You are on page 1of 55



Dr. Thibault Schrepel

Research Associate at the Sorbonne-Business & Finance Institute

Sorbonne Law School (Paris 1)

INTRODUCTION ................................................................................................ 4
I. UNILATERAL PRACTICES ON BLOCKCHAIN ............................................ 7
A. The Functioning of Blockchain: Setting The Stage ......................... 7
1. General Points .......................................................................... 7
2. Consensus and Governance....................................................... 9
3. Public vs. Private Blockchain ...................................................11
4. From Blockchain 1.0 to Blockchain 3.0 ................................... 13
B. Competition Between Blockchains and Platforms: At War ........... 16
1. The Token Network Effect ........................................................ 16
2. Competition For End Users ..................................................... 20
C. Which Unilateral Practices To Expect: The Crystal Ball ............. 21
1. The Dominant Position (Relevant Market)............................... 21
2. The Abuse of The Position ....................................................... 25
II. BLOCKCHAIN AND REGULATORY INFILTRATION ................................... 38
A. The Law As We Know It: Ineffective?........................................... 39
B. Regulatory Infiltration................................................................. 41
C. Regulatory Humility .................................................................... 44

Suggested citation:

Thibault Schrepel, Is Blockchain the Death of Antitrust Law?

The Blockchain Antitrust Paradox (forthcoming)




Dr. Thibault Schrepel1

To this day, the legal system has been very useful in providing trust and reducing
uncertainty, or at least, in eliminating the need to worry about trust by providing an
alternate remedy. But some costs remain so to represent ourselves as reliable and
blockchain may reduce them to a smaller level.

In the meantime, the very nature of this technology raises fundamental questions
for competition law. With this paper, our first ambition is to contribute to the
literature by portraying the challenges on unilateral practices. Because blockchain
is decentralized, anonymous and immutable, multiple questions do in fact arise
regarding the detection of practices as well as the identification of perpetrators. We
show that some practices are de facto more likely to be implemented, but they are
yet to be identifiable.

This article further aims to contribute to the literature by questioning our current
rules and how the law can fit into the technology. And indeed, for technical reasons,
some remedies cannot be used to prevent the development of anti-competitive
practices implemented through the blockchain. We will address what should be the
focus for competition authorities and regulators in this regard. Meanwhile, they
must observe a strict regulatory humility so as not to prevent the emergence of
blockchain and to use it as an excuse for regulating all the practices that are
perpetrated on it despite having a real competitive effect — what we call the
“blockchain excuse.”

Thibault Schrepel (Ph.D., LL.M.) is a research associate at the Sorbonne-Business & Finance
Institute, University of Paris I Panthéon-Sorbonne. He is in charge of the Rules for Growth
Institute’s innovation law department and is the Revue Concurrentialiste’s creator. His personal
website is

This paper has been prepared for the OECD hearing on “Blockchain and competition policy.”
I haven’t received any fund for this research and have no financial interest in blockchain. I
am grateful to friends and colleagues who have helped me along the process of writing this article—
especially John Newman (Concurrentialiste’s best co-author) and Spencer Waller, people at the
Harvard Berkman Klein Center (especially Nathan Kaiser and Nikolas Guggenberger), people at the
Stanford Center for Internet and Society (especially Jonathan Cardenas), people at the Yale Tsai
Center for Innovative Thinking (especially Martin Wainstein), Julie Maupin, Bastien Teinturier and
Benoit Vovan. All views and errors are mine, and because this manuscript is a draft, all comments
and criticisms are very welcome (reach me at


But in the end, one question arises as follows: is blockchain the death of antitrust
law? Should it be? Answering them today is not easy as blockchain is still prone to
drastic evolution, but some initial answers are to be provided nonetheless. In order
to do so, this paper proceeds in three parts. The first details how unilateral practices
can be implemented on blockchain and further establish a risk map. The second part
focuses on the challenges for enforcers and presents a new theory entitled
“regulatory infiltration.” The last part questions the legitimacy of competition law
in the face of this technology - the “blockchain antitrust paradox” - and the need to
decentralize competition authorities.




B lockchain fever is hotter than ever. The technology that is expected to store a
non-negligible part of the global GDP2 is experiencing an unparalleled craze3.
Some see it as a new way of organizing modern-day society,4 while others deplore
the chaos that it could create.5 There are also some skeptics6 that describe
blockchain as the new Netscape,7 but if they are ever wrong, the blockchain will
have revolutionized all industries8 without them being ready for it. And maybe it’s
more than just a revolution. Maybe it is the advent of a new way of developing our
relationships. If that were to be the case, our societies would be completely
changed, and with it, our legal systems would be called into question.

To this day, the legal system has been very useful in providing trust and
reducing uncertainty, or at least, in eliminating the need to worry about trust by
providing an alternate remedy.9 And yet, some costs remain so to represent
ourselves as reliable and blockchain may reduce them to “a much, much smaller
level10.” Blockchain makes contracting easier, and on a broader scale, it may solve

Up to 10 percent of global GDP by 2027 according to the World Economic Forum, Technology
Tipping Points and Societal Impact, Survey Report, September 2015.
World Economic Forum, White Paper, Blockchain Beyond the Hype: A Practical Framework
for Business Leaders, introduction (April 2018): “One of the most unique aspects of blockchain is
its high number of evangelists – people who believe blockchain can solve everything from global
financial inequality to access to financing for start-ups, the provision of ID for refugees, to solving
supply chain problems and enabling people to sell their houses without needing an estate agent.”
Melanie Swan, BLOCKCHAIN: BLUEPRINT FOR A NEW ECONOMY, preface (O’Reilly Media,
2015): “the blockchain concept is even more; it is a new organizing paradigm for the discovery,
valuation, and transfer of all quanta (discrete units) of anything, and potentially for the coordination
of all human activity at a much larger scale than has been possible before.”
On the idea that new technologies may, if not create chaos, generate losses, see Lawrence
Lessig, CODE: AND OTHER LAWS OF CYBERSPACE, VERSION 2, 339 (New York: Basic Books, 2006),
ending his book by the following: “it is not a great time, culturally, to come across revolutionary
technologies. We are no more ready for this revolution than the Soviets were ready for theirs.We,
like they, have been caught by a revolution. But we, unlike they, have something to lose.” While
writing this, Mark Zuckerberg was studying at Harvard… On the same subject, see also Jonathan
University Press, 2008): “Traditional cyberlaw frameworks tend to see the Net as an intriguing force
for chaos that might as well have popped out of nowhere. It is too easy to then shift attention to the
‘issues raised’ by the Net, usually by those threatened by it.”
See for instance Kai Stinchcombe, explaining that “ten years in, nobody has come up with a
use for blockchain,” Kai Stinchcombe, Ten years in, nobody has come up with a use for blockchain,
HACKERNOON, (December 23, 2017)
A technology which disappeared after being seen as very promising.
Lawrence Lessig, Thinking through Law & Code, Again, presentation at the Sydney Blockchain
Workshop, December 2016: “the blockchain is the biggest innovation since the Internet.”
See Darcy WE Allen, Chris Berg & Mikayla Novak, Blockchain: An Entangled Political
Economy Approach 8 (2018): “trust in blockchain platforms substitutes for conventional trust in
third parties.” In fact, blockchain in most circumstances doesn’t provide trust but provides
verification and eliminates the need to worry about trust. As it had been said by Ronald Reagan,
“trust, but verify” (I have to thank Spencer Waller for this one).
Jim Epstein on Bitcoin, the Blockchain, and Freedom in Latin America, ECONTALK (February


contractual incompleteness,11 creating a world in which “computers will fill in the
gaps of contracts.”12 The trade facilitation that blockchain could create - to the
detriment of the “middleman” - is accompanied by numerous legal challenges.

Several institutions - including the OECD13 - have identified the need to

address the challenges created by the blockchain for competition law. The first of
these challenges is lexical. Blockchain abolishes trust in the sense of trustees, while
most of our rules in competition law are based on being anti-trust14 — the U.S.
terminology which is a reaction to the misuse of the trust instrument. So what
happens when antitrust addresses a trustless technology in both senses of the word
trust? Is it time for the creation of an antitrustless law? And more generally, are our
current rules well suited to analyzing blockchain and its processes? What should be
the focus for competition authorities and how can companies limit their legal risks
in this respect? Answering these questions today is not easy as blockchain is still
prone to drastic evolution, but some initial answers are to be provided nonetheless.

With this paper, our ambition is to contribute to the literature by portraying the
challenges that blockchain raises for our analyses of unilateral practices. But15 let’s
be especially careful regarding this matter.16 Some have already predicted the death

Lin William Cong & Zhiguo He, Blockchain Disruption and Smart Contracts 4 (2018):
“blockchains, via decentralized consensus, enable agents to contract on delivery outcomes and
automate contingent transfers. Hence, the authentic entrant is now able to signal her authenticity
fully. This eliminates information asymmetry as a barrier for entry and greater competition,
enhancing welfare and consumer surplus in this blockchain world.”
Thibault Schrepel, Antitrust Conversations with Nobel Laureates, CONCURRENTIALISTE
REVIEW (2018)
OECD, Hearing on Blockchain and Competition Policy, DAF/COMP/WD(2018)47
See the Legislative History of the Federal Antitrust Laws and Related Statutes, 10-13 (1978).
Also, Daniel R. Ernst, The New Antitrust History, 35 N. Y. L. SCH. L. REV. 879 (1990). Robert L.
Bradley, Jr. underlines John Sherman’s “intense opposition to trusts,” see On The Origins of the
Sherman Act, 9 CATO 737, 740 (1990). Also, Eric Posner & E. Weyl, RADICAL MARKETS:
2018): “During the Gilded Age, monopolies interfered with politics in many ways; indeed, the
Sherman Antitrust Act, and the reforms undertaken by the Progressives, were motivated as much by
the political dangers posed by monopolies as their economic costs.” In UK as well, at the beginning
of the 19th century, “the common law negative view of monopolies was the default rule which could
be modified or abrogated by statute,” see Barry E. Hawk, English Competition Law Before 1900,
ANTITRUST BULLETIN (Forthcoming, 2018). Lastly, see Robert H. Bork, THE ANTITRUST PARADOX:
A POLICY AT WAR WITH ITSELF 19 (Basic Books, 1978): “running through the arguments and
decisions of this early period was a recognition of the need to eliminate the evils of monopoly without
hampering business efficiency,” adding that “there is always in Congress, moreover, a strong
element of anticorporate populist sentiment, a desire to punish business precisely because it is
successful” at 412.
We voluntarily exclude cartels from our study for reasons related to the size that an article
must reasonably have. Many of the developments of this article can nonetheless be applied to cartels
FILIPPI & WRIGHT, supra note 16, at 209: “Given that blockchain technology is still largely
immature, there is a danger that regulating the technology too early could preclude the emergence
of new and unexpected applications that have not yet been fully explored or discovered.”


of competition law when the Internet surfaced.17 It has led several authors to ask for
the implementation of a whole new set of dedicated rules. The idea that the Internet
requested the creation of a sui generis body of law to prevent competition law from
becoming inapplicable has lived out its fifteen minutes of glory. In a famous article
entitled Cyberspace and the Law of the Horse,18 U.S. Judge Frank H. Easterbrook
answered these concerns by stating that any effort to create specific rules for the
“cyberspace” arena was “doomed to be shallow and to miss unifying principles.”19
At the end of the day, the Internet didn’t kill competition law. In fact, quite the
contrary happened. It took time, but eventually the European Commission, for
instance, became very active with regard to these markets, having recently ordered
Google to pay a 2.4 billion Euro fine. Judge Easterbrook was correct to argue for the
need to develop general bodies of law, and then, to apply it to the specifics⁠.20

But it very much seems like blockchain has its own challenges whose nature
differs from that of “cyberspace.” Above all, the Internet had mostly created a
significant challenge relating to the speed at which the law was applied, which U.S.
Judge Richard A. Posner took up in his famous article entitled “Antitrust in the New
Economy.”21 With blockchain, it’s not just about speed, and this article further aims
to contribute to the literature by showing why the very nature of this technology raises
fundamental questions. Indeed, because blockchain is decentralized, anonymous and
immutable, multiple questions arise regarding the detection of practices as well as the
identification of perpetrators. We show that some practices are de facto more likely
to be implemented, but they are yet to be identifiable.

This article further aims to contribute to the literature by questioning our

current rules and how the law can fit into the technology. And indeed, for technical
reasons, some remedies cannot be used to prevent the development of anti-
competitive practices implemented through the blockchain. We will address what
should be the focus for competition authorities and regulators in this regard.
Meanwhile, they must observe a strict regulatory humility so as not to prevent the
emergence of blockchain and to use it as an excuse for regulating all the practices
that are perpetrated on it despite having a real competitive effect — what we call
the “blockchain excuse.”

In the end, one question arises as follows: is blockchain the death of antitrust
law? Should it be? Answering them today is not easy as blockchain is still prone to

FILIPPI & WRIGHT, supra note 16, at 206: “legal scholars thought that the rule of code would
ultimately prevail on the Internet.”
Frank H. Easterbrook, Cyberspace and the Law of the Horse, 1996 U. CHI. LEGAL F. 207
See id. at 207.
See id. at 208: “this leads directly to my principal conclusion: develop a sound law of
intellectual property, then apply it to computer networks. problem: we do not know whether many
features of existing law are optimal.”
Richard Posner, Antitrust in the New Economy, 68 ANTITRUST L.J. 925 (2001).


drastic evolution, but some initial answers are to be provided nonetheless. In order
to do so, this paper proceeds in three parts. The first details how unilateral practices
can be implemented on blockchain and further establish a risk map. The second part
focuses on the challenges for enforcers and presents a new theory entitled
“regulatory infiltration.” The last part questions the legitimacy of competition law
in the face of this technology and the need to decentralize competition authorities.


This section intends to re-evaluate unilateral practices in the light of

blockchain, whether they are practices that are already known or new types of
practices. We will first present the functioning of blockchain technology (A). A
second stage will be dedicated to the type of competition that blockchains make -
and will make - between themselves in order to evaluate what degree of competitive
intensity will exist and, consequently, the practices that can be implemented in order
to obtain or maintain a dominant position (B). Logically, a third phase will be
dedicated to the analysis of unilateral practices (C).


Blockchain is still a new technology. Its functioning - as of today - must

therefore be explained, otherwise, no analysis in competition law can be conducted
(1). It implies detailing the way the consensus works and how governance is
decided (2). We make a particular distinction between public and private
blockchains, which has important implications in terms of competition issues (3).
Lastly, we distinguish between blockchain 1.0, 2.0 and 3.0 (4).


The World Wide Web is a technology that “enables the frictionless transfer of
information” while blockchain “enables the frictionless transfer of value.”22 The
reason is that it is frictionless, or, at least, that it creates less friction23 than a
transaction in the physical world. In the words of Satoshi Nakamoto, blockchain is
based on “cryptographic proof instead of trust,”24 making it “not a ‘disruptive’

Katya Malinova & Andreas Park, Market Design with Blockchain Technology (2016). See
EVERYTHING 21 (St. Martin’s Press, 2018): “Blockchains point the entire digital economy toward
something people are calling the Internet of Value. Whereas the first version of the Internet allowed
people to send information directly to each other, in the Internet of Value people can send anything
of value to each other, be it currencies, assets, or valuable data that was previously too sensitive to
BLOCKCHAIN TECHNOLOGY 21 (O’Reilly Media, 2016): “Bitcoin was the first successful
decentralized store of wealth.”
Michael Milnes, Blockchain: Issues in Competition & Consumer Law, LINKEDIN (May 26, 2016).
Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008)


technology… [but] a foundational technology”25 that “has the potential to create

new foundations for our economic and social systems.”

A blockchain is an open and distributed26 ledger that can record - manually or

automatically - all sorts of transactions between users.27 Once they are recorded,
these transactions are permanent and can be seen by all users, which is one of the
reasons why blockchain can be trusted. All of the users agree to a certain set of
procedures - called the protocol28 - which sets the rules of the blockchain. Once the
protocol is determined, the blockchain operates under it and no deviation from it is
in theory possible, which creates trust.29

The trust issue, in fact, is absolutely central to the viability of the technology
as well as its capacity to be widely adopted. In 1975, Kenneth Arrow stated that
The authors then add that “with blockchain, we can imagine a world in which contracts are
embedded in digital code and stored in transparent, shared databases, where they are protected
from deletion, tampering, and revision. In this world every agreement, every process, every task,
and every payment would have a digital record and signature that could be identified, validated,
stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary.
Individuals, organizations, machines, and algorithms would freely transact and interact with one
another with little friction. This is the immense potential of blockchain,” see Marco Iansiti & Karim
R. Lakhani, The Truth About Blockchain, HARVARD BUSINESS REVIEW (2017)
For the difference between decentralized and distributed applications, see RAVAL, supra note
22, at 4: “Distributed means computation is spread across multiple nodes instead of just one.
Decentralized means no node is instructing any other node as to what to do. A lot of Stacks such as
Google have adopted a distributed architecture internally to speed up computing and data latency.
This means that a system can be both centralized and distributed.” Also, Eric Posner & E. Weyl,
University Press, 2018): “To understand how the market solves the ‘very large system of equations,’
you need to know the key ideas of distributed computing and parallel processing. In these systems,
complicated calculations that no one computer could perform are divided into small parts that can
be performed in parallel by a large number of computers distributed across different geographic
locations. Distributed computing and parallel processing are best known for their role in the
development of ‘cloud computing,’ but their greatest application has gone unnoticed: the market
economy itself.”
SWAN, supra note 4: “The economy that the blockchain enables is not merely the movement
of money, however; it is the transfer of information and the effective allocation of resources that
money has enabled in the human- and corporate-scale economy.”
AND BLOCKCHAIN PROGRAMMING FOR BEGINNERS 3 (Apress, 2017): “a protocol is a system of rules
that describes how a computer (and its programmer) can connect to, participate in, and transmit
information over a system or network. These instructions define code syntax and semantics that the
system expects. Protocols can involve hardware, software, and plain-language instructions.” See
also Bryant Nielson, Review of the 6 Major Blockchain Protocols, RICHTOPIA (March 2017)
VIGNA & CASEY, supra note 22, at 64: “Blockchain technology doesn’t remove the need for
trust. In fact, if anything it’s an enabler of more trustful relations. What it does do is widen the
perimeter of trust.” Arguing that blockchain is a catallaxy in the sense of Hayek, “a catallaxy is a
special kind of spontaneous order produced by the market by people acting within the rules of the
law of property, tort and contract,” see Sinclair Davidson, Primavera De Filippi & Jason Potts,
Economics of Blockchain (2016) quoting Friedrich A. Von Hayek, THE DENATIONALISATION OF
MONEY THE ARGUMENT REFINED (London: Institute for Economic Affairs, 1978).


