Enterprises have been joining consortiums to implement blockchain networks and benefit from network effects. In a Deloitte survey of “blockchain-savvy executives,” three quarters of respondents stated that their firms were either involved in consortiums or would likely join one.
DLT has the potential to solve major problems. In doing so, it may also present risk for collusive behavior.
Nodes in a consortium hold substantial power over the governance or any potential native tokens like in the Hedera and Libra networks, and therefore may be subject to accusations of cartelization and other anticompetitive behavior. In this webinar, we will discuss:
- How can “smart contracts” (computer-enforced agreements) magnify or mitigate the risk of cartelization and other anticompetitive behavior in blockchain consortiums?
- In Leibowitz v. iFinex and Young v. iFinex, investors sued the issuers of the “stablecoin” and a crypto exchange. Plaintiffs argue that the collaboration between these two companies amounted to collusion to manipulate the price of the token, costing investors $466 million. How can economics help prove and calculate the economic damage caused by anticompetitive behavior by fintech firms?
- Aside from tokens, blockchain can arguably encourage anticompetitive behavior within traditional industries by facilitating the decentralized, public exchange of information. Todd v. Exxon (2d Cir. 2001) suggests that companies that exchange information about their current or future strategies will face heightened antitrust scrutiny. How can traditional firms navigate the information-sharing advantages of blockchain without exposing themselves to litigation risk?
For more on the hold-up problem, see Can Blockchain Solve the Hold-Up Problem for Shared Databases?