ANTITRUST in ASIA: ONE SIZE FITS ALL? ASEAN, China, Hong Kong, India

ANTITRUST IN ASIA: ONE SIZE FITS ALL? ASEAN, China, Hong Kong, India

WEBINAR 2: DIGITAL: MONOPOLIZATION & MERGER CASES Tuesday, 10 November 2020

Knut Fournier | APAC Regional Counsel, Stubhub, Hong Kong Lilla Csorgo | Senior Consultant, Charles River Associates, Hong Kong Kun Huang | Senior Vice President, Compass Lexecon, Beijing Yong Lim | Associate Professor, Seoul National University, School of Law Moderator: François Renard | Partner, Allen & Overy, Hong Kong

Johanne Peyre: Good morning, good afternoon, good evening, everyone, depending on where you are connecting from. I see that we still have some time. While we are waiting for everyone to join, you can see on the bottom of your screen that there is a chat box, so don’t hesitate to use it to let us know where you are connecting from. Today you are more than 100 people to have reg- istered from over thirty-five countries, and I see that the United States, Hong Kong, and Singapore are among the most-represented countries. I know we’ve heard a lot that these are very strange and challenging times, but it’s still very nice to see that we can find a way to be connected, even if remotely. We can’t wait to welcome everybody live again. Today’s webinar, “Digital: Monopolization and Merger Cases,” is the second part of the 2020 edition of the Antitrust in Asia conference. My name is Johanne Peyre. I am a Special Adviser at Concurrences. I am joined tonight in New York by my colleague Carolina Malhado. She is working hard behind the scenes to make it technically impeccable, and she worked really hard to prepare this webinar with our colleague Gio Xu. We are extremely delighted to welcome you on behalf of the Hong Kong Competition Association, Allen & Overy, Baker McKenzie, Charles River Associates, Compass Lexecon, King & Wood Mallesons, Norton Rose Fulbright, Qualcomm, and White & Case. Before we begin, I have some very quick practical information. After the webinar, we will release the video, the podcast, the transcript, and the synthesis of today’s discussion. You will be able to access all those documents with your Concurrences+ subscription. If you do not have access yet, we will also provide you, I think in the chat box, with a link and a process for how to ask for temporary comple- mentary access.

1 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

Now let’s turn to today’s program. The panel discussion should last about an hour, and after the panel discussion we will have around thirty minutes of questions and answers live with all the speakers. How does it work? It is very simple. To ask a question there is a Q&A box at the bottom of your screen. You just type your question into this box, and you can submit your question to the speakers throughout the presentation or at the end. If you want your question to be answered by a specific speaker, don’t forget to mention that in your question as well. During the webinar you will also be able to vote for the questions that are being asked by clicking on the “thumbs up” and the most-voted questions will appear at the top of the list, which means that they will have more chances to be asked and answered by the speakers at the end. During the session all the participants’ microphones and videos are turned off by, but during the Q&A session we will be able to turn on your microphone if you want to ask live your question to the speakers. There is also, as I mentioned, a chat box. You can use this to liaise with the speakers, but please do not use it to ask your question because then the speakers will not see your question at the end of the session. Only use the Q&A box for that. Another practical information to mention here is about CPD. At the end of the webinar, Carolina will post in the chat the form to get CPD credit. In order for you to receive CPD credit you will need to fill out the CPD form and send it back to us at concurrences- [email protected]. We are, needless to say, very thankful to our speakers for having accepted our invitation, and to our sponsors also who make it possible to have this webinar and to have it free for all attendees. Today’s panel will be chaired by François Renard. François is a Partner at Allen & Overy in Hong Kong. He is a renown competition lawyer, dividing his time between Asia and Europe. I am very delighted now to turn to François to introduce our distinguished speakers. François, the floor is yours. François Renard: Thank you, Johanne. The reason, I think, why we will be focusing today on the digital sector for an hour and a half with our distinguished panelists is really because we are seeing a very long list of developments in the last five years. When you think about it, it started in 2015 with the Android case in Korea, but since then we have had an extremely long list of developments. In fact, if Concurrences is able to make a summary of this at the end, I will be very impressed. The truth is that it will be impossible in an hour and a half, despite the fact that we have great speakers today, to cover all those topics. We have had developments in the regulatory spheres — just the publication of the Draft China Guidelines on E-commerce yesterday is a good example — but there are many of those in Korea, Japan, Singapore, and many other places.

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The market surveys are extremely important. We have seen the impact of the inquiry on digital platforms in Australia, which is another amazing development, because actually it was the first in the world to do that. Now we have abusive cases, we have merger cases, and we have new abusive cases — one just decided or brought in Taiwan — and we will be focusing particularly on Korea, which has been very focused on those cases. We have other types of cases as well, which, let’s say, are probably atypical. The ones on platform-to-business (P2B) protections and transparency questions in Korea and Japan are key, and obviously influenced by their counterparts in Europe, but probably being the first ones of many in the region. There is also a focus on data protection and consumer protection, and we can see what has happened in Singapore. As you see, there is a long list of different initiatives in the digital sector only and very focused on that sector. I am pleased today to be joined by four speakers, who will, as you will see, bring their wisdom and experience in these matters. Lilla Csorgo from Charles River Associates will focus on merger control. Knut Fournier from Stubhub will focus from the in-house perspective on search issues, everything related to search. Kun Huang from Compass Lexecon will focus more on the self-preferencing issues that we have seen in different countries. Finally, Yong Lim will focus a little bit more on Korea, which I have to say is probably first in class in the region — probably with Australia — on the digital cases. Without further ado, I would like to give the floor now to Lilla. Lilla Csorgo: Thank you, François. I am starting off with an agree/disagree question on which I understand you have but- tons on your screens to vote one way or the other. That question is: “Competition law is generally poorly placed to address the competition issues arising among FAANG and other large digital players.” I think you have about thirty seconds to vote one way or the other, and then I will read out the results once those are available. I will get started, since time is limited. As François noted, I am going to be focused on the merger issues in this regard. The words that have come to be associated with merger analysis in the digital space are not new, but they are more frequently used than they used to be. They are things like network effects; two-sided markets or multisided markets; zero pricing; killer acquisitions or, related to that, nascent competition; and, perhaps a little less commonly used, conglomerate or leveraging effects. If you are in Parliament or otherwise in government and you are considering these questions, then those are not the words that typically arise when you are talking about the competition issues in this space. The words that come up are things like privacy; media, particularly traditional media; plurality of voices and diversity of voices; echo chambers; and even democracy. Just by way of example, as François noted, Australia is one of the first agencies to come out with a report in this area. In 2019 they did a report on online search engines, social media, digital platforms, and particularly competition in media. This was an over-600-

