Michal Gal

Algorithms, especially those based on artificial intelligence, play an increasingly important role in our economy. They are used by market participants to make pricing, output, quality, and inventory decisions; to predict market entry, expansion, and exit; and to predict regulatory moves. In a growing number of jurisdictions, algorithms are also used by regulators to detect and analyze anti-competitive conduct. This game-changing switch to (semi-)automated decision-making has the potential to reshape market dynamics. While the effect of algorithms on coordination between competitors has been a focus of attention, and scholarly work on their effects on unilateral conduct is beginning to accumulate, merger control issues have been undertreated. Accordingly, this article focuses on such issues. The article identifies six main functions of algorithms that may affect market dynamics: collection and ordering of data; improving the ability to use existing data; reducing the need for data, for instance by generating synthetic data; monitoring; predicting, to determine how different types of conduct, including mergers, are likely to affect market conditions; and decision-making. The article demonstrates how such algorithms can exacerbate anticompetitive conduct with respect to both unilateral and coordinated effects. Towards this end, seven scenarios are explored: collusion, oligopolistic coordination, high unilateral prices, price discrimination, predation, selective pricing (in which a buyer offers a higher price to some suppliers in an aggressive bid for an input), and reducing the interoperability of datasets. For each scenario, we analyze how the market conditions necessary for such conduct are affected by algorithms. These findings are then translated into merger policy. Algorithms are shown to affect substantive as well as institutional features of merger control. Algorithms also challenge some of the assumptions that are

This essay argues that regional competition law agreements on joint enforcement and advocacy (rjcas) hold an important potential to solve many of the enforcement problems that small and developing jurisdictions face and can provide additional benefits that go beyond such solutions. It also argues that the costs involved in such agreements are not prohibitive and that many of these costs can be overcome by structuring appropriate solutions. Accordingly, rjcas have the potential to create Pareto superior solutions to enforcement problems relative to unilateral enforcement. The essay then broadens the analysis to the potential effects of rjcas on non-member states. It is argued that such agreements create much lower negative externalities for non-member states and for international coordination efforts than regional trade agreements. On the contrary, they often create positive externalities for non-member jurisdictions. Accordingly, they offer important potential for strengthening comp...

Big data has become an important resource not only for commerce, but also for governance. Governance-by-data seeks to take advantage of the bulk of data collected by private firms, to make law enforcement more efficient. It can take many forms, including setting enforcement priorities, affecting methods of proof, and even changing the content of legal norms. For instance, car manufacturers can use real-time data on the driving habits of drivers, to learn how their cars respond to different driving patterns. If shared with the government, the same data can be used to enforce speeding limits or even to craft personalized speeding limits for each driver. The sharing of data for the purpose of law enforcement, raises obvious concerns to civil liberties. Indeed, over the past two decades, scholars have focused on the risks arising from such data sharing for privacy and freedom. So far, however, the literature has generally overlooked the implications of such dual use of data for data mar...

Big data has become an important resource not only for commerce but also for governance. Governance-by-data seeks to take advantage of the bulk of data collected by private firms to make law enforcement more efficient. It can take many forms, including setting enforcement priorities, affecting methods of proof, and even changing the content of legal norms. For instance, car manufacturers can use real-time data on the driving habits of drivers to learn how their cars respond to different driving patterns. If shared with the government, the same data can be used to enforce speed limits or even to craft personalized speed limits for each driver. The sharing of data for the purpose of law enforcement raises obvious concerns for civil liberties. Indeed, over the past two decades, scholars have focused on the risks arising from such data sharing for privacy and freedom. So far, however, the literature has generally overlooked the implications of such dual use of data for data markets and ...

A realistic analysis of antitrust must deal in positive terms with political influences. Political influences are especially strong in the antitrust arena, where decisions and policy measures often significantly affect the profitability of market players. It is thus important, in designing an antitrust regime, to acknowledge such influences and to design institutions and methods that will harness political aspirations to the achievement of antitrust goals. Accordingly, the goal of this article is to analyze the different effects political motivations might have on antitrust, and to suggest tools that may minimize such effects. A short theoretical analysis of the political economy of antitrust enforcement is followed by some recent and interesting examples of cases in which political influences shaped antitrust decisions. The conclusion that is reached is that we should wisely recognize that politics cannot be simply ignored. Building upon this conclusion, the article then introduces...

