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Towards Competition Law Based Regulation and Policy for the EU Digital Economy?

When Ursula von der Leyen announced the composition of her proposed European Commission, the announcement contained an interesting innovation.  For several decades, the Competition Commissioner has had a slightly distinct position from the other members of the College.  The Competition Commissioner has been responsible both for the policy framework governing competition, and for approvals of M&A and anti-trust enforcement, at European level.  The framework of competition law currently in effect dates from 2003, and makes national competition authorities also responsible for enforcement of the relevant Treaty and legislative provisions, governing market dominance, collusion, and anti-competitive practice, M&A, and state aid.  So the work of the Commissioner, supported by DG COMP, has concentrated more on enforcement and authorisation.  The Commission position is vested with the most direct enforcement powers of any, and the role has not surprisingly attracted many of the Commission’s strongest and most prominent members over the years – none more so than the Juncker Commission incumbent Margrethe Vestager.  No great surprise then that the proposed von der Leyen Commission sees her keep the portfolio.

However, von der Leyen announced something rather more than that.  In addition to her role as Competition Commissioner, Vestager becomes Executive Vice-President of the Commission charged with “Europe fit for the Digital Age”, effectively incorporating the previous Digital Economy and Society portfolio into a senior coordinating function within the Commission.  At the policy coordination level, this could help to address what was sometimes characterised as poorly coordinated policy-making in the digital economy area, with many different Commissioners feeding into parts of the overall digital agenda.  But a more significant and interesting question lies in the relationship between digital policy-making and the framework for and enforcement of competition law.  Speaking of her appointment and the regulatory agenda for digital industries, Vestager said that “we see in a number of [antitrust] cases that the case work itself cannot do it”, so “we may need to broader rules to make sure that the way companies collect data doesn’t harm the fundamental values of our society”. Some clues as to the direction in which this could take competition policy for the digital economy may be found in a report published in April this year by Jacques Crémer (Toulouse School of Economics), Yves-Alexandre de Montjoye (Imperial College London) and Heike Schweitzer (Humboldt University of Berlin).  The report was commissioned by Commissioner Vestager.

The authors highlight the changing nature of competition as digital platforms emerge, going from having a large enough number of companies producing the same or similar products, to a more platform-based market.  They note that this can produce extreme returns to scale, has significant network effects, and that data has an important role in the market.  They argue that the experience so far of the digital economy does not require a move away from the core principles of EU competition policy, but that some of the tools of analysis and enforcement may require rethinking.  The report explores the relationship between competition law enforcement and regulation, for example in the regulation of data portability and data interoperability, as complementary tools in the regulatory toolkit.  The report concludes that some existing competition law concepts, such as dominance and market definition, may need refining to deal effectively with competition in the digital economy, in other areas, such as interoperability, may be better dealt with by regulation than application of competition law.

However, the report looks only at the application of competition law insofar as it affects internet digital platforms and associated technologies.  It does not look at the intersection between that competitive landscape and the more traditional competitive landscape at network infrastructure level.  This intersection is partially dealt with in the European Electronic Communications Code, which for example distinguishes between Number-Independent Interpersonal Communications Services (typically internet digital platforms) and Number-Based Interpersonal Communications Services (typically traditional telcos).  From the consumer’s point of view, both the network and the service levels need to function effectively, as does the relationship between them, if the consumer is to have access to the services they want through the widest possible range of access coverage.  With her new combined portfolio, Commissioner Vestager would be perfectly placed to address this intersection between a more traditional parallel competition-based market and the platform market which sits on top of it.

Vestager, alongside the other new Commission members nominees, is expected to receive the approval of the European Parliament before she can formally take office on 1 November. The Parliament has scheduled hearings in late September and early October.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Matthew Kirk International affairs adviser Squire PB
International Affairs Adviser

Matthew Kirk is an international affairs advisor in our Public Policy International Practice. He provides strategic advice concerning business, politics and international law from the firm’s London office. He also advises clients on regulatory risk, market entry, cyber risk and reputation risk.

A career diplomat, he served as the UK’s Ambassador to Finland from 2002 to 2006. Most recently, he served as external affairs director at Vodafone.

Ambassador Kirk is a highly experienced international risk strategist and negotiator of complex multinational issues....

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Francesco Liberatore, Squire Patton, London, European Competition Lawyer, Markets Authority Attorney
Partner

Francesco Liberatore advises clients on all aspects of the application of communications and competition law.

On the behavioral side, Francesco's practice includes bringing and defending all types of regulatory and competition disputes before Ofcom, the Competition and Markets Authority and the European Commission, as well as managing internal investigations, dawn raids, and counseling on compliance issues and various commercial agreements. On the transactional side, Francesco handles UK and EU merger control due diligence and filings, as well as coordinating multijurisdictional merger control strategies. He also advises private equity investors, banks, and other financial investors on arbitrage opportunities. Francesco's litigation experience includes representing clients in matters before the Competition Appeal Tribunal, the High Court of Justice and the European Courts.

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