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To Regulate Or Not to Regulate Big Tech Graef, Inge; Costa-Cabral, Francisco Tilburg University To regulate or not to regulate Big Tech Graef, Inge; Costa-Cabral, Francisco Published in: Concurrences Publication date: 2020 Document Version Publisher's PDF, also known as Version of record Link to publication in Tilburg University Research Portal Citation for published version (APA): Graef, I., & Costa-Cabral, F. (2020). To regulate or not to regulate Big Tech. Concurrences, 2020(1), 24-29. 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Download date: 27. sep. 2021 To regulate or not to regulate Big Tech Inge Graef [email protected] Assistant Professor Tilburg University, Tilburg Law and Economics Center (TILEC) Francisco Costa-Cabral [email protected] Assistant Professor Tilburg University, Tilburg Law and Economics Center (TILEC) I. Introduction enforcement under the newly reappointed Commissioner Vestager indicates the possibility that legislation may be 1. Whether to continue relying on existing competition introduced to tackle concerns in digital markets expressed rules in the digital sector, or instead seek new compe- throughout her preceding tenure as competition commis- tences and dedicated legislation, is the question for sioner.4 At this point, it may therefore be tempting to competition authorities in Europe. Several prominent prepare for regulation and shuffle off the uncertainty that reports (some at the request of those authorities) have currently surrounds competition enforcement. posited this as the natural “evolution” of competition 1 law. Germany has forged ahead with a proposed amend- 2. This paper nevertheless asks if we should pause before ment to its legislation that, among others, would allow overhauling a system that has served the EU well for the competition authority to impose measures on under- many decades—even if only for the digital sector. Theory Art. Intellectuelle). Personal use of this document is authorised within the limits Art. Intellectuelle and DRM protection. L. 335-2 Code de la Propriété L 122-5 Code de la Propriété takings with “paramount significance for competition holds that principle-based rules are best suited to face across markets” including with regard to discrimination novel situations, and that characterisation fits the open- 2 and access to data. A joint memorandum by the Belgian, ended prohibitions of Articles 101 and 102 TFEU and Dutch, and Luxembourg competition authorities also merger control’s standard of “significant impediment to pushes for an ex ante tool enabling them to impose effective competition.”5 The current discussion therefore remedies without having to establish a competition law shows a lack of trust in principle-based rules rather than 3 infringement. Perhaps most significantly, the combina- a proved substantive gap. We suggest this is due to two tion of the portfolios for digital policy and competition factors: stepping outside the comfort of the Commission guidance, which has for long specified those principles to some degree, and the relatively early stage of the process of administrative and case law refinement of such princi- 1 See i.a. the report of the Digital Competition Expert Panel, Unlocking ples to the digital context. digital competition, March 2019, at https://assets.publishing.service.gov. uk/government/uploads/system/uploads/attachment_data/file/785547/ unlocking_digital_competition_furman_review_web.pdf; the report 3. Since the “modernisation” of its enforcement,6 the to the Commission by J. Crémer, Y.-A. de Montjoye & H. Schweitzer, Commission has used numerous instruments to fill in Competition policy for the digital era, May 2019, at http://ec.europa.eu/ competition/publications/reports/kd0419345enn.pdf (“Expert Report to the gaps of a principle-based competition law. The result the Commission”); and the report by the Stigler Committee on Digital has been an increase of legal certainty and economic Platforms, September 2019, at https://research.chicagobooth.edu/-/media/ sophistication at the cost of some inflexibility. The main research/stigler/pdfs/digital-platforms---committee-report---stigler-center. pdf?la=en&hash=2D23583FF8BCC560B7FEF7A81E1F95C1DDC5225E. 2 For an analysis, see R. Podszun & F. Brauckmann, Germany’s Pressing Ahead: The Proposal for a Reformed Competition Act, Competition Policy International, 6 November 2019, available at https://www.competitionpolicyinternational.com/ 4 See the many references to the digital sector last year alone: https://ec.europa.eu/ germanys-pressing-ahead-the-proposal-for-a-reformed-competition-act. competition/speeches/index_2019.html. Joint memorandum of the Belgian, Dutch and Luxembourg competition authorities 3 5 Expert Report to the Commission p. 39. on challenges faced by competition authorities in a digital world, 10 October 2019, available at https://www.belgiancompetition.be/en/about-us/publications/ 6 Commission’s White Paper on Modernisation of the Rules Implementing Articles 85 and joint-memorandum-belgian-dutch-and-luxembourg-competition-authorities. 86 of the EC Treaty, Commission Programme No. 99/027, OJ C 132, 12.5.1999, pp. 1–33 délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende (art. utilisation non autorisée constitue une contrefaçon, d'auteur par les conventions internationales intellectuelle du 1er juillet 1992. Toute du droit en vigueur et le Code de la propriété au titre Ce document est protégé by copyright laws and internationalNon-authorised use of this document pouvant accompagner ce document. This document is protected copyright treaties. personnelle est strictement autorisée dans les limites de l’article techniques de protection L. 122 5 CPI et des mesures L. 335-2 CPI). L’utilisation constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment € 300 000 fine ( 24 Concurrences N° 1-2020 I On-Topic I Digital & competition problem concerns the static approach adopted in the services that were demoted in Google’s general search Commission guidance,7 which has proven unsuited to the results.8 The Google Android case addressed the restric- characteristics of the digital sector. As will be discussed, tions Google imposed on Android device manufac- this guidance is tailored for market power in defined turers and mobile network operators in order to entrench markets, cost-based competition, and price-centric its dominance in general internet search.9 The ongoing consumer harm, while the digital sector involves cross- Amazon Marketplace investigation focuses on Amazon’s market strategies, innovation competition, and services dual role as retailer and marketplace, and explores typically provided free of monetary charge. Nonetheless, whether Amazon’s use of data from independent retailers principle-based rules remain available, and enforcement is anti-competitive.10 These cases, different as they are, has availed of them when stepping outside the Commis- nevertheless all deal with the extent to which the ability sion’s guidance. Recent Commission decisions and some of rivals to compete with a dominant firm deserves case law precedents so far indicate that such principles protection under competition law. are flexible enough to adapt to the digital context. 6. Although attributing a consumer welfare goal to EU 4. The paper will show that, despite promising signs, competition law is the subject of constant debate,11 the it will take some time until competition principles are Court of Justice has stated that competition rules protect fleshed out for the digital sector. This path is more uncer- consumers directly as well as indirectly by safeguarding tain than regulation, and particularly dependent on the the process of competition.12 This has been connected outcome of the judicial review of Commission decisions. with the view that is not the aim of competition law to keep It does, however, have the advantage of a tried-and-tested competitors on the market, a sentiment given support by method to achieve administrative and judicial coherence. the statement in Post Danmark I that “[c]ompetition on Importantly, our purpose is not to reject regulation that the merits may, by definition, lead to the departure from could complement this enforcement, in particular when the market or the marginalisation of competitors that are it would serve public interests like the creation of a level- less efficient and so less attractive to consumers from the playing field or the protection of plurality and diversity. It point of view of, among other things, price, choice, quality may also be necessary to draw new remedies or even over- or innovation.”13 This mirrors the Commission’s defini- arching principles for those public interests and compe- tion of competitive harm based on market power in its tition law. The key—for either regulation
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