New competition tool: something old, something new, something borrowed

NL Law
EU Law

Large online platforms may face more regulatory obligations, whilst non-dominant companies’ unilateral conduct may soon be curbed. The European Commission intends to tool up its kit by adding a new regulation to keep digital gatekeepers in check, as well as providing more clarity on how to define digital markets in its new Market Definition Notice.

It is also eyeing a market investigations tool, similar to that available to competition authorities in the UK and Greece. Consultations to collect stakeholders’ views on these initiatives are ongoing. Meanwhile, it is business as usual under the ‘old’ competition rules, with recently launched antitrust investigations into Apple’s conduct and possibly more frequent use of interim measures and restorative remedies.

Companies should be aware that more rules may be on the way: it is time to take stock of the potential implications for their businesses and respond accordingly to the ongoing consultations.

Something new: ex ante regulation of digital gatekeepers

Businesses are increasingly dependent on a limited number of large online platforms to connect them to consumers. These ‘gatekeeper’ platforms can use the large amounts of data gained from these connections to nip competition in the bud, for example by refusing competitors access to this data or by developing new activities in adjacent markets. Through the current consultation, the Commission intends to find ways to safeguard a fair trading environment and intensify the innovation potential and capacity across online platform ecosystems.

The suggested policy options range from revising the Platform-to-Business Regulation to include prescriptive rules on certain practices (such as ‘self-preferencing’, data access policies and unfair contractual provisions) to the introduction of a new ex ante regulatory framework for ‘gatekeeper’ online platforms, featuring blacklisted trading practices and tailor-made remedies (such as data access obligations or data portability requirements). Criteria based on significant network effects, size of user base, and ability to leverage data across markets may be used to distinguish ‘gatekeeper’ online platforms from others.

The recently launched consultation on the Market Definition Notice could also help to provide more guidance to companies on how to define product markets and geographic market, in light of increasing digitalisation.

Something borrowed: new competition tool

In parallel with the possible platform-specific ex ante regulation of digital gatekeepers, the Commission is considering a new competition tool resembling the market investigations tool available to competition authorities in the UK and Greece. In contrast to the Commission’s current power to conduct sector inquiries, this tool would allow the Commission to impose structural and behavioural remedies outside the scope of individual infringement proceedings, including the possibility of breaking up companies.

The tool aims to remedy structural market failures and prevent the creation of gatekeepers in digital and non-digital markets, without any prior finding of an infringement. The tool could either apply across all sectors or be sector-specific. Suggested options range from a dominance-based competition tool to a market structure-based tool to catch monopolising conduct by powerful non-dominant companies or tacit collusion in concentrated markets.

Something old: antitrust investigations

Irrespective of the consultations’ outcome, the Commission continues to tackle potential anti-competitive conduct under the ‘old’ competition rules. It recently launched an investigation into Apple’s App Store rules following complaints by Spotify and an e-book/audiobook distributor regarding Apple’s potential gatekeeper role. A similar investigation is ongoing at the Dutch Authority for Consumers and Markets (see our May 2019 newsletter).

In addition, the Commission is also looking into Apple’s conduct relating to Apple Pay. The Commission has concerns about Apple's terms, conditions, and other measures related to the integration of Apple Pay for the purchase of goods and services on merchant apps and websites on iOS/iPadOS devices, as well as alleged access restrictions to Apple Pay for specific products of rivals.

Prepare, beware, react

Companies should be aware of the potential implications of the current consultations (such as more rules to abide by), and give their reactions to the consultations before preparing for possible upcoming rules. The feedback period for both consultations ends on 8 September 2020. Based on the input received, the Commission intends to publish a proposal for implementing its plans by the end of this year.

This article was published in the Competition Newsletter of July 2020. Other articles in this newsletter: