UNCTAD UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Competition and Consumer Protection Policies Competition and Consumer Protection Policies for Inclusive Development in the Digital Era for Inclusive Competition and Consumer Protection Policies for Inclusive Development in the Digital Era UNITED NATIONS UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Competition and Consumer Protection Policies for Inclusive Development in the Digital Era Geneva, 2021 © 2021, United Nations This work is available through open access, by complying with the Creative Commons licence created for intergovernmental organizations, at http://creativecommons.org/licenses/by/3.0/igo/. The ideas, interpretations and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the United Nations or its officials or Member States. The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Photocopies and reproductions of excerpts are allowed with proper credits. This publication has been edited externally. United Nations publication issued by the United Nations Conference on Trade and Development. UNCTAD/DITC/CPLP/2021/2 eISBN: 978-92-1-005858-2 ii Competition and Consumer Protection Policies for Inclusive Development in the Digital Era NOTE Considering the important role of research and policy analysis in the development of appropriate policies and legislation in the areas of competition and consumer protection, UNCTAD created the Research Partnership Platform (RPP) in 2010. The UNCTAD RPP is an initiative that aims at contributing to the development of policies and best practices to promote effective law enforcement for competitive markets and inclusive development. The RPP is coordinated by Ebru Gökçe Dessemond under the general guidance of Teresa Moreira. The RPP brings together research institutions, universities and civil society, and provides a platform for joint research and exchange of ideas amongst scholars and practitioners on the issues and challenges in the area of competition and consumer protection faced particularly by developing countries and economies in transition. The role of UNCTAD is to facilitate and provide guidance on the research and analysis to be undertaken by members of RPP. UNCTAD benefits from the research findings in responding to the challenges faced by developing countries through its technical assistance and capacity-building activities. iii Competition and Consumer Protection Policies for Inclusive Development in the Digital Era NOTES ON THE CONTRIBUTORS Patrick L. Krauskopf is Professor for Competition Law and Head of the Center for Competition Law and Compliance at ZHAW School of Management and Law. He is a Member of the Federal Communication Commission of Switzerland. Dr. Fabio Babey is Lecturer for Competition Law and Deputy Head of the Center for Competition Law and Compliance at ZHAW School of Management and Law. Maximilian Diem is Research Associate for competition law at the Center for Competition Law and Compliance at ZHAW School of Management and Law. Dr. Christine Riefa is Reader at Brunel University, United Kingdom. Max Huffman is Professor of Law at Indiana University-McKinney School of Law, United States. Thembalethu Buthelezi is Principal Economist at the Economic Research Bureau of the Competition Commission of South Africa. James Hodge is Chief Economist at the Economic Research Bureau of the Competition Commission of South Africa. Diogo R. Coutinho is a Law Professor at the University of São Paulo, Brazil. Beatriz Kira is Researcher at the Blavatnik School of Government, University of Oxford, and a PhD candidate at the Faculty of Law, University of São Paulo, Brazil. iv Competition and Consumer Protection Policies for Inclusive Development in the Digital Era ACKNOWLEDGEMENTS This UNCTAD publication is prepared by Ebru Gökçe Dessemond, Legal Officer and Coordinator of the UNCTAD Research Partnership Platform, under the overall guidance of Teresa Moreira, Head of the Competition and Consumer Policies Branch, in collaboration with Prof. Patrick Krauskopf, ZHAW - Zurich School of Management and Law and his team. The editor is grateful to Elizabeth Gachuiri and Hyejong Kwon for their substantive support; and Joshua Ciampi for his extensive assistance, review and support for this publication. Catherine Garson provided editing of the report and funding was provided by the ZHAW Zurich School of Management and Law. Magali Denise Studer prepared the overall design and the cover and layout of the report was undertaken by Nathalie Loriot, of the United Nations Office at Geneva. Special thanks are due to all the authors for their generous contributions to this publication. v Competition and Consumer Protection Policies for Inclusive Development in the Digital Era CONTENTS EXECUTIVE SUMMARY ........................................................................................................................ 1 CHAPTER I: THE DIGITAL ECONOMY, BIG DATA AND COMPETITION ...................................... 3 CHAPTER II: CONSUMER LAW ENFORCEMENT AS A TOOL TO BOLSTER COMPETITION IN DIGITAL MARKETS: A CASE STUDY ON PERSONALIZED PRICING ................ 15 CHAPTER III: THE SHARING ECONOMY AND COMPETITION ...................................................... 30 CHAPTER IV: COMPETITION POLICY IN THE DIGITAL ECONOMY: THE SOUTH AFRICAN PERSPECTIVE ............................................................................................................. 46 CHAPTER V: COMPETITION POLICY AND PERSONAL DATA PROTECTION IN BRAZIL: NEW CHALLENGES AND CONTINUING CONCERNS ............................................. 59 vii Competition and Consumer Protection Policies for Inclusive Development in the Digital Era EXECUTIVE SUMMARY The global economy is in the midst of dramatic changes. While it is clear that consumers have benefited greatly The emergence of the digital economy has led, in turn, from the expansion of digital businesses and from the to the emergence of new business models. While low or zero cost of many digital services, there remains these online platforms offer multiple benefits, their the justified fear that reliance on these businesses market power and its potential abuse poses serious has led to the concentration of market power in the challenges for both markets and for consumers. The hands of a few digital firms. Moreover, the Covid-19 increasingly entrenched market power of these online pandemic has increased the use of digital platforms, platforms, if they remain unregulated, poses the threat reinforcing their market position even further and as that markets may become monopolistic. And the a result increasing concerns about their potential challenge for consumers is the collection and use of anticompetitive conduct. their data. To address these challenges and ensure Chapter 2 continues this discussion, examining competitive, open and accessible digital markets, how current competition law may not be it is high time that governments find effective ways sufficient in regulating digital businesses. As a to regulate these businesses, while preserving the result, enforcement agencies will likely have to benefits they offer and excising the threat of market incorporate a new approach to adequately protect over-concentration. consumers from threats to their privacy and from These new forms of regulation need to be carefully the monopolistic effects of these businesses. While curated, and it is unlikely that there will be a “one size consumer protection and competition metrics are fits all” solution that all countries can effectively apply. generally used separately, it is argued that fusing Some countries have opted for new laws or regulations them would be particularly effective in protecting that are designed specifically for the digital economy, citizens from businesses that present such a dual to effectively regulate these new forms of business. threat. In fact, many studies have demonstrated Others have chosen to adjust the existing competition that this method will ultimately be more effective law framework to restore competition and address than the existing approaches. This new approach the emerging challenges in digital markets. Countries may also require online businesses to incorporate a should take this opportunity to learn from one another fairness-by-design approach, that puts consumers to find effective methods of enhancing competition in on even footing with the firm while on the platform. digital markets and better protecting consumers. This It is only by taking these, and other, innovative and is uncharted territory for everyone, and it would be complementary steps that competition can be beneficial for competition and consumer protection restored and enhanced effectively. authorities to cooperate with one another as well as Chapter 3 examines the sharing economy, a new with other relevant government ministries and sector business structure that has formed over digital regulators. In fact, to do so would guarantee policy platforms, and its effect on competition. The sharing coherence and consistent regulation that will not harm economy is characterized by the shared use of capital businesses, not prevent innovation and better protect assets using a digital platform. The lack of relevant