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page report, and in that report the word “merger” came up eighty-three times, while the word “privacy” came up 1350 times. I think in some ways that is no surprise, because if we look at this sector at a very high level, then the traditional red flags of competition do not come up. When we think of price, many of these products continue to be zero-priced on the consumer side. On the advertising side, they are typically sold through auctions, so there is no clear scope for market power there. They continue to be innovative. In fact, the quality issues are really where we are left with pointing to the traditional concerns of competition law, so that would be potentially an erosion of the quality parameter of privacy. But, nonetheless, I do not think that the politicians and other people who are involved in this area are wrong to say that these other issues, including things like plurality of voices, or even in an extreme democracy, are not potentially linked to questions of a lessening of competition in this area. So what have we — and by “we” I mean sort of the grandiose competition community — potentially done wrong? One of the possibilities is that we have done nothing wrong, that this is essentially, apart from the odd abusive conduct by these large firms, a question of superior competitive performance and, if there continues to be concerns here, then it really should be a regulatory one rather than a competition enforcement one. The other possibility is that abuse is actually quite rampant and that the whole format of that kind of enforcement by competition agencies is very slow and tends to take place after the fact, so even though there might potentially be large fines for abusive conduct, and even cease-and-desist orders, then what you end up with is still victims who are long dead, or at least relegated to niche positions, and they are not in a position to challenge the market power of those players. In the merger realm, the complaints have been that the competition agencies have been poor at recognizing acquisitions that are so-called “killer acquisitions,” meaning that they are mergers that result in a lessening of potential competition; and also in the merger realm that competition agencies have been poor at recognizing mergers that result in a lessening of competition not because of some sort of horizontal overlap in the products but, rather, because of an overlap in assets, particularly in data, that might raise barriers to entry and expansion. Focusing on mergers, what have the recommendations been in terms of how this might potentially be resolved? In most places none of these things have been implemented, and it is of note, for example, that in Singapore, when they were considering possible bigger changes as to how to address potential concerns in this area, they really just sort of settled on “Well, we just need to make our guidelines a little bit clearer in terms of the kinds of issues that we are interested in and how we would actually analyze them.” But, nonetheless, particularly, as François noted, Australia has taken the lead in this area. There are two things that are coming straight from Australia. They think that the merger law should be amended to clearly include the prevention of potential competition or lessening of potential competition, and it is interesting to note here that there are a lot of countries that, of course, already have this. Another one coming from Australia is that the merger law should be clearly set out to include the acquisition of assets, not just

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products, and particularly the focus on overlapping products, and again it is of note that there are many countries that already provide for that. The other recommendations have been focused on lowering the thresholds for merger notification or changing them — for example, Austria and Germany have changed from a turnover threshold to a transaction value-based threshold. Australia again has said that in their voluntary regime they would actually make it compulsory for firms in this sector to notify any transaction, so essentially lowering that threshold to zero. In terms of more radical recommendations, one of them is to change from a balance-of- probabilities to a balance-of-harm approach to mergers. Of course, this is quite extraor- dinary in an enforcement setting, but it is not unusual in government otherwise. Essen- tially, that would be to take low-probability events that have a large potential for harm and weigh those in a way that you might actually decide to stop the merger. Of course, government would take this approach often in cases of, say, something like a one-in- 300-year chance of a flood, and they may well build levees to try to protect against that kind of flooding, and we as taxpayers would be grateful in the situation if there is indeed a flood that is one of these one-in-300-year ones. Moving away from the amendment context, the focus has otherwise been on emphasiz- ing that mergers are not just about horizontal overlap, or even vertical overlap, but that there is the potential for conglomerate effects. Historically, of course, that has been largely ignored, with the view that conglomerate mergers are largely efficient, or at worst benign, but to now focus on those potential conglomerate effects, where one of them would be very similar to the question of asset acquisition, really data acquisition being the focus. And the other one being that perhaps there is an expansion of network effects as a consequence of the merger of products that do not otherwise overlap. I have to say about this second one that I do not see how it is completely clear how you would have stronger network effects that would result from non-overlapping products coming together, but we can discuss that in a little bit more detail, because I see François is giving me the sig- nal that I am at the end of my time. Thank you. François Renard: Thank you, Lilla. Can I ask Kun to react and give us another point of view on how merger control is evolving? Kun Huang: Sure. Thanks, François, and thanks, Lilla, for that interesting summary and discussion. I think it is fair to say that there has been a trend among major jurisdictions towards increased intervention in mergers involving digital platforms, including adopting measures that will lower the hurdle for authorities to intervene, such as changing the notification thresholds, as you mentioned. I would like in my reacting to your comments to add two quick discussions of this round for China, as that is the region I am more familiar with.

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First, I think there has been a recent development in China that is largely consistent with the global trend of increasing intervention, which could have significant implications for future merger filings by Internet companies involving the so-called variable interest entity (VIE) structure in China. Just by way of background, the VIE structure basically is a type of contractual control. In a typical VIE setup, the actual controlling party does not own shares of the operating entity, but it has de facto control of the business operation through a series of agreements. In a typical VIE setup, the controlling entity is incorporated overseas with the controlled operating entity operating as a domestic company that carries out actual business. In July 2020, the State Administration for Market Regulation (SAMR), which is the Chi- nese merger review authority, unconditionally cleared a joint venture between a man- agement consulting company and an information technology company involving VIE structure. This is the first time that the Chinese antitrust authority accepted an unconditionally cleared concentration involving parties with a VIE structure. I think the practical implication for digital platforms is actually quite significant for two reasons: (1) many prominent Internet companies in China actually use such a VIE setup; and (2) mergers involving VIE structure in the past have not been formally accepted and, therefore, have not been subject to antitrust review by the Chinese authority. Therefore, I think SAMR’s recent acceptance and unconditional approval of the joint venture involving a VIE structure changed the dynamic quite a bit. I think it shows that SAMR still has the ability and determination to review these mergers under the Chinese Anti-Monopoly Law including digital platform mergers involving a VIE setup. I think, as François mentioned earlier as well, literally this morning SAMR issued an Antitrust Guideline for the Digital Economy on its website to solicit public feedback. In that Guideline, SAMR specifically states that VIE-related concentrations meeting the filing threshold need to file with the merger review authority, so I would expect to see a lot of future filings on digital platform mergers down the road, which will be very interesting. The second thing I want to quickly mention is the focus of conglomerate effects, which Lilla mentioned as well. In the past, I think SAMR has not been shy in terms of bringing up conglomerate effect concerns focusing on the potential foreclosure effect following tying or bundling arrangements after the merger. Given the nature of the digital economy that often sees platforms expanding into adjacent markets, to the extent that a platform wants to implement this kind of strategy via an acquisition, now that the VIE hurdle has been relaxed or moved, I also expect that the Chinese authorities will give digital mergers a serious look with respect to conglomerate effects, despite that economists and practitioners have some different opinions and are mostly saying that conglomerate effects will be mostly procompetitive. My experience with the Chinese authorities is that they will look at conglomerate effects when it is necessary, and they will look at this really hard and seriously. Thank you. François Renard: Thank you, Kun.

