Introduction: Why Digital Markets?
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Competition agencies’ increased focus on digital markets
The emergence of the digital economy has been a powerful force, bringing about increased competition across a wide range of products and services. As noted in the European Commission’s report ‘Competition policy for the digital era’, digitisation and developments in artificial intelligence have led to the emergence of new possibilities and business models. The Report recognises that ‘many of these changes have greatly benefited European citizens’, for instance, ‘the accessibility of information has greatly increased . . . [transacting] across national borders has been facilitated . . . [and] [consumer] choice has increased.’ The report of the UK’s Digital Competition Expert Panel similarly found that the ‘digital economy has benefited consumers by creating entirely new categories of products and services’, often high-quality with low prices, and has in some areas facilitated greater competition, for example in the case of digital comparison tools.
As with any cycle of disruption and innovation, this digital revolution also presents some challenges for competition law enforcement. The contributions to this guide show that competition agencies continue to intensify their scrutiny of the digital economy, and that they are trying to get to grips with both the opportunities and challenges.
It is clear from the contributions to this guide that many agencies are also aware that regulatory overreach could have negative effects on the development of digital markets and that they should take an evidence-based approach to competition enforcement in this area. As a first step, a number of agencies (or their governments) commissioned market studies or appointed experts in the digital field to prepare industry reports. Jurisdictions such as the European Union, the United Kingdom, Germany, France and Canada led the way in this respect and others have since followed (including the United States and India).
It is notable that a first wave of studies and reports on selected topics, such as e-commerce and data, has been followed by a second wave of studies and reports tackling broader topics, such as ‘digital competition’ and ‘digital platforms’. Examples of such reports include:
- the ‘UK Expert Panel Report – Unlocking Digital Competition’ (the Furman Review) (March 2019), followed by the CMA’s ‘Online platforms and digital advertising market study’ (July 2020);
- the ‘EU Commission Special Advisers Report on Competition Policy for the Digital Era’ (April 2019);
- the report by the majority staff of the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law, which followed a series of hearings on digital competition (October 2020); and
- the Australian Competition and Consumer Commission (ACCC)’s Digital Platforms Inquiry final report (July 2019), Digital Platform Services Inquiry’s interim reports (the latest edition published September 2022) and Digital Advertising Services Inquiry final report (September 2021).
Many competition agencies have also established or appointed specialist digital markets units or officers with the aim of developing expertise and regulation to deal with fast-paced digital markets. For example:
- In the United Kingdom, a Digital Markets Unit (DMU) has been established within the CMA. While the DMU is currently working on a non-statutory basis, the UK government is consulting on legislative proposals for a new pro-competition regime for digital markets. Under the proposals, the new regime will focus on companies that the DMU designates as having ‘strategic market status’.
- In the United States, the FTC has operated a permanent Technology Enforcement Division since October 2019.
- In Canada, the Competition Bureau set up its Digital Enforcement and Intelligence Branch (CANARI) at the end of 2021. CANARI stands for Competition through Analytics, Research and Intelligence.
- In Australia, the ACCC has set up a specialist Digital Platforms Branch to conduct further work related to digital platform markets.
- In the EU, Competition Commissioner Vestager announced in September 2022 that the EC was in the process of establishing a chief technology office.
While many reports and studies have found that existing competition rules generally continue to provide a solid basis for protecting competition in the digital age, the calls for greater changes to regulation are growing. The reports have generally noted that the traditional tools for competition analysis may require some adaptation or refinement to address better the specificities of online markets, such as the multisided nature of platforms, network effects, zero-price markets, ‘big data’ and the increased use of algorithms. In some jurisdictions, changes to the existing competition law framework have been suggested – for example, in India, changes to the jurisdictional thresholds in merger control have been proposed to capture more digital mergers (see below), and similar changes have already been implemented in Germany and Austria. Germany has also amended its competition legislation to tighten the control of abusive conduct in digital markets. Under the amended act, the Federal Cartel Office can intervene at an early stage in cases where ‘competition is threatened by certain large digital companies’ and prohibit certain types of conduct.
In other jurisdictions – in particular the EU, the US, China and the UK – there are proposals for new ex ante regulation to govern gatekeeper digital platforms, with a general move to more prescriptive regulation of such platforms.
The European Commission has in particular profiled itself as a frontrunner in regulating digital industries and this has led to various legislative initiatives, including the Digital Markets Act (DMA). The DMA, which could have far-reaching implications, particularly for companies designated as ‘gatekeepers’, entered into force on 1 November 2022. Following their designation, gatekeepers should have until early March 2024 to comply with its requirements. It will be interesting to see how the DMA regime will interact with traditional competition law enforcement by the EC and the national competition authorities.