“virtually every commercial transaction has within itself an element of trust,”30 trust
being “an imperfect substitute for information.”31 Blockchain provides information
by granting access to the ledger and therefore solves this issue as well as the
“Byzantine Generals Problem,”32 according to which computer systems cannot
reach consensus without relying on a central authority.33 This is the most decisive
element that defines what a blockchain is.34 Stemming from the Lex
Cryptographia35 which is defined as the “rules administered through self-executing
smart contracts and decentralized (autonomous) organizations,”36 blockchain is a
trusted and decentralized technology.


Blockchains can be classified by the way they achieve consensus. In fact, most
recent public blockchains (Bitcoin, Ethereum…) currently use “proof of work” in
which miners do expensive work to create blocks.37 Many of them38 are currently
working on developing “proof of stake”39 - consensus achieved by cryptoeconomics
and game theory - which is presently difficult to prove as secure. Meanwhile,
private blockchains - where actors are known and trustable - can use proof of
authority, which is very efficient.

In the words of Vitalik Buterin, Ethereum founder, “public blockchains are

secured by cryptoeconomics--the combination of economic incentives and
cryptographic verification using mechanisms such as proof of work or proof of
stake.” In the case of the private blockchain, on the contrary, there is generally no

Kenneth Arrow, Gifts and Exchanges, in ALTRUISM, MORALITY, AND ECONOMIC THEORY 24
(E. Phelps ed. 1975).
Richard Posner, The Right of Privacy, 12 GA. L. REV. 393 (1978).
SATOSHI NAKAMOTO 77 (2014): “Satoshi Nakamoto Thu, 13 Nov 2008 19:34:250800: The proof-of-
work chain is a solution to the Byzantine Generals’ Problem.”
Aaron Wright & Primavera De Filippi, Decentralized Blockchain Technology and the Rise of
Lex Cryptographia (2015).
This is the main reason why blockchain is the “fifth disruptive computing paradigm,” in the
words of SWAN, supra note 4.
FILIPPI & WRIGHT, supra note 16.
WRIGHT & FILIPPI, supra note 33.
VIGNA & CASEY, supra note 22, at 39: “Consider that Bitcoin is now the most powerful
computing network in the world, one whose combined “hashing” rate as of August 2017 enabled
all its computers to collectively pore through 7 million trillion different number guesses per second.
Well, it would still take that network around 4,500 trillion trillion trillion years to work through all
the possible numbers that could be generated by the SHA-256 hashing algorithm that protects
Bitcoin’s data.”
For instance, Ethereum is said to intend to migrate to proof of stake.
See Vlad Zamfir, Introducing Casper “the Friendly Ghost”, ETHEREUM BLOG (August 1,
2015) “In it, the algorithm
attempts to solve these problems by removing the mining concept entirely and replacing it with
another mechanism. With the proof of stake, the same participant invests $1,000 by directly
purchasing the cryptocurrency of the blockchain then deposits these cryptocurrencies using the
proof of stake mechanism, which will then (pseudo-)randomly assign that participant the right to
produce blocks and receive a reward.”


mining, no proof of work and no remuneration.40 The incentive to use them is that
private blockchains allow many income-generating uses and applications.41 The
ranges could be (i) applications for the transfer of assets (monetary use, securities,
votes, industrial patents, Internet of Things - IoT, stocks, bonds), (ii) applications
of the blockchain as a register to ensure a better traceability of products and
assets; and (iii) smart contracts42 in which the terms and conditions are
automatically executed by stand-alone programs.43 In practice, these different
consensuses make it possible to ensure the integrity of the ledger.

Whomever controls the consensus - also known as the consensus protocol - in a

way controls the governance of the blockchain.44 But this isn’t governance as we
know it for conventional entities. The economic incentive, which is created by the
chosen consensus, is a way of governance for some blockchains - including Bitcoin45
- because it creates conversion without coercive action. “Proof of Work” creates an
economic incentive for solving the “Byzantine Generals Problem.”46 Here, there isn’t
any real possibility of implementing unilateral strategies. But most blockchains are
currently working on having a new kind of governance system47 and, actually, some
already have implemented governance in a more traditional way.48 Applications that
work on the blockchain also aim at governance systems.49

Some private blockchains, indeed, use proof of work and are working on moving to proof of
On the contrary, the main incentive to use public blockchains lies in the fact that using it brings
value, and value brings profitability.
See Pierluigi Cuccuru, Beyond bitcoin: an early overview on smart contracts, 25 INT’L JL &
INFO TECH 179 (2017).
Dominique Guegan, Public Blockchain versus Private blockhain, Documents de travail du
Centre d'économie de la Sorbonne (2017).
Gur Huberman, Jacob D. Leshno & Ciamac C. Moallemi, Monopoly without a Monopolist:
An Economic Analysis of the Bitcoin Payment System 2 (2017): “The innovation in Bitcoin’s
blockchain design is in the absence of a governing organization. Rather, a protocol sets the system’s
rules, by which all constituents abide.”
For the history of bitcoin creation, see Nathaniel Popper, DIGITAL GOLD: BITCOIN AND THE
Leslie Lamport, Robert Shostak, & Marshall Pesce, The Byzantine Generals Problem, 4.3
ACM TRANS.ON PROGRAMMING LANGUAGES AND SYSTEMS 382, 382 (1982): “Reliable computer
systems must handle malfunctioning components that give conflicting information to different parts
of the system. This situation can be expressed abstractly in terms of a group of generals of the
Byzantine army camped with their troops around an enemy city. Communicating only by messenger,
the generals must agree upon a common battle plan. However, one or more of them may be traitors
who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal
generals will reach agreement.” Also, for a technical analyis of the byzantine agreement, see Roger
Wattenhofer, THE SCIENCE OF THE BLOCKCHAIN 33 (CreateSpace, 2016).
Fred Ehrsam, Blockchain Governance: Programming Our Future, MEDIUM (November 27,
c3bfe30f2d74. Also, Vlad Zamfir, Against on-chain governance, MEDIUM (December 1, 2017) Lastly, Vitalik
Buterin, Notes on Blockchain Governance, VITALIK BUTERIN’S WEBSITE (December 17, 2017)
This need is described by Benito Arruñada & Luis Garicano, Blockchain: The Birth of
Decentralized Governance 1 (2018): “For blockchain to fulfill its promise and outcompete
centralized firms, it needs to develop new forms of ‘soft’ decentralized governance (anarchic,
aristocratic, democratic, and autocratic) that allow networks to avoid bad equilibria.”
See for instance


This is the case of Dash50 - a crypto-currency - which allows its users to vote
if they hold tokens.51 Decred52 and Tezos53 also are crypto-currencies with a more
centralized governance as well. In fact, one of Tezos’ main characteristics is its
ability to amend its consensus when necessary,54 and indeed, the way the consensus
- i.e. the software that governs rules, operations, and communication between
network nodes - is controlled is also a form of governance. Some are monitored by
foundations,55 others are led by majority rule.56 New forms of monitoring will
emerge in the coming months. In short, a study of these different types of
governance with regard to competition law will have to be conducted once they are
more developed. Depending on the type of governance chosen, the blockchain may
indeed be more or less capable of implementing anti-competitive strategies, but for
the time being, it remains too early to analyze them in greater detail.


Public blockchain, also called permissionless or open blockchain, is a

blockchain that anyone can read and proposes new transactions toward participation
in the consensus process for determining what blocks get added to the chain open.
In most open blockchains, there is no guarding against bad actors and no access
control is needed. Applications may be added to the network without the approval
or trust of others, using the blockchain as a transport layer. In practice, some public
blockchains only permit a finite number of actions that can be contained in a
transaction; for instance, only allowing transactions that send X tokens57 from
address A to address B. But most blockchains allow a lot more and they are

Some of these users, called Masternode, have more power into the community.
L.M Goodman, Tezos — a self-amending crypto-ledger, White paper (2014)
See id. at 8: “protocol can be amended to reflect virtually any blockchain based algorithm.”
IOTA, for instance. See VIGNA & CASEY, supra note 22, at 138: “The way IOTA works is that
in order for one device to make a transaction with another one—to send it money in the form of
IOTA tokens or other forms of valuable information—it must itself confirm the validity of two
randomly assigned transactions from elsewhere in the network. Two transactions out of millions is
obviously a significantly lesser computing load than is faced by miners in Bitcoin and Ethereum,
who must process all of those within a given block. It’s on this basis that IOTA makes its claim to
scalability. But its success—and, in fact, the security of the entire IOTA network—depends on
network effects. If there are only a few devices on the network, then a rogue actor in charge of one
machine would sooner or later get assigned by the random process to validate one of his or her own
past transactions, creating an opportunity to approve a double-spending or otherwise fraudulent
This is the case of Bitcoin.
On tokens, see VIGNA & CASEY, supra note 22, at 99: “How do tokens work? Just as Bitcoin’s
protocol steers users and participants into certain actions that serve the community’s interest—in
its case, creating a secure, reliable ledger that all can trust—the programs that run tokens
incorporate incentives and constraints that encourage certain pro-social behavior. A new concept—
token economics—is emerging. It encapsulates the idea that we can embed into these
“programmable” forms of money a way to steer communities toward desired common outcomes.
Tokens might help us solve the Tragedy of the Commons. In other words, they could be a big deal.”


generally secured by requiring new entries to include a “proof of work.”58 Public

blockchains result from the open source and cypherpunk movement.59

Private blockchain - also called permissioned blockchain - is a blockchain in

which read permission may be public or restricted to certain participants only. As
far as its operation is concerned, submitting new transactions is generally limited
to a predefined list of entities, and with regard to archiving, the creator of such
blockchain does not hold a full copy of the ledger unless it is designed otherwise.
Private blockchains are subdivided in two different categories. The first is called
“single entity blockchain.” In it, as its name suggests, one entity set up the protocol
and runs the blockchain whilst read permission may be public or restricted to certain
participants. The second is called “consortium blockchain.” In it, the consensus
process is controlled by a pre-selected set of nodes. It could be, for instance, made
of five companies, each of which operates a node and of which three must sign
every block in order to validate them. In any case, they are operated under the
leadership of a group instead of a single entity. In addition to private and public
blockchains, there are also semi-private blockchains. Such blockchains are run by
a single company who grants access to any user who qualifies. They typically target
business-to-business users. The following graphic shows a representation of these
different blockchains:

To be differentiated from Proof of Stake, see Ameer Rosic, Proof of Work vs Proof of Stake:
Basic Mining Guide, BLOCKGEEKS (2017)
Eric Hughes, A Cypherpunk’s Manifesto, ACTIVISM, (March 9, 1993) “Cypherpunks deplore regulations on
cryptography, for encryption is fundamentally a private act.” See also Timothy May, The
Cyphernomicon (1994),
More generally, see Jack Goldsmith & Tim Wu, WHO CONTROLS THE INTERNET? ILLUSIONS OF A
BORDERLESS WORLD (Oxford: Oxford University Press, 2006).


In practice, semi-private and private blockchains have a multitude of access

levels.60 They may be an entirely permissioned blockchain in which transaction
processing is performed by a predefined list of subjects with known identities. They
may also be less strict. Reading transactions, proposing new transactions or creating
new blocks of transactions may be only partially restricted, e.g. a user may have
limited access to transactions that involve him directly. We have gathered most of
this information in the following table,61 for the sake of readability:


A distinction is to be made between blockchain as platforms and the software

operating on it,62 because it indicates two types of anti-competitive practices: those
that are committed via the blockchain itself and those that are committed via
applications that work on the blockchain.

Some blockchains don’t offer capabilities for software to run on top of it, some
do. Ethereum is the best example of a blockchain that is specifically built in order
to allow anyone to create “smart contracts” on it,63 being defined as agreements
between accounts to render a transfer of tokens when certain conditions are met.64

On hybrid blockchain, see Marc Pilkington, Blockchain Technology: Principles and
Applications, RESEARCH HANDBOOK ON DIGITAL TRANSFORMATIONS 21 (Edward Elgar, 2016): “The
Bank of England is currently reflecting on ways to implement ‘hybrid systems’ involving distributed
ledger technology, also bearing in mind the idea of a continuum, and raising the issue of
remuneration, incentives, and honest participation, so as to ensure socially efficient outcomes.”
This table is more than partially based on the one made by William Mougayar, 2016.
Peder Østbye, The Case for a 21 Million Bitcoin Conspiracy 3 (March 2018): “Most software
implements a rule that only valid transactions are propagated further to the network. This is
however no hard rule, but dependent on users following the protocol.”
DANNEN, supra note 28, at 3: “In Ethereum, the protocol is designed for building decentralized
applications, with emphasis on rapid development time, security, and interactivity.”
See id. at 51. Smart contracts are therefore not necessarily contracts in the legal sense.


And anyone can upload a program onto this platform and leave it to self-execute
securely.65 This is permitted by the fact that Ethereum implements a programming
language called Solidity66, making it a “fundamental underlying infrastructure
platform that can run all blockchains and protocols, rather like a unified universal
development platform.”67 And Bitcoin also allows for the creation of token that
represents a wide range of valuable assets by using Color Coin.68 And new
decentralized file-sharing protocols69 enable “people to store files on a peer-to-peer
network and control access to those files using smart contracts, creating new tools
to build robust and complex decentralized applications.”70

On the basis of these applications running on blockchain, a distinction is to be

made between three generations of blockchain. The first, blockchain 1.0, is a
currency, which includes “cash, such as currency transfer, remittance, and digital
payment systems.”71 The second, blockchain 2.0, is a contract, including “stocks,
bonds, futures, loans, mortgages, titles, smart property, and smart contracts.”72 All
blockchains allowing applications dealing with these activities are included in this
category. The third, blockchain 3.0, includes all “applications beyond currency,
finance, and markets—particularly in the areas of government, health, science,
literacy, culture, and art.”73

Blockchain 1.0 is fairly stand-alone, but analyzing blockchain 2.0 and 3.0
implies to understand what exactly are decentralized applications (Daaps),

FILIPPI & WRIGHT, supra note 16, at 28: “Ethereum also implements a Turing-complete
programming language called Solidity, which makes it possible for anyone to write smart contracts
and deploy decentralized applications. With Solidity, it is theoretically possible to execute a range
of complex computations on a peer-to-peer network.”
SWAN, supra note 4, at 21.
FILIPPI & WRIGHT, supra note 16, at 30: “For example, protocols such as Color Coin enable
parties to use the Bitcoin network to create tokens that represent a range of valuable assets. Using
the Color Coin protocol, parties can send a transaction for a nominal amount of bitcoin (or another
digital currency) and append some metadata to the transaction to indicate that the transaction in
fact represents the transfer of a tangible or digital asset, such as a stock certificate, a title to a
copyrighted work, or a vote.”
TAPSCOTT & TAPSCOTT, supra note 65, at 222: “Just as the blockchain protocol is distributed,
a distributed application or DApp runs across many computing devices rather than on a single
server. This is because all the computing resources that are running a blockchain constitute a
computer. Blockchain developer Gavin Wood makes this point describing the Ethereum blockchain
as a platform for processing.”
FILIPPI & WRIGHT, supra note 16, at 30: “More ambitiously, new decentralized file-sharing
protocols enable people to store files on a peer-to-peer network and control access to those files
using smart contracts, creating new tools to build robust and complex decentralized applications.
Because the Bitcoin blockchain can only store a limited amount of information per transaction, and
because the Ethereum block- chain charges for each computational step in a smart contract
program, it is often prohibitively expensive to build decentralized applications that rely on a
blockchain for file storage. New distributed storage platforms and content distribution services,
such as Swarm and Filecoin (powered by the IPFS protocol), are trying to address these limitations
to support more advanced blockchain-based uses.”
SWAN, supra note 4.
See id.
See id.


decentralized autonomous organizations (DAOs) and decentralized autonomous
corporations (DACs),74 and decentralized autonomous societies (DASs). They are,
in short, “a potential progression to increasingly complex and automated smart
contracts.”75 Dapp is an application that runs on the blockchain. Some expect,
someday, that Dapp will “become more widely used than the world’s most popular
web apps.”76 A DAO is a more complex form of a Daap with “a constitution, which
would outline its governance publicly on the blockchain, and a mechanism for
financing its operations,”77 while DACs are organized under another legal form.
Then come DASs which gather smart contracts and/or Daaps, DAOs and DACs.
They are called self-bootstrapped organization, a standalone entity with some
“standardized smart-contract, self-bootstrapping software to crowdfund itself
based on a mission statement; operate; pay dividends or other remuneration back
to crowdfunding investors; receive feedback (automated or orchestrated) through
blockchain prediction markets and decentralized blockchain voting; and eventually
dissolve or have periodic confirmation-of-instantiation votes (similar to business
relationship contracts evergreening or calling for periodic reevaluations).
Automatic dissolution or reevaluation clauses could be critical in avoiding
situations.”78 Of course, these different strata of smart contracts are increasingly
complex and will be of interest to antitrust law in the years to come.

