This edition of Keeping Up With... was written by Ana Enriquez.
Ana Enriquez is Scholarly Communications Outreach Librarian at the Penn State University Libraries, email: enriquez@psu.edu.
Introduction
Antitrust law, or competition law (as it is known in Europe), regulates markets with the goal of protecting competition and thus increasing efficiency and consumer welfare. These laws are relevant to libraries for two reasons: (1) antitrust enforcement is often suggested as a solution for the problems of the scholarly publishing market, and (2) the specter of antitrust violations often scares libraries away from taking collective action to address those same problems.
An October 2018 complaint to the European competition authority about RELX Group (the parent company of Elsevier) is the latest attempt to repair the scholarly publishing market through antitrust enforcement. Looking at the complaint in detail is a good way to explore issues in antitrust and competition law.
Tennant, Brembs, and Antitrust
In the complaint, European academics Jonathan Tennant (a paleontologist) and Björn Brembs (a neurobiologist) call for two lines of investigation. First, that there are “general problems within the scholarly publishing market sector that actively prohibit competition,” and second, that Elsevier has abused its dominant position within that market. [1] While the complaint addresses Elsevier, the largest firm in the sector, it notes that much of what it discusses “can also be applied to other major players within the wider scholarly publishing market.”
The complaint deserves the attention of academic and research librarians both for its content and for its practical implications. Its arguments are familiar, but Tennant and Brembs make them particularly well. They summarize recent research (on APCs [2], Elsevier’s open access business [3], and vertical integration by publishers [4]) and current events (the rise of national purchasing consortia within the European Union, the announcement of Plan S, etc.). The solutions they suggest are also of interest; while they are intended for the competition authority, some could be implemented by libraries or consortia.
Competition Versus Antitrust Law
The basics of EU competition law and US antitrust law are similar. However, there are key differences in their enforcement. Additional aims beyond efficiency, such as maintaining rivalry within a market and discouraging division of the European single market along the political barriers of its constituent states, motivate EU enforcement. Broadly speaking, EU competition enforcement is more interventionist. That is, some conduct that is legal in the United States is prohibited in the European Union. [5] Thus, while the arguments in the Tennant and Brembs complaint are roughly similar to arguments that could be made under US law, the result (if any) might be different than it would be in the United States.
The Tennant and Brembs complaint is based on Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). Article 101 prohibits concerted anticompetitive action (analogous to Section 1 of the Sherman Antitrust Act in U.S. law). Article 102 prohibits abusive behavior by dominant firms. Its rough counterpart in the United States is Section 2 of the Sherman Act, which prohibits “monopolization,” but the gulf between US and EU law is large here. Article 102 proscribes more conduct than does Section 2, both in the behavior it prohibits and the minimum market share (as low as 40%, compared with 50% to 70% under Section 2) a firm must have to fall within its scope. (The complaint reviews many estimates of Elsevier’s market share, noting that it is “as high as 71% in fields such as psychology.”)
Copyright’s distorting effect on the scholarly publishing market is a major component of the complaint. The complaint argues that publishers are not truly competitors because their products (e.g., scholarly articles) are unique and non-substitutable. (No two articles are identical; one article is not equally good to a consumer as the next.) By default, copyright makes the article’s rightsholder a monopolist, and for scholarly works this default rarely changes. (Open licenses, of course, do change it.)
Of course, it cannot be a competition law violation simply to hold a copyright. However, competition authorities sometimes intervene to weaken an intellectual property right in order to foster competition. In both the European Union and the United States, enforcement sometimes imposes a “duty to deal” with competitors. Broadly speaking, this doctrine is expanding in EU law and narrowing in US law. [6]
Big Deals, Non-disclosure, and Analytics
Tennant and Brembs also describe anticompetitive impacts of big deals, non-disclosure agreements, and integration of publishing and publishing analytics into a single firm. Writing about big deals, they express particular concern about emerging “OA big deals” (i.e., offsetting agreements [7]), which extend the negative consequences of big deals beyond the subscription journal market to what the complaint calls “native” OA publishers.