Some trends in competition enforcement
Trends in antitrust
In an increasing number of jurisdictions, competition agencies have moved on from market studies and expert panel reports, and instigated investigations into specific conduct. In some instances, these investigations have resulted in enforcement action. Overall, this action confirms that competition agencies across the globe have found that the current competition rules are sufficiently flexible to deal with a range of potentially anticompetitive restrictions in a digital environment, including third-party platform bans, online sales restrictions (including ‘geo-blocking’), dual pricing, most-favoured-nation (MFN) clauses and algorithmic collusion.
For example, based on its E-commerce Sector Inquiry findings (May 2017), the European Commission opened a number of antitrust investigations in relation to online vertical restrictions. These investigations resulted in (1) four decisions relating to online resale price maintenance (RPM) (against four manufacturers of consumer electronics products) in July 2018; and (2) a decision in relation to an online cross-border sales restriction (against Guess) in December 2018. Vertical restraints in digital markets, such as dual pricing and RPM, have also been the subject of national investigations in Europe.
There have also been a number of newly launched or continued abuse of dominance investigations against tech companies. In Europe, a key focus has been the dual role of platforms and the impact of ‘closed ecosystems’ on competition. For example, the European Commission is investigating Apple in relation to its App Store and iOS, and Amazon in relation to its use of marketplace seller data and its e-commerce business practices. Regulators in many other jurisdictions have also opened investigations with a particularly noticeable uptick in the United States.
From a procedural perspective, regulators have also shown that they can use the existing frameworks to resolve digital cases via commitments or settlements. For example:
- In the European Commission’s RPM and online cross-border sales restrictions cases described above, the companies cooperated with the Commission ‘beyond their legal obligation to do so’ and the Commission therefore granted fine reductions ranging from 40 per cent to 50 per cent. Using the settlement procedure for non-cartel cases in this way helped the Commission speed up its investigations.
- In February 2019, the CMA accepted commitments from a group of hotel booking websites following concerns that these sites had been misleading consumers online. The CMA accepted further commitments from 25 more hotel booking sites, including online travel agencies, meta-search engines, hotel chains and short-term rental sites shortly after its original decision in a push to standardise practices across this sector.
- In July 2021, the AGCM closed its investigation into the broadcasting agreement made by DAZN and Telecom Italia after the parties agreed to a series of commitments designed to broaden consumer access to the parties streaming content online.
- In February 2022, the CMA decided to accept commitments from Google in relation to its proposals to remove third-party cookies (TPCs) on Chrome and develop its Privacy Sandbox tools bringing the CMA’s investigation to an end without an infringement decision.
There has also been an increase in the use of interim measures in relation to digital and technology markets (e.g., in France and the EU). In particular, in October 2019, the European Commission imposed interim measures on Broadcom (a designer, developer and provider of integrated circuits for wired communication devices) in the TV and modem chipsets markets. At the time, Competition Commissioner (now Executive Vice-President) Margrethe Vestager said that in the absence of intervention ‘Broadcom’s behaviour is likely . . . to create serious and irreversible harm to competition . . . We therefore ordered Broadcom to immediately stop its conduct.’ This was the first time in 18 years that the Commission imposed interim measures.
Trends in merger control
Some enforcers have raised questions about the prevalence and potential impact of low-turnover, high-value transactions in digital markets. So far, legislative changes have mostly remained limited to refinements to the jurisdictional tests in certain countries to address the perceived concern that such transactions may otherwise escape review. However, more far-reaching proposals have been put forward in some jurisdictions. For example, the UK government is considering introducing a new regime in which companies designated as having ‘strategic market status’ would have to report their most significant mergers to the CMA prior to completion and the CMA would have a broader jurisdiction to review such mergers through the introduction of a transaction value threshold and an accompanying UK nexus test. Germany and Austria have already introduced transaction value thresholds. While there are no plans to amend the jurisdictional thresholds in the EU Merger Regulation, the European Commission announced an overhaul to its approach to the use of the referral mechanism in the EU Merger Regulation so as to allow it to review transactions falling below EU and national merger review thresholds.
A number of jurisdictions have intensified their merger control enforcement in relation to tech companies. One example is China. The Chinese State Administration for Market Regulation (SAMR), for example, prohibited the proposed merger between Huya and DouYu, two companies backed by the Chinese Internet giant Tencent, who are operating live game streaming platforms in China. SAMR has also imposed fines for gun-jumping, for example in relation to Tencent’s acquisitions of China Music Corporation without seeking merger control approval.
