Horizontal agreements

Special rules and exemptions

Do any special rules or exemptions apply to the assessment of anticompetitive agreements between competitors in digital markets in your jurisdiction?

There are no formal antitrust rules or exemptions regarding agreements between competitors specific to digital markets in the US. Note that some activities of digital businesses may fall within the jurisdiction of sectoral regulators such as the Federal Communications Commission or Department of Transportation.

Access to online platforms

How has the competition authority in your jurisdiction addressed horizontal restrictions on access to online platforms?

To date, the US federal competition agencies have not specifically addressed agreements among competitors to not use particular online platforms, or agreements in which suppliers restrict particular platforms from hosting rival products or services.

Under the general antitrust framework, an explicit agreement among competitors to refuse to deal with particular rivals can be illegal per se, absent a plausible justification. The agencies often regard a concerted refusal to deal targeting particular customers or suppliers, or an agreement to deal with them only on certain terms, as unlawful if it appears to be a means to implement a 'naked' agreement in restraint of trade. For example, in 2012, the DOJ alleged that Apple orchestrated an agreement among six book publishers not to supply a rival e-book platform (Amazon) except at higher prices. The courts ruled the arrangements illegal per se (United States v Apple Inc, 791 F.3d 290 (2d Cir. 2015)). Agencies and courts are far less likely to characterise exclusivity and non-compete agreements as per se unlawful refusals to deal, but instead consider their potential anticompetitive and pro-competitive effects under the more comprehensive ‘rule of reason.’

Algorithms

Has the competition authority in your jurisdiction considered the application of competition law to the use of algorithms, in particular to algorithmic pricing?

The US antitrust agencies have not addressed algorithmic pricing in any guidance documents, but in the only matter to date touching on such conduct, the DOJ has criminally indicted and entered into guilty plea agreements with two individuals and a corporate entity for conspiring to fix the prices of posters sold online. According to the charges, the co-conspirators agreed, among other things, to adopt specific pricing algorithms to coordinate the price of certain posters sold in the US through Amazon Marketplace. One of the defendants also allegedly ‘instructed’ his firm’s algorithm-based software to set the prices of these posters in compliance with the price-fixing agreement. The investigation of price fixing in the online wall decor industry is ongoing. The agencies have not brought a case involving or otherwise addressed the question of whether there can be an agreement where two algorithms coordinate pricing with no human input.

Data collection and sharing

Has the competition authority in your jurisdiction considered the application of competition law to ‘hub and spoke’ information exchanges or data collection in the context of digital markets?

To date, the federal competition agencies have not specifically addressed information exchanges or data collection in the context of digital markets.

Under the general antitrust framework discussed in the DOJ and FTC Antitrust Guidelines for Collaboration Among Competitors, information sharing among competitors may be reasonably necessary for some pro-competitive collaborations or pro-competitive in itself, particularly where managed by a third party that is not an actual or potential competitor. However, information exchanges raise competitive concerns if the information exchanged:

  • is competitively sensitive, such as that relating to price, output, costs, or strategic planning;
  • concerns current operations or future plans; or
  • is not sufficiently aggregated and anonymised.

 

For example, in 2018–2019, the DOJ brought claims against 12 television broadcasters for sharing data from which each could infer the other’s current unsold advertising inventory and its anticipated value, allowing them to resist advertisers’ efforts to create competition in negotiations. Similarly, in 2017, the DOJ brought claims against video programming distributor DIRECTV alleging it had been involved in exchanges of forward-looking strategic information with certain competitors to coordinate negotiations for video programming. 

Agencies have not directly addressed situations where a platform operator collects information from market participants in order to compete against them. However, some commentators have urged agencies to consider, and some proposed legislation addresses, the potential effects of platform operators using their access to customer or competitor data to gain an unfair competitive advantage or otherwise harm competition.

Other issues

Have any other key issues emerged in your jurisdiction in relation to the application of competition law to horizontal agreements in digital markets?

As the DOJ’s e-books case against Apple illustrates, agencies have shown increasing concern that some vertical restraints common in digital settings, such as MFNs or other contract provisions referencing rivals, can facilitate horizontal coordination.

Potential antitrust concerns related to horizontal and vertical intellectual property licensing practices, such as through standard-setting organisations, have produced increasing study and debate within the agencies. Most recently DOJ has shifted enforcement focus in this area from the unilateral behaviour of patent owners to the collective action of the members of standards development organisations, recently taking the unusual step of issuing a supplement to a 2015 business review letter evaluating the patent policy of the Institute for Electrical and Electronics Engineers.

Law stated date

Correct on

Give the date on which the information above is accurate.

8 November 2020.