European Competition Authorities unite in their call for new enforcement instruments in the digital sector
Consensus appears to increase among European competition authorities, that the enforcement instruments that they currently possess aren’t enough to deal with the specific and complex competition issues that may arise on digital markets.
Within a couple of days, both the French Autorité de la Concurrence (AdlC) and the German Bundeskartellamt have both issued publications calling for new instruments.
In a paper dated 21 February 2020, the AdlC aims to contribute to the debate on the suitability of the present competition rules to tackle the challenges of the digital future. In this respect, the AdlC observes on the one hand that competition law is a flexible area of law, and that its concepts can be adapted to cover new practices, without a requirement for new legislation to be introduced. The AdlC refers to the Commission’s decision in Google Android and its own decision in Google/Gibmedia as examples of cases in which innovative reasoning allowed for the application of the existing prohibition on abuse of a dominant position to novel situations.
Nonetheless, the AdlC believes that the existing rules will not suffice to deal with all problems on digital markets. It believes that it would be useful to explore the possibility of supplementing competition law, at a national or a European level, with a mechanism allowing action to be taken on behaviour harmful to competition implemented by so-called ‘structural’ market players. These are companies that have acquired such positions that they are dominant in various markets, benefitting from significant network effects linked to their large community of users or to the data to which they have access. The AdlC therefore proposes a new legal regime in order to prevent and sanction anti-competitive behavior implemented by these operators in situations of considerable market power, but also providing for the possibility to impose obligations on these operators in terms of interoperability, non-discrimination or access to data. The AdlC suggests to draw up a list of practices raising competition concerns specific to such ‘structural’ players. These practices would include at least (i) discriminating against competing products or services, (ii) hampering access to adjacent markets in which they are not dominant or ‘structural’, (iii) the use of data on a dominated market in order to make access for new entrants more difficult, (iv) making the interoperability of products or services more difficult, (v) making data portability more difficult, and (vi) obstructing the use of multi-homing. In the event that such practices would be implemented by a structural player and would be likely to raise competition concerns, it would be up to the companies in question to demonstrate, if they would not wish to comply with the measure envisaged by the competent competition authority, that their practices are objectively justified by efficiency gains. This reversal of the burden of proof would enable rapid action against potential competition concerns. The AdlC believes that the implementation of such a tool should be considered as a priority at the level of the European Commission, which is best placed to understand practices with a European dimension, but could also be provided to national competition authorities such as the AdlC.
Not too long ago, the Dutch Authority for Consumers & Markets (ACM) has made a similar call. The AdlC also believes that national competition authorities in the EU should refer more merger cases to the European Commission in order to ensure a coherent assessment from a European perspective.
Just a few days later, the Bundeskartellamt embraced a new legislative proposal that would increase its enforcement powers. The proposal includes the introduction of a specific concept of ‘intermediary power’ of two-sided digital platforms in the prohibition of abuse of a dominant position. The new rules also include a possibility of imposing measures on undertakings with considerable market power in the absence of an infringement of the cartel prohibition or the prohibition of abuse of a dominant position, as advocated by the AdlC and the ACM.
The AdlC, ACM and FCO do not stand alone in their call for more enforcement powers. For example, in a recent speech, the president of the Portuguese Autoridade da Concorrência stressed the “need for speedier competition enforcement to ensure data access and interoperability”, warning that the increased use of algorithms may lead to price collusion or weaken competition.
In view of this unanimity among enforcers, it appears only a matter of time before new rules will indeed be introduced throughout the European continent. To stay on top of all these and other fascinating and rapid developments, Loyens & Loeff has set up its Digital Competition Team. As members of the Digital Competition Team, these rapid developments also inspired us to publish our book Digital Competition Law in Europe: A Concise Guide (Kluwer), which provides an overview of where European digital competition law currently stands and where it is likely to head in the future.