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Knut, can I give you the floor to change the topic a little bit and focus on your own interesting experience? Knut Fournier: Hi, everyone. I am Knut from the Hong Kong Competition Association and also possibly with a little bit of an in-house view on today’s topic. One of the things I want to talk about today is search engines and some of the reasons why we have not seen as much focus on search engines and search companies in Asia as we have, for instance, in Europe or more recently in the United States. To analyze that, I will break it down by countries — that makes sense — but also I want to look in each country at whether there are policy reasons behind some of the enforcement choices that were made and whether that explains the cases (or the absence of cases) and also look at the competitive landscape. Before I became an in-house lawyer, I was really less sensitive to the notion of the competitive landscape. Of course it matters whether you are dominant or not, but I think when you are doing competition law from a private practice perspective or when you are looking at it from the point of view of an academic, you have a tendency to perhaps see dominance as a black-and-white issue, a kind of yes-or-no question if you want. Mov- ing in-house and suddenly being on the customer side — my company is a customer of most search engines across Asia Pacific; we advertise on search engines and social media platforms in Japan, Taiwan, Korea, China, Singapore, South East Asian countries — it therefore forces you to become more granular. For instance, let’s look at China. Baidu is a large Internet search engine, it’s a very large Internet company. Probably there are some policy reasons behind the fact that we have not seen a lot of focus by public enforcement authorities on large Internet companies in general. Not just Baidu, but the other large Internet companies, have generally escaped to a large extent the clutches of the antitrust regulator in Mainland China, and part of that is policy. It’s not a crystal ball exercise. All you have to do is look at what the Chi- nese government publishes about its intentions for Chinese companies going out of China and dominating the Internet market in other countries. It is written in black and white. If you look at the 2015 “Internet Plus” strategy, for instance, the Chinese government announced that it was going to support three Internet of Things local companies and basically let them develop as much as they need at home and then unleash them on to the world; and had the intention of tripling its cloud size by 2020, which I believe it has done. All of that is policy related. But look at the competitive landscape domestically. Baidu is not alone there, especially because now domestically it is facing a relative newcomer, Sogou, which is another homegrown private Chinese company, which captured around 20-to-25 percent of the market — that is not nothing; that actually matters — and, even if you were managing to bring an antitrust case against Baidu, you would still have to account for the fact that there is another search engine that accounts for almost a quarter of the market. And the market share of Sogou is even larger on the mobile Internet, which of course is fairly important because it develops faster than the non-mobile Internet, and it is even larger with young people, people below the age of thirty — which of course matters enor-

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mously because these are the people who use the Internet the most; these are the people who shop online the most, and it is also the fastest-growing segment of Internet users. Effectively what that means is that when you are a company like mine, when you are on the buying side or when you are on the customer side, you have a choice. You do not have to go to Baidu. If Baidu were trying to suddenly impose ridiculous conditions in its advertising contracts through agents, you could walk away from that. Of course it would be difficult, but it would not be impossible. A 70-to-75 percent market share is not a 95 percent market share. So what we are seeing here is a genuinely different competitive landscape. There are other factors in China. We are looking, for instance, at the very high evidentiary burden that is put on private plaintiffs, and that, in parallel to the lack of cases by public enforcers, probably explains to a large extent the lack of cases in private enforcement, the Article 50 enforcement. In 2010, Baidu was sued in court by Tangshan Renren, a medical services consulting provider, for effectively blocking its website from Baidu search results. The case was dismissed in the end. The court’s analysis was interesting, in that it did recognize that Baidu probably — at least at that time, ten years ago — was dominant in the search sector, but the court also found that it had good reasons for delisting or blocking the results of the plaintiff. That came with a very high evidentiary burden on the plaintiff that had to prove dominance with solid economic analysis support, and all of you who have tried to do that know that is not it is not easy to try to convince a judge that an Internet company is dominant. That high evidentiary burden was confirmed in court in 2014 in Qihoo v. Tencent. Going back to the competitive landscape, it has changed a lot since that case ten years ago. The last decade has changed a lot, where we see Baidu becoming less dominant than it was at that time. That explains probably the lack of cases. And we find that in other countries of the region as well. If we look at Japan, for instance, where my company is also active, we see a recent interest in Google in relation to the Fitbit acquisition. There was an announcement by the new head of the JFTC that the JFTC will look at it in an interview with Reuters a few weeks ago. That is probably a premature announcement since, to the best of my knowledge, there has been no investigation opened against the acquisition in Japan. So it seems a bit strange that a regulator would actually go to Reuters to announce a future investigation in a hypothetical case. But that’s another problem. Interestingly, we have seen an Amazon case recently. While there is a lack of search engine cases, the Amazon case tells a lot about perhaps how the competitive landscape affects the policy focus on the enforcement focus of the regulator. Amazon came into Japan relatively late; it was not in Japan ten years ago. The Japanese e-commerce market was dominated by local players, Rakuten primarily. Amazon successfully entered the Japanese market, offered free delivery, offered next-day and same-day delivery, and absolutely crushed the e-commerce market in Japan. The result of that is it ran into trouble with the regulators for something relatively minor. In 2018, Amazon was investigated by the JFTC for allegedly forcing its sellers and forcing its suppliers to shoulder parts or all of the discounts that it was offering to consumers. There is always an interesting question here of whether you really want to open

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an antitrust case when the result of the alleged activity is actually a discount for consumers. But, of course, here the argument was not that Amazon was crushing or exclud- ing other e-commerce companies, but that it was abusing its market power against its sellers and its suppliers. Here we see a lot of the thinking that we have seen in countless retail cases — this is the kind of 7-Eleven thinking, this is the minimart thinking, of going after the dominant retailer and trying to protect the rest of the supply chain in that economic sector, rather than necessarily taking into account the effect on the end-consumer. Again, here we can see that there is an effect of the competitive landscape on the priorities of the regulator. Looking at search engines again, there has been no Google search case in Japan. Again, Google in Japan is not Google in Europe. It holds 70-to-75 percent of the market in Japan. That is not 95 percent. Another solid player in Japan is Yahoo! Japan, which is a separate company from the rest of Yahoo! and is owned by Softbank, the large Japanese Internet and telecoms conglomerate. I believe that if we ever see a Google case one day in Japan, it will come from a Softbank complaint, but then you wouldn’t want to impose anything on Google that you would then want to see applied to Softbank or Yahoo! Japan a few years later if Yahoo! Japan was to continue to grow. Of course it is difficult not to mention Korea here. The competitive landscape is actually quite interesting. We see a split between two types of Internet uses in Korea. We have seen Google argue in the European Union and we have seen Google argue in the United States that it is not really dominant, or that its dominance is not as alleged, because it is not competing against the other search engines but it is competing against e-commerce companies, like Amazon, or it is competing against social media, or for screen time in general, or attention, or e-commerce search results, so it is competing with Facebook and WhatsApp. Interesting argument, but it’s true. If you look at the Korean market, effectively you’ve got two types of Internet uses. Google is certainly dominant in the search sector, but not when it comes to e-commerce. An Internet user in Korea is very likely to use Google for political news, election results, for instance, but when it comes to buying movie tickets or buying a new pair of running shoes, you would probably go straight to Naver. Naver has established its dominance, a very strong market position and a brand, in the e-commerce sector, so Internet users are much more likely to go directly to Naver and not go through another search engine because generally the search results of Naver for e-commerce are preferred by local Internet users. Naver got in trouble for some of its practices. We have all seen the recent announcement that the KFTC was imposing a US$23 million fine on Naver for tweaking its algorithms a number of times between 2012 and 2015 to gradually favor its own website as opposed to the websites of its e-commerce competitors, such as Gmarket or Auction. François Renard: Knut, sorry to interrupt you. On that note, can I ask Yong to jump in and give a little bit of a touch on Korea? I think this is a good way of transitioning. Yong Lim: Just to add to what Knut was mentioning with regard to the competitiveness of the Korean market, what has been really striking is the different business models that are

