Short Reads

Tackling Big Tech up-front? Time to stop thinking and start acting

Tackling Big Tech up-front? Time to stop thinking and start acting

Tackling Big Tech up-front? Time to stop thinking and start acting

07.11.2019

Benelux competition authorities have published a joint memorandum on how best to keep up with challenges in fast-moving digital markets. As well as calling on the European Commission to issue an economic study on digital mergers, the memorandum calls for an ex ante intervention tool to fill the gap between interim measures and ex post enforcement. This tool would pre-emptively impose behavioural remedies on digital gatekeepers without first having to establish an actual competition law infringement.

The call for swift up-front action to tackle Big Tech companies has not fallen on deaf ears; the recently-adopted interim measures on Broadcom demonstrate the European Commission's willingness to make the "best possible use" of this already-existing up-front intervention tool. Time will soon tell whether any other up-front tools will be introduced, since – as stated by ACM chairman Martijn Snoep – 2020 should be "the year of concrete action".

The joint memorandum

The joint memorandum issued by the Belgian, Dutch and Luxembourg competition authorities is the latest in a long line of studies and reports on competition law challenges posed by the digital economy (see our September 2019 Newsletter). The memorandum focuses on (i) issues in merger control, (ii) the need for guidance in fast-moving digital markets and (iii) the need for an ex ante tool to impose binding commitments without first establishing an infringement.

(i)           Mergers in the digital sector

After recapping the main findings and questions raised in the earlier digital reports, the memorandum calls for the Commission to issue an economic study to analyse acquisitions by the main platforms and to review digital merger decisions by competition authorities over the past decade to find answers to questions such as (i) whether merger review should be stricter in cases involving dominant platforms active in markets with significant networks effects and entry barriers and (ii) whether the burden of proof should be reversed in some cases, so as to have the acquirer prove the acquisition's pro-competitiveness or lack of competitive harm, rather than the competition authority proving its anti-competitive effects. The economic study could also be used to evaluate whether the merger notification thresholds should be amended to include additional thresholds based on the acquirer's market power or the transaction's value.

(ii)          The need for guidance

In line with the earlier digital reports, the memorandum urges the European Commission to provide more guidance on new digital topics but also to update existing guidelines on, for instance, market definition to include dynamic multi-sided markets. In addition, national competition authorities should be encouraged to share their experience and discuss upcoming national guidance papers within the European Competition Network, in order to safeguard a coherent policy across the EU. The memorandum also calls for the introduction of a less formal fast-track procedure by promoting the use of informal guidance letters or the finding of inapplicability of the competition rules under Article 10 of Regulation 1/2003.

(iii)         The need for an ex ante intervention tool

The memorandum suggests the introduction of an ex ante intervention tool to pre-emptively strike down potential anti-competitive conduct by online gatekeepers. This tool would enable competition authorities to impose proportionate behavioural remedies (such as platform access, data portability, data-sharing and non-discriminatory ranking) without having to establish an infringement beforehand. This would result in even faster solutions than currently possible through interim decisions or commitment decisions.

Interim measures on Broadcom

For now, the European Commission will have to resort to interim measures for fast solutions. Its recent interim measures on Broadcom show that it is – for the first time in nearly twenty years – not afraid to use them.

According to the Commission's preliminary findings, Broadcom holds a dominant position in various markets in the chipset sector. The Commission finds that, at first sight, Broadcom has abused this dominance by including (quasi-)exclusive purchasing and leveraging clauses in its agreements with six of its main customers. To prevent serious and irreparable harm to competition, the Commission imposed interim measures preventing Broadcom from applying these clauses for a maximum period of three years. In the meantime, the Commission will continue its substantive investigation into whether Broadcom restricted competition in various chipset markets. Broadcom has stated its intention to appeal the Commission's decision to impose interim measures.

More frequent use of this tool could be expected in future, particularly given Commissioner Vestager's commitment to make "the best possible use of this important tool". Additional fast solution tools for digital markets may follow suit. After contemplating all the options in the many digital reports, competition authorities may soon transform words into actions, or in other words: "act and do stuff".

 

This article was published in the Competition Newsletter of November 2019. Other articles in this newsletter:

 

 

 

 

Team

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