Thursday, July 18, 2013

Issues for Two-Sided Platforms in Canadian Competition Law

Posted by D. Daniel Sokol

Grant Bishop University of Toronto - Faculty of Law discusses Issues for Two-Sided Platforms in Canadian Competition Law.

ABSTRACT: This paper proposes a framework for the analysis of anti-competitive conduct in the context of two-sided platforms under Canadian competition law. Applying this framework, the paper analyzes two recent reviewable conduct applications by the Competition Commissioner – against Visa and Mastercard, and against the Toronto Real Estate Board – that implicate the economics of two-sided platforms and are currently under consideration by the Competition Tribunal. In general, two-sided platforms intermediate interactions between two distinct sets of users, such that demand from one side of the platform depends on the extent of demand from the other side (e.g. operating systems, security exchanges, video game consoles). This paper argues that restrictions on a platform’s users should be permitted to the extent that these maintain incentives for efficient conduct within the platform and neither constrain nor distort the ability of participants to transact on alternative platforms nor facilitate cartels. Conduct that limits users’ ability to transact on alternative platforms, removing a competitive constraint through exclusivity, or that facilitates cartel behaviour should be regarded as anti-competitive.

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