European Union Competition Law in the Digital Era

Posted by Social Science Research Network

European Union Competition Law in the Digital Era Massimiliano Kadar (European Commission)

Abstract: What is the role of competition policy in the digital economy? The question is not new, and many have commented on this topic already at the end of the 1990s, particularly in the context of the United States Department of Justice’s proceedings against Microsoft. In recent years, however, the debate has been fuelled by the ever-growing digitalisation of our lives, as well as by the considerable public attention received by the European Commission’s competition case on Google’s activities related to general internet search.

Some believe that competition authorities should refrain from intervening in fast-moving, technology driven industries, as the cost of intervention in those industries would generally outweigh possible benefits. Almost on the opposite front, others have argued that a muscular intervention from competition authorities is needed, but that this is not sufficient to constrain the market power of large companies operating in the digital space. Some of those observers argue that a new regulatory framework would be required to address problems such as access to “essential” digital platforms by third parties, which are not within the scope of existing non-competition laws (e.g. on privacy and copyright) and are also not allegedly tackled by competition law enforcers effectively. A third group argues that competition policy is the right tool to address issues related to market power in digital markets, and conversely that ex-ante regulation would not be desirable insofar as it would likely result in undue constraints on innovation. However, according to these observers, the current European Union competition law legal framework may have to be reassessed and potentially improved to meet the challenges posed by digital markets.

In this article, after having defined the main features of digital markets, I will discuss in turn the above arguments and criticisms. I will conclude that (i) competition law enforcers’ intervention in digital markets is appropriate and desirable, when the circumstances of a case justify it; (ii) competition law cannot deal with all perceived issues in a given market. However, it is the right tool to remedy distortions to competition caused by market power. Conversely, the introduction of pervasive ex-ante regulation in digital markets to ensure access to “essential platforms” does not appear to be warranted; and (iii) in general, the current legal framework appears to be suitable and sufficiently flexible to allow the Commission to intervene and remedy competitive distortions in digital markets. Whilst some of the proposals to further enhance the effectiveness of the enforcement system may have some merit in principle, more in-depth research would be required before any legislative reform.