In any case, all the major blockchain platforms, even the enterprise DLT
systems like Corda79 and Hyperledger80, are open source or offer an open source
version. This allows for forking by those who disagree with the direction taken by
the platform, which is an important check on market power. At this stage, it seems
unlikely that a closed-source blockchain platform - in which the code isn’t public -
would succeed,81 but there is no reason the software has to be open source.82
However, because this software is yet to be created, our analysis will mostly focus
on blockchain platforms.

Part of the “blockchain community” opposes this label, see RAVAL, supra note 22, at 13:
“Decentralized Autonomous Corporations. This one is controversial. Some think that this shouldn’t
even be a phrase because the word corporation is derived from the legacy system of legal contracts
and hierarchical centralized control from which we are trying to evolve.”
SWAN, supra note 4, at 23.
RAVAL, supra note 22, at 1: “Dapps are just now gaining media coverage but will, I believe,
someday become more widely used than the world’s most popular web apps.”
SWAN, supra note 4, at 24.
SWAN, supra note 4, at 25.
It is what intranet is to internet.
For a more detailed analysis of this, see Kevin Werbach, THE BLOCKCHAIN AND THE NEW



The competition between platforms such as Google, Facebook, Uber and

Amazon is often discussed. The one between blockchains will very soon be a topic
of great interest. At this stage of the technology’s development, the robustness of
the network effects created by it must be assessed in order to evaluate the extent to
which dominant positions will be maintained — this is competition between
blockchains (1). But also, by eliminating middle firms, blockchains will soon
compete with existing platforms that do not use blockchains — this is competition
between blockchain and non-blockchain platforms (2).


The various forms of blockchain are already the subject of an economic war
set to determine which model will be the most prosperous. This raises the question
of competition between blockchains and, in fact, of the robustness of their dominant
positions. We focus this section on the issue of network effects that appear to be a
strong explanation of how blockchain will maintain a dominant position. For that
purpose, we will answer these two questions: can blockchains benefit from network
effects? Is the agglomeration effect of users different on the blockchain than it is on
other kinds of platforms?

Network effects are often used in the literature on digital sectors.83 They are
twofold - direct or indirect - the idea being that the more a technology is used, the
more new users are encouraged to join the group.84 This is a fairly classic mass
effect that is also described as the Metcalfe’s Law in the context of information
technology according to which the value of a network is approximately proportional
to the square of the number of users (people plus machines) that are connected to
it. When reaching a certain number of users, “the value exceeds the cost for the
majority of potential users, and they start multiplying rapidly, increasing the value
in total, and to other individual users.85 That number effect is also described by the
“Aggregation Theory”86 based on which “consumers are attracted to an aggregator
through the delivery of a superior experience.”87 The idea of experience here is
added to the simple mass effect. So does the blockchain, thanks to its intrinsic
qualities, allow network effects to be limited in time?88 Is blockchain the “most

Showing how network effect can positively and negatively affect social welfare, see Michal
S. Gal, The Power of the Crowd in the Sharing Economy, LAW AND ETHICS OF HUMAN RIGHTS
(Forthcoming, 2018).
Also, on blockchain, as on current platforms, “reputation has emerged as one of the most vital
facets of competition in many modern markets,” for more on that see John M. Newman, Complex
Antitrust Harm in Platform Markets, CPI (2017).
MULTISPEED WORLD (Picador, 2012).
Ben Thompson, Antitrust and Aggregation, STRATECHERY (April 26, 2016)
See id.
See generally David S. Evans & Richard Schmalensee, Debunking the ‘Network Effects’


viable way out from the antitrust trap created by Aggregation Theory”?89 That is
very likely90 and if that were to be the case, “New Googles” will soon be created.
We will explain.

With blockchain, the data is public and shared by the distributed ledger system.
This structure is opposite to the client-server platforms as we know it, whose results
are an acceleration of the competitive process to the extent that it creates an
incentive to share information about the blockchain in order (i) to make it effective
against third parties and (ii) to encourage other users to share information (sense of
community).91 In the words of Fred Ehrsam, “while some blockchain-based data
will be encrypted and private, much of it will also be open out of necessity…this
open data has the potential to commoditize the data silos most tech companies like
Google, Facebook, Uber, LinkedIn, and Amazon are built on and extract rent from.
This is great for society: it incentivizes the creation of a more open and connected
world. And it creates an open data layer for AIs to train on.”92

The incentive system of public blockchain also creates a strong incentive to

join it as soon as possible, contrary to what happens on digital platforms as we know
them today. It results in a weakening of these platforms against blockchains whose
users have an interest in quickly joining the community — and not only once the
network effect is created. This difference between “network effects” and “token
effects” (network effects on blockchain) also lies in the fact that tokens help
“overcome the bootstrap problem by adding financial utility when application
utility is low,”93 as it is summarized in the following figure:94

Bogeyman, 40 REGULATION 36 (2018).
Rhys Lindmark, Macro Blockchain #1: The End of Aggregation Theory, TOKEN ECONOMY
(June 6, 2017).
See Neil Gandal & Hanna Halaburda, Can We Predict the Winner in a Market with Network
Effects? Competition in Cryptocurrency Market, GAMES (2016): “While Bitcoin essentially
dominates this market, our data suggest no evidence of a winner-take-all effect early in the market.”
Also, Abeer ElBahrawy, Laura Alessandretti, Anne Kandler, Romualdo Pastor-Satorras & Andrea
Baronchelli, Evolutionary dynamics of the cryptocurrency market, R. SOC. OPEN SCI. (2017).
As underlined by Eric Posner, Marx and Weber have argued that market—or, capitalism—
undermines community, see Eric A. Posner, LAW AND SOCIAL NORMS 221 (Cambridge, MA: Harvard
University Press, 2009). Blockchain, which is driven by capitalism, proves this analysis to be
Fred Ehrsam, Blockchains are a data buffet for AIs, MEDIUM (March 6, 2017).
Chris Dixonn, Crypto Tokens: A Breakthrough in Open Network Design, MEDIUM (June 1,
Which is more than partially inspired by Chris Dixonn, see id.


In fact, token effects sort out the bootstrapping problem by creative different
sorts of incentives.95 Initial Coin Offerings96 are one of them because they drive the
buyers to make the blockchain prosper97 in order to make their tokens valuable.98
Other blockchains give away tokens,99 which is called an “airdrop.”100 We can
imagine all kinds of conditions to get these tokens for free: the creation of an
account via a social network101 in order to share some information as the contact

For instance, Steemit - a decentralized Reddit-like token network - makes payments to users
who post and upvote articles.
Paul Vigna, What’s an Initial Coin Offering? ICOs Explained in 11 Questions, WALL STREET
JOURNAL (October 2, 2017)
explained-in-11-questions-1506936601. Christian Catalini & Joshua S. Gans, Initial Coin Offerings
and the Value of Crypto Tokens (2018), explaining why “ICO mechanism allows entrepreneurs to
generate buyer competition for the token, which, in turn, reveals consumer value without the
entrepreneurs having to know, ex ante, consumer willingness to pay.”
For “a taxonomy of initial coin offerings,” see Dirk Zetzsche, Ross P. Buckley, Douglas W.
Arner & Linus Föhr, The ICO Gold Rush 6 (2018).
But see Christian Catalini & Catherine Tucker, Seeding the S-Curve? The Role of Early
Adopters in Diffusion 1 (2016): “We then show not only that natural early adopters are more likely
to reject the technology if they are delayed, but that this rejection generates spillovers on adoption
by their peers who are not natural early adopters.”
For instance, Mstoken, Bethereum, Sharelectric, Xriba, ConcertVR, Blockport, Wr, Articlex. For
more details see What new ICOs are giving away free tokens right now?, QUORA. To track them, see See also VIGNA & CASEY, supra note 22, at 103: “Brave’s model included a
token-issuance strategy for dealing with that challenge. It set aside a 300 million–strong “user growth
pool” to attract new users. There’s a plan, for example, to deliver a small amount of BATs to the
integrated Brave wallet whenever there’s a unique new download of the browser. In this way, the token
is designed as a tool to bootstrap adoption, to foster network effects.”
This is also called “coin drop,” see SWAN, supra note 4, at 73.
See for instance or


list, proof of the possession of other tokens,102 for example, which may possibly
create anti-competitive concerns. And the amplitude of token effects is shown by
Michael Porter’s Five Forces Framework103 which determines the competitive
structure of an industry:

Three of these forces (substitute products or services, established rivals, new

entrants) result in horizontal competition while the other two (the bargaining power
of suppliers and the bargaining power of customers) produce vertical competition.
Token networks line up users to work together toward a common goal — the growth
of the network and the appreciation of the token. Because public blockchains are
horizontal, vertical forces are eliminated from them.

In short, blockchain greatly diminishes the aggregation effects and sort out - at
least - two of Porter’s forces. For that other reason, blockchain could set up new
rules in terms of competition. Maybe it also explains why public-ledger currencies
are extremely volatile. For instance, it has been said in 2014 that Bitcoin was “more
than 18 times more volatile than the euro.”104 We may thus wonder about the
stability of crypto-currencies, and more generally, about the stability of blockchains
in terms of use and utility. Potentially, the intrinsic characteristics of blockchain, as
previously presented, will cause token effects to be created even faster than network
effects but they also will disappear faster. Will the blockchain lead to a new era of
“serial monopolies”? It is likely, unless “time consistency”105 is integrated within
the technology in some way.
See for instance Pioneer Badge which requires ERC20 tokens (based on Ethereum)
Michael E. Porter, How Competitive Forces Shape Strategy, HARVARD BUSINESS REVIEW
David S. Evans, Economic Aspects of Bitcoin and Other Decentralized Public-Ledger
Currency Platforms (Coase-Sandor Inst. for Law & Econ. Working Paper No. 685, 2014). More
generally on Bitcoin, see also June Ma, Joshua S. Gans & Rabee Tourky, Market Structure in Bitcoin
Mining (Forthcoming, 2018).
SCHREPEL, supra note 12.



The competition that blockchain will cause to traditional platforms106 due to

the “token network effect” is reinforced by the fact that this technology tends107 to
eliminate middle companies.108 In the words of Vitalik Buterin, “blockchains will
drop search costs, causing a kind of decomposition that allows you to have markets
of entities that are horizontally segregated and vertically segregated.”109 It is then
expected that competition will shift on end users, putting into great danger much of
the big tech that we know,110 starting with Facebook, Twitter, Google, AirBnB,
Uber, Amazon, eBay and so on, as they play the middle firm in these transactions.
Middle firms have existed throughout history. The Internet gave rise to central firms
playing and blockchain could lead to a reduction in their usefulness by helping “self
sovereign identity”111 to become mainstream. Instead of “Login with Facebook,”
you may one day “Connect with Bitcoin.”112

Blockchain could indeed help to make our data, which is currently stored on
platform servers such as Facebook, Google, etc., stored in our own personal
blockchain and users would then make a secure transaction without the traditional
institutions we rely on to build trust.113 There will be potentially a scenario where
“no intermediary brokered the deal; no social-media network captured the data
from my transaction to better target its advertising; no credit bureau tracked the

Darcy WE Allen, Chris Berg & Mikayla Novak, Blockchain: An Entangled Political
Economy Approach 13 (2018): “The potential significance of crypto-entities from an entangled
political economy perspective cannot be understated. The blockchain enables virtual start-ups and
open-source enterprises to directly compete with entrenched, conventional-economy incumbents
with inflated transactions costs and locked-up rents.”
Although some intermediaries will remain, see FILIPPI & WRIGHT, supra note 16, at 8: “Even
though blockchains create increasingly autonomous and potentially lawless systems, there are still
means to shape and control their use and deployment. Blockchains may reduce the need for
intermediaries, but they are unlikely to eliminate them altogether.”
TAPSCOTT & TAPSCOTT, supra note 65, at 54, quoting an interview with Vitalik Buterin,
September 30, 2015: “Instead of putting the taxi driver out of a job, blockchain puts Uber out of a
job and lets the taxi drivers work with the customer directly.” For a contrary opinion, see Derek
Bambauer, Middleman, FLA. L. REV FORUM 65 (2013):1–4, quoting The Who: “Meet the new boss,
same as the old boss.”
See id. at 183, quoting an interview with Vitalik Buterin, September 30, 2015.
Vitalik Buterin recently confessed, “I don’t trust governments and large corporations,”
REDDIT (May 2018)
Alex Preukschat, Self Sovereign Identity — a guide to privacy for your digital identity with
Blockchain, MEDIUM (January 11, 2018)
This is what offers BitID, “a decentralized authentication protocol that takes advantage of
Bitcoin wallets as a form of identification and QR codes for service or platform access points. It
enables users to access an online account by verifying themselves with their wallet address and uses
a mobile device as the private-key authenticator,” see SWAN, supra note 4, at 35.
On that, see also RAVAL, supra note 22, at 26: “Due to the recent advancements in cryptography,
a lot of the solutions have been ‘assume a public-key infrastructure.’ Basically, assume that people
would be willing to store a private key safely and identity will be decentralized. Only those with the
keys would have access to it. BitAuth is a good current example of this.”
TAPSCOTT & TAPSCOTT, supra note 65, at 257.


activity to build a portrait of my financial trustworthiness.”114 Social media, for
instance, would then hold the data it generates itself thanks to the use of its service,
and users would be in possession of the data they decide to bring: photos, status and
all sorts of information… If that were to happen, blockchain would become the
platform which would greatly diminish the power of existing platforms and would
create a real competition on the platform rather than for the platform.


Blockchain poses a characterization problem: first, it complicates the

characterization of dominant positions (1), and second, it complicates the
attribution of liability for anti-competitive practices (2). In fact, European
competition law is notably built on the premises of the Sherman Act which itself
finds its origin in a desire to fight against trusts. When these trusts give way to
anonymous communities,115 the following question necessarily arises: is
competition law just a passing fad in history?116


Defining relevant markets is sometimes tricky with high-tech markets. This is

especially true where services are “offered” to the users, at least, where they are
“zero-price markets.”117 As a result, the definition of the relevant market seems to
have become a legal deception. It has become hard to imagine that a competition
authority would withdraw its investigation against some Internet giants based on
the ground that they do not hold a dominant position. And yet, the relevant market
must be properly defined so that only the practices of dominant companies will,
eventually, be sanctioned.

As a matter of fact, blockchain raises important questions about what exactly

is a dominant position. And because decentralized organizations are not recognized
as legal entities,118 a first question arises: can a nonentity hold a dominant position?
Can blockchain create a “monopoly without a monopolist”?119 And how to address
whether a blockchain is dominant, and if it is, which users and/or entities hold that
dominant position? Depending on the way chosen to characterize a dominant
position, liability will be assigned in different ways. In fact, to draw on an analogy

Steven Johnson, Beyond the Bitcoin Bubble, NEW YORK TIMES MAGAZINE (January 16, 2018)
But let’s note that “with the original Internet: Everyone was an invisible man” as well, see
LESSIG, supra note 5, at 38, adding that “as cyberspace was originally architected, there was no
simple way to know who someone was, where he was, or what he was doing. As the Internet was
originally architected, then, there was no simple way to regulate behavior there.”
“Antitrust Law RIP (1890 - 2030)”…
John M. Newman, Procompetitive Justifications in Antitrust Law, 48 IND. L. J. (forthcoming
FILIPPI & WRIGHT, supra note 16, at 143.
Gur Huberman, Jacob D. Leshno & Ciamac C. Moallemi, Monopoly without a Monopolist:
An Economic Analysis of the Bitcoin Payment System (2017).


with what we already know for a fact, an entity that holds a dominant position is
fully liable for the practices implemented within it — except for subsidiaries,
although the liability goes back to the parent company level. The same is true for
blockchains: the way in which the dominant position will be characterized will
entail the liability. One can then argue the necessity of adopting the “nearest person
theory” and assume that the creator(s) of the blockchain should be held (jointly)
liable for the practice. Alternatively, users of the blockchain could be held liable for
the practices committed on it. Another way is to fine the blockchain organization
itself. Several options are to be studied in this regard. Most of them dedicate
technologically distinct definition of the market, they help to understand how the
market can be divided between blockchains. It is understood that other markets -
outside the blockchain - will have to be possibly integrated on a case-by-case basis.

The first would be to consider that all blockchains hold a dominant position in
themselves. Each blockchain - as a ledger on which transactions are registered -
would then constitute a relevant market, excluding all of the issues related to the
characterization of dominance. If this were to be the case, all of the blockchain’s
users should be considered as co-holders of this dominant position. Accordingly,
the liability for anti-competitive practices would fall on all of them — creating an
inseparable whole. It would otherwise be illogical to consider that they altogether
hold a dominant position but that the abuse of this position is only attributable to a
fraction of them. But to retain such a market definition would considerably reduce
the incentive to use blockchains as the users could be held liable for practices they
that have no idea about. It would be a bit like condemning all companies using a
platform, regardless of their involvement in the platform’s practices, or, to treat a
single brand as a product market.120 For that, such a hypothesis must be discarded.