In the EU, another important recent development has been the way in which merger control deals with data and privacy. The Commission’s decisions have set new precedents on market definition for data markets, the theories of harm that may be relevant and the remedies that can solve such concerns. Meanwhile, in the US, recent statements by AAG Kanter suggest that remedies in technology mergers or acquisitions may face more scrutiny than in previous administrations.
Updated guidance from agencies and courts
Another trend that is noticeable in the jurisdictions covered by this guide is that a number of competition agencies have reviewed and updated, or intend to review and update, their published guidance as they gain more experience in relation to digital markets. For example:
- In 2020, the JFTC amended its guidelines on merger review (Merger Review Guidelines) to clarify the JFTC’s approach to various issues mainly relating to digital economy, for example the issue of market definition in digital markets.
- In China, the Anti-monopoly Guidelines on Platform Economy, implemented in February 2021, list factors that indicate when an e-commerce platform is dominant.
- In March 2021, the CMA adopted revised Merger Assessment Guidelines. Changes from the previous Guidelines include a greater emphasis on a dynamic approach to assessing mergers and non-price factors of competition;
- In May 2022, the European Commission published its new Vertical Block Exemption Regulation (VBER) and the related Vertical Guidelines, with some amendments aimed at ensuring that the VBER and Guidelines better reflect practices in digital markets.
- In January 2022, the DOJ and FTC announced a review of the agencies’ Horizontal and Vertical Merger Guidelines that they had issued in June 2020, suggesting that these were too lenient.
The courts are also increasingly providing guidance on how the competition rules should be applied to digital markets. For example, in May 2021, the German Federal Court overturned an earlier decision by the Higher Regional Court of Düsseldorf and held that the latter had failed to consider whether Booking.com’s narrow MFNs were ‘objectively necessary’ for the performance of the main contract, the provision of online intermediary services. Another landmark decision in the area of vertical restrictions in online markets is the European Court of Justice’s ruling in 
Enforcer guidelines and court rulings that provide further guidance on how the competition rules will or should apply to online markets (including how and when the traditional tools require adaptation or refinement) should be welcomed. It is clear from the contributions to this Guide, however, that issues of market definition and potential competition in digital markets continue to be debated. This can also be seen in the FTC’s litigation against Facebook, alleging that Facebook holds monopoly power in an alleged market for ‘personal social networking services’. Facebook is not the only tech company facing litigation by US regulators.
As can be seen from the contributions, there has also been an uptick in private enforcement claims against tech platforms, including Epic Games v. Apple, in which the United States District Court for the Northern District of California considered allegations of antitrust violations in relation to the control of an app store and in-app purchasing systems, as well as a number of other private enforcement actions. These claims will also continue to provide important precedents on competition issues in digital markets.
Continue to keep calm and carry on . . . in a global way
Technological innovation is largely pro-competitive and the existing competition rules are, and will continue to be, flexible and robust enough to deal with the challenges of the online world. Careful, evidence- and precedent-based enforcement in individual cases continues to be the best approach to address competition concerns in digital markets, although this will in future likely operate alongside ex ante regulation of gatekeeper platforms in some jurisdictions.
A globally coordinated approach to the challenges raised in competition law by the digital age remains important wherever possible. Not only are the substantive issues similar across jurisdictions, but remedies should be coordinated where possible to avoid undermining the very cross-border competition that the online world has facilitated. We hope this Guide encourages competition enforcers and practitioners to think and act globally when it comes to the enforcement and practice of competition law in the online world.
1 Claire Jeffs is a partner and Nele Dhondt is a PSL counsel at Slaughter and May. The authors would like to thank Gunnar Schulte, former associate at Slaughter and May, for his contributions to this introduction.
2 The report is available at https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf.
3 The report is available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.pdf.
4 For example, the authors of Chapter 17 (India) refer to the Competition Commission of India (CCI) noting that ‘the competition regulator needs to balance regulation and/or intervention while ensuring that it does not chill innovation’.
5 These include the e-commerce sector inquiry reports of the European Commission (in 2017) and the French competition agency (in 2012).
6 The Expert Panel report is available here: www.gov.uk/government/publications/unlocking-digital-competition-report-of-the-digital-competition-expert-panel and the CMA market study is available here: https://www.gov.uk/cma-cases/online-platforms-and-digital-advertising-market-study.
7 The report is available here: https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf.
8 The report is available here: https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf?utm_campaign=4493-519. The report found that Amazon, Apple, Facebook and Google held significant and durable market power and urged stronger antitrust enforcement and legislative reform.
9 These hearings covered a variety of e-commerce-related topics, including: (1) the identification and analysis of collusive, exclusionary and predatory conduct by digital and technology-based platform businesses; (2) the antitrust framework for evaluating acquisitions of potential or nascent competitors in digital marketplaces; (3) privacy, big data and competition; and (4) algorithms, artificial intelligence and predictive analytics.
