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The SSNIP Test and Zero-Pricing Strategies:

Considerations for Online Platforms

DOI https://doi.org/10.21552/core/2018/4/4

Daniel Mandrescu

The increasing critique on the business practices of the major online platforms in Europe is gradually leading to a rising in the number of abuse of dominance investigations and prohibition decisions. Such present and future cases revolving around the dominant position of various online platforms depend greatly on the correct definition of the relevant market. The process of the market definition with regard to online platforms requires, however, revisiting the compatibility of the current competition law tool kit, particularly in the case of the hypothetical monopolist test (HMT). Accordingly, the application of the HMT based on a small but significant non transitory increase in price (SSNIP) test of demand elasticity, will require an overhaul in order to maintain its relevance in the case of zero-pricing strategies commonly used by online platforms. In such cases the only feasible option for assessing demand elasticity for the purpose of performing the HMT entails converting the price centred analysis into a quality oriented one, namely based on a small but significant non transitory decrease in quality (SSNDQ). In the absence of such a conversion the market definition in the case of online platforms relying on zero-pricing will be performed solely based on a qualitative evaluation of the functionalities facilitated by such platforms as seen in the Google Shopping case. Although such outcome is not inherently problematic it does imply backtracking to older practices rather than advancing the development of a more future resilient legal framework and tool kit which should always be pursued.
Keywords: Online Platforms, Market Definition, Digital Economy, Market Power, Data Costs, Quality Considerations, Demand Elasticity

Daniel Mandrescu, Phd-Fellow Competition Law and Innovation, Europa Institute, Leiden University. For correspondence: <mailto:d.mandrescu@law.leidenuniv.nl>.


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