Benelux Competition Authorities Address the Challenges Faced by Competition Authorities in the Digital Age
In a joint position paper, the Competition Authorities of the Benelux Countries (the Dutch ACM, the Belgian BCA and the Grand-Duchy of Luxembourg’s Conseil de la Concurrence) have shared their views on the specific challenges that the digital economy raises for competition authorities.
The presidents of the three authorities present their joint ideas about specific issues that digital developments might raise in merger control cases, they discuss the need for informal guidance for market players, and finally propose the introduction an ex ante instrument through which competition authorities would become entitled to impose binding commitments on dominant (tech) companies, without the need to first establishment an infringement of competition law.
Mergers in a digital environment
The first issue addressed in the paper is whether there would be a need for new merger control rules in a ‘winner-takes-all environment’. The first concern of the authorities is that tech giants may acquire small promising start-ups too easily, since the turnover of such start-ups may be below the applicable jurisdictional thresholds. And even if the relevant turnover is above, the authorities fear that clearances may be issued too easily, since it difficult to correctly assess the potential future market power of such start-ups in a conventional merger control analysis.
The authorities suggest that these problems could be tackled for example by introducing alternative notification thresholds (e.g. based on market power of the acquirer or om the value of the transaction), or by reversing the burden of proof in certain cases. Merger control assessment could also become stricter in case dominant companies operating in markets with significant network effects and entry barriers would want to acquire a competitor. The authorities advise that the European Commission should commission an economic study into the need for such measures and their expected effectiveness.
Ex ante guidance for companies operating in digital markets
The Benelux competition authorities believe that competition authorities should develop the ability and willingness to provide ex ante guidance on specific issues relating to digital markets, for example through guidance papers and case-by-case guidance letters. They propose to examine the possibility of developing an approach that would allow the European Commission and national competition authorities to sidestep the infringement route in a more informal and fast track commitment procedure. The authorities believe that such a change could be possible under the current legislative regimes of the EU and the Benelux countries, but would require a change of mentality among competition authorities.
An ex ante instrument providing for remedies without the establishment of an infringement
The Benelux competition authorities support the idea of an ex-ante intervention mechanism to prevent anti-competitive behaviour by dominant companies acting as gatekeepers to online ecosystems. They envisage a tool that allows the European Commission and national competition authorities to impose proportionate remedies in order to prevent competition problems from occurring, rather than relying on after-the-fact enforcement. Such remedies would be behavioural in nature and tailored to specific situations. One could think of platform access, data portability, data-sharing and non-discriminatory ranking. The remedies would not involve sanctions such as fines. The introduction of such tools would require a change in the legislation of both the EU and the Benelux countries. Whether there exists a sufficient political will to introduce such legislative changes remains to be seen.
Loyens & Loeff Digital Competition Team
The position paper of the Benelux authorities comes at a time at a time when the level of competition law enforcement in the digital sector is taking a serious flight (see our post of 31 July). It is also interesting to note that the Belgian BCA has reconfirmed its particular interest in the digital sector, after already qualifying the sector as an enforcement priority for 2016.
To stay on top of all these rapid developments, Loyens & Loeff has set up its Digital Competition Team. As members of the Digital Competition Team, we are proud to announce our book Digital Competition Law in Europe: A Concise Guide (Kluwer), which was first published in September 2019 and provides an overview of where European digital competition law currently stands and where it is likely to head in the future.