A second option would be to evaluate the power of blockchains based on the

number of users. In this scenario, blockchains with the most users would be seen as
being dominant, independently of the applications running on them. This poses a
problem in terms of blockchain interchangeability, but also, it necessarily implies
the dominant position to be characterized by the users themselves. It follows that
the liability for anti-competitive practices would fall on all of them — holding the
dominant position by their number. But can the dominant position be characterized
by all of the blockchain users although they are distinct entities? Can an analogy be
drawn between blockchains and the collective dominant position? This would solve
the issue relative to the fact that blockchain isn’t an entity, and yet, the possibility
must be ruled out. Case laws teach us that although article 102 TFEU expressly
condemns the abuse of a dominant position by “one or more undertakings,”
collective dominance implies the finding of economic links between undertakings
enabling them to adopt the same line of action on the market.121 Such link doesn’t
exist on blockchain, in fact, a tiny fraction of users are interacting with another tiny

The Supreme Court’s Kodak decision being the exception here, see Berkey Photo v. Eastman
Kodak, 603 F.2d 263 (2d Cir. 1979).
Case C-68/94, France v Commission, Case n° C- 68/94 and C-50/95 [1998] ECR 1-1375.


fraction of users — when they are co-contractors. Other users, still a tiny fraction
of them, verify the authenticity of the transaction. The way the blockchain operates,
therefore, does not allow us to characterize a real link between users. Finally, it
should be noted that the notion of collective dominance is applied to oligopolies,
and that a blockchain with several hundred users is anything but the member of
such an oligopoly. This characterization of dominance must therefore be rejected.

A third option would be to evaluate the power of blockchains based on the

number of recorded transactions, the revenues (which is linked to the number of
transactions) or the number of blocks, without any other referent. In terms of
liability, if blockchains are seen as being dominant based under this standard, they
would be entirely liable for all of their users’ practices, which would be problematic
in terms of causation.122 In fact, most of the foundations who introduced
blockchains have interests that are decorated with it over which they have no
control. And once again, such a hypothesis has an inherent flaw because
blockchains with similar numbers of transactions are not necessarily
interchangeable if they do not allow the same services. For these reasons, this third
option must be rejected.

A fourth option would be to evaluate the position based on the respective

market power of the users on the blockchain. If that were to be the case, it would
then be possible to consider that only these users will hold dominance via the
blockchain, and therefore, that only the latter could be found liable of abusing the
dominant position. Such a hypothesis would have the advantage of preserving the
interest of other users to use the blockchain as well as to reinforce the incentive of
these dominant users to ensure the good conduct of the blockchain — which
corresponds to the “proof of stake” consensus. But if that were to be the case, the
market definition won’t be linked to the technology of blockchain but to all different
sorts of external markets. Indeed, the market power of each of the blockchain users
in their respective markets would be the decisive element. This possibility must be
ruled out because it would make the assessment of market power extremely
complex and, above all, would greatly reduce the legal certainty of users who would
logically ignore such information - if only because the market shares of other users
are very difficult to assess, but also because the anonymity of users can create a
barrier to access this information.

A fifth option would consist of evaluating the dominance of blockchains based

on their type of governance. Accordingly, public blockchains would compete with
one another while private blockchains would compete on a different market. But this
option is not to be further considered. An open-source platform can compete with a
proprietary platform, and for the same reason, a private blockchain can compete with
a public blockchain. And the same could be said of evaluating the dominance of

Jeff Miles, Principles of Antitrust Law (2016)
uthcheckdam.pdf. See also Hanns A. Abele, Georg E. Kodek & Guido K. Schaefer, Proving
Causation in Private Antitrust Cases, 7 J.C.L.& E. 847 (2011).


blockchains based on the type of consensus. It only has the merit of showing the need
to take into account the type of service provided by the blockchain.

A sixth and final option is the only viable solution that we can think of.
Following it, market power would be evaluated based on the type of applications
that run on the blockchain.123 This would allow for differentiation between
blockchains which often have similar characteristics which make them
interchangeable. This option also has the advantage of indirectly taking into account
the type of blockchain - public or private - to the extent that different types of
services are generally offered on the latter. The type of blockchain (1.0, 2.0 or 3.0)
which are different strata of smart contracts124 will also be at the center of this
market definition. And such a market definition would allow us to take the dual
nature of the market125 into account by analyzing the functioning of applications.

Blockchain power would then be evaluated according to the applications they

allow. A distinction to be made would be whether blockchain does or does not
compete with another technological way, or, even a hard copy way of achieving the
same end result. If that is the case, blockchain would be integrated into a wider
market - as is the case, for example, of online sales which can be integrated into the
general sales market (including physical sales). This would address the issue of
what are reasonably effective substitutes. In other words, it is a question of
incorporating a rather classical definition of relevant product markets. Similarly to
what the European Commission points out in the Google decision, “for the purposes
of investigating the possible dominant position of an undertaking on a given
product market, the possibilities of competition must be judged in the context of the
market comprising the totality of the products or services which, with respect to
their characteristics, are particularly suitable for satisfying constant needs and are
only to a limited extent interchangeable with other products or services.”126
Characterizing a dominant position this way would make it possible to retain
liability only for users who offer or run or use the application that has been the
subject of anti-competitive practices on the blockchain. Only the users who would
implement the practices - whether by programing the blockchain or using it - would
be held accountable.

A distinction would be further made on whether the blockchain allows the realization of a
service taking place outside of the technology, or whether it provides a service within the blockchain.
In the first case, it will have to be determined whether blockchain can be integrated into a wider
market - as it is the case, for example, with online sales that can be integrated into the general sales
market (including physical sales). In the second case, only competition between blockchains will
have to be evaluated.
Namely smart contracts, Daaps, DAOs, DACS, DASs and DASs, see supra FROM
BLOCKCHAIN 1.0 TO BLOCKCHAIN 3.0. For a distinction between strong and weak smart contracts -
“as defined by the costs of their revocation and modification” - see Max Raskin, The Law and
Legality of Smart Contracts, 1 GEO. L. TECH. REV. 305 (2017).
Jean-Charles Rochet & Jean Tirole, Platform Competition in Two-Sided Markets, 4 J. EUR.
ECON. ASS’N 990 (2003).
Case COMP/39.740—Google Shopping (June 27, 2017), 145


But there still remains the question of which elements to take into account in
order to evaluate the power between blockchains running the same type of
applications: the number of users, the number of transactions recorded, the number
of blocks, the revenues, etc. In the Google decision, the European Commission “has
used market shares by volume as a proxy for four reasons. First, market shares by
value cannot be computed because general search services are provided free of
charge to the user. Second, despite its best efforts, the Commission has been unable
to obtain precise and verifiable values regarding the Revenue Per Search (“RPS”) of
the main general search services. Third, advertisers look at usage shares when
deciding where to place their search advertisements. Fourth, […].”127 But are these
reasons true and applicable for all blockchains? This remains to be seen based on how
blockchains will evolve and the use that would be made of it. In fact, the answer to
that question is probably negative. Everything thus suggests that different elements
will have to be taken into account on a case-by-case basis, sometimes, the number of
users in combination with the revenues, some other times, the number of users with
the number of transactions... In short, establishing a methodology would be ideal in
so far as it would increase legal certainty, but it is not said that this is possible. And
finally, the question of the geographical dimension will have to be addressed. The
language used on blockchain is universal, but some applications may be focused on
a local market, the reasoning for why a positive answer seems to be the given.


This section focuses on unilateral practices which are directly related to

blockchain.128 Practices that originate outside129 a blockchain, such as the
imposition of unfair terms by smart contract130 or the tracking of products,131 are
not dealt with because they do not pose the same degree of difficulty and because
they are too numerous to be studied in a single article. Still, two questions remain:
(i) does blockchain help practices that we already know and (ii) does it cause the
appearance of new practices that are directly related to it.

The answer is positive on both counts. Blockchain may help vertical

agreements to be coupled with discriminatory practices inducing horizontal

See id. at 275.
We exclude cartel from our analysis, on that topic, see Lin William Cong & Zhiguo He,
Blockchain Disruption and Smart Contracts 1 (2018): “Smart contracts can mitigate informational
asymmetry and improve welfare and consumer surplus through enhanced entry and competition, yet
the distribution of information during consensus generation may encourage greater collusion.”
On how to use the blockchain for assets which exist outside the blockchain itself, see Chris
Reed, Uma M Sathyanarayan, Shuhui Ruan & Justine Collins, Beyond BitCoin—legal impurities
and off-chain assets, 26 INT’L JL & INFO TECH 160 (2018).
On smart contracts, see Kevin D. Werbach & Nicolas Cornell, Contracts Ex Machina, 67
DUKE L.J. 313 (2017). For a “natural functional definition of smart contracts,” see Lin William
Cong and Zhiguo He, defining them as “digital contracts allowing terms contingent on decentralized
consensus that are tamper-proof and typically self-enforcing through automated execution,”
Blockchain Disruption and Smart Contracts 9 (2018).
On that issue, see VIGNA & CASEY, supra note 22, at 148, “Tracking the Stuff We Make”.
Tracking could be used to ensure compliance with a fixed price, for example.


distortions. Exclusionary practices may also be combined with abusive practices

where a private blockchain discriminates amongst its users. Some users may be
banned from accessing the technology. We will discuss these different risks through
three competitive issues: one related to practices of exploitation, another one
focused on the risks of exclusions and the last one based on competition between
blockchains. We will distinguish between public and private blockchains.

And let’s recall that private blockchains have a governance132 design which
allows the blockchain to be piloted, unlike public ones, meaning that there is no
real possibility of implementing unilateral strategies on public blockchains as of
today. As things stand, the possibility of later committing anti-competitive practices
is to be embedded in public blockchains from the creation. But because all
blockchains are currently working on the introduction of sophisticated governance
systems, 133 our study takes a step ahead of the technology and describes strategies
that will be implemented on public blockchain as well once new governance
systems will be generalized.134 And indeed, different types of governance will be
implemented. TheDAO135 is a good example of a blockchain with programmable
organizational governance.136 Some will be flexible and will allow the governance
to be changed very easily. On the contrary, other governance designs will be much
stricter and will not permit any kind of modifications. And governance could also
be entrusted to artificial intelligence,137 which would create new issues. This is to
be closely watched.138

Vitalik Buterin, Notes on Blockchain Governance, VITALIK BUTERIN’S WEBSITE (December
17, 2017) “people who think that the purpose of
blockchains is to completely expunge soft mushy human intuitions and feelings in favor of completely
algorithmic governance (emphasis on “completely”) are absolutely crazy.”
See Fred Ehrsam, Blockchain Governance: Programming Our Future, MEDIUM (November
27, 2017)
c3bfe30f2d74. Also, Vlad Zamfir, Against on-chain governance, MEDIUM (December 1, 2017), and lastly,
Vitalik Buterin, Notes on Blockchain Governance, VITALIK BUTERIN’S WEBSITE (December 17,
So far, blockchains are “managed primarily by distributed consensus—using smart contracts
to aggregate the votes or preferences of token holders,” see FILIPPI & WRIGHT, supra note 16, at
TheDAO is a participatory investment fund operating on the Ethereum. It takes the name of
DAO (“decentralized autonomous organization”) but it must be distinguished from it.
FILIPPI & WRIGHT, supra note 16, at 138: “TheDAO represented the first signifficant
experiment with programmable organizational governance. Following the example of TheDAO,
other blockchain-based organizations have emerged—including and MakerDAO—which
operate using a consensus-based governance model.”
Melanie Swan describes blockchain as a “path to artificial intelligence,” see SWAN, supra
note 4, at 26. She contends that “blockchain technology facilitates the coordination and
acknowledgment of all manner of human interaction, facilitating a higher order of collaboration
and possibly paving the way for human/ machine interaction. Perhaps all modes of human activity
could be coordinated with blockchain technology to some degree, or at a minimum reinvented with
blockchain concepts,” see SWAN, supra note 4, at 27.
FILIPPI & WRIGHT, supra note 16, at 140: “Questions thus emerge as to whether decentralized
organizations will op- erate with the same degree of efficiency, or even comparable efficiency, as
more hierarchical organizations. Thee social friction caused by democratic processes may
ultimately hobble these organizations, limiting their ability to generate social and economic gains.”


For the time being, the table (below) helps to identify which kinds of practices
will be the most likely to occur. It will have to be revised depending on the evolution
of the blockchain in years to come, but can nonetheless be used as a first canvas.
Blockchain poses new challenges that should not be used as an excuse - the
“blockchain excuse” - for regulating all the practices that are perpetrated on it
despite creating a real competitive risk. Here is our best estimate that the following
practices will soon appear:

For all these practices, damage to the consumer will have to be proven on a
case-by-case basis. The latter cannot be presumed. And let’s keep in mind that all
practices - whether anti-competitive or not - perpetuated on blockchains are public
and visible by all,139 which we call the “visible effect.”140 That is true for public
blockchains and could be true for private blockchains as well, unless they are
designed otherwise141. Because of that, we have reason to believe that the overall
level of unilateral practices may be lower on blockchains than on other tech
markets, precisely because blockchain bring transparency in some aspects. As

Most of the data put in the blockchain is encrypted so that only people with the right keys can
decrypt it. However, the “visible effect” remains the rule and the protocol design is visible by all.
Therefore, when anti-competitive practices are set up in the blockchain, that information is visible.
Only the manifestation of that practice may be encrypted.
Here is an example with a random wallet address, showing how easy it is to check up every
incoming and outgoing transaction from a known wallet:
Privacy blockchain based cryptocurrencies widely use "Zero knowledge proof," which
provides trust. Trust in the system is also granted by the fact that transactions are visible by all. The
more there are, the more trust there is in the blockchain and the more its utility rises. It is thus not
certain that private blockchains will, in the future, make transactions non-visible.


stated by Sun Tzu, “what is of supreme importance in war is to attack the enemy’s
strategy.”142 If that strategy is known by all, it necessarily reduces the incentive to
implement it in the first place. And yet, an automatic pass should not be granted as
some of these practices are to be expected nonetheless.

In order to study what practices will most certainly be implemented, let us

imagine a hypothetical example that will serve as a reference along the following
developments. In it, a company - named X - which is operating on a tech market
decides to diversify its activities and create a private blockchain to do so. The
blockchain is designed so that X can choose which users may access the blockchain,
which operations they can perform on it, the cost of latter, etc. X also has the power
to change these settings at any given time. To generate revenue, X has developed a
new professional social network - called TrustJobs - that operates on top of its
blockchain. Some users post job offers and others apply to them. At each stage of
the recruitment process, a smart contract is operated and recorded on the
blockchain, whether it is the first interview with the HR department, the second
with the General Director, the sending of an offer to the candidate, the refusal or
acceptance of this offer. Everything is automated, making it very convenient for
companies, but of course, the registration of each of these transactions has a cost
that users looking for a candidate pay in the form of tokens. After a while, this
application encounters a great success and X realizes that some of its competitors
are using it to recruit candidates that will enable them to reduce X’s market shares
on its main activity outside the blockchain. In reaction, X may compete on the
merits or implement an anti-competitive strategy.

• Exclusionary abuses

Access to the blockchain

1. Refusal to deal.143 Related practices consist in a monopolist’s refusal to do

business with a rival. Refusal to deal is a common practice outside of the
blockchain. It is expected to be rarer on blockchains, at least, as far as public
blockchains are concerned. Indeed, a refusal to grant access to the blockchain would
have to be implemented in the governance design, which, by definition, is made to

Sun Tzu, THE ART OF WAR 25 (Wordsworth Editions, 1997), dating from the 5th century BC.
For a general view on refusal to deal:
On the European part, see C-7/97 Oscar Bronner v Mediaprint, EU:C:1998:569; Case T-374/94
European Night Services, EU:T:1998:198; T-301/04 Clearstream / Commission
ECLI:EU:T:2009:317. Refusing to provide access to a facility is abusive if it is likely to eliminate
all competition on the secondary market; if access is indispensable for entering the market in
question, and if access is denied without any objective justification.
On the US part, see United States v. Terminal Railroad Ass’n, 224 U.S. 383 (1912); Verizon
Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. (2003) in which the court
has suggested that a refusal to deal motivated solely by a desire to eliminate competition, with no
other purpose, might constitute illegal monopolisation. To establish liability under the essential
facilities doctrine, a plaintiff must show that the monopolist hold a control of the essential facility,
its inability to duplicate the essential facility; the denial of use of the facility and the feasibility of
providing access to the facility.


allow public access. The participation in the consortium is free within
permissionless blockchains, as is the procedure for setting the relevant standard.
The same is true for semi-private blockchains which are run by a single company
that grants access to all users who qualify. No user picking is directly possible; it
can only be made when setting up the access rules. Therefore, such a strategy goes
against what we call public blockchains, and if it were to be implemented, it will
not be a public blockchain anymore.