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constantly evolving and, thus, competing with one another. So you have a pure online play in terms of e-commerce, like Open Market; you also have firms that mix offline and online, like department stores that have dedicated online sites as well; and you have what we call home shopping websites that have similar plays. So there are different business models that keep evolving. One challenge that came up in the Naver case that Knut mentioned was how to grapple with these evolving business models and how to define the market. I think that is going to be a particular challenge when dealing with these cases going in. François Renard: Thank you, Yong. It is indeed something that we have to look at, and I look forward to hearing from you a bit later on those different Korean cases and approaches. Can I now please give the floor to Kun? Kun, we are running a little bit late, so, if you don’t mind just going directly into your presentation. Kun Huang: Thank you, François, and many thanks to Concurrences for inviting me to speak on this panel. In the next ten minutes I will focus on discussing a particular type of conduct in the digital economy, so-called self-preferencing, which has recently attracted increasing attention in multiple jurisdictions. To start, let’s first go to some definitional issues. What is self-preferencing in the context of the digital economy? In recent years it has been widely realized that digital platforms are categorized by features like direct and indirect network effects, economies of scale and scope, and privileged data access, and these characteristics are believed to have potentially led to the emergence of gatekeepers to digital markets. When these alleged gatekeepers in one key market channel provide preferential treatment to their own services or their subsidiaries’ services over rivals in a neighboring or downstream market, this so-called self-preferencing has raised some competitive concerns. Some leading examples include the famous Google Shopping case investigated by the European Commission and the investigation of Amazon’s dual role as both a seller on the one hand and an operator of its Marketplace hosting third-party sellers on the other hand. Also there is the recent case mentioned by Knut and Yong in Korea, similar to the Google Shopping case, where the KFTC determined that Naver, a search engine operator, abused its dominance to favor its shopping and other services over rivals. When we look at these cases, I think the natural question is: How do we think about self- preferencing from the angle of competition analysis? The first thing to realize is that self-preferencing seems to be a fairly common practice in the digital economy. Companies may have a natural tendency to favor their services or products, even absent any anticompetitive motives. Economists have recognized some possible procompetitive rationales of self- preferencing. For example, self-preferencing could be thought of as a way to reward and preserve incentives to innovate. It is well known that it takes a tremendous amount of investment for platforms to grow to where they are today. When these platforms have

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the ability to expand into the downstream or neighboring markets and benefit from the larger user base, rich data, and experience they have accumulated in their platforms, that actually will give them incentives to invest in the infrastructure of the platforms, provide a better-quality product, and also continue future innovation. If we consider a systematic ban on self-preferencing and impose a requirement of granting equal treatment to all rivals, that actually could diminish its incentive. Second, I think that self-preferencing behavior in some ways is quite similar to what we call integration. It is well known in economic literature that vertical integration could result in the elimination of double marginalization and outward expansion, which are typically treated as procompetitive benefits in vertical merger analysis. I think as a general principle, and also as pointed out in the Furman Report commis- sioned by the European Commission, self-preferencing should not be deemed as per se abusive and it should be subject to an effects test. Having discussed the procompetitive benefits of self-preferencing, the natural question then is: When does self-preferencing become anticompetitive? Unfortunately, I think there have been very few settled court decisions to date to offer much needed clarity on this issue. There have been several theories of harm that were floated. Some people treat self- preferencing as a refusal to supply. They argue that dominant platforms are in fact an essential facility for the distribution of rivals’ goods and services without which the rivals cannot compete, and effectively they argue that self-preferencing should be subject to the essential facilities doctrine. Some other people treat self-preferencing as a more traditional form of exclusionary conduct — for example, like tying or margin squeeze — which typically involves leveraging market power in one upstream market to another to foreclose its rivals downstream. Yet some others treat self-preferencing as a form of unlawful discrimination. These theories of harm have not been settled and they are going to continue to be the subject of debate. When we turn our attention to China, where does China stand in analyzing self- preferencing? China faces a similar uncertainty in terms of which theories of harm should apply to self-preferencing. There are few formal court antitrust decisions or cases in China that target self-preferencing in the context of digital platforms. However, I think there is some self-preferencing behavior of digital platforms that has caught media attention and has been the subject of scholarly debate in China. One example is earlier this year during the pandemic, it was reported that users of Lark, which is an enterprise collaboration app developed by TikTok’s parent company ByteDance, cannot open any Lark links in WeChat, China’s widely popular social network app; Lark users need to copy the link and open it in a browser instead of opening the app directly via WeChat. Some commentators viewed Tencent’s decision to block Lark’s links in WeChat as self-preferencing because Lark is considered a rival to WeChat’s enterprise productivity app. I should emphasize that this debate is far from over and we are still far from reaching an agreeable framework to analyze this kind of behavior in China. But I think it is clear that self-preferencing has raised interest from the general public as well as scholars in China.

11 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

Second, as discussed above, one of the leading theories of harm for analyzing self- preferencing is to treat a dominant platform as an essential facility, but I think that this has been quite controversial, depending on which jurisdiction you are in. As far as I know, the concept of essential facility is not specifically discussed in China’s Anti-Monopoly Law enacted in 2008. But in June 2019, the Chinese authority issued Interim Rules on Prohibition Against Abuse of Dominant Market Position, which may have some particular relevance or implication for how to analyze self-preferencing in China. In particular, I think that this interim provision highlights that when it comes to determining market dominance in the digital or Internet industry, one can take into account, among other things, the business models, size of the user base, network effects, locking effects, the ability to master and process relevant data, and the market power in related markets. It also adds more color to the Anti-Monopoly Law with respect to whether refusal to supply could constitute an antitrust violation. Specifically, the interim provision prohib- its entities with market dominance from refusing to allow its rivals to use its essential facilities under reasonable conditions unless they have a valid justification. If we think about these two things together — an emphasis on the features of a digital platform in evaluating market dominance plus an acknowledgement of the essential facility concept — this could suggest that the Chinese authorities may be open to relying on the essential facilities doctrine as a potential framework to analyze self-preferencing behavior in the digital economy, but whether the Chinese authorities will indeed do that I think remains to be seen. I see a thumbs-up to finish, so I will stop here. Thank you. François Renard: Thank you, Kun. I appreciate that. Lilla, do you have some perspective inside or outside of China on self-preferencing? Lilla Csorgo: It’s not so much inside or outside China or Asia but a more general comment. Of course self-preferencing is not new. The example that is commonly used is that gro- cery stores will self-preference their private labels by putting them in a more attractive location, normally at eye level, and there have been questions around that kind of self- preferencing historically. What is interesting about that is that it is always that example that comes up as “Oh, it’s not really necessarily new,” suggesting to me that it was not so prevalent historically, and, as Kun indicates, it seems to be quite prevalent among these platforms now. The other thing that I think is potentially different is of course the type of firm that is engaged in it. I don’t want to overstate the differences across these theories of harm and how you would want to approach it. I would very much not want to get caught in juris- prudence of, say, essential facilities that might not actually apply generally all that well, and particularly all that well in these types of situations, rather that we take a step back and ask the question: Are firms potentially being rendered less competitively effective; and, as a consequence, is there some sort of lessening of competition?

