Europe’s antitrust chief, Margrethe Vestager, warned Apple that its recent changes to privacy rules must not give preferential treatment to its apps over those of its competitors or it might be in violation of antitrust norms. Apple has framed those changes as being designed to protect users’ personal data, but that does not exempt its actions from competition rules.
This warning came in reaction to recent changes to the Cupertino-based group’s privacy policy, which led other platforms in the digital advertising market to accuse it of unduly distorting competition.
Specifically, the changes to Apple’s privacy policy will make blocking ad tracker software targeting users’ personal data the default setting on all apps sold for use on Apple devices (meaning through the Apple Store). Apple users can choose to allow ad tracking of their data, but they must actively provide consent.
No introduction to antitrust legislation would be complete without addressing mergers and acquisitions. We can divide these into horizontal, vertical and potential competition mergers.
Horizontal Mergers: When firms with dominant market shares prepare to enter a merger, the FTC must decide whether the new entity will be able to exert monopolistic and anti-competitive pressures on the remaining firms. For example, the company that makes Malibu Rum and had an 8% market share of total rum sales, proposed buying the company that makes Captain Morgan’s rums, which had a 33% of total sales to form a new company holding 41% market share.7
Meanwhile, the incumbent dominant firm held over 54% of sales. This would mean the premium rum market would be composed of two competitors together responsible for over 95% of sales in total. The FTC challenged the merger on the grounds that the two remaining companies could collude to raise prices and forced Malibu to divest its rum business.7
Unilateral Effects. The FTC will often challenge mergers between rival firms that offer close substitutes, on the grounds that the merger will eliminate beneficial competition and innovation. In 2004, the FTC did just that, by challenging a merger between General Electric and a rival firm, as the rival firm manufactured competitive non-destructive testing equipment. In order to go forward with the merger, GE agreed to divest its non-destructive testing equipment business.8
Vertical Mergers. Mergers between buyers and sellers can improve cost savings and business synergies, which can translate to competitive prices for consumers. But when the vertical merger can have a negative effect on competition due to a competitor’s inability to access supplies, the FTC may require certain provisions prior to the completion of the merger. For example, Valero Energy had to divest certain businesses and form an informational firewall when it acquired an ethanol terminator operator.9
Potential Competition Mergers. Over the years, the FTC has challenged rampant preemptive merger activity in the pharmaceutical industry between dominant firms and would-be or new market entrants to facilitate competition and entry into the industry.