10 See Louise Klamka, Andrew Low, Amelia Douglass and Michelle Xu (Chapter 15). The ‘Digital advertising services inquiry – final report’ is available at https://www.accc.gov.au/publications/digital-advertising-services-inquiry-final-report.
11 See https://www.gov.uk/government/consultations/a-new-pro-competition-regime-for-digital-markets.
12 See https://www.ftc.gov/news-events/blogs/competition-matters/2019/10/whats-name-ask-technology-enforcement-division.
13 See Chapter 13 (Canada).
14 See Louise Klamka, Andrew Low, Amelia Douglass and Michelle Xu (Chapter 15).
15 Speech at Fordham Annual Conference on International Antitrust Law & Policy, New York, 16 September 2022.
16 For example, the EU Commission Special Advisers Report notes that, ‘Over the last 60 years, EU competition rules have provided a solid basis for protecting competition in a broad variety of market settings. Competition law doctrine has evolved and reacted to various challenges and changing circumstances case by case, based on solid empirical evidence. At the same time, the stable core principles of EU competition rules have ensured consistent enforcement. We are convinced that the basic framework of competition law . . . continues to provide a sound and sufficiently flexible basis for protecting competition in the digital era. However, the specific characteristics of platforms, digital ecosystems, and the data economy require established concepts, doctrines and methodologies . . . to be adapted and refined.’
17 See Chapter 17 (India).
18 See Press release of Bundeskartellamt, Amendment of the German Act against Restraint of Competition, 19 January 2021, available at: https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2021/19_01_2021_GWB%20Novelle.html?nn=3591568.
19 For the EU and UK, see the Chapter on Digital Regulation in Europe and the chapter on EU: Restrictions of Online Sales. For the US, see Chapter 7 on Key Developments in the United States, and for China, see Susan Ning, Ruohan Zhang, Weimin Wu (Chapter 16).
20 The Chapter on Digital Regulation in Europe (Chapter 2) provides an extensive overview of the new regulatory regime established by the DMA – including the obligations for gatekeepers – and a bird’s-eye perspective of the Digital Services Act and Data Act. See also ‘Key Developments in Europe’ (Chapter 1).
21 EC press release, Digital Markets Act: rules for digital gatekeepers to ensure open markets enter into force, 31 October 2022, IP/22/6423.
22 The EC investigation found that Guess’s distribution agreements restricted authorised retailers from, among other things: (1) using the Guess brand names and trademarks for the purposes of online search advertising (an infringement of the EU competition rules not yet known to the Commission); and (2) selling online without a prior specific authorisation from Guess (which was not based on any specified quality criteria). The related press release is available here: https://europa.eu/rapid/press-release_IP-18-6844_en.htm. See also Chapter 3, Stephen Mavroghenis and Christina Kolotourou, ‘European Union: Restrictions of Online Sales’.
23 For an overview of the relevant decisional practice of European national competition agencies, see Chapter 3.
24 For commentary on abuse of dominance investigations and decisions by the EC and NCAs in Europe, see ‘Key Developments in Europe’ (Chapter 1) and ‘Self-preferencing in Digital Markets’ (Chapter 5).
25 See, for example, Hideki Utsunomiya, Yusuke Takamiya and Yuka Hemmi (Chapter 18), Chapter 17 (India) and Chapter 13 (Canada). For the US, see George L Paul, D Daniel Sokol and Gabriela Baca, ‘Key Developments in the United States’ (Chapter 7).
26 The companies provided evidence with ‘significant added value’ and expressly acknowledged the facts and the infringements of EU antitrust rules.
27 This included Booking.com, Expedia. Ebookers, Hotels.com, Trivago and Agoda Company Pte.
29 See https://globalcompetitionreview.com/exclusivity-clauses/italy-accepts-telecom-italia-and-dazn-broadcasting-commitments.
30 More info is available on the CMA’s case page here: https://www.gov.uk/cma-cases/investigation-into-googles-privacy-sandbox-browser-changes. In its October 2022 update report on the implementation of the commitments, the CMA concluded that Google is complying well with the commitments.
31 For France, see Isabelle de Silva, President of the Autorité de la concurrence, keynote speech at Fordham Conference, 12 September 2019, p. 6.
32 European Commission press release, 16 October 2019, available here: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_6109. Broadcom offered commitments in April 2020 – see further https://ec.europa.eu/commission/presscorner/detail/en/ip_20_755.