On the other hand, refusal to give general access is one of the characteristics of
private blockchains.144 Within private blockchains - let’s call them permissioned
blockchains here145 - users can restrict who can enter the blockchain and who can
create smart contracts on it. Going back to our TrustJobs example, X may refuse
the access to Y and Z which are its main competitors. And in fact, this access
problem can be divided into several subcategories: a company can be prevented
from reading the information on the blockchain, from proposing new transactions
on it or from validating the blocks. As is explained by IBM, “a private blockchain
network requires an invitation and must be validated by either the network starter
or by a set of rules put in place by the network starter (…) The access control
mechanism could vary: existing participants could decide future entrants; a
regulatory authority could issue licenses for participation; or a consortium could
make the decisions instead.”146 Granting access to the blockchain can therefore
belong to different actors depending on the type of governance chosen.

We find here a similar problem to that of standard essential patents. Holders of

such patents are strongly encouraged to license them on FRAND terms so as to
avoid any breach of competition law. In Europe, the ECJ has held in Huawei v.
ZTE147 that the holder of a standard-essential patent that has committed to license
on FRAND terms may be found in breach of Article 102 TFEU when seeking an
injunction against a potential licensee in certain circumstances. In the United States,
the case law is more uncertain, but the FTC seems to hold a similar position to that
of the European Commission.148 One can therefore imagine the development of a

The refusal to grant access to the blockchain could be an abuse of dominant position if decided
by one company, but it could also be a cartel if the blockchain is run by a consortium.
FILIPPI & WRIGHT, supra note 16, at 31: “a number of alternative ‘permissioned’ blockchains
have emerged. These blockchains rely on a peer-to-peer network, but they are not open for anyone
to join. Rather, a central authority or consortium selects the parties permitted to engage in a
blockchain-based network, imposing limits on who can access or record information to the shared
database. Consortium members ultimately control membership, thus creating an environment where
each party on the network is known or somewhat trusted.”
Praveen Jayachandran, The difference between public and private blockchain, IBM (May 31,
Case C-170/13, Huawei v. ZTE, EU:C:2015:477.
See recently FTC v. Qualcomm, Case No. 5:17-cv-00220-LHK
For a contrary view, see Assistant Attorney General Makan Delrahim Delivers Remarks at the
USC Gould School of Law's Center for Transnational Law and Business Conference (November 10,
remarks-usc-gould-school-laws-center. See also Assistant Attorney General Makan Delrahim


similar case law in which private blockchain holders will have no choice but to
grant access to their blockchain on reasonable and non-discriminatory terms.

Accordingly, a firm that runs an essential private blockchain - a blockchain

whose access is crucial to offer a competitive service/product - might be prohibited
from setting terms, thereby creating an exclusionary effect. And indeed, where a
blockchain system is permission-based, its gatekeeper should consider whether
refusing access to third parties will be compliant with competition law.149 Although
the blockchain is not declared as essential to a standardization body - creating
therefore no formal obligation to grant access to the latter - a similar problem may
arise in practice. For instance, developers whose access to online stores is denied may
bring an action in violation of competition law. But then, which legality test would
apply in order to determine if refusing to grant access to the blockchain is illegal?

The as-efficient-competitor test is often applied for price-related practices.150 But

in addition to the intractable difficulties in determining what “efficiency” means, the
blockchain gatekeeper may not be actors on the market for which the blockchain has
been set up, he may in fact simply provide the blockchain for any sort of reason.
Therefore, how should we evaluate if the company excluded was as efficient? And if
the blockchain gatekeeper is indeed operating on the market and is more efficient
than all of its competitors, that situation would give him a free pass.

The no-economic sense test is the better suited to evaluate this practice. In
application of the latter, a practice may only be sanctioned if it tends to reduce or
eliminate competition and provide a benefit to the dominant firm solely because of
its tendency to reduce or eliminate competition. The test may also be adapted to study
technical issues such as the one that can occur on blockchain - this is the enhanced
version of the test that we have previously presented.151 Accordingly, if the judge
suspects that some of the effects created by the practice are pro and anti-competitive,
he must determine whether it is possible to distinguish between all the modifications
made to the product - here the blockchain and/or the smart contract152 - and each
economic justification. It makes it possible to evaluate the pro or anti-competitive

Delivers Keynote Address at University of Pennsylvania Law School (March 16, 2018)
address-university, calling for a “’New Madison’ approach to the application of antitrust law to
intellectual property rights” according to which “because a key feature of patent rights is the right
to exclude, standard setting organizations and courts should have a very high burden before they
adopt rules that severely restrict that right or—even worse—amount to a de facto compulsory
licensing scheme.” He adds that “consistent with the fundamental right to exclude, from the
perspective of the antitrust laws, a unilateral and unconditional refusal to license a patent should
be considered per se legal.”
Blockchain: Competition Issues In Nascent Markets, NORTON ROSE FULBRIGHT (November
See for instance Case C-413/14 P, Intel Corp. v. Comm’n, ECLI:EU:C:2016:788.
Thibault Schrepel, The “Enhanced No Economic Sense Test”: Experimenting With Predatory
Innovation, 7 N.Y.U. JOURNAL OF INTELL. PROP. & ENT. LAW 30 (2018).
On how to modify smart contracts, see Max Raskin, The Law and Legality of Smart Contracts,
1 GEO. L. TECH. REV. 305, 326 (2017).


nature of exclusion from the blockchain. For instance, if excluding one company
from the blockchain helps the consortium to operate more efficiently because that
company is involved in illegal activities, it would be deemed legal.

2. Tying/bundling. Tying practices153 consist in making the conclusion of

contracts subject to acceptance by the other parties of supplementary obligations that
have no connection with the subject of such contracts. Bundling consists of supplying
a product only in a bundle with one or more other products. As a matter of fact,
blockchain may be used to implement related strategies.154 Such strategies seem
unlikely on public blockchains for the following reason: in the absence of high
barriers to entry, tying can reduce the number of users. In other words, tied sales -
contractual ones - and the creation of network effects do not mix well. And public
blockchains are about creating a network effect (aggregation theory). Moreover, it
should be noted that no direct sales are made on public blockchains, they are only
recorded on them. To this extent, in the absence of a first sale, no other sale may be
linked. Finally, it should be noted how, for technical reasons, tied selling seems to be
unlikely on public blockchains because they would have to be implemented in the
governance design from start. With the modification of the governance design at a
later stage being difficult, it is unlikely that such a practice should happen.

On the other hand, private blockchains may, if created by for-profit companies,

have an interest in imposing tying or, at the very least, practices that respond to a
similar mechanism. This may be the case, for example, of a company that requires
an account on another platform in order to connect to its blockchain or to get
tokens.155 If we go back to our TrustJobs example, X may require to connect to its
application with an account created on the service it offers outside the blockchain.
Of course, this will be counterbalanced by the desire to create a network effect, but
this is necessarily more limited than it could be on a public blockchain. Tied sales
are therefore expected on private blockchains.156

For an overview of tying:
On the European part, the Commission lists four conditions in its guidance paper that must be
met for a finding of an infringement of article 102 in the case of tying. A dominant position must be
hold in the tying market; the tying and tied goods must be two distinct products; the tying practice
is likely to have a market-distorting foreclosure effect; and the tying practice must be not objectively
justified and must not generate overriding efficiencies. See, for instance, COMP/C-3/37.792—Sun
Microsystems, Inc. v. Microsoft Corp., Comm’n Decision (Apr. 21, 2004).
On the US part, although the Supreme Court traditionally held that tying is per se illegal under
section 1 of the Sherman Act. See for instance Jefferson Parish Hosp District No. 2 v Hyde. Lower
courts have started to apply the more flexible ‘rule of reason’, see for instance United States v.
Microsoft Corp., 253 F.3d 34, 68 (D.C. Cir. 2001). The Supreme Court decision, Illinois Tool Works
v Independent Ink, is more keen to adopt the rule of reason, however, “the general per se rule for
tying arrangements when market power is present very likely still survives,” according to Herbert J.
Hovenkamp, The Rule of Reason, 70 FLA. L. REV. 81, 96 (2018).
For more on bundling, see Nicholas Economides & Ioannis Lianos, Elusive Antitrust Standard
on Bundling in Europe and in the United States in the Aftermath of the Microsoft Cases, 76
ANTITRUST L.J. 483 (2010).
Kiran S. Desai, Blockchain and competition law, EY LAW ALERT (April 2018).
See supra note 96.
It will still be necessary to demonstrate the anti-competitive effect.


• Ejection from the blockchain: predatory innovation

1. Predatory innovation. Innovation is defined by the Oslo Manual as “the

implementation of a new or significantly improved product (good or service).”157
Accordingly, when the blockchain governance is modified,158 it could be seen as an
innovative practice — being a new product. Such a situation is similar to the one of
a software company uploading the new version of one of its products. And where
there is innovation, there is a risk of “predatory innovation” which we define as
“the alteration of one or more technical elements of a product to limit or eliminate
competition.”159 Predatory innovation takes the form of a real innovation - it’s a
new version of a product/technology - but is not. In short, predatory innovation
encompasses all anti-competitive strategies that, under the guise of being real
innovations, aim at eliminating competition without benefiting consumers or users.

In the words of Vitalik Buterin — Ethereum creator, “the consortium or

company running a private blockchain can easily, if desired, change the rules of a
blockchain, revert transactions, modify balances, etc.”160 This is predatory
innovation through blockchain. Such practices are expected to be more common on
private blockchain where a change in the rules is easy and does not require any
approval from the users. In fact, immutability is a characteristic that is shared only
among open decentralized peer to peer blockchains and it does not apply to private
blockchains. Accordingly, private blockchains can modify their governance design
anytime as they do not need to convince any user to adopt the change. Our TrustJobs
example helps to understand how X may modify its blockchain in order to eliminate
Y and Z which are its main competitors. And predatory innovation could be made
on public blockchains as well if the new governance design is adopted by a majority
of the miners. But this seems unlikely at this time, first, because any change to the
public blockchain governance design requires coordination and consensus among
all of the stakeholders,161 and second, because it is impossible to “replace” the
original blockchain.162 When it is done, a “hard fork” is created,163 a copy of the
ledger is made and miners switch their hardware (hashing capacity) to the new

OECD & Eurostat, OSLO MANUAL, Third Edition, 146 (2005)
ØSTBYE, supra note 62, at 5: “certain stakeholders may have a more influential roles than
others. As just explained, block-validators play such a role. There is a risk of concentration among
such validators, which increases their influence. If changes in the protocols are to be implemented,
it is ultimately the block-validators that must execute these changes.”
Thibault Schrepel, Predatory Innovation: The Definite Need for Legal Recognition, SMU SCI.
& TECH. L. REV (2018).
Vitalik Buterin, On Public and Private Blockchains, Ethereum Blog (August 7, 2015) In fact, this is a
“godmode.” The blockchain owner can freeze any account or move the funds away; but chances are
that people will eventually discover it and sell all the stocks/securities/tokens.
But still, no rule is set in stone, since they can all be modified with a broad consensus.
This subject is being discussed. The creation of an hard fork depends on the governance
system. Some blockchains, according to the chosen governance, will thus allow a modification of
governance without the creation of hard forks.
Joon Ian Wong, Everything You Need to Know about the Ethereum Hard Fork, QZ.COM (July 18,


governance design. If they do not, the software running under the old rules see the
blocks produced according to the new rules as invalid, which creates a situation in
which the original blockchain is split into multiple blockchains.164 Therefore, as the
community grows on public blockchains, it becomes increasingly more difficult to
reach a consensus on changing governance.165 But let us already note that the future
introduction of new governance models in public blockchain will reduce these
difficulties and thus facilitate predatory innovation.

In addition, there are reasons to believe that predatory innovation may be

particularly effective on blockchain, and therefore, a common practice. First of all,
predatory innovation on blockchain is cheap as it can be implemented at no cost.
Its implementation can also be very fast, in fact, interactions/validations via
blockchain only take a few seconds or minutes at most. Although transactions and
modification are not invisible on public blockchain, they can be on private
blockchains — the access to information and the history of the blockchain can be
limited to some users. And predatory innovation on blockchain can have a radical
effect: it will produce immediate effects by excluding a targeted user which also is
a competitor. Lastly, predatory innovation practices can take different forms with
multiple effects, beyond the mere exclusion from the blockchain. A company that
owns a private blockchain can indeed modify its governance design so that a user’s
access is purely and simply denied, or, to a lesser extent, that the user can no longer
read all the information on the blockchain, register transactions or take part in the
block validation process. Of course, a badly designed blockchain operating rules to
the detriment of some users would be unattractive, hence the interest to modify it
once its adoption is generalized or to make some transactions not visible by all.

Here lies a similar problem to the one related to the platforms that we know
today. The modification of blockchain governance may create issues while the
initial choice of the type of blockchain - public, private… - should be exempt from
antitrust scrutiny,166 although the type of governance that is chosen indicates the
likelihood of anti-competitive practices being committed. But what is particularly
worrying is that our legal concepts are blind to the full extent of this type of practice.
Two concepts are generally used to analyze what is actually predatory innovation
— tying167 and leveraging,168 but they are ineffective. Tying is inoperative to the

To read about the Ethereum “hard fork,” see Kevin D. Werbach, Trust, But Verify: Why the
Blockchain Needs the Law, Berkeley Tech. L.J. Forthcoming: “Whether or not the Ethereum
Foundation made the right call, the is that the controversy raised questions that could not be
answered within the framework of the blockchain. They required appeal to some higher-level
principles. The viability of trustless trust is ultimately a matter of governance.”
Patrick Murck, Who Controls the Blockchain?, HARVARD BUSINESS REVIEW (April 19, 2017)
Hanno F. Kaiser, Are “Closed Systems” an Antitrust Problem?, 7 COMP. POL’Y INT’L 91,
102 (2011).
For instance, Telex Corp. v. Int’l Bus. Machs. Corp. (Telex 1), 367 F. Supp. 258, 347 (N.D.
Okla. 1973); also, United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001).
See C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998). Also, Richard S.
(Springer 2014); Alan Devlin. & M. Jacobs, Anticompetitive Innovation and the Quality of


extent that, with blockchain, only one product is involved. Moreover, it may not be
sold - at least its access - and for this reason too, tying would be ineffective.
Leveraging is unenforceable as well because, in the absence of two separate
markets, it cannot be used. This concept is also ineffective when only one
competitor is foreclosed but a wide competitive field remains active.

In short, predatory innovation is - for the time being - subject to several legal
rules that are ill-adapted.169 And yet, it is one of the most anticipated and dangerous
anti-competitive unilateral strategies that can be implemented on a blockchain. This
should raise questions about the need to adapt our legal rules to a blockchain — and
more broadly, about the role of the regulator.

2. Predatory pricing. Related practices consist in a dominant undertaking

attempting to drive a smaller competitor out of the market by systematically
undercutting its prices.170 On blockchain, pricing occurs mainly in the form of
transaction fees171 when a user is submitting a transaction to be registered into the
chain, which is costly. Predatory pricing is very unlikely on public blockchains, the
main reason being that it would imply a new governance to be adopted at some point
to raise the price charged to some users in order to recover the cost. But the situation
is quite different for private blockchains. Private blockchains can change the
governance anytime without having to convince anyone to adopt the change. No
majority vote is required. Predatory pricing could be easily done; however, it would
imply little competitive pressure so as not to lose all users, which, for the time being,
is the exact opposite of the state of competition on blockchain.

3. Margin squeeze. Related practices occur when a dominant company sets

both its price to users and its wholesale price to competitors at levels such that the
difference means that an equally efficient competitor would be unable to compete
in the downstream market on a lasting basis.172 It implies for a vertically integrated

Invention, 27 BERKELEY TECH. L.J. 1 (2012).
See SCHREPEL, supra note 159, and SCHREPEL, supra note 151.
For an overview of predatory pricing:
On the European part, predatory pricing is considered abusive if the prices charged by the
dominant undertaking are below average variable costs; or if the prices charged by the dominant
undertaking are below average total costs and if they are set as part of a plan for eliminating a
competitor. For a case, see C-202/07 P France Télécom SA v Commission [2009] ECR I-2369.
On the US part, the Supreme Court held that in order to establish predatory pricing, the below-
cost pricing and a dangerous probability of recoupment by the monopolist once the rival has been
driven from the market have to be proved, see Brooke Group Ltd. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209 (1993).
See How Do Ethereum Smart Contracts Work?, COINDESK,
See also DANNEN, supra note 28, at 47: “The Ethereum Virtual Machine (EVM) is a worldwide
computer that anyone can use, for a small fee, payable in ether. The EVM is a single, global 256-bit
“computer” in which all transactions are local on each node of the network, and executed in relative
synchrony. It’s a globally accessible virtual machine, composed of lots of smaller computers.”
For an overview of margin squeeze:
On the European part, according to the Guidance on the Commission’s enforcement priorities in
applying the Communication from the Commission – Guidance on the Commission’s Enforcement
Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant


undertaking with dominant position in the upstream market to prevent the
downstream rivals to achieve a feasible price–cost margin. But public blockchains,
by definition, are horizontal. It is therefore very unlikely for a margin squeeze to be
perpetrated on public blockchains. The case is different, however, for private
blockchains, which tend to be more vertical. Because they allow income-generating
applications, one can imagine a strategy of margins squeezing to be implemented.
But it also implies to change the price which is charged in the upstream market (i.e.
the blockchain) depending on the users. In a development phase of blockchain, such
a strategy seems unlikely but will have to be closely monitored in the years to come.

