Towards a Layered Approach to Relevant Markets in Multi-Sided Transaction Platforms

The American Supreme Court decision in Ohio v. American Express (AMEX) will shape the future of US antitrust enforcement on multi-sided platforms. In a controversial landmark ruling, both the Court's majority and minority battled over definitions of relevant markets in the complex industry of electronic payments: the majority affirming that “transaction platforms” always constitute a single “two-sided relevant market” and the minority arguing that electronic payments are regular complementary goods subject to traditional “one-sided” analysis. This article challenges both views and proposes a novel, multi-layered approach to define relevant markets in multi-sided transaction platforms, one that focuses on how indirect network effects shape the competitive constraints faced by the multiple firms operating within and across such platforms. This approach acknowledges the importance of indirect network effects in multi-sided markets, but also stresses how, depending on the structure of the platform, these effects vary in intensity and may not effectively limit a firm's ability to raise prices on a single side of the platform. This insight allows for the separation between one-sided and two-sided transaction markets, so that even transaction platforms may allow for the definition of multiple layers of competition—a proposition that helps bridge the divide between the majority and minority opinions in AMEX and in scholarship more generally. The article then discusses the rich international experience of the EU and Brazil in the application of competition law to of electronic payments' markets as examples of cases where authorities sometimes correctly applied and sometimes fell short of this multi-layered view. Building on these insights, the article develops a framework to define relevant markets in cases involving transaction platforms, providing guidelines for scholars and policymakers faced with this difficult task. This framework allows lower courts and private parties to comprehend when a narrower interpretation of AMEX should be the ruling precedent, increasing legal certainty. The article concludes by outlining the applicability of this layered approach to a variety of markets commonly found in today's digital economy, such as marketplaces, booking apps and mobility apps