JANUARY 22, 2019 tODE (Tuesday Online Digest for Employees)=>

Keeping Up With… Antitrust and Compet= ition Law

Antitrust law, or competit= ion law (as it is known in Europe), regulates markets with the goal of prot= ecting competition and thus increasing efficiency and consumer welfare. The= se laws are relevant to libraries for two reasons: (1) antitrust enforcemen= t is often suggested as a solution for the problems of the scholarly publis= hing market, and (2) the specter of antitrust violations often scares libra= ries away from taking collective action to address those same problems.

 An October 2018 comp= laint to the European competition authority about RELX Group (the parent co= mpany of Elsevier) is the latest attempt to repair the scholarly publishing= market through antitrust enforcement. Looking at the complaint in detail i= s a good way to explore issues in antitrust and competition law.

 Te= nnant, Brembs, and Antitrust

In the complaint, European= academics Jonathan Tennant (a paleontologist) and Bj=C3=B6rn Brembs (a neu= robiologist) call for two lines of investigation. First, that there are =E2= =80=9Cgeneral problems within the scholarly publishing market sector that a= ctively prohibit competition,=E2=80=9D and second, that Elsevier has abused= its dominant position within that market. [1] While the complaint addresse= s Elsevier, the largest firm in the sector, it notes that much of what it d= iscusses =E2=80=9Ccan also be applied to other major players within the wid= er scholarly publishing market.=E2=80=9D

 The complaint deserv= es the attention of academic and research librarians both for its content a= nd for its practical implications. Its arguments are familiar, but Tennant = and Brembs make them particularly well. They summarize recent research (on = APCs [2], Elsevier=E2=80=99s open access business [3], and vertical integra= tion by publishers [4]) and current events (the rise of national purchasing= consortia within the European Union, the announcement of Plan S, etc.). Th= e solutions they suggest are also of interest; while they are intended for = the competition authority, some could be implemented by libraries or consor= tia.

 Co= mpetition Versus Antitrust Law

The basics of EU competiti= on law and US antitrust law are similar. However, there are key differences= in their enforcement. Additional aims beyond efficiency, such as maintaini= ng rivalry within a market and discouraging division of the European single= market along the political barriers of its constituent states, motivate EU= enforcement. Broadly speaking, EU competition enforcement is more interven= tionist. That is, some conduct that is legal in the United States is prohib= ited in the European Union. [5] Thus, while the arguments in the Tennant an= d Brembs complaint are roughly similar to arguments that could be made unde= r US law, the result (if any) might be different than it would be in the Un= ited States.

 The Tennant and Brem= bs complaint is based on Articles 101 and 102 of the Treaty on the Function= ing of the European Union (TFEU). Article 101 prohibits concerted anticompe= titive action (analogous to Section 1 of the Sherman Antitrust Act in U.S. = law). Article 102 prohibits abusive behavior by dominant firms. Its rough c= ounterpart in the United States is Section 2 of the Sherman Act, which proh= ibits =E2=80=9Cmonopolization,=E2=80=9D but the gulf between US and EU law = is large here. Article 102 proscribes more conduct than does Section 2, bot= h in the behavior it prohibits and the minimum market share (as low as 40%,= compared with 50% to 70% under Section 2) a firm must have to fall within = its scope. (The complaint reviews many estimates of Elsevier=E2=80=99s mark= et share, noting that it is =E2=80=9Cas high as 71% in fields such as psych= ology.=E2=80=9D)

 Copyright=E2=80=99s = distorting effect on the scholarly publishing market is a major component o= f the complaint. The complaint argues that publishers are not truly competi= tors because their products (e.g., scholarly articles) are unique and non-s= ubstitutable. (No two articles are identical; one article is not equally go= od to a consumer as the next.) By default, copyright makes the article=E2= =80=99s rightsholder a monopolist, and for scholarly works this default rar= ely changes. (Open licenses, of course, do change it.)