12 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

But in that context I do wonder if some of the issues that have come up in the merger setting are potentially applicable also in the abuse setting. Of course, a lot of these firms that have potentially been targeted by self-preferencing are not ones that are obviously competitively effective now. So we have had this question arise in the merger context of nascent competition and killer acquisitions, and I wonder if that would potentially apply equally in the abuse context of killer abusive behavior against a nascent rival. François Renard: Thank you, Lilla, for that additional touch on that topic. Yong, could we have a go at Korea, which is the leading authority these days in this sector? Yong Lim: Sure. First of all, thank you to the organizers of this event for inviting me. I am honored to join my fellow experts on the panel today. What I would like to do with my allotted time is to use the excellent observations by my fellow panelists as a springboard to take a closer look at what is actually transpiring on the ground, particularly in Korea, and maybe provide a few observations of my own. As everyone knows, there is a real-time ongoing debate on what approach regulators should choose in tackling market concerns posed by the digital economy. Some advocate invigorated ex post enforcement by authorities; others argue for more ex ante regulation. Some believe that existing competition law tools are sufficiently malleable and robust to meet the challenge; others believe that we need new tools that in some cases exceed the conventional boundaries of competition law in order to do the job. In the case of Korea, what is interesting to me is that the authorities have opted for a cocktail of regulatory approaches that mix these different options. First of all, there is now heightened antitrust enforcement in the area, as showcased by what our fellow panelists have already mentioned several times, the KFTC’s Naver decisions for three different charges that came out recently in the past two months: one related to search for shopping; another on video content; and the third on real-estate offerings data. In June the KFTC also sanctioned Yogiyo, which is a food-delivery app service operated by the Korean subsidiary of Delivery Hero, for MFN clauses which purportedly pre- vented restaurants from selling at lower prices to competitors or other sales channels. The KFTC Chairwoman has also recently mentioned that there are other ongoing investigations involving large online platforms — namely Google, as François also mentioned — and the expectation is that the KFTC staff will bring charges against Google before the end of this year. Another ongoing case is the Delivery Hero Korea/Woowa Brothers merger case, which involves a tie-up of the two largest food-delivery app services in the country. Again, that is ongoing and we have yet to see how the KFTC will come out on that case. On the other hand, Korea has also moved to enact ex ante regulation that includes the proposed Act on Fairness of Intermediated Transactions Through Online Platforms, which purports to promote transparency and fairness in transactions between online

13 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

platforms and businesses, which is similar to the European Union’s P2B Regulation. The KFTC released the legislative draft in September and plans to submit the bill to Korea’s National Assembly, our legislative branch, early next year. The KFTC has also announced that it plans to comprehensively review and amend the current e-Commerce Act to address platform-to-consumer issues in addition to P2B issues, where amendments will strengthen the duties and responsibilities of platforms toward consumers. Again, the plan is to submit the legislative proposal to the National Assembly by June next year, which means we should see a draft at least by early next year. In the meantime, the KFTC has amended its Merger Analysis Guidelines to allow greater focus on data-related competitive concerns. The current comprehensive reform bill of our primary competition law, the Monopoly Regulation and Fair Trade Act (MRFTA), includes amended merger filing rules where filings will be required not only in terms of the parties’ sales but also the merger transaction amount, like other countries (for example, Germany). The KFTC, however, is not only looking to amend existing rules, but is also working on creating new guidelines and rules that address anticompetitive concerns posed by online platforms which would target behavior such as self-preferencing, MFN clauses, discouraging multi-homing, etc. According to the KFTC, they plan to finalize the new guidelines by June of 2021. Korea’s National Assembly is also looking to at least partly address app store dominance issues directly through a new law that would prevent certain dominant app stores from requiring apps to use their own proprietary payment systems, an issue that has been dealt with through private litigation by Epic Games in the United States. The KFTC and the Ministry of Science and ICT have also announced that they could possibly look into this issue. As you can see, there is a hodgepodge of different regulatory initiatives, ongoing pro- posals, and investigations going on in this area. Now a few observations. In this context, we need to really be careful when considering the cumulative effects of overlapping and intersecting regulation and really need to avoid falling into what I call “the fallacy of composition.” Individual regulations might make sense — in their own view, they have their own regulatory rules, which are per- fectly justifiable — but if they start to overlap and you have cumulative regulations in place, the effects and the outcome might be different. I think that is one thing that we have to be very careful about in approaching the various effects. One easy example of regulatory effects conflicting with one another that has been widely discussed is the tension between competition enforcement and privacy regulation, where data access remedies to invigorate competition might impede on the privacy of data subjects. Another tension that we might think about related to the platforms is where you have, on the one hand, authorities strengthening the liability or responsibility of platforms regarding the content on those platforms and saying that they have to be more aggres- sive in regulating hate speech or misinformation, like fake news; and, on the other hand, you have competition authorities or other authorities saying, “You have to be neutral;

14 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

you should not unfairly discriminate between content from different players.” So you have another tension there. We might end up in a place where there is a whole lot of regulatory cost due to different regulatory initiatives, whereas the effects are canceling out each other and so we do not achieve any of those goals, or at least there is some waste going on. One interesting point here is that these regulations can also increase the cost of doing business. They may actually raise entry costs. It is notable that the Korea Startup Forum, an alliance of startup companies in Korea, has raised objections to at least parts of many of the new proposed laws and regulations in Korea on grounds that they would actually make it more difficult for them and other startups to do business. A second observation is the use, in Korea at least, of unfair trade practices rules, in particular abuse of superior bargaining position (ASBP). According to my understanding, there is increased interest around the world in possibly utilizing similar tools. The KFTC relied on ASBP to adjudicate the Delivery Hero MFN clause case, which means that there is no direct requirement in these cases to consider competitive effects of a conduct but, rather, they can adjudicate liability based on unfairness. The Naver case and these new cases definitely pose some difficult questions in terms of the merits, particularly self-preferencing, but I think there is also an issue of remedies. The final remedies have not come out in the Naver decisions yet. They will probably be issued in the written decisions that will come out in the coming months. But, as I understand it, at least the staff recommended that Naver should not create and/or use its search algorithms that would be unfairly advantageous to products marketed by ven- dors that used Naver’s Open Market service — so basically not to do self-preferencing. You constantly have to tweak algorithms. That is part of the game. That is how you compete in and on these platforms, among these platforms, and so to state that you cannot unfairly advantage one party or another, how does that translate into actual enforcement or actual adjudication of whether compliance is done? So I think there are going to be very thorny issues and questions and disputes regarding fashioning remedies and adjudicating whether remedies have been complied with. François Renard: Thank you very much, Yong. Knut, on that note, or maybe other notes, it would be interesting to hear your perspective about the impact of how all those wonderful theories may apply to companies. You to represent one of those companies. What is your take on that? Knut Fournier: Thank you. That was very interesting. There are a couple of very important points in what you just said that I are really worth insisting on. Abuse of a superior bargaining position, if it were adopted in other jurisdictions, would be quite a serious change in thinking. It would be a bit of a mini-revolution in abuse-of- dominance cases and monopolization cases, because so far this really has set out Korea from the rest of the pack in terms of policy, in terms of enforcement, and in terms of how competition authorities look at dominant companies. Abuse of a superior bargaining position really affects every aspect of your business when you are a company with a

