Forging a European Competition Policy Response to Online Platforms

By Alexiadis, Peter | Business Law International, May 2017 | Go to article overview

Forging a European Competition Policy Response to Online Platforms


Alexiadis, Peter, Business Law International


Introduction

'Mind the gap '

Trading in marketplaces is a familiar process for law-makers, who have seen fit since antiquity to establish normative rules of behaviour for trading standards and business etiquette governing market behaviour.1 Indeed, even the development in the European Union (EU) of a coherent antitrust policy for business-to-business (B2B) transactions dates back to the millennium, where a series of behavioural and merger decisions by the European Commission (the 'Commission') established clear working principles according to which business transactions conducted online could be assessed.2

However, the exponential rise over the past 20 years in computer processing power, coupled with the growth in connectivity brought about by the increased capacity of the telecoms networks underlying online platforms, has fuelled an explosion in demand for digital content and new means of communication over the internet. This has in turn facilitated the ability of trading marketplaces to accommodate an infinite range of B2B and business-to-consumer (B2C) transactions3 (in parallel or in combination) in an online environment. In doing so, they have fostered an online environment characterised by a series of infinitely more complex commercial relationships. The range of these relationships in the digital world has pressed commentators into referring to concepts in terms of the internet 'space', 'ecosystem' or 'value chain'. These shorthand terms have developed over the past decade, inter alia, as a means of conveying the message that the competitive dynamics of the internet embrace a range of complex interactions going well beyond the sorts of competitive constraints usually associated with:

(1) on the one hand, 'markets' prone to antitrust (ex post) investigation because of identifiable (and well understood) anti-competitive conduct; and

(2) on the other, stable, well understood 'services' or 'networks' that can justify forward-looking (ex ante) regulatory intervention to remedy market failures driven by the existence of market power.

Increasingly, policy-makers around the world have become concerned about the rate at which a number of large, global, internet-based market players have successfully developed their business models over a short period of time, while at the same time being perceived, to a significant degree, to act beyond traditional public policy constraints usually associated with many other industrial and commercial sectors.4 Many of these concerns are in turn encapsulated in the use of the emotive term 'big data', which has become synonymous with those large global internet market players whose business models are in some way driven by very high levels of accumulation, processing and exploitation of data drawn from and about end users. Policy-makers have come to feel that, while data protection authorities may in principle have leverage over big data market players as regards the effective application of data protection rules, they are constrained in their attempts to curb the exercise of market power, whether in preventing them from foreclosing smaller market players or engaging in exploitative abuses.

It should come as no surprise that much of the thinking devoted to determining whether and how online platforms should be addressed under antitrust rules has been pioneered (and is ongoing) in the EU, both at the Community and at the Member State level. The policy developments have occurred both in the context of the enforcement of a range of individual competition infringement actions under antitrust rules and merger reviews, and through competition law-driven stakeholder consultations. This article aims to review the recent policy developments across the EU and to draw some preliminary conclusions as to where such investigations might be leading and those areas where competition policy enforcement is likely to be compromised.

In seeking to develop a coherent competition policy that addresses public policy concerns arising from online platforms, the overarching question that needs to be asked is whether European policy-makers should be wary of committing 'Type 1' errors through premature interventions in markets that are still relatively immature, or whether pre-emptive action is necessary to ensure that emerging markets are not artificially distorted (ie, 'Type 2' errors). …

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