Opening

Legal regulation of economic competition itself is usually considered as quite complex and difficult matter. But it is even more complicated when speaking about the economic competition at technology markets including the software market. It is due to the fact that technology markets are characterised by number of specific features that make the regulation a subject to a debate.

Pokusne video

Software Market Specific Features

There are at least two qualities that are rather unique for software markets. These qualities are so called public goods effect and network effect. Public goods effect can be briefly described as the fact that it is extremely difficult to exclude unlawful users from utilising the product. The origin of the public goods effect lies in the ubiquity of the software that has been discussed in previous lectures. Network effect is quite common to all the technology markets and refers to the reality of particular technology value and usefulness raising in accordance with the number of users utilising the technology. The usefulness of Internet or cell phones is for example extremely dependant on the large number of users.

Paper discussing technology industries and market structure.

Current State of Global Software Market

It is really interesting to briefly look at the following resources under the scope of network effect reality. It is quite obvious that the software markets which are more affected by the reality (e. g. operating systems market, office suites market) tend to create situations very close to monopolies, while those markets that are less affected (e. g. antivirus market, antispyware market) allow a number of equally strong competitors to operate at the markets.

A presentation on various application software market share in 2006.	Operating systems market share graphs.

 

Legal Implications

At the most basic level we can sum up that some core concepts of economic competition regulation are largely affected by the above specified unique features of software markets. This applies mainly to the perception of monopolies, contribution to the improvement of the production or distribution of goods and consumers' share of the benefit arising from it.

Legislation

Economic competition regulation:

• The Treaty Establishing the European Community (Title VI, Chapter 1, Section 1, Article 81 - 86)
• Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (Text with EEA relevance)
• Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation)

Case Law

Compulsory Reading and Exercise

Mann, R. J., 2006. Patents and Business Models for Software Firms. The University of Texas School of Law - Law and Economics Research Paper no. 77.