Platform Competition, the Apple Ebooks Case and the Meaning of Agreement to Fix Prices

Dean Williamson (Economic Design LLC)

Abstract: Looking out on the devastation wrought by the English Civil Wars, political philosophers found themselves contemplating how to harness collective action to obviate problems of collective irrationality. With the advent of competition law more than two centuries later, American courts were situated to take up certain manifestations of collective action: those that obtain from “conspiracy” to restrain trade. Building on the game theory advances of 1950, economists found ways to characterize the governance of antitrust conspiracies as the mechanisms by which conspirators harness collective action among themselves to obviate, or at least mitigate, their own problems of collective irrationality (profit-diminishing competition). Making the effort to characterize the governance of conspiracies can impose structure on the meaning of “agreement” in the antitrust case law to unreasonably restrain trade. From such a governance perspective, however, the district court’s analysis of “agreement” in the Apple eBooks price-fixing case, 952 F.Supp.2d 638 (S.D.N.Y. 2013), would appear to be truncated and underdeveloped to the point of being stillborn.