4. Exclusive dealing. Related practices consist of agreements under which

customers are contractually required to purchase particular goods or services
exclusively from a dominant company.173 Such terms could be implemented in the
user agreement which is signed before using the blockchain.174 It seems unlikely that
such exclusive dealing will be imposed on a public blockchain because it would
imply integrating such a term from start with the option to monitor it, which will be
made very difficult because of pseudonymity. Moreover, once a transaction is
registered on a blockchain, users have low interest in registering the transaction on
another blockchain because it is costly. The technology itself thus reduces the
incentive to use several blockchains for the same transaction, unlike a retailer who
may want to offer several versions of the same product for sale. But the situation is
quite different for a private blockchain. Foreclosing competitors is an efficient way
to increase the overall blockchain price for users and developers. Moreover, private
blockchains have an interest in increasing their level of attractiveness by obtaining
data that they alone will have. In our TrustJobs illustration, X may want to be the only
one to list the job offers it has on its application. For this reason, it is highly likely
that exclusive dealing practices will soon be observed on this type of blockchain,
although monitoring this practice remains difficult.

Undertakings, COM (2009) 80 final (Feb. 24, 2009), it occurs when a dominant undertaking may
charge a price for the product on the upstream market which, compared to the price it charges on
the downstream market, does not allow even an equally efficient competitor to trade profitably in
the downstream market on a lasting basis. See C-52/09 Konkurrensverket v TeliaSonera Sverige
AB, EU:C:2011:83; C-280/08 P Deutsche Telekom AG v Commission, EU:C:2010:603; C-295/12
P, Telefónica, EU:C:2014:2062.
On the US part, a margin squeeze does not constitute an independent cause of action under Section 2
of the Sherman Act., see Pacific Bell Tel. Co. v. LinkLine Commc’ns, Inc., 555 U.S. 438 (2009).
For an overview of exclusive dealing:
On the European part, see C-549/10 P, Tomra Systems ASA and others v Commission [2012]
EU:C:2012:22 and C-413/14 P, Intel Corp., EU:C:2017:632, holding that exclusive dealing are
restrictions by object, although, in theory, the anticompetitive harm is simply presumed.
On the US part, exclusive dealing may constitute a violation of Section 2 of the Sherman Act if
it forecloses competitors from accessing the market. The D.C. Circuit held in United States v.
Microsoft Corp., 253 F.3d 34, 70 (D.C. Cir. 2001) that “a monopolist’s use of exclusive contracts,
in certain circumstances, may give rise to a section 2 violation even though the contracts foreclose
less than the roughly 40 per cent or 50 per cent share usually required in order to establish a section
1 violation.”
Legal agreement, ETHEREUM


5. Loyalty rebates. Related practices consist in granting rebates which are

conditional on the customer’s obtaining all or most of its requirements from the
undertaking in a dominant position.175 Granting loyalty rebates or discounts, to the
extent that the information is public on the blockchain, could be a push-back for users
who do not benefit from such a discount, provided, of course, that they are not
objectively justified. Because, once again, all practices are recorded and visible on
public blockchains, one user benefiting from a discount - related to the fees to register
a transaction on the blockchain - will be seen by all. Public blockchains therefore
push for equal treatment of all users when there is no reason to differentiate between
them. But some private blockchains do not benefit from this “visible effect.” They
may also, for commercial reasons, have a greater interest in attracting reputable users
by offering them discounts. In our TrustJobs example, X may want to give some of
its users a discount on the fees to register transaction, for instance, to all users who
are becoming less active on the application.

• Exploitative abuses

This section is intended to describe how exploitative abuses could be

implemented on blockchain. It should be noted in this regard that in theory this type
of abuse is not sanctioned under U.S. law which only punishes exclusionary abuses.
But some of these exploitative practices are caught nonetheless176 in practice,
especially when they are related to IP and digital markets.177 Accordingly, the
following developments concern the two bodies of law.

Exploitative abuse consists in directly or indirectly imposing unfair

conditions178 on existing customers and/or suppliers. Such abuses could be

For an overview of loyalty rebates:
On the European part, C-413/14 P, Intel Corp., EU:C:2017:632; 85/76 Hoffmann-La Roche &
Co. AG, EU:C:1979:36; T-228/97, Irish Sugar v Commission, EU:T:1999:246; T-219/99 British
Airways v Commission, EU:T:2003:343.
On the US part, loyalty discount and rebate scheme programmes can violate Sherman Act
Section 2, see LePage’s Inc. v. 3M, 324 F.3d 141, 154, 157 (3d Cir. 2003); Cascade Health Solutions
v PeaceHealth, 502 F.3d 895 (9th Cir. 2007); Eisai v Sanofi-Aventis, n°08-4168, 2014 WL 1343254
(D.N.J. March. 28, 2014), according to which a loyalty discount programme is not anti-competitive
as long as the resulting prices were above cost.
THE EU AND THE US 73 (Hart Publishing, 2012).
See Harry First, Exploitative Abuses of Intellectual Property Rights, in THE CAMBRIDGE
“It is the standard view in the United States that US antitrust law does not reach acts of exploitation
by a monopolist,” adding that “without denying this substantial divergence in general between the
United States and the rest of the world, it turns out that there may be fewer differences between the
United States and other jurisdictions when it comes to judging exploitative behavior by intellectual
property rights holders with market power,” and concluding that “contrary to conventional wisdom,
antitrust law is being used today to control the ability of intellectual property rights holders to
exploit their licensees through excessively high prices or the imposition of particular nonprice
terms.” For cases, see Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1033 (9th Cir. 2015);
Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297. 310, 314 (3d Cir. 2007).
Article 102(2)(a) refers to the imposition of unfair purchase or selling prices as well as other


characterized by the creation of a dual blockchain environment, one for those who
pay the most and one for those who pay less and whose transactions lag behind as
a result. In our example, X may impose such unfair conditions on some users in
order to get visibility on TrustJobs. And in fact, the rise of “fairness” terms in the
European Commission’s language,179 whose definition and scope are still
undefined,180 could be seen as a sign of the European willingness to tackle all
practices which create similar issues to the ones related to “net neutrality.” Indeed,
in its Impact Assessment entitled Fairness in platform-to-business relations,181 the
European Commission identified several issues related to platforms, including the
fact that “businesses cannot negotiate terms and conditions, which are subject to
unilateral and frequently unannounced changes,” noticing further that “the overall
policy objective is to ensure a fair and innovation-friendly platform economy.”
Everything suggests that blockchain issues will be tackled under this general policy
as well.

An exploitative abuse could also be characterized, for instance, when the

marketing team of a cryptocurrency provides services in exchange for preferential
treatment.182 They may also happen whenever one blockchain imposes to treat
another blockchain less favorably — although such a practice is at the frontline
between exploitative and exclusionary abuses. Nonetheless, the very moving nature
of blockchain forces us, for the time being, not to focus too much of our attention
on exploitative abusive because it is likely, as it is a young and fast-moving
technology linked to dynamic industries, that most of the related markets will
correct themselves — see our developments on the “token network effect.” This
type of abuse is nonetheless possible and will undoubtedly be the subject of legal
proceedings, especially in Europe.

• Discriminatory abuses

Discriminatory abuses are characterized when “applying dissimilar conditions

to equivalent transactions with other trading parties, thereby placing them at a
competitive disadvantage.”183 Such abuses can be of several kinds, although price

unfair trading conditions. For instance, in Case COMP/38.636, Rambus Inc., 2010 O.J. (C 30), the
Commission had to deal with potentially abusive royalties for the use of patents.
See Margrethe Vestager, The importance of being open – and fair, European Conference,
Harvard University (March 2, 2018)
On the difficulty to define them, see Mogul Steamship Co. v. McGregor [1892] App. Cas. 25,
49 (HL) (Lord Bramwell) (Citing 23 Q.B.D. 625, 626): “I adopt the vigorous language and opinion
of Fry L.J.: ‘To draw a line between fair and unfair competition, between what is reasonable and
unreasonable, passes the power of the courts.’”
Fairness in platform-to-business relations, European Commission (2017)
Peder Østbye, The Adequacy of Competition Policy for Cryptocurrency Markets (2017).
See Article 102 c) of the Treaty on the Functioning of the European Union http://eur- Also, Robert
O’Donoghue & A. Jorge Padilla, THE LAW AND ECONOMICS OF ARTICLE 102 TFEU 789 (Hart
Publishing 2013).


discrimination is the most common.184 According to Richard Posner, “price

discrimination is a term that economists use to describe the practice of selling the
same product to different customers at different prices even though the cost of sales
is the same to each of them. More precisely, it is selling at a price or prices such
that the ratio of price to marginal costs is different in different sales (…)185.” In
short, price discrimination could be two things: (i) collecting different prices for the
same product, or (ii) charging the same price for different products.

Could price discrimination occurs on blockchains? Certainly. But let’s recall

that because of the “visible effect” of public blockchains, their occurrence will be
limited. On the contrary, there are reasons to believe that discriminatory terms may
be encountered within private blockchains to the extent that applying different
terms to users is an effective way to urge users to join the blockchain. It could also
be used to incentivize them to stay active on the blockchain. Accordingly,
discriminatory abuses are likely to happen on such blockchains. In our example, X
may want to impose discriminatory terms so to thank a user for a commercial
advantage granted on another market. But for the time being, we must await the
introduction of the first complaints in order to analyze what approach will be
adopted by the judges and competition authorities in this matter.


Dominant undertakings which abuse a dominant position are sanctioned when

the abuse is detected. But what if the identity of the perpetrator is anonymous and
technically protected? Does it imply to force all identities to be known on
blockchain, although this may kill the technology? Should disclosure rules be
imposed, and if so, how should they be applied? Also, starting from the observation
that blockchain is immutable, how to ensure that anti-competitive practices can be
abolished? How to make sure that they will no longer produce an effect in the future,
and finally, how to ensure that they won’t keep being automatically implemented?

In this section, we are not assessing the anti-competitive nature of unilateral

practices, but how they can be sanctioned (A). It implies answering the following

For an overview of discriminatory abuses:
On the European part, there are few cases in which price discrimination alone was found abusive.
See for instance the Commission’s Clearstream upheld by the General Court in 2009, T-301/04,
Clearstream Banking AG, EU:T:2009:317. In its guidance paper, the Commission refers to anti-
competitive foreclosure when an ‘as efficient competitor’ cannot compete effectively with the price
of the dominant undertaking. In C-209/10, Post Danmark A/S v. Konkurrencerådet, EU:C:2012:172,
the ECJ clarified that where prices are below average total costs while being above average
incremental costs, a finding of abuse requires a demonstration of actual or likely exclusionary
On the US part, price discrimination by a monopolist violates section 2 of the Sherman Act only
to the extent that it is predatory or otherwise excludes competitors from the relevant market, see for
instance Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic, 65 F.3d 1406, 1413
(7th Cir. 1995). Price discrimination may also violate the Robinson-Patman Act, see Brooke Group
Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 220 (1993).
Richard Posner, ANTITRUST LAW, Second Edition 79-80 (University of Chicago Press, 2001).


questions: is there a “blockchain fortress,” and if so, how to enter it?186 (B) We
further develop the principles that should be respected when doing so (C).


One of the major issues faced by competition law in the face of blockchain is
related to the identification of anti-competitive practices. This problem is new and
twofold. First, algorithms are drastically accelerating the implementation of anti-
competitive practices. They create issues on how to detect such practices, and
incidentally, how to address evidence.187 But when practices implemented by
algorithms are identified, the perpetrator is generally known concomitantly. The
second issue faced by competition law is relative to blockchain. As we have
previously explained, blockchain is a technology that ensures the anonymity -
called pseudonymity - of its users. These anonymous nodes create obstacles in
terms of enforcement, in fact, the distributed network architecture of blockchain
constitutes a real barrier to antitrust enforcement. No one is in control of public
blockchains, but everybody is at the same time.188 For that reason, although a
practice is seen as being anti-competitive, the author may remain unidentified.

This has led some authors to ask for “regulatory instruments {that} could be
used to prevent certain wallets and exchanges from becoming dominant.”189 But
such a proposal amounts in practice to “condemning” - or at least outlawing -
dominant positions. It would disconnect competition law from practices and would
bring it back towards a structuralist and ordo-liberal vision detached from the
current state of economic science.190 For that reason, such a proposal should be
prescribed. And yet, if it is assumed that competition law benefits the consumer,
something has to be done. A way must be found for anti-competitive practices
committed on the blockchain to be sanctioned. Because the blockchain is in
principle immutable, although this principle suffers from a few exceptions191 that

Please note that the law is not the only way to enter it. Market operations or social norms, for
instance, could be used to do so as well, see FILIPPI & WRIGHT, supra note 16. Other distributed
ledger technologies are stating that they “intend to work with governments to provide the same level
of protection to distributed public ledgers as is currently present in the financial system,” Hedera:
A Governing Council & Public Hashgraph Network 7 (2018)
Computational law is that branch of legal informatics concerned with the mechanization of
legal analysis (whether done by humans or machines), see and
Gur Huberman, Jacob D. Leshno & Ciamac C. Moallemi, Monopoly without a Monopolist:
An Economic Analysis of the Bitcoin Payment System 37 (2017): “Monopolies are often regulated
to prevent or at least mitigate their abuse of power. Bitcoin is not regulated. It cannot be regulated.
It need not be regulated because individually the miners are price takers.”
Peder Østbye, The Adequacy of Competition Policy for Cryptocurrency Markets (2017).
Philippe Aghion, Nick Bloom, Richard Blundell, Rachel Griffith & Peter Howitt,
Competition and Innovation: An Inverted-U Relationship, 120 Q. J. ECON 701 (2005).
Angela Walch, The Path of the Blockchain Lexicon (and the Law), 36 REV. BANKING & FIN.
L. 713, 713 (2017), arguing that “the widespread use of the term ‘immutable’ as a defining feature
of blockchain technology is misleading.”


are debated in the blockchain community,192 it is all the more necessary to prevent
these practices from being implemented, and if they already are, to send a strong
signal to other companies.


The only way, or the least, the most effective way,193 to make competition law
effective again seems to have blockchain designed in compliance with a regulatory
framework.194 The law is to be embedded into code, because where it isn’t,
governments could try to preserve their hegemony by resorting to draconian
measures. They could indeed filter Internet service providers,195 criminalize
software developers, blacklist malicious decentralized autonomous organizations
or introduce backdoors on individual computers to monitor citizens’ behavior.196 In
order to avoid such extreme measures,197 it is time for “code is law”198 to become
“law is code.” What it means is that the law has to be designed in a way to positively
impact the blockchain. The time has come for “law & programing.”

Kevin D. Werbach, Trust, But Verify: Why the Blockchain Needs the Law, Berkeley Tech.
L.J. Forthcoming.
Jeff John Roberts, The Law of Blockchain: Beyond Government Control?, FORTUNE (May 11,
“Even though blockchain ledgers like bitcoin are decentralized and run by computers across many
countries, state authorities can still target chokepoints in their infrastructure to exert control. In the
same way governments have targeted intermediaries like search engines and ISPs to tame unruly
aspects of the Internet, they could do the same to put pressure on blockchain networks.”
On that, Michèle Finck, Blockchains and Data Protection in the European Union 1 (2018):
“Regulators must (…) nudge blockchain developers to design their products in compliance with this
important public policy objective.”
Although this would have to be done at a worldwide level, which seems very unlikely to
happen anytime soon.
WRIGHT & FILIPPI, supra note 33.
Jay P. Kesan & Rajiv C. Shah, Shaping Code, 18 HARV. J.L. & TECH. 319 (2004): “In
considering regulatory actions, prohibitions can be an effective method of regulation, but current
export prohibitions on encryption code are impractical. Similarly, there are regulatory trade-offs
involved with technology-forcing regulation.” But it is not even certain that these measures would
be effective because the technology will keep developing, see for example RAVAL, supra note 22,
at 31, on decentralized bandwidth: “The latest example is the Firechat app for iOS, created by a
company called Open Garden. Firechat lets phones speak to each other directly, peer to peer, using
the iOS multipeer connectivity feature. No ISP is required. Firechat is an example of a mesh
networking application. Mesh networks are the decentralized version of the standard centralized
Internet. In a mesh network, users don’t need to go through a central gateway to access a site; they
can connect directly to the nearest router, which would be a nearby computer.”
LESSIG, supra note 5, at 121: “regulator could be a significant threat to a wide range of
liberties, and we don’t yet understand how best to control it. This regulator is what I call ‘code’—
the instructions embedded in the software or hardware that makes cyberspace what it is. This code
is the ‘built environment’ of social life in cyberspace. It is its ‘architecture’.” He adds that “in real
space, we recognize how laws regulate—through constitutions,statutes, and other legal codes. In
cyberspace we must understand how a different “code” regulates— how the software and hardware
(i.e., the “code” of cyberspace) that make cyberspace what it is also regulate cyberspace as it is.”
See also Lawrence Lessig, The Code Is the Law, THE INDUSTRY STANDARD, (April 9, 1999):, and Timothy Wu, When Code
Isn’t Law, V. L. REV. 89 (2003).


For the first time in history, integrating the law upstream has become a
necessity,199 because otherwise, technical impossibilities will deprive it of any
effect.200 And indeed, because blockchain is governed under the lex cryptographica,
it will continue to function as long as the people who interact with it pay the
transaction fees charged by miners who support the blockchain201. This is why we
call for “regulatory infiltration.” Blockchain creates a technical fortress and the
practices that are carried out inside the blockchain - or via the blockchain - are very
well protected. Because they are, one can think that they will quickly become the
Queens of unilateral anti-competitive practices, comfortably seated in their
armchairs of “untouchable practices.”

