DOJ Assistant AG Proposes Strategies to Combat Digital Market Monopolies

DOJ Assistant Attorney General of the Antitrust Division Jonathan Kanter proposed strategies to combat anticompetitive practices in the digital economy.

In a speech at the CRA Brussels Conference, Mr. Kanter emphasized that the digital landscape demands new tactics to address an old anticompetitive strategy – moat-building (i.e., the practice of constructing barriers to entry that prohibit competition and protect the position of a dominant party's core products or services). He asserted that unlike the robber barons of the industrial age, digital platforms scale very rapidly, have more complex relationships with partners and use moat-building to defend from threats in "every direction," not just the traditional vertical (supplier) and horizontal (competitor) directions. As a result, Mr. Kanter proposed three strategies to prevent moat-building in the digital economy.

1. Revise merger enforcement tools to meet new market realities by focusing on "nascent competitor acquisitions" that are not purely horizontal or vertical, but instead can occur in novel, adjacent, or differentiated markets. As Mr. Kanter put it: "Moats surround the entire castle, which means buying up firms anywhere in the ecosystem."
2. Evaluate potential moat-building strategies holistically and not just focus on one aspect of a firm’s conduct; rather, potential exclusionary conduct must be viewed in light of the firm’s entire course of conduct and overall strategy to maintain dominance.
3. Target discriminatory and self-preferencing strategies that can strengthen moat-building efforts by discouraging potentially competitive businesses on a platform from innovating in ways that could create competition.

Mr. Kanter noted that to his third point, there is currently key legislation before Congress that would "clarify the illegality of anticompetitive and exclusionary discrimination by dominant platforms," which the DOJ supports and hopes to see become law.