To Discriminate or Not to Discriminate? Personalised Pricing in Online Markets as Exploitative Abuse of Dominance

Abstract

The advent of big data analytics has favoured the emergence of forms of price discrimination based on consumers’ profiles and their online behaviour (i.e. personalised pricing). The paper analyses this practice as a possible exploitative abuse by dominant online platforms. The paper argues that, in view of its “mixed” effect on consumers’ welfare, personalised pricing requires a case-by-case assessment under EU competition law and thus it should not be banned a priori. However, in view of the recent case law of the European Court of Justice on price discrimination, the National Competition Authorities (NCAs) and the European Commission would face a high burden of proof to sanction this conduct under Art. 102(c) TFEU. Finally, the paper argues that, due to its case-by-case approach, competition law seems more suitable than omnibus regulation to tackle the negative effects that personalised pricing could have on consumers’ welfare. In particular, an NCA/the European Commission could negotiate with online platforms different kinds of behavioural commitments: transparency requirements, limits on data collection/user profiling, rights to opt out of personalised pricing and the obligation to share customers’ data with competitors could significantly tame the risks of personalised pricing.

Keywords: Price discrimination; personalised pricing; EU competition law; exploitative abuse; remedies

JEL Classification: K21; L11; L41; L42; L86