Digital Platforms & Economic Dependence in Chile - Any Room for Competition Theories of Harm without Dominance? 2021, 32
Digital platforms may generate economic dependence on their trading partners, with a double effect. Downstream, it may result in the exploitation of weaker parties that cannot compete on an equal footing against bigger ones. Horizontally, economic dependence may raise entry barriers since the platform’s trading partners cannot switch to a different platform without engaging in significant costs, which might result in a lock-in effect. If so, due to the economics of platforms, the market may tend towards tipping scenarios in which one player—the winner—takes the whole market. As already alerted by several reports worldwide, in the digital context, these threats can rapidly become real harms. Against this backdrop and considering that Latin America is witnessing the advent and rapid growth of digital platforms in different markets, this paper explores whether one of this region’s jurisdictions—Chile—is prepared to address these new threats. Considering a distinction between two types of economic power—dominant power and uneven bargaining power—and the effects that economic dependence may generate on the market’s functioning, the paper maps four possible harmful scenarios: dominance with anticompetitive effects; no-dominance without anticompetitive effects; no-dominance with horizontal anticompetitive effects; no-dominance with up/downstream anticompetitive effects. We argue that the Chilean legal framework—i.e., unfair competition law (Law 20.169) and competition law (DL 211)—has sufficient scope to address all but the last scenario. Regarding the latter, a legal modification would be necessary.