And indeed, there is a way for competition law to enter the fortress.202
Regulation has a role to play in this regard, not by replacing competition law which
is about analyzing practices from a micro perspective, but by intervening at the
macro level. This must be done without too much brutality, so that existing castles
are not destroyed, and especially so that future castles will continue to be built.
Indeed, it is hard to imagine the ordering of palace construction if it is known that
they are to be infiltrated from the moment of their creation, and looted of any
interest. So that the castle does not become a ruin, the regulators must take care that
the essentiality of the blockchain is preserved. Here is the schematic representation
of this situation.

Outside the blockchain, when practices are implemented and further detected,
antitrust law can break them and fine the perpetrator:

EASTERBROOK, supra note 18, at 207: “Beliefs lawyers hold about computers, and predictions
they make about new technology, are highly likely to be false. This should make us hesitate to
prescribe legal adaptations for cyberspace. The blind are not good trailblazers.” The same caution
must be exercised today with the blockchain.
Showing how laws affect community, see POSNER, supra note 91 at 214-219.
FILIPPI & WRIGHT, supra note 16, at 144.
For instance, Lin William Cong and Zhiguo He calls for a “regulatory node in the blockchain”
in order to detect anti-competitive practices. They add that “in the traditional world, in general it
helps for regulatory agency to observe and collect more information about the market in order to
better detect collusive behaviors. Similarly, adding a regulatory node in the blockchain, especially
for private permissioned chains that do not automatically include regulators as part of the business
ecosystem, can help regulator monitor the economic behaviors of market participants and reduce
tacit collusion,” and conclude that “regulators can also potentially participate in the protocol
design” at 32.


As we have shown, a blockchain is protected by its technicalities. As a

consequence, when practices are committed within it, antitrust law is ineffective.
Here’s what then happens on blockchain without regulatory infiltration:

But regulatory authorities can open blockchains when necessary, which would
allow antitrust law to enter and sanction anti-competitive practices. Here, therefore,
is what happens with regulatory infiltration:



The law often lags behind technology — see the GDPR in the face of the
blockchain, precisely.203 This is very often an excellent thing so that technologies
can be developed freely, without legal constraints of any kind.204 The time for
regulation must come after the time for technology,205 at least, this is what should
be recommended in practice insofar as lawyers have a tendency to regulate in an
uninformed manner206 and/or little concern for type I and II errors.207 Furthermore,
“as governments increase their control, they replicate their vices on the Internet,”208
and that is to be avoided.209 But the paradigm is quite different for blockchain.
Without upstream regulation, it will be impossible - because of technical reasons -
for the law to catch up with the technology. Regulations are therefore essential in
this matter, and yet, it should be as fair as possible especially because most uses of
blockchain are still unknown and should not be curbed by legal issues. More than
usual, regulatory humility210 should apply as a principle. This will be done, notably,
by not ever questioning the founding principles of blockchains:

Michèle Finck, Blockchains and the GDPR, OXFORD BUSINESS LAW BLOG (February 13,
underlining that “most current blockchain projects are likely incompatible with the GDPR. This
signals that even before the legal framework’s entry into force it already seems outdated in respect
of the newest developments in data management. While this is true in the blockchain context, the
GDPR also cannot be easily applied to big data, machine learning and AI.” Also, Michèle Finck,
Blockchains and Data Protection in the European Union 1 (2018): “Whereas the GDPR was
fashioned for a world where data is centrally collected, stored, and processed, blockchains
decentralize each of these processes,” adding that “blockchains (especially those that are public and
unpermissioned) and the GDPR are profoundly incompatible at a conceptual level as the data
protection mechanisms developed for centralized data silos cannot be easily reconciled with a
decentralized method of data storage and protection.”
TAPSCOTT & TAPSCOTT, supra note 65, at 517: “Let’s be clear: regulation differs from
governance. Regulation is about laws designed to control behavior. Governance is about
stewardship, collaboration, and incentives to act on common interests. But experience suggests
governments should approach regulating technologies cautiously, acting as a collaborative peer to
other sectors of society, rather than as the heavy hand of the law.”
See id. at 66, quoting an interview with David Ticoll, December 12, 2015: “If the blockchain
is as big and universal as the Net, we are likely to do a comparably bad job of predicting both its
upsides and downsides.”
Also, “regulating too soon could provide valuable guidance as to the legitimate uses of
blockchain technology but could also stamp out potential benefits,” see FILIPPI & WRIGHT, supra
note 16, at 57.
Type I errors, also called “false positive,” reflect the fact that a judge or a competition
authority condemns an undertaking for having implemented one or more practices which, in reality,
are not anti-competitive. Conversely, type II errors, also called “false negative,” reflect the fact that
a judge or a competition authority decides not to condemn a company which has implemented one
or more practices which are in fact anti-competitive.
See the preface of GOLDSMITH & WU, supra note 59. They further add: “government is often
ugly and pathological” (p. 140).
Angela Walch, The Path of the Blockchain Lexicon (and the Law), 36 REV. BANKING & FIN.
L. 713, 763 (2017): “Taking a slow, inquisitive, and deliberative approach is in tension with the
need to quickly get up to speed on the technology to ensure that imminent risks are identified and
addressed efficiently.”
Friedrich A. Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519 (1945). Also,
Thibault Schrepel, Friedrich Hayek’s Contribution to Antitrust Law and Its Modern Application


Distributed ledger system:211 The distributed ledger system is how blockchain

works, its fundamental essence. In a (public) blockchain, each participant has
access to the complete information and its complete ledger. No single participant
controls the information or the data, no one is “in charge” of the public blockchain.
This is one of the core principles of blockchains which create distributed power, the
reason why there’s no central point of failure and why reckless behavior on the part
of one person is limited to damage for that person.212

Peer-to-peer transmission: Peer-to-peer transmission wasn’t created for

blockchains, but it is a core element nonetheless. In it, communication occurs
between peers instead of passing through a central node. Each node stores and
forwards information to all other nodes. This transmission system, vital to the use
of blockchain, must not be called into question.

Computational logic: The digital nature of the general ledger means that
transactions in the blockchain can be linked to computational logic and
programmed. Accordingly, users can set up algorithms and rules that automatically
trigger transactions between nodes, knowing that the heterogeneity of the nodes is

Blockchain consensus:213 The consensus is the general agreement, unanimous

by nature, under which the blockchain operates. Blockchain integrity relies on
consensus to clear transactions and blockchain creators are to remain free to adopt
Proof of Work, Proof of Stake, Proof of Burn,214 Proof of Authority, Proof of
Capacity, Proof of Storage or any other consensus they want.215 It implies that
blockchain users must be free to participate in the block validation process without
engaging their liability on the sole basis that they have validated an anti-competitive

Data immutability:216 “Unlike Pinocchio, the blockchain doesn’t lie.”217

Blockchains are immutable, at least in theory,218 and this is one of their cost
functionalities and utilities. That irreversibility of the consensus and records

Nolan Bauerle, What is a Distributed Ledger?, COINDESK
The 7 Design Principles of a Blockchain Economy, STEEMIT (2016)
Ameer Rosic, Basic Primer: Blockchain Consensus Protocol, BLOCKGEEKS (2018)
Belavadi Prahalad, Proof of Work, Proof of Stake and Proof of Burn, HACKERNOON (March
11, 2018)
TAPSCOTT & TAPSCOTT, supra note 65, at 77.
Toshendra Kumar Sharma, How Data Immutability Works in Blockchain?, BLOCKCHAIN
COUNCIL (September 5, 2017)
TAPSCOTT & TAPSCOTT, supra note 65, at 282.
Gideon Greenspan, The Blockchain Immutability Myth, MULTICHAIN (May 4, 2017) See also the “editable
blockchain,” Making AI/Blockchain/IT Good for Society, 58 ITNOW 66 (2016).


guarantees, once a transaction is recorded on the chain, to be indelible as it is linked
to every transaction record that came before it. If that were to be changed under
regulatory policy, blockchain would certainly be killed.

Pseudonymity: Each node and/or user has a unique alphanumeric address of

more than 30 characters that identifies it. The “meaning” of the transaction is
secret219 and, on top of that, users may choose to remain anonymous.220
Transactions take place between the addresses in the blockchain. This principle
suffers from an exception in practice221 insofar as the combination of different
information on a user can make it possible to find his identity.222 Cyber-forensics
could be used as well, which is what the FBI is doing.223 But different blockchain
systems are currently working to solve this224 and there is every reason to believe
that technology will move faster than regulators or authorities on this subject.225
For instance, Monero is using “ring signatures”, a group of cryptographic
signatures with at least one real participant, but no way to tell which in the group is

Robert P. Murphy & Silas Barta, UNDERSTANDING BITCOIN, 52 (Version 1.11, 2017): “it’s
possible to hide the ‘meaning’ of a transaction (to the extent that it’s connected to people’s
identities) from everyone except the two parties to it. In contrast, conventional banking requires that
these third parties be able to look up the real owner of an account and ‘connect the dots’ regarding
who transferred what to whom.”
CHAMPAGNE, supra note 32, at 136: “Satoshi Nakamoto November 25, 2009, 06:17:23 PM:
The possibility to be anonymous or pseudonymous relies on you not revealing any identifying
information about yourself in connection with the bitcoin addresses you use. If you post your bitcoin
address on the web, then you’re associating that address and any transactions with it with the name
you posted under. If you posted under a handle that you haven’t associated with your real identity,
then you’re still pseudonymous.” Also, TAPSCOTT & TAPSCOTT, supra note 65, at 94: “Satoshi
installed no identity requirement for the network layer itself, meaning that no one had to provide a
name, e-mail address, or any other personal data in order to download and use the bitcoin software.”
Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped, MIT TECHNOLOGY REVIEW
(August 23, 2017)
anonymous-as-everyone-hoped/. And indeed, simply looking at when transactions are made and
from which IP addresses allow to get an approximate location of the user.
Finding identity could be make using big data or cyber forensics, see Cyberforensics,
John Bohannon, Why criminals can’t hide behind Bitcoin, SCIENCE MAG (March 9, 2016)
Michael del Castillo, With Zcash Launch, Blockchain Enters the Age of Anonymity, COINDESK
(October 28, 2016) . See also
Steven Buchko, The Best Fully Anonymous Bitcoin Wallet Options, COINCENTRAL (November 13,
2017); Tyler Durden, Is Bitcoin Really
Anonymous? IRS Moves To Track Cryptocurrencies With New Chain Analysis Tools, ZEROHEDGE
(August 25, 2017)
moves-track-cryptocurrencies-new-chain-analysis-tools. Lastly, see FILIPPI & WRIGHT, supra note
16, at 39: “Over time, however, blockchains may become increasingly anonymous, making
transaction graph analyses and comparable tracing techniques increasingly difficult. Services
already have sprung up to mix and scramble Bitcoin transactions to mask parties’ identities.
Recently launched blockchains, such as Zcash and Monero, are hiding the source, destination, and
amount of digital currency transferred within these blockchain-based networks by using advanced
cryptography such as zero-knowledge proofs and ring signatures.”
For instance, Zcash seems to be a suitable way to provide a real anonymity because it makes
it impossible to retrace in and out transactions from a specific known address. Monero is also
focused on providing true anonymity.


the real one as they all appear valid.226 Zcash is using “Zero-knowledge.”227 And
in fact, there is a lot of work going on in the cryptography space to move to a system
where everything will be encrypted228 (even the number of transactions). The
blockchain space is heading in a direction229 where everything on the blockchain
will be encrypted, where, “nobody knows you’re a dog.”230 The principle
of pseudonymity is to be recognized as essential to the blockchain231 as imposing
upstream disclosure of all users’ real identities would go against the very essence
of the technology232. In fact, anonymity will allow society to reveal itself, to go
even further in the direction it wants and it is not for the regulator to prevent it. That
will create great challenges because our economic system is based on knowing third
parties’ identities233.

Challenging one of these principles would probably cause blockchain to lose

its utility. To paraphrase Lawrence Lessig, there are choices to be made about how
blockchain will evolve.234 These choices will affect fundamentally what values are
built into it. The question “is whether we’re capable of making those choices235,”
and in the event that we are not because anyway the “law tends to arrive at basic
answers before the right questions have been asked,”236 compliance with these
principles will ensure that the blockchain continues to develop.

And there is remaining room for regulation to enter the fortress. Governance
could be subject to rules of good conduct237 rather than dictating how they should
work. A way has to be found to reveal the identity of users when a violation of
competition law is committed, and maybe this should be included in blockchain
governance somehow, because if it isn’t, it could be impossible to do so afterward.

Ring Signature, MONERO
“Zero-knowledge proofs allow one party (the prover) to prove to another (the verifier) that a
statement is true, without revealing any information beyond the validity of the statement itself,” see
What are zk-SNARKs?, Z CASH
One of the notable projects is MimbleWimble. Bitcoin is working to make all amounts
For an explanation why, see TAPSCOTT & TAPSCOTT, supra note 65, at 459, quoting an
interview with Stephen Pair, June 11, 2015: “The biggest threat to bitcoin is that it becomes so
heavily regulated at some point that a competitor that’s more private and more anonymous shows
up and everybody switches to that.”
“On the Internet, nobody knows you’re a dog,” see Condé Nast, Peter Steiner’s cartoon (1993)
Iyke Aru, Blockchain Transaction Anonymity is Necessary Evil, COIN TELEGRAPH (April 18,
See Malte Möser & Rainer Böhme, The price of anonymity: empirical evidence from a market
for Bitcoin anonymization, 3 JOURNAL OF CYBERSECURITY 127 (2017).
On that, see VIGNA & CASEY, supra note 22, at 224, asking “can we afford not to tackle
It has been argued that without evolution, some blockchain could disappear, see Campbell R.
Harvey, Bitcoin Myths and Facts 9 (2014): “It is likely that bitcoin will have to adapt and make
changes if it is to survive. It is unlikely that the model proposed in 2008 is the best model.”
He answered, “my argument is that we’re not,” see LESSIG, supra note 5, at 311.
BORK, supra note 14, at 16.
Known and public, by definition, because as it has been said by Lawrence Lessig, we should
“worry about a regime that makes invisible regulation easier,” see LESSIG, supra note 5, at 136.


In that were to be the case, users would connect to a platform using a private key
connected to their personal blockchain and would then commit anti-competitive
practices with impunity. Since no one controls blockchains, at least public ones, a
mechanism must exist to reveal the identity of users when necessary… but only
when necessary! The solution may be to promote certain types of governance by
setting out “safe harbors” for some of them. Indeed, perhaps legal guarantees will
have to be provided as a bargaining chip. Self-regulation and co-regulation are also
to be considered a serious alternative.238

In addition to the issue raised by pseudonymity,239 other issues occur in relation

to the effectiveness of sanctions and remedies240 because there are no “choke
points” on blockchain. For instance, Augur - “a decentrazlied oracle & prediction
market platform” - has no central party that can stop its operation.241 This platform
will continue to work even if governments get tough — and even if penalties are
imposed on the original parties who develop or promote the blockchain242. No
“technically skilled people of goodwill”243 are needed to keep the blockchain going,
in fact, Daaps cannot be shut down because there is no server to take down.244 They
can only be modified under specific and technical circumstances. 245

Blockchain creates issues related to emergency measures due to the fact that
injunctions against a decentralized autonomous organization are nearly impossible
to be taken. The only way around, once again, would be to encode these measures
into the blockchain’s governance. More broadly, it will be necessary to ensure a

On the subject, see WW. Martijn Scheltema, Balancing Public and Private Regulation, 12
UTRECHT L REV. 16 (2016). See also Linda Senden, Evisa Kica, Mariette Hiemstra & Kilian Klinger,
Mapping Self- and Co-regulation Approaches in the EU Context, Utrecht University, RENFORCE
(March 2015).
This issue has been raised in the past, at a time when Internet wasn’t “designed to reveal who
someone is, where they are, and what they’re doing,” see LESSIG, supra note 5, at 38.
Indeed, FILIPPI & WRIGHT, supra note 16, at 44: “Blockchains thus enable the creation of
autonomous software programs run through the collaborative effort of parties with different
incentives and in different locations scattered across the globe, none of which can unilaterally affect
the code’s execution. Once deployed on a blockchain, these programs no longer need or necessarily
heed their creators; they are run on a decentralized network, making it difficult to unwind or halt
their execution.”
Robert P. Murphy & Silas Barta, UNDERSTANDING BITCOIN, Version 1.11, 78 (2017):
“Remember that no one is “in charge” of Bitcoin. So long as just one copy of the blockchain survives
on someone’s hard drive somewhere on Earth, the Bitcoin network can quickly propagate to
thousands of other computers once that person gets online.”
FILIPPI & WRIGHT, supra note 16, at 104.
ZITTRAIN, supra note 5, at 246: “Our generative technologies need technically skilled people
of goodwill to keep them going, and the fledgling generative activities above—blogging, wikis,
social networks—need artistically and intellectually skilled people of goodwill to serve as true
alternatives to a centralized, industrialized information economy that asks us to identify only as
consumers of meaning rather than as makers of it.”
RAVAL, supra note 22, at 7: “Data in a dapp is decentralized across all of its nodes. Each
node is independent; if one fails, the others are still able to run on the network.”
See Max Raskin, The Law and Legality of Smart Contracts, 1 GEO. L. TECH. REV. 305, 326
(2017). They could be linked to publicly available relevant legal provisions which, when they are
modified, will automatically change smart contracts. These contracts could also be written with the
option of inserting code later.


sufficiently effective deterrent effect,246 because practices are immutable and

written on the blockchain forever. And many other procedural questions will
arise,247 as dawn raids usefulness which will be called into question insofar as the
seizure of a single computer will not make it possible to go back to the source,
added to the fact that all the data - the amount of a transaction, its object, the identity
of the parties - will be encrypted and tear-proof.248 Questions also arise as to the
territoriality of the law.249 Competition authorities could lack the ability to seize the
organization’s assets or enforce an injunction. Blockchain users located outside of
the country in which the legal action is brought could indeed refuse to grant access
to the blockchain.250

In short, if competition is maintained as it is today, it will quickly become

ineffective for technical reasons that will not be possible to compel. Because of the
need for regulatory infiltration, fascinating debates of public policies are ahead of us
on how to proceed. And we need to get to the subject quickly, because as Lawrence
Lessig already underlined in 2006, “we are at a stage in our history when we urgently
need to make fundamental choices about values, but we should trust no institution of
government to make such choices.”251 The good news is that if governments take too
restrictive measures against blockchain, developers will move away to different
countries. It is what happened with the BitLicense252 which is issued by the New York
State Department of Financial Services, causing many startups to leave the State.253
If they cannot vote with their computers, developers will vote with their feet when
they change territory. Let us not forget that.

