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Sharing and traditional economy: a matter of substitutability… between cats and dogs?

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Marcin Mleczko (Polish Office of Competition and Consumer Protection)/March 24, 2017

Sharing economy firms are disrupting traditional industries across the globe. As Tom Goodwin once put it: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” Something interesting is happening indeed, also from the competition law perspective.

One of the general sharing economy’s most attractive features is lower entry barriers: Airbnb facilitates entering the accommodation market and competing with hotels and hostels, and Uber facilitates entering the taxi services market[1]. One can’t argue that it’s for the benefit of the consumers, when sellers can easily enter and exit markets without incurring great costs.

But the new business models put the traditional markets under constant threat. Last year, a French hoteliers body complained against Airbnb over unfair competition by private persons offering accommodation via Airbnb, without having to respect the stringent rules applicable to hotels. Similar actions have taken place all across Europe, putting pressure on regulators and lawmakers. At first, their responses differed to a great extent. However, in the most recent past, many national competition authorities from the EU (see for example Polish[2] or British[3]) have warned against over-regulating new online and sharing economy markets, or even taken action against existing restriction. Since the end of 2015, also the European Commission has undertaken many initiatives relating to the sharing economy, including the Communication on a European agenda for the collaborative economy[4]. In the Communication, the Commission uses the term collaborative economy to refer to “business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals”. The Commission intends to provide non-binding legal guidance and policy orientation to public authorities, market operators and interested citizens for the balanced and sustainable development of the collaborative economy with a focus on how existing EU law should be applied to the collaborative economy.

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Source: http://kluwercompetitionlawblog.com