Neelie Kroes on the Goals of Antitrust Intervention in Standards-based Industries
In industries governed by standards, it is not always easy to identify the goal of antitrust intervention. Neelie Kroes defined it as follows:
When a market develops in such a way that a particular proprietary technology becomes a de facto standard, then the owner of that technology may have such power over the market that it can lock-in its customers and exclude its competitors’. Where a technology owner exploits that power, then a competition authority or a regulator may need to intervene. In essence, the competition authority has to recreate the conditions of competition that would have emerged from a properly carried out standardisation process.This definition makes a collaborative standard setting process the normative benchmark even for de facto standards that evolve as a result of the operation of the marketplace.
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June 10th, 2008 at 7:22 pm
I think you miss the point. We should unconditionally accept market results only from competitive markets. In all other cases, as Neelie Kroes correctly points out, we should do what we can to achieve the same result that a competitive market would have.
Competitive marketplaces protect consumers. Non-competitive marketplaces serve other interests at the expense of consumers.
June 11th, 2008 at 6:06 pm
Suppose you introduce a great product in an industry with direct network effects. Customers love it, and at some point the market tips and your product becomes the de facto standard. In this scenario, the de facto standard is the result of a competitive market. Nevertheless, your newly found dominant position triggers the “special obligations” under Art. 82. If you don’t live up to those obligations, “the competition authority has to recreate the conditions of competition that would have emerged from a properly carried out standardisation process.” What are those conditions? Probably FRAND licensing commitments as they would have been negotiated at a time when there were still technological choices and your market power had not yet been amplified by widespread standards adoption. Thus I don’t think I am misreading her statement: De facto standards are to be evaluated against a benchmark of a hypothetical, ideal SSO situation.