International trade has changed some of the challenges faced by antitrust authorities: it has added an international dimension. Under the current system of international antitrust, the backbone of enforcement is unilateral: each country applies its own tools to deal with international antitrust issues within the constraints imposed upon it by public international law. This enforcement pattern is sometimes coupled with cooperation agreements which are based on the realization that while cooperation among firms might be anti-competitive, this is generally not true for cooperation among countries. Yet such cooperation is often limited. This paper, which is part of a book on Cooperation, Comity And Competition Policy (Oxford University Press, 2009), analyzes the effects that a unilateral enforcement system has on a small economy, by focusing on a specific case study: Israel. The case of Israel is interesting not only as a stand-alone case study, but mostly because it provides useful ins...

May a dominant firm justify below-cost pricing by simply arguing that it aligned its prices with those of its rivals? In this essay I show that generally the answer is negative. I also argue, however, that such a rule should not be categorical and that in some circumstances a below-price meeting competition defense should be allowed, in order to protect competition. Such an exception is necessary in order to take account of the special economic characteristics of dynamic industries which differ from the brick-and-mortar industry model that assumes that scale economies are small and entry barriers are low. The article exemplifies these arguments by using the EU recent France Telecom case.

A bit over a decade ago the Israeli competition law was amended. The legislator simply 'cut and paste' Article 82 of the Treaty of Rome, which prohibits the abuse of dominance, into the Israeli Competition Act. The question this article addresses is whether the copying of Article 82 has been a Trojan horse - in that its adoption into brought in doctrines and legal rules which did not serve well Israeli competition law, or whether it served as a racing horse, in that it move forward the Israeli law of abuse. The answer, I suggest, is a hybrid horse. Nonetheless, a few years of exercise on the local racetrack have strengthened its racing abilities by acclimatizing it to the special conditions of the new legal environment. The article uses the Israeli experience as a case study and reaches some interesting conclusions with regard to the conditions necessary for a successful legal transplant.

For the most part, competition policy literature focuses on large economies. Yet the economic paradigms on which such competition policies are based do not necessarily apply to the many small market economies that exist around the world. As this paper argues, the size of an economy necessarily affects the optimal competition policy that should be adopted by it. The paper demonstrates the effects of market size both on rules of thumb used in competition policy as well as on more general policy prescriptions, such as policy goals, trade-offs and remedial tools. The implications of this article extend beyond domestic competition policy to the evaluation of the current global drive towards the world-wide harmonization of competition policies. * Visiting fellow, NYU center for Law and Business. The author wishes to thank Michael J. Trebilcock, Bill Bishop, Avery Katz, Valentine Korah, Victor Goldberg, Harvey Goldschmid, Frank Mathewson, David Tadmor, Ralph Winter and Richard Whish for in...

Laws are oftentimes modeled, at least in part, on those of jurisdictions with established antitrust regimes, a trend we call “the follower phenomenon.” Follower behavior might involve a transplant of a legal rule, its interpretation, or both.This article analyzes the main causes of the follower phenomenon in antitrust and its welfare effects, both on the following jurisdiction and on the followed one. It argues that the proliferation of one's antitrust prohibitions can sometimes act as a boomerang, negatively affecting the welfare of the followed jurisdiction as well as third jurisdictions. This boomerang effect can result from three main causes: (a) the limited ability of the followed jurisdiction's domestic firms to monopolize or cartelize foreign markets due to stricter antitrust policies of the following jurisdiction based on a correct following of the followed jurisdiction’s antitrust prohibitions; (b) the abandonment of neutral or procompetitive conduct by firms based ...

Algorithms are employed by a growing number of firms in order to make choices for users. One prominent example involves news and views consumption through media platforms, which is increasingly mediated by algorithmic personalization. Rather than engaging with the rich variety of ideas on the web, many online users are exposed primarily to content chosen by algorithms, which generally attempts to fit each user’s pre-existing views. This raises questions regarding competition law’s responsibility and ability to protect the free exchange of ideas in the marketplace. We argue that while competition law can be used to protect the diversity of content in the market, the protection of a diversity of exposure is much more challenging. An interference that is aimed at exposing users to diverse ideas need not conflict with the goals of antitrust. In particular, we argue that even if algorithmic choices attempt to cater to users’ preferences, they need not conflict with the ideals of consumer...

Private enforcement of competition law serves many important goals, including deterrence of future anti-competitive harms and correction of past harms. This article sheds light on several potential legal obstacles to such enforcement which could prevent it from achieving its goals. The examples mainly build upon the experience of different jurisdictions with private litigation. It also suggests some possible solutions for dealing with or limiting such obstacles. As Europe is in the early stages of applying its Damages Directive and creating a private competition law enforcement regime, recognising – and possibly avoiding – obstacles to efficient private enforcement is both timely and important.

