrace this. Despite the scathing criticism that it sometimes attracts and regardless of the outcome of the current cases, Coles deserves recognition for its commitment to regional communities through not-for-profit projects such as SecondBite (which it has donated $5 million in meals to disadvantaged families over the last four years).</p>
<p>These are questions actively being explored by our political leaders and those who are in the position to influence directly the nature of the policies, law and enforcement action that impact on our lives. We should support them in this endeavour - by continuing to engage in the discourse and ensure our voices are heard in a debate, the outcomes of which will have fundamental and long term implications for how we feel about being Australian.</p><img src="https://counter.theconversation.com/content/33135/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caron Beaton-Wells does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the space of just six months, the Australian Competition and Consumer Commission has launched two major cases against supermarket giant Coles for alleged unconscionable conduct against its suppliers…Caron Beaton-Wells, Professor, Melbourne Law School, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.