 Of course, it cannot= be a competition law violation simply to hold a copyright. However, compet= ition authorities sometimes intervene to weaken an intellectual property ri= ght in order to foster competition. In both the European Union and the Unit= ed States, enforcement sometimes imposes a =E2=80=9Cduty to deal=E2=80=9D w= ith competitors. Broadly speaking, this doctrine is expanding in EU law and= narrowing in US law. [6]

 Bi= g Deals, Non-disclosure, and Analytics

Tennant and Brembs also de= scribe anticompetitive impacts of big deals, non-disclosure agreements, and= integration of publishing and publishing analytics into a single firm. Wri= ting about big deals, they express particular concern about emerging =E2=80= =9COA big deals=E2=80=9D (i.e., offsetting agreements [7]), which extend th= e negative consequences of big deals beyond the subscription journal market= to what the complaint calls =E2=80=9Cnative=E2=80=9D OA publishers.

 To support their cla= im that non-disclosure agreements make price discrimination easier for publ= ishers, they cite remarks in 2013 by David Tempest, previous Director of Ac= cess Relations at Elsevier, who said that if Elsevier=E2=80=99s customers k= new what its other customers paid, =E2=80=9Ceverybody would drive [prices] = down, down and down.=E2=80=9D [8] Finally, to illustrate the anticompetitiv= e effects of a single firm having both a publishing and a publishing analyt= ics business, the complaint cites research by Carl T. Bergstrom and Jevin W= est showing that Springer Nature journals =E2=80=9Cscored up to 40% lower u= sing CiteScore rankings (based on Scopus data, owned by Elsevier), whereas = Elsevier titles increased by around 25%, compared to their journal impact f= actors (owned by Clarivate Analytics and Web of Science).=E2=80=9D [9]

 Po= ssible Interventions

The complaint concludes by= suggesting possible interventions the competition authority could make. Am= ong other things, it suggests oversight of the market by an independent reg= ulatory body, prohibition of non-disclosure clauses in vendor contracts, ba= nning certain flawed measures of publication impact from hiring, funding, a= nd tenure decisions, and strengthening library consortia. They even suggest= =E2=80=9Cabolishing copyright on journal articles.=E2=80=9D

 While some of the su= ggested interventions could not be implemented by private parties, there ar= e two that libraries and library consortia could take up: strengthening con= sortia and rejecting non-disclosure clauses. Together with the rest of the = higher education community, libraries are also well-poised to reduce the us= e of flawed measures of publication impact and to examine critically the ro= le that copyright plays in this market.

 Co= nclusion

If one of the answers to t= hese problems is strengthening library consortia, how strong can they get b= efore they themselves risk antitrust scrutiny? For US libraries, considerin= g antitrust trends and the current enforcement environment is a good place = to start. While many types of conduct were illegal per se during much of an= titrust=E2=80=99s history, the trend since the mid-1970s has been for court= s to put fewer and fewer types of conduct in that category. Instead, follow= ing the =E2=80=9CChicago school,=E2=80=9D they look at the impact of that c= onduct to see whether it is in fact anticompetitive. Thus, the famous langu= age of Section 1 of the Sherman Act outlawing =E2=80=9Cany contract, combin= ation, or conspiracy . . . in restraint of trade=E2=80=9D is in fact subjec= t to exceptions. For example, collective action by libraries that improves = the efficiency of the market (e.g., by improving price competition between = publishers) likely would not be an antitrust violation.

 Librarians seeking f= urther reading would be well-served by reading the Tennant and Brembs compl= aint itself. The Atlantic Divide in Antitrust: An Examination of U= S and EU Competition Policy, a 2015 book by Daniel J. Gifford and Robe= rt T. Kudrle, provides a deep comparison of the two systems, including a fu= ll chapter on antitrust and intellectual property. Although the book is wri= tten for specialists, its first chapter provides an accessible and brief ov= erview.



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