15 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

substantial market share or strong market power coming from other factors. Clearly, it is interesting to see where this is going, but any change in that area is likely to be very slow, and I am not sure if any competition authority would feel that they could adopt that without legislative changes because this is not how the law is designed at the moment in most jurisdictions. Guidelines are great, but in most countries they are not always binding, they are just guidelines. I think what we are seeing right now in Korea is quite interesting because the KFTC is saying: “We have done quite a few cases in monopolization. We have done quite a few cases in abuse of dominance. Now let’s extract the good lessons from these cases and turn them into viable rules for companies’ behavior in the future.” I think this is probably how you really want a regulator to progress, rather than publishing policy document after policy document, or even enforcement guide after enforcement guide. You really would want them to have that relatively humble position of saying: “Okay, we have done things right, we have done things wrong. Let’s remember that companies need predictability, they need stability, they need the results, and they need the outcome to be predictable.” One of the best ways to do that is to look at past cases and say: “This is how we have done things in the past and, thus, we intend to repeat it. That therefore becomes, if not the rule for everyone, at least our guide. As regulators, we are going to be guided by the way we have done this in the past.” I think this is quite positive. As an in-house, I encourage that type of development, rather than seeing regulators sit down and write hundreds of pages of guidelines before they even have a case on their hands. This is more interesting. François Renard: Especially if all those guidelines are slightly different from country to country. Johanne, we have finished the presentation. We have several questions listed here and we have questions internally as well. Johanne, would you like to take over for a minute? Johanne Peyre: Yes, I can take over. I don’t want to take too much of your time because this is such an interesting and complex topic and we have probably a very lively discussion ahead of us. There is still, I think, a lot ahead of us on this topic of how enforcers will address the situation with these platforms in the future. Now let’s turn to the Q&A session. François, you will see in the chat box all the questions that are being asked. François, you can either read the questions or invite the attendees to read them. It is really up to you. François Renard: Behind the scenes we were trying to allocate the questions, but obviously the numbers have changed, so I hope I didn’t get it completely wrong. I think there are a couple of questions on market shares, how to calculate market shares, and how important it is. Lilla, would you mind having a go at that, and obviously other panelists may feel free to jump in? Lilla Csorgo: I will start off with how to calculate those market shares rather than speaking to the

16 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

thresholds. I will leave that to the other panelists. Of course, this is a million-dollar question to which there is no easy answer and there is a good reason why there are so many economic consulting firms out there. It really depends on the situation and the side of the market — for example, on those multisided platforms that we were talking about — and really very much also depends on the theory of harm. Just to give you an example, on the user side an appropriate base may be the number of users, or it could be the usage time. If you are trying to better understand the extent of multi-homing versus single-homing, you might want to look at usage time or number of users who use single-home versus multi-home. On the advertising side, very much typically it is the revenue, but even there, of course, market definition plays a massive role. Consequently, it could be that if we are talking about targeted advertising versus display advertising, the market definition and the market participants differ, and you might want to look at those market shares separately for, say, targeted versus display advertising. If we are talking about negotiation or bidding markets, then that really again emphasizes the fact that so many of these markets are differentiated product markets and we really must keep in mind that market shares might be misleading. That is particularly the case in negotiation markets. Many, if not most, business-to-business product sales are often subject to negotiation, or even outright tenders, and there the market shares might be misleading and understate the importance of competition in terms of the second-ranked bidder perhaps having a huge competitive effect but a relatively low market share if at a particular point in time it was not as successful in winning its number of bids. Unfortunately, there really just isn’t an easy answer to that, and it will depend on the situation. François Renard: Thank you, Lilla. Anyone else — Yong, Knut, or Kun — who would like to jump in here? Knut Fournier: I will jump in, just to use that to answer one of the other questions: “What are the most complicated issues or challenges in merger and monopolization?” The answer is market definition. That conversation will never end. It will never end because markets are evolving, they are fast-changing. Countries have taken different views — for instance, we were talking about search earlier — on whether a certain type of search or whether search in itself is a market. Countries have adopted slightly different views on the kind of evidence you need to bring in a two-sided market case. That will never end. We will continue to have these discussions on market definition, market share, and the relevance of other factors in five years or in ten years. That will absolutely never end. That is the most difficult point, and that is why you need economists. That is why you need specialist lawyers. That is why you need the ability to think in an innovative way. That is why you need to be able to sit down with a business and really understand what they do on a day-to-day basis. What are their options, how they deal with other compa-

17 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

nies in the same sector, whether they react this way or that way when they are facing a no, whether they are able to side with someone else, what would happen if you increase prices — all of that is not a legal theoretical discussion; it is a business day-to-day discussion for your company or for your client, and this should be the place to start. François Renard: Yong, one of the questions is about the European Union versus the United States versus no model. Which one do we pick in Asia? Yong Lim: It depends on what you mean by the U.S. and EU models because both jurisdictions are in flux a bit, so we are talking about actually moving targets. I guess the conventional view is that the United States has taken a relatively hands-off approach and that the European Union is more interventionist. There are those who dispute that, saying that the United States has actually been quite proactive in enforcement, just in a different way. Nonetheless, I think there is no silver bullet to this answer. For Korea, I think we should experiment a little bit more in terms of what is the right regulatory approach for us. As I view it, the EU competition authorities have brought numerous cases — apparently they thought it did not have much impact on the market or invigorating competition — and, allegedly, there are also some industrial policy concerns. They are now searching for new competition tools, etc., more ex ante regulation. Whereas in the United States the conventional view again is that they had a relatively light touch, did not do a lot of merger enforcement action, and now they are gearing up with the new cases coming out. I think Korea has not fully tested our toolbox. We are now in the midst of doing that — the Naver case has come out, the Google case is ongoing, and there will be different cases coming up also litigated in the courts — so I think we should see how those fare and then think more about what rules and laws should be enacted based on what transpires in those cases, like Knut just said. I think a more cautious approach is important. I know that there are people who talk about urgency and say that digital markets are prone to tipping and that we need to be more fast-moving. I believe that. At least in my view, online markets — it depends on the market you are talking about — are quite competitive in Korea and competition is very much alive. I am not saying that there are no problems, but I think there is sufficient time and opportunity to experiment, and I would advocate the authorities to do so. François Renard: Thank you. Kun, can I have your perspective, maybe merging two questions again? Do you think there are complicated topics and issues to handle in particular in Asia, and, in light of what Yong just said, that maybe we should pause here and not follow the same views as, for instance, in Europe or in the United States? What is your view, Kun? Kun Huang: I want to first follow up on what Knut said about the most complicated and lively issues in antitrust analysis. My experience is mostly based on the Chinese cases. I do agree that market definition seems to be at the forefront of the difficult issues. I