In the European Union, private litigation of competition law violations is in its nascence. As this article shows, excessive pricing raises strong concerns for such litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair; and (3) the institutional features of general courts in EU member states, which are ill-suited to the required tasks. We elaborate on these concerns, pointing to four specific challenges inherent to private litigation and to three instances where a lack of sufficient economic understanding could entrap general courts (a cost trap, a fairness trap, and a monopolistic competition trap). Together, these factors create a risk of error costs much higher than any experienced so far, which could potentially reduce welfare. The article suggests some measures that can be taken to ensure ...

Much has been written on the ability of sharing platforms to affect market conditions. In this research we focus on another piece of the puzzle, which is often overlooked but can play a significant role in shaping market structure and conduct: the users of the platform – whether suppliers or consumers (hereinafter jointly or severally: “the crowd”). As will be shown, the power of the crowd can both positively and negatively affect social welfare. Accordingly, this paper seeks to recognize the effects of crowd power and to identify both market-based as well as regulatory solutions to increase its welfare-increasing qualities, while reducing its negative ones. To do so, the study develops in a three stages. The first part explores the welfare effects of the sharing economy on the crowd. This serves as a basis for the second part, which focuses on the role of the crowd in shaping sharing platform markets. The third part then explores the potential role, as well as the limitations, of r...

A realistic analysis of antitrust must deal in positive terms with political influences. Political influences are especially strong in the antitrust arena, where decisions and policy measures often significantly affect the profitability of market players. It is thus important, in designing an antitrust regime, to acknowledge such influences and to design institutions and methods that will harness political aspirations to

A bit over a decade ago the Israeli competition law was amended. The legislator simply 'cut and paste' Article 82 of the Treaty of Rome, which prohibits the abuse of dominance, into the Israeli Competition Act. The question this article addresses is whether the copying of Article 82 has been a Trojan horse- in that its adoption into brought in

One of the main challenges of this decade in the antitrust arena is the creation of some form of cooperative international antitrust regime. The potential benefit of increased international trade and cooperative competition policies to all countries involved are enormous. This Article analyzes this issue from the point of view of small and developing jurisdictions. Part I sets the stage

In most jurisdictions the legal inquiry into whether a firm enjoys a monopoly position is an integral part of an inquiry into whether a firm has abused its market power, and a positive answer to the first is a precondition for conducting the second. This combination creates some inefficiencies. Most notably, market participants, including the would-be monopolist, are uncertain of

... Ed Iacobucci, Niva Elkin-Koren, Allan Fels, John Fingleton, Idit Froim, Barry Hawk, Ehud Kamar, Bill Kovacic, David Lewis, Menachem Perlman, Peter Roth, Steven Salop, Oz ... To my parents, Etty and Avraham Shitzer, whose belief in my abilities is nothing less than as-tounding. ...

In the EU, private litigation of competition law violations is in its nascence. As this article shows, excessive pricing raises strong concerns for such litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair; and (3) the institutional features of general courts in EU member states, which are ill-suited to the required tasks. We elaborate on these concerns, pointing to four specific challenges inherent to private litigation and to three instances where a lack of sufficient economic understanding could entrap general courts (a cost trap, a fairness trap, and a monopolistic competition trap). Together, these factors create a risk of error costs much higher than any experienced so far, which could potentially reduce welfare. The article suggests some measures that can be taken to ensure that welfare is served.

Human choice is a foundational part of our social, economic and political institutions. This focus is about to be significantly challenged. Technological advances in data collection, data science, artificial intelligence, and communications systems are ushering in a new era in which digital agents, operated through algorithms, replace human choice with regard to many transactions and actions. While algorithms will be given assignments, they will autonomously determine how to carry them out. This game-changing technological development goes to the heart of autonomous human choice. It is therefore time to determine whether and, if so, under which conditions, are we willing to give up our autonomous choice.

To do so, this article explores the rationales that stand at the basis of human choice, and how they are affected by autonomous algorithmic assistants; it conscientiously contends with the “choice paradox” which arises from the fact that the decision to turn over one’s choices to an algorithm is, itself, an act of choice. As shown, while some rationales are not harmed – and might even be strengthened – by the use of autonomous algorithmic assistants, others require us to think hard about the meaning and the role that choice plays in our lives. The article then examines whether the existing legal framework is sufficiently potent to deal with this brave new world, or whether we need new regulatory tools. In particular, it identifies and analyzes three main areas which are based on choice: consent, intent and laws protecting negative freedom.