Charting the way forward for digital competition policy

By James Mancini, OECD Competition Division, Directorate for Financial and Entreprise Affairs. The topic, Competition in the digital age, will be discussed at a keynote panel during the 2020 OECD Competition Open Day.

Competition policy has received an increasing amount of media attention recently, as a debate rages about the size, conduct and influence of large digital firms. Calls for more strict antitrust law enforcement, or new regulatory measures to address a range of digital policy concerns, are surfacing in many jursidictions. To help chart the way forward, several governments have commissioned studies of existing competition policy frameworks to determine whether changes are needed.

Expert panels have been commissioned by the EU[1], Germany[2], Japan[3] and the UK[4], while competition authorities in Australia,[5] Canada,[6] France and Germany,[7] Italy[8], and Portugal[9], among others, have conducted studies of their own. In the US, the Federal Trade Commission held a series of hearings on a wide range of topics relevant to digitalisation while the Stigler Centre commissioned its own expert panel.[10] Further, the G7 competition authorities issued a “Common understanding” in June this year, setting out their collective views on the opportunities and challenges of digitalisation for competition policy.[11] While the legal context, focus and findings of each of these efforts varied significantly across jurisdictions, as with many other antitrust topics, several key themes have begun to emerge. These common threads can be used to guide further research, studies by competition authorities, and the formulation of policy and legislative proposals moving forward.

In particular, a consensus exists around some core ideas. There is a recognition that digitalisation offers wide-ranging benefits for consumers and economic productivity, and any policy measure should not unduly compromise these benefits. Many reports acknowledge that digital markets represent a unique challenge for policymakers due to a combination of market features, including strong network effects, economies of scale and scope, frequent innovation, and data-centric business models. Further, most agree that competition policy cannot solve all concerns about digital markets, and the line with other policy areas such as consumer protection should be considered. Finally, there is consensus on the need for case-by-case analyses in many situtations, as well as international co-operation among competition enforcers.

When it comes to concrete changes to the competition policy framework, however, there is much more controversy. Some commentators have suggested that competition enforcers have all they need to address concerns in digital markets – as long as they are genuinely antitrust concerns. Indeed many discussions in the OECD Competition Committee have found that the right tools are available to address certain types of misconduct. However, most of the reports mentioned above have called for additional measures, among them:

Establishing a new digital regulator, which could have responsibilities ranging from faciliatating portability, interoperability and micro-payments, to participating in merger reviews;
Rethinking the framework, for example, reversing the burden of proof in some cases, adopting an expected balance of harms test, or creating a category of misconduct that harms dependent firms;
Developing new enforcement approaches, such as a greater focus on potential competition, and a greater willingness to accept the risks of more stringent enforcement;
Ensuring anticompetitive digital sector mergers are notified and assessed, through new merger notification requirements;
Streamlining procedures, including lowering the legal bar on the use of interim measures (i.e. measures imposed prior to a final decision);
Enhancing our understanding of consumer behaviour to recognise the role of behavioural biases in creating market power and to ensure that competition analysis and remedy design reflect actual consumer decision-making patterns.

There is a way to go before there is concensus on these issues – the proposals vary significantly across expert panels, and have attracted significant criticism. However, they do chart a way forward by identifying key ideas for stronger competition policy frameworks. While considering these proposals and adapting them to the context of their jurisdiction, competition policymakers can also undertake some uncontroversial measures in the short run to promote competition in digital markets; namely better and faster co-operation among competition authorities, continuing to use existing enforcement tools in digital markets when warranted, and further reliance on market studies to understand competition problems in digital markets outside the framework of enforcement action. In sum, there is much to do for the competition community to keep the momentum, and ensure that the digital economy is a competitive one.

This blog post is based on an article published in the November 2019 edition of Concurrences, available at https://www.concurrences.com/en/review/issues/no-4-2019/international/james-mancini.

[1] See background at: https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/commission-appoints-professors-heike-schweitzer-jacques-cremer-and-assistant-professor-yves_en

[2] See, for instance: https://www.competitionpolicyinternational.com/germany-sets-up-body-to-lead-modernisation-of-competition-law/

[3] Through the Study Group on Data and Competition Policy, https://www.jftc.go.jp/en/pressreleases/yearly-2017/June/170606_files/170606-4.pdf

[4] UK Report: Digital Competition Expert Panel (2019), “Unlocking digital competition”, https://www.gov.uk/government/publications/unlocking-digital-competition-report-of-the-digital-competition-expert-panel

[5] Australia Report: Australian Competition & Consumer Commission (2019), “Digital Platforms Inquiry: Final Report”, https://www.accc.gov.au/system/files/Digital%20platforms%20inquiry%20-%20final%20report.pdf

[6] See https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04342.html

[7]Which produced a joint report on Competition Law and Data: http://www.autoritedelaconcurrence.fr/doc/reportcompetitionlawanddatafinal.pdf

[8]See: https://www.concurrences.com/IMG/pdf/agcm_-_autorita_garante_della_concorrenza_e_del_mercato-7.pdf?51760/e0bb8e15333a93d3f362c8b221d3310d0ab89b55

[9]See: http://www.concorrencia.pt/vEN/News_Events/Comunicados/Documents/Digital%20Ecosystems%20Executive%20Summary.pdf

[10] See https://www.ftc.gov/policy/hearings-competition-consumer-protection

[11] See http://www.autoritedelaconcurrence.fr/doc/g7_common_understanding.pdf