LESSIG, supra note 5, at 152: “Even with open code, if the government threatens punishments
that are severe enough, it will induce a certain compliance.”
This paper focusses on substantial issues.
This is all the more true if the blockchain uses a “Zero knowledge proof” system.
On the need for regulatory cooperation in face of new technologies, see Hannah L. Buxbaum,
Transnational Antitrust Law, OXFORD HANDBOOK OF TRANSNATIONAL LAW 11 (Peer Zumbansen
ed., forthcoming).
FILIPPI & WRIGHT, supra note 16, at 145.
He further adds that “the government we now have is a failure. Nothing important should be
trusted to its control, even though everything important is,” LESSIG, supra note 5, at 8.
Stan Higgins, New York Lawmakers Open to Revisiting the BitLicense, COINDESK (February
23, 2018)



Satoshi Nakamoto’s paper was only published ten years ago and Ethereum was
created in 2015. In all likelihood, the 2010s will be remembered as the beginning
of blockchain (and distributed ledger technologies)254 as the years 1990s have
become the beginning of the Internet255. In fact, Don Tapscott and Alex Tapscott
describe blockchain as the “return of the Internet.”256 But previous generations of
technology were mostly about speeding up exchanges of information while
blockchain is about the exchange of value, the reason why it represents a shift.257

The way blockchain will evolve is yet difficult to predict as an infinite number
of applications may emerge.258 A great deal of what will happen will also depend on
how the blockchain infrastructure layer will develop.259 As of today, there are two
dominant platforms, Bitcoin and Ethereum, with Ripple being another great player
focusing on a specific application. There also is an infinite number of smaller
networks under development, several of them probably being destined to become
major players. And in fact, notable alternatives to blockchain - which address the
same problem - are already in development, notably the Tangle and Hashgraph. Let’s
see how many competing technologies will survive and how well the various
proposed interoperability mechanisms will pan out.260

For instance, Tangle and Hashgraph.
In this matter, Ethan Katsh wrote that “as we encounter cyberspace, we become linked to a
light, a sun, that unleashes powerful energies for new and creative visions,” see M. Ethan Katsh,
LAW IN A DIGITAL WORLD, 243 (Oxford University Press, 1995).
TAPSCOTT & TAPSCOTT, supra note 65, at 43.
World Economic Forum, White Paper, Blockchain Beyond the Hype: A Practical Framework
for Business Leaders, 4 (April 2018): “previous generations of technology were predominantly
about the faster and more secure exchange of information; that is, they were aimed at delivering the
same objectives faster (…) Blockchain, meanwhile, is about the exchange of value; it is intended to
enable individuals to exchange currency and other assets with one another without relying on a
third party to manage the transactions.”
TAPSCOTT & TAPSCOTT, supra note 65, at 296, listing streaming music, art galleries, free
press, education… Blockchain may also help dispute resolution, see Jeremy Barnett & Philip
Treleaven, Algorithmic Dispute Resolution—The Automation of Professional Dispute Resolution
Using AI and Blockchain Technologies, 61 COMPUT. J. 399 (2018). On dispute resolution through
blockchain, see SWAN, supra note 4, at 48: “PrecedentCoin: Blockchain Dispute Resolution,” Also, Jude Umeh, Blockchain Double Bubble or Double
Trouble?, 58 ITNOW 58 (2016), and lastly, Ethereum White Paper, A Next-Generation Smart
Contract and Decentralized Application Platform (2014)
World Economic Forum, White Paper, Blockchain Beyond the Hype: A Practical Framework
for Business Leaders, introduction (April 2018): “Given the relatively early stages of this
technology, anchoring on blockchain without consideration of associated risks, including, among
others, cost, security and the relevant industry’s regulatory environment, can be detrimental.” See
also DANNEN, supra note 28, at 14: “the Ethereum network is not yet complete. It is operational
today, but will not be complete until sometime in 2019. Funds for continued development are
endowed to the Swiss nonprofit Ethereum Foundation.”
For a more detailed analysis of this, see WERBACH, supra note 82.


Because we do not know how blockchain will evolve and which type of
governance will emerge, it is still difficult to evaluate the scope of the practices that
will go along with it although we may already have identified several unilateral
anti-competitive practices which are the most likely to occur. But we do now know
that most usual mechanisms of competition law would be ineffective in the face of
blockchain.261 And even with “regulatory infiltration,” some of the instruments
which are used today - such as emergency measures, commitments... - will become
inoperable in their current form.262 One is therefore entitled to wonder whether, in
the face of blockchain, competition law is just a passing fad in the history of
economic regulation. Is blockchain the death of antitrust, at least, as far as this
technology is concerned? The answer might very well be positive, at least in three

First, competition law as we know it will probably die because it will become
ineffective without regulatory infiltration. For the first time in its history,
competition law will have to be supplemented by another body of rules. And indeed,
competition law won't have complete answers to these three issues: how to detect
the practices committed on the blockchain, how to identify the author of these
practices, and finally, how to remedy them for the future? Even though ways could
be found to identify the author of anti-competitive practices, questions remain for
the effectiveness of sanctions and remedies because information on blockchains is
immutable. In a rather revealing way, the home page of the Ethereum Project
indicates: “Build unstoppable applications.”263 Maybe they are indeed, even in the
eyes of the law.

Thus, even if we find a way to get antitrust law into blockchain, its death could
come from the fact that it will no longer be a central subject and/or a creator of
welfare on its own. It’s a bit like the death of jazz. That music still exists and it still
has its public but it doesn’t create debate anymore or lead to any movement that
goes beyond its own framework, the reason why it’s dead.264

The second reason is that public blockchains will greatly limit the number of
abuses of a dominant position that can be committed on the latter, even when
governance design will be implemented. In particular, predatory pricing and refusal
to deal seem to be very unrealistic, while tying, margins squeeze, exclusionary
dealing, loyalty rebates, exploitative and discriminatory abuses are unlikely to
happen. For the time being, they mostly are impossible.

Timothy May, The Crypto Anarchist Manifesto (1992): “Just as the technology of printing
altered and reduced the power of medieval guilds and the social power structure, so too will
cryptologic methods fundamentally alter the nature of corporations and of government interference
in economic transactions.”
KATSH, supra note 255, at 240: “Law is not only a process that touches all other societal
institutions but it is, as I have stressed, an institution that is fundamentally oriented around
information and communication.”
Which I can only regret, by the way.


Furthermore, because practices implemented on blockchain are visible to all, it
reduces the incentive to implement anti-competitive practices detrimental to some
users. If this was to be maintained, or even reinforced, anti-competitive practices
would become even less likely. The upcoming developments of the new governance
designs will be a good indicator of private blockchains’ ability to allow unilateral
anti-competitive practices.

Please note that although our study is focused on unilateral practices, the issues
of the detectability of practices, identification of their perpetrators and unsuitability
of remedies is the same for cartels.

The third and final reason why we can expect competition law to die is related
to a questioning of its foundations. It is very unlikely that competition law will
disappear as a body of positive law265 — who would bet the slightest nickel on that?
Let’s trust the regulator to find a way to introduce the law into it. It could be266 by
regulating end users, transportation layers, information intermediaries, blockchain
intermediaries, transaction processors or by regulating code, architecture or
hardware manufacturers.

So regulatory measures will indeed protect competition law, but to what extent
will this go hand in hand with consumer protection? We must keep this question in
mind, because if we protect the law too much, we run the risk of forgetting its
intention. After all, modern competition law has been built on the premises of the
Sherman Act to fight against trusts.267 In the absence of trusts, a question arises as
to its legitimacy. Accordingly, if an anti-competitive practice is committed on a
blockchain, one may wonder if the latter is de facto legitimate and/or objectively
justified.268 Some might argue, indeed, that if competition law is ineffective against
blockchain, it is for a good reason. This technology is attractive because of its
characteristics, nobody is forced to use it, and if it is used despite the legal issues it
creates, this element should not simply be ignored.

But make no mistake about it, the death of competition law is not solely linked
to blockchain technicalities. Although blockchain users do accept a system based
on a technology that, as a matter of fact, can be used to enshrine anti-competitive
practices, it doesn’t imply that they give their endorsement to everything happening
on the blockchain. As Milton Friedman wisely stated,269 “there’s a common
misconception that people who are in favor of a free market are also in favor of

Being defined as the “law actually and specifically enacted or adopted by proper authority
for the government of an organized jural society,” see Positive law, Black's Law Dictionary (5th
ed.). West Publishing Co. 1979.
FILIPPI & WRIGHT, supra note 16, at 175-183.
See supra note 14.
On that idea, see VIGNA & CASEY, supra note 22, at 60: “Some libertarian-minded crypto
enthusiasts who want to live entirely by the rules of a blockchain and free themselves from
dependence on government are fond of citing the phrase ‘code is law,’ used by Harvard professor
Lawrence Lessig.”
Milton Friedman, The Business Community’s Suicidal Impulse, CATO POLICY REPORT (1999).


everything that big business does. Nothing could be further from the truth.” The
same logic applies here. This is true even when these users take part in the
validation process because they only validate the existence of the transaction, not
its legality. They are, accordingly, only bound to what blockchain is for.270 In short,
the legitimacy of competition should not be questioned on the sole basis of the way
blockchain functions.

If the legitimacy of competition law is to be questioned, it is based on the

confrontation between the reasons behind blockchain and the way competition law
is designed and enforced. It is what we create a “blockchain antitrust paradox.” Let
us recall indeed that there is no trust - third-party fiduciary relationship - within the
framework of the blockchain, and this, in spite of the size of the community.
Accordingly, the intention of antitrust laws are confronted here with an absence of
object, or said differently, blockchain solves antitrust concerns. In addition,
blockchain is built around the idea of decentralization,271 whether public or private.
Blockchain makes the world flat and brings everyone on the same scale, being the
exact opposite of a “praise of hierarchy.”272 Conversely, compliance with
competition law is ensured by central bodies, such as the European Commission,
the national competition authorities, the FTC, the DOJ... And furthermore,
competition law was created by and for centralized entities. The real question we
should then ask ourselves is the following: are we legitimate to reject the desire for
decentralization that blockchain represents and bring this technology back to
centralize entities? If we do so, isn’t it a way to impose ideas and concepts from the
past on a technology of and for the future? What is, differently said, our legitimacy
in imposing on the blockchain, horizontal by nature, the vertical reasoning of the
“old world”?273

It is a fact that some use the blockchain, not for “philosophical” reasons related
to its decentralized nature, but because it is practical to them.274 But blockchain
precisely is practical because it is decentralized, making this characteristic central
in any case. Should we take this technology out of its philosophical principles?
There is indeed a real issue of legitimacy in this respect. The culture and

For a contrary view, see FILIPPI & WRIGHT, supra note 16, at 180, calling to regulate miners
and transaction processors because “in blockchain-based networks, miners retain the ultimate
authority to adopt new software that amends or modifies a blockchain’s underlying protocol.”
See id. at 3. See also SWAN, supra note 4, at 69: “blockchain is a technology for
decentralization.” In fact, “blockchain technology could help achieve what some commentators are
calling the promise of “Internet 3.0,” a re-architecting of the Net to assert the core objective of
decentralization that inspired many of the early online pioneers who built the Internet 1.0.,” see
VIGNA & CASEY, supra note 22, at 17. Lastly, Sinclair Davidson, Primavera De Filippi & Jason
Potts, Disrupting Governance: The New Institutional Economics of Distributed Ledger Technology
(2016), describing DLT as “new institutional technology of governance that competes with other
economic institutions of capitalism, namely firms, markets, networks, and even governments.”
Elliot Jaques, In Praise of Hierarchy, HARVARD BUSINESS REVIEW (1990).
As it has been noticed, “blockchain potentially poses a challenge to those economic, social
and political participants interested in perpetuating vintage ledgers,” Darcy WE Allen, Chris Berg
& Mikayla Novak, Blockchain: An Entangled Political Economy Approach 11 (2018).
On that, see Max Raskin, The Law and Legality of Smart Contracts, 1 GEO. L. TECH. REV.
305, 308-209 (2017).


sociological factors that led to the development of blockchain simply cannot be
ignored by the law.

There are the technical issues that this article discusses, and the issue of legal
philosophy that questions the legitimacy of competition law. While I am fairly
certain that the former will find ways leading to a new application of competition
law, I am not sure that the latter will legitimize its applicability. Accordingly, our
next big challenge is to find a way to decentralize competition authorities.275 It
requires a minima designing276 and implementing a new governance model for
competition authorities,277 which will be done by integrating blockchain and the
principles of new governance models such as futarchy,278 quadratic voting,279 liquid
democracy280 or holacracy.281 It also means going beyond the national framework282

Here’s another good reason to do it: “Any system which gives so much power and so much
discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects,
is a bad system. It is a bad system to believers in freedom just because it gives a few men such power
without any effective check by the body politic” Milton Friedman, CAPITALISM AND FREEDOM :
FORTIETH ANNIVERSARY EDITION 50 (University of Chicago Press, 2009).
On how to design competition agencies, see Frédéric Jenny, The Institutional Design of
Competition Authorities: Debates and Trends (2016). See also OECD Policy Roundtables, Changes
in Institutional Design of Competition Authorities, DAF/COMP/M(2015)1.
On that, see Michael Abramowicz, Cryptocurrency-Based Law, 58 ARIZ. L. REV. 359, 420
(2016): “Peer-to-peer law is likely to emerge slowly and in unpredictable ways, but it has the
potential to create authoritative decisions without authoritative decision-makers. There may be
decisive arguments against particular peer-to-peer institutions, but legal theorists should at least
allow peer-to-peer institutions to join the menu of possible regulatory arrangements.”
Futarchy is a system in which elected officials define measures of national welfare, and
prediction markets are used to determine which policies will have the most positive effect, see Prediction markets are exchange-traded markets created for
the purpose of trading the outcome of events. Futarchy was initially proposed by Robin Hanson,
Futarchy: Vote Values, But Bet Beliefs (2007), see
also Robin Hanson, Shall We Vote on Values, But Bet on Beliefs?, 21 J. POLIT. PHILOS. 151 (2013).
It has been praised by Vitalik Buterin, An Introduction to Futarchy, ETHEREUM BLOG (August 21,
2014) See also FILIPPI & WRIGHT,
supra note 16, at 140: For instance, “prediction market–based governance structures known as
futarchy, or more meritocratic governance models where votes are weighed according to reputation,
could be explored.”
Using quadratic voting, individuals pay for as many votes as they wish using a number of
“voice credits” quadratic in the votes they buy. See Eric A. Posner & E. Glen Weyl, Voting Squared:
Quadratic Voting in Democratic Politics, 68 VAND. L. REV. 441 (2015).
Liquid democracy allows voters to vote directly on issues or to delegate their voting power
to delegates who vote on their behalf, see For
more on it, see Anson Kahng, Liquid Democracy: An Algorithmic Perspective (2016) Also, SWAN, supra note 4, at 89: “Decentralization is an idea
whose time has come. The Internet is large enough and liquid enough to accommodate decentralized
models in new and more pervasive ways than has been possible previously. Centralized models were
a good idea at the time, an innovation and revolution in human coordination hundreds of years ago,
but now we have a new cultural technology, the Internet, and techniques such as distributed public
blockchain ledgers that could facilitate activity to not only include all seven billion people for the
first time, but also allow larger-scale, more complicated coordination, and speed our progress
toward becoming a truly advanced society.”
Holacracy is “a method of decentralized management and organizational governance (…) in
which authority and decision-making are distributed throughout a holarchy of self-organizing teams
rather than being vested in a management hierarchy,” see
More at
SWAN, supra note 4, at 30: “Through its global decentralized nature, blockchain technology


of competition authorities, because nations necessarily centralize. Competition

authorities can no longer rely on pyramidal structures and operate in a closed circle
on the model of nation-state-led government. Competition law as we know it must
die and be reborn. Failing this, we are likely to see a positive law whose foundations
are no longer legitimate.

* *

has the potential ability to circumvent the current limitations of geographic jurisdictions. (…)
Irrespective of supporting the legitimacy of nation-states, there is a scale and jurisdiction
acknowledgment and argument that certain operations are transnational and are more effectively
administered, coordinated, monitored, and reviewed at a higher organizational level such as that of a
World Trade Organization.”