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Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Seminar: Eric Morrison

10:45-11:45, M 1003

Eric Morrison is a competition economist currently working for the UK Financial Conduct Authority (FCA). He is also a part-time lecturer in competition economics at Kings College London. Prior to joining the FCA, Eric worked in the competition economics practice at PwC. He has also worked for a number of UK competition regulators including the Office of Fair Trading (now the CMA), Ofcom, and Postcom where he was acting Chief Economist and a member of the executive board

Abstract

We generate a massive volume of digital data in our everyday lives via our online transactions, which can now be tracked on a continuous and highly granular basis. This tracking ability, combined with the power of machine learning, has given rise to an ever widening array of personalized services, ranging from personalized news content, advertising and energy management, to fitness tracking and mating services. While this has radically improved the shopping experience, the extension of this tracking ability into personalized pricing based on an algorithmic assessment of each individual consumer’s willingness to pay has led to widespread and rising consumer anxiety. Concerns include the use of “surveillance” techniques, data protection, discrimination (including, but not limited to against protected characteristics), fairness, and competition.

One of the main innovations of the paper is that it addresses the concerns associated with personalized pricing from three different perspectives: economic efficiency, social justice, and EU competition law. Our paper begins with an assessment on the impact of personalized pricing on economic efficiency (interpreted in our paper as consumer surplus). We find that in aggregate consumers are often made better off through personalized pricing due to its (typically) positive impact on competition. However, where price discrimination is based on search costs, it may both weaken competition and reduce consumer surplus. We then consider the extent to which economic efficiency clashes or converges with three different notions of fairness: perceived fairness, unfair dealing (corrective justice), and distributive (or collective) justice. We argue that regulators should only intervene on the basis of fairness where it leads to consumer harm, and that this is most likely where consumers make search and purchasing decisions based on pricing norms which apply in the bricks and mortar world but which do not necessarily apply online.  In considering how the fairness of these pricing practices should be interpreted by competition law, we look first at the goals of Article 102. Because the current legal position is unclear, we argue that where economic efficiency and fairness concepts clash, “fairness” should have a secondary role when Article 102 in the form of a defence to an allegation of abuse of dominance. That is, that personalized pricing which had the effect of reducing consumer surplus would not constitute an abuse where it leads to a fairer distribution of prices. However, more generally we argue that competition law will often not be the most appropriate way to challenge fairness concerns that arise from personalized pricing

Meetingslots are available, please contact TILEC if you wish to meet with Eric Morrison on Wednesday 31 October.


When: 31 October 2018 10:45

End date: 31 October 2018 11:45