Competition law and digital gatekeepers: Too many studies, too little enforcement?

The past couple of years have seen the launch and, in most cases, completion of multiple studies by competition authorities as well as independent bodies on what needs to be done to address the competition challenges created by large digital platforms (see, e.g., the UK Furman report, the U.S. Stigler report, the EC Competition Policy in a Digital Era report; the CMA Online Platforms and Digital Advertising Market Study, the ACCC Digital Platforms inquiry, etc.).

While these studies have been extremely helpful in collecting a wealth of information about the functioning of digital markets, competition issues arising on such markets and possible solutions, many companies that depend on the services provided by such platforms and/or compete with them on vertical markets consider that enforcement has been insufficient. While this assessment may be unfair as certain enforcement actions have been launched, it is true that it is often hard to convince a competition authority to bring proceedings against large digital platforms.

Why is this the case considering there is a high demand for enforcement? Let’s look at possible explanations:

  • In some cases, complaints made against these platforms may simply lack merit or can’t be dealt with through competition law. While competition law has a wide scope, certain conditions need to be met for it to apply (e.g., Article 102 TFEU requires the finding of a dominant position on a relevant market). There might also be some gaps in existing competition rules. While monopolization is an offense under U.S. antitrust law, Article 102 TFEU applies to abuses of a dominant position (that is, the undertaking examined must hold a dominant position at the time when the alleged abuse is committed). This is one of the rationales expressed by the European Commission to justify the need for a New Competition Tool.
  • A reason regularly mentioned by competition authorities for not intervening is that they have limited resources and thus need to focus on their enforcement priorities. This is the most frequent “excuse” not to intervene, but also the most frustrating one for complainants as there is nothing to say in response. How can you argue with a competition authority that tells you that it cannot investigate your case because it has limited resources when you do not know the size of these resources and how much of these resources are already being employed? Having heard this refrain multiple times from DG Competition, I suspect that some of its units, especially those dealing with digital markets, are indeed insufficiently resourced compared to the task they have to accomplish.
  • Competition authorities tend to be conservative institutions, which means they prefer to rely on tested theories of harm. For instance, most of the exclusionary cases that have been pursued by DG Competition in the digital space are “vertical leveraging” cases, i.e. variations of the Microsoft decision adopted in 2004 and confirmed by the General Court in 2007. This is obviously a theory of harm that the Commission sees as “safe”. The downside is that if a case does not fit in that box, it is a hard sell.
  • Industrial policy considerations may also play a role in some cases. For instance, rumours are circulating in Brussels’ competition circles that, despite complaints filed by Daimler and several Tier-1 suppliers, DG Competition has shown reluctance to open proceedings against Nokia as this could hurt the company at a time where the Commission places a greater focus on digital sovereignty. Whether this is the case or not is impossible to say, but these considerations may impact enforcement (and can go in both directions, in some cases with investigations being prioritized and in others with cases being placed on the back burner).

In any case, few will disagree that there have been enough studies and that the priority should now be for competition authorities to enforce the law. But can we expect more enforcement actions in the digital space in the coming months/years? This depends on several factors. First, some of the issues dealt with by competition authorities could in the future be addressed through ex ante regulation, although it will take some time to have this regulation in place. Second, digital cases are often complex and we cannot expect DG Competition to deal with dozens of such cases, unless resources are materially increased, which is unlikely in the near future. Third, we need to see whether NCAs will defer to the Commission in tech cases or take the lead. There are, however, clear signs that these authorities are willing to tackle digital gatekeepers. This is perhaps where a growing number of enforcement actions is to be expected.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s