18 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

think that in China, in particular when you look at the merger review process, the Chi- nese authorities typically would like to know the relevant market with very clear boundaries. It is not like in the European Commission where sometimes you can leave the market boundaries open. When we talk about abuse-of-dominance cases, when we quickly looked at the guideline issued this morning, they also mentioned that it should draw relevant markets quite clearly, although for horizontal and vertical agreements that sometimes we do not need to draw the relevant market with clear boundaries. My own experience has been that it is notorious and it has been a very challenging task to get a clear boundary of relevant markets. Economists have been working on this issue for forever, but I think no one could reach a consensus. I think, in part, that is because when you think about digital economy competition, it is really a competition for attention. And the potential competition can come from unexpected avenues. For example, if you think about the hotel-booking industry in China, you probably immediately think about Ctrip, but it turns out that Meituan, which is the leading food-delivery service platform in China, actually processes more domestic hotel room nights than Ctrip. That is because Meituan basically accumulates a lot of traffic, attracts a large user base for its food- delivery platform, and then it can expand into the hotel-room-booking business pretty quickly. So you never know where your competition will come from tomorrow. In that spirit, I know that there are some thoughts, probably reflected in the EC report as well, that have called for more focus on analyzing the competitive effects of the conduct rather than putting a lot of attention on market definition issues. I think that is something that is probably worth thinking about down the road. François Renard: My own personal experience in the region is that — and frankly I don’t think this is only in this region — there is a traditional perspective which is still adopted by regulators, and the very first question that they ask is, “What is the relevant market?” So we are still there. Actually this is a problem because whenever we make a merger filing or whenever we try to defend, the first thing that we will be battling on is about a relevant market. Should there be more views out there saying that we probably have to move away from relevant market? That allows me also to make a shift to another question that was asked, which basically is asking whether we are facing cases where the regulators will be going on a fishing expedition and trying to find what works against platforms. Again, is it really in flux? Do we have to focus on a more open perspective, being innovative — that is what I think Lilla was saying — or do we just have to ask regulators to wait and see? Lilla, if I may turn to you, this question is about fishing expeditions. We have the recent U.S. complaint against Google, which is going indeed in all directions. Do you think this is a strategy that regulators should opt for, or be more specific and more granular? Lilla Csorgo: I certainly would not want to go on a fishing expedition against Google. You would ask for even just a small amount of data and your servers would be overwhelmed and you would be unable to carry on your investigation.

19 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

But, setting that aside, of course you cannot reasonably start an investigation, or even carry on an investigation, without having some theory of harm in mind. That might not be fully developed, it certainly might evolve as your investigation goes on, and it might change enough that you open a new investigation or a new aspect of the investigation, but you would not start with a fishing expedition because you would be overwhelmed with information that you would not be able to make heads or tails of without a sound economic framework in order to think about those questions. François Renard: Any other view on this, Yong, Knut, Kun? Yong Lim: I would like to second what Kun said and what Lilla alluded to earlier, that all of these issues of market definition also come up when you talk about anticompetitive effects, so you actually have to look at it again. I do not think that just untethering market definition through conventional rules will make life easier for regulators. I have seen some attempts by regulators to chart an easier course, maybe sidestep the market definition rules — such as, in my view, in Ger- many, where the amendment to the Competition Law talks about intermediation power. I think that is one way to sidestep whether you have to look at one side of the market or all together and just look at intermediated volume. I think that is how they want to try to do that. So I see those attempts. But again, I think market definition is actually a tool or a screen to do a better job in assessing anticompetitive effects. Even if you do that, you once again arrive to the same issues and the same difficulties in terms of assessing competitive harm. Again, I think it is more important to do a better job. To be more analytical does not necessarily mean that it has to be a more hands-off approach or more lenient, but I think it is more important, like Lilla said, to have a clear anticompetitive theory of harm and to really test it properly, especially with the data and analytical tools that we have now. François Renard: I will maybe twist one of the questions that we got about what economic methods we normally use in analyzing those digital cases. I would probably not turn this into “What economic methods?” But let me ask you: Do we have nowadays economic methodology that easily applies to the digital market, which probably has been used in other markets, or do we also have to review those economic analyses, methodologies, or ways of calcu- lating and analyzing the data? Kun Huang: There have been some traditional economic tools economists typically use for market definition purposes, like the small but significant non-transitory increase in price (SSNIP) test and critical loss analysis, which are the most frequent tools that economists have been using. But when we try to apply that tool to the digital economy, it turns out that it is a very difficult process because of the nature of the platform, the zero-pricing phenomenon. People try to improve it, taking into account the two-sided market nature, and then you try to take into account the direct and indirect network effects, but when you try to implement the SSNIP test, the formula becomes super-complicated with a lot of requirements for data which you almost for sure will not have in the actual world.

20 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

That is why I think it has been a struggle, in my personal experience as well, as to how you are going to rely on some reliable analytical tools to come up with a well-supported market definition. I am not sure whether Lilla has some better ideas or better analytical tools that can shed light on this issue, but that has been my personal experience. François Renard: Lilla? Lilla Csorgo: Just to reiterate what has been said to date, I don’t think we should over-emphasize market definition in all these cases. At some point, it is a tool that has been developed to try to better understand market power and at times it might not actually be all that helpful, but if it does seem like a tool that is helpful in a particular situation, then I agree with Kun that something like zero-pricing and the multisided nature of these products can very much confuse the situation and make it that much more challenging. I also think that can be a rabbit hole, an economic rabbit hole even, that we sometimes can avoid by stepping back and asking, “Who are the consumers, who are the users of this product; and, if they are going to be harmed, how are they going to be harmed?”— to come back to those basics and ask, “Is this tool helping me in answering that basic question?” François Renard: Apparently economists will need to be innovative as well. Knut, we have been talking about places like Korea, China, and obviously Australia, and we have been talking about other markets. You happen to be based in Hong Kong. Do you see any development in Hong Kong or in the area here? Do you see new digital cases coming up here? Knut Fournier: Personally I would be surprised. The economy bases like Hong Kong, or even Singapore for the South, are very digitalized and are digitalizing, but the competition authorities are not the same in terms of their size and their budgets. As some of the panelists mentioned earlier, when you begin this kind of large-scale investigation against companies that are effectively holding more data than any other sector in the economy, you have to have the firepower to go through that data, you have to be able to analyze documents in volumes that you have never seen before, and right now I would be surprised to see a competition authority in South East Asia or in Hong Kong take on a large digital case. Another aspect of it is that these are dominance cases, and right now these authorities have not shown an appetite for dominance cases. They are focused on cartel cases and they have developed their expertise really in that area. They have not taken on many dominance case — almost none in Singapore, and none publicly in Hong Kong where there may have been complaints but there has not been any public investigation. We have not seen many in South East Asia either, and if we have, they have been in the sec- tors that make sense for the economy and for the stages at which the economy is — infrastructure, industry, and transportation, which make up a very large share of the