To support their claim that non-disclosure agreements make price discrimination easier for publishers, they cite remarks in 2013 by David Tempest, previous Director of Access Relations at Elsevier, who said that if Elsevier’s customers knew what its other customers paid, “everybody would drive [prices] down, down and down.” [8] Finally, to illustrate the anticompetitive effects of a single firm having both a publishing and a publishing analytics business, the complaint cites research by Carl T. Bergstrom and Jevin West showing that Springer Nature journals “scored up to 40% lower using CiteScore rankings (based on Scopus data, owned by Elsevier), whereas Elsevier titles increased by around 25%, compared to their journal impact factors (owned by Clarivate Analytics and Web of Science).” [9]
Possible Interventions
The complaint concludes by suggesting possible interventions the competition authority could make. Among other things, it suggests oversight of the market by an independent regulatory body, prohibition of non-disclosure clauses in vendor contracts, banning certain flawed measures of publication impact from hiring, funding, and tenure decisions, and strengthening library consortia. They even suggest “abolishing copyright on journal articles.”
While some of the suggested interventions could not be implemented by private parties, there are two that libraries and library consortia could take up: strengthening consortia and rejecting non-disclosure clauses. Together with the rest of the higher education community, libraries are also well-poised to reduce the use of flawed measures of publication impact and to examine critically the role that copyright plays in this market.
Conclusion
If one of the answers to these problems is strengthening library consortia, how strong can they get before they themselves risk antitrust scrutiny? For US libraries, considering antitrust trends and the current enforcement environment is a good place to start. While many types of conduct were illegal per se during much of antitrust’s history, the trend since the mid-1970s has been for courts to put fewer and fewer types of conduct in that category. Instead, following the “Chicago school,” they look at the impact of that conduct to see whether it is in fact anticompetitive. Thus, the famous language of Section 1 of the Sherman Act outlawing “any contract, combination, or conspiracy . . . in restraint of trade” is in fact subject to exceptions. For example, collective action by libraries that improves the efficiency of the market (e.g., by improving price competition between publishers) likely would not be an antitrust violation.
Librarians seeking further reading would be well-served by reading the Tennant and Brembs complaint itself. The Atlantic Divide in Antitrust: An Examination of US and EU Competition Policy, a 2015 book by Daniel J. Gifford and Robert T. Kudrle, provides a deep comparison of the two systems, including a full chapter on antitrust and intellectual property. Although the book is written for specialists, its first chapter provides an accessible and brief overview.
Notes
[1] Jonathan Tennant and Björn Brembs, “RELX Referral to EU Competition Authority,” October 26, 2018, https://zenodo.org/record/1472045#.XBzx9Pxryu6.
[2] Bo-Christer Björk and David Solomon, Developing an Effective Market for Open Access Article Processing Charges, March 2014,
https://fwf.ac.at/fileadmin/files/Dokumente/Downloads/Dev_Effective_Market_OA_Article_Processing_Charges.pdf.
[3] Heather Morrison, “From the Field: Elsevier as an Open Access Publisher,” The Charleston Advisor 18, no. 3 (January 2017): 53-59. https://doi.org/10.5260/chara.18.3.53.
[4] Alejandro Posada and George Chen, “Inequality in Knowledge Production: The Integration of Academic Infrastructure by Big Publishers,” paper presented at ELPUB 2018, Toronto, Canada, June 2018, https://dx.doi.org/10.4000/proceedings.elpub.2018.30.
[5] Daniel J. Gifford and Robert T. Kudrle, The Atlantic Divide in Antitrust: An Examination of US and EU Competition Policy (Chicago: The University of Chicago Press, 2015).
[6] The European Commission’s 2007 proceeding against Microsoft is an example of the Commission ordering a firm to license its intellectual property to a competitor to remedy a competition problem. Gifford and Kudrle, 161–195.
[7} See Ana Enriquez, “Weighing the Costs of Offsetting Agreements,” In the Open (blog), November 16, 2018, http://intheopen.net/2018/11/weighing-the-costs-of-offsetting-agreements/.
[8] “Elsevier's David Tempest explains subscription-contract confidentiality clauses,” 2013, https://www.youtube.com/watch?v=4JsNT1gKe7I.
[9] Carl T. Bergstrom and Jevin West, “Comparing Impact Factor and Scopus CiteScore,” December 2016, http://eigenfactor.org/projects/posts/citescore.php.