21 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

economy in many of these countries, as opposed to South Korea, the most connected country in the world. I think that makes sense, and possibly, if you are a young competition authority, your first dominance cases should probably not be against Google. François Renard: Yes, Google or another one, obviously. Thank you, Knut. One last question for all of you. As we all know, our panelists have a crystal ball. What do you guys see in your respective crystal balls? Five years from now, do you think we will be — going back to the title of this conference — converging into a similar approach throughout Asia — taking into account what Knut just said, that maybe some countries will be a bit more advanced than others — or do you think that we will have a relatively diverse perspective on all those key topics? Lilla Csorgo: That is a very, very difficult question. I think Asia is sufficiently diverse. There are so many different Asian countries that have had laws that are largely based on the Euro- pean example, including China, but China has very much gone its own way since the development of that basic premise of the law. And, of course, the United States is always seeking to influence in terms of how competition law is interpreted and understood, including throughout Asia. The truth is that, as we have discussed here, the digital setting in Asia is radically different from what we see in North America, the South Pacific (meaning New Zealand and Australia), and in Europe, and so there is no reason to think that, even if the law is applied the same way, that the fact situation would be similar enough that we would get similar outcomes. François Renard: Knut? Knut Fournier: I wish I actually had a crystal ball, because that question always comes up during panels, so I would show my actual crystal ball. That would be a lot of fun, very Halloween. I do not think we will see a convergence in five years. Five years is a drop of water, it is nothing in the grand scheme of things, and I think that will come very quickly. The reality is that the challenges that competition authorities are facing now are probably going to be very similar in five years. Economies will continue to be at different stages of development and, therefore, the focus of the competition authorities will be different. How independent they are or how independent they feel from government policy initiatives and policy priorities will also be different. We have seen the KFTC happily taking on government policy and turning that into enforcement priorities, whereas in other jurisdictions probably the competition authorities would balk at that and simply assert their independence from government policy. That will not change. That kind of diver- gence will continue to be the norm in a region in which there is no or little political unity.

22 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

I think in five years we will see probably more cross-border cases in South East Asia, though, and possibly the first digital dominance cases in Hong Kong and Singapore. François Renard: All right. Thank you. Yong, your view? Yong Lim: I think there are forces that will make the jurisdictions converge and there are forces that will make the jurisdictions diverge. I think there are two main forces that will push jurisdictions toward converging in Asia. First is resource restraints. Small, resource-constrained agencies may actually want to copy or ride the coattails of other regulatory actions around the region. That may be one reason why we will see some convergence. The other is just the sheer fact that we are talking about GAFAM (Google, Apple, Face- book, Amazon, and Microsoft), these multinational, multijurisdictional businesses that really have a global impact. There again you may see similar issues and similar concerns coming up within the market because the digital market transcends borders. There may be, though, forces that cause jurisdictions to diverge. I think one important aspect that needs to be stressed always is what Lilla said, that Asia is not monolithic. It is the same point where I think many in the United States were unhappy that people were lumping up minorities or races from Latin America as “Latinos” and saying that that’s not right. Same here. Yes, there is an “Asian” perspective, but it is quite different. There are different economic models, different stages of development, etc. I think one additional very important diverging force on the rise is the interest in industrial policy. That is permeating a lot of the initiatives for regulation and pushes for new laws and rules. This tendency to try to cultivate or boost domestic online digital economies and companies — not so much national champions, but those industrial policies and how they are running through all of this discourse — will make countries diverge a bit in terms of their own interests. François Renard: Thank you very much on this. Kun, to finish, what is your view? Kun Huang: I like very much what Yong just said. I think the issues he mentioned actually apply in a lot of ways to China as well. I understand that China’s merger control agencies are facing staff constraints and also at the national level there is sometimes industry policy that affects things quite a bit. Also, I particularly want to point out that when you look at the merger control regime in China, the digital platform mergers have not been reviewed that much in the past, but we are going to see quite a bit of these kinds of digital platform-related mergers in the future, I suppose. When you look at abuse-of-dominance cases, particularly abuse-of-dominance cases in the digital platform markets, the leading case is an exclusive-dealing case, but the court

23 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.

has not made any decision yet. I think we are still at a very early stage both in terms of merger review and also abuse- of-dominance cases in the digital era in China, so I would expect a lot of developments in the next five years. At this stage it is really too early to say whether things will converge. François Renard: Thank you very much, Kun. I think we will finish with this obviously. It is probably good news for Concurrences because that means we will come back in the coming years and talk about the same topic. Thank you very much for those answers. From my perspective, thank you very much to the four panelists and also to the eighty- plus audience that we have today. It is great to have you. Thank you so much. Johanne Peyre: Thank you, François, Lilla, Yong, Kun, and Knut. I have to say that I also want really to congratulate you. This is really such a vast, complex, debated topic with a lot ahead of us yet, and you have managed tonight to really enlighten us, sharing your precious insights with us in a way that was very interactive and engaging. I particularly enjoyed the crystal ball part. I noted all the answers down, by the way, so we can compare them in five years. So yes, there will definitely be room for other webinars of the like in the near future, François. I also want to thank our audience because you really engaged with many questions, including very challenging ones, tonight, and we are very grateful. Just a few practical details before we leave here. You can find the CPD form in the chat box. Please do remember to fill in the form and send it completed to [email protected]. There will be a survey that the attendees will receive. Please keep an eye out for the survey and give us your feedback about the discussion. This is always very useful to us to organize conferences in the future. The materials: Tomorrow you will be able to access the panel video and the podcast of this discussion through your Concurrences+ subscription, and in a few days you will also be able via the same means to access the transcript and the synthesis of today’s discussion. Again, if you don’t yet have a subscription, you can ask for a free trial at web- [email protected] or in the contact that you can find on concurrences.com. As a reminder, tomorrow, Wednesday, November 11, at 12:00 p.m. Hong Kong time, we will have the third and final webinar of this conference, “M&As: Asian Mergers Hotch- potch.” We are looking forward to seeing a lot of you, if not all of you, tomorrow with us. This is now the end of this webinar. Again, thank you very much to our speakers for their time, to François especially for having moderated brilliantly this panel, and thanks again to all our sponsors. Have a very good night and a very good day for those who are in Asia and Europe. Bye- bye.

24 Antitrust in Asia: One Size Fits All? ASEAN, China, Hong Kong, India Webinar 2: Digital: Monopolization and Merger Cases, 10 November 2020 Verbatim transcript of oral presentations provided by Concurrences without prior vetting by the speakers.