33 In particular, Germany amended its merger control thresholds in 2017 to include a size-of-transaction test to address concerns that the existing thresholds, which were based on turnover, did not always catch deals of competitive significance. However, these (alleged) concerns are not specific to the digital economy but are or could also be relevant in relation to other research-intensive sectors (e.g., the pharmaceuticals and technology sectors). For further details on the debate around merger control thresholds, see, for example, Hideki Utsunomiya, Yusuke Takamiya and Yuka Hemmi (Chapter 18), Chapter 17 (India) and Susan Ning, Ruohan Zhang and Weimin Wu (Chapter 16).
34 The CMA has already taken an increasingly expansive approach to the jurisdictional scope of UK merger control under the existing rules.
35 See, for example, the guidance published by the Bundeskartellamt and the Bundeswettbewerbsbehörde, available at https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Leitfaden/Leitfaden_Transaktionsschwelle.pdf?__blob=publicationFile&v=2.
36 Commission Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases, C(2021)1959, 26 March 2021. The guidance states: ‘Article 22 of the Merger Regulation allows for one or more Member States to request the Commission to examine, for those Member States, any concentration that does not have an EU dimension but affects trade between Member States and threatens to significantly affect competition within the territory of the Member State or States making the request. It is clear from the wording, the legislative history and the purpose of Article 22 of the Merger Regulation, as well as from the Commission’s enforcement practice, that Article 22 is applicable to all concentrations, not only those that meet the respective jurisdictional criteria of the referring Member States.’
37 See https://my.slaughterandmay.com/insights/briefings/first-merger-prohibition-in-the-digital-space-china-blocks-the-huyadouyu-merger-and-more-gun-jumping-decisions. See also Susan Ning, Ruohan Zhang and Weimin Wu (Chapter 16).
38 See Gerwin Van Gerven, Annamaria Mangiaracina, Will Leslie and Lodewick Prompers (Chapter 6).
39 See George L Paul, D Daniel Sokol and Gabriela Baca, ‘United States: Tech Mergers’ (Chapter 8) and Daniel S Bitton, Leslie C Overton, Melanie Kiser and Neelesh Moorthy, ‘United States: E-Commerce and Big Data Merger Control’ (Chapter 9).
40 See Hideki Utsunomiya, Yusuke Takamiya, and Yuka Hemmi (Chapter 18).
41 See further Susan Ning, Ruohan Zhang, Weimin Wu (Chapter 16).
42 See the accompanying blog post published by the CMA, available at https://competitionandmarkets.blog.gov.uk/2021/04/08/bringing-the-cmas-merger-assessment-guidelines-up-to-date.
43 The review and content of the new VBER and Guidelines are considered by Philippe Chappatte and Kerry O’Connell (Chapter 4) and Stephen Mavroghenis and Christina Kolotourou (Chapter 3).
44 See George L Paul, D Daniel Sokol and Gabriela Baca, ‘Key Developments in the United States’ (Chapter 7); Daniel S Bitton, Leslie C Overton, Melanie Kiser and Neelesh Moorthy, ‘United States: E-Commerce and Big Data Merger Control’ (Chapter 9) and Garibotti and Gorin, United States: Platforms and Mergers (Chapter 10).
45 See Philippe Chappatte and Kerry O’Connell (Chapter 4). The new VBER only comes out strongly against retail wide parity clauses but recognises that parity clauses at other levels of the distribution chain or indeed narrow retail parity clauses could deliver efficiencies which would justify a block exemption. Meanwhile in post-Brexit UK, the Competition Appeal Tribunal (CAT) recently overturned a CMA decision that found insurance price comparison website CompareTheMarket’s use of wide MFNs violated both Section 2(1) of the UK’s Competition Act 1998 and Article 101 TFEU, and imposed a fine of £17.9 million. The CAT criticised the CMA’s findings, concluding that wide MFNs are not by object infringements and that the UK NCA had failed to establish that the clauses had the anticompetitive effects articulated in its decision.
46 Judgment of 6 December 2017, Coty Germany GmbH v. Parfümerie Akzente GmbH, C-230/16. For an analysis see Chapter 3 (Restrictions of Online Sales). In this chapter, Stephen Mavroghenis and Christina Kolotourou note that the new Vertical Guidelines of the EC further clarify the position vis-à-vis market place bans in a number of ways, for example, they define ‘market places’.
47 See, for example, Daniel S Bitton, Leslie C Overton, Melanie Kiser and Neelesh Moorthy (Chapter 9).
48 See George L Paul, D Daniel Sokol and Gabriela Baca, ‘Key Developments in the United States’ (Chapter 7). As set out in this chapter, the suit was dismissed by a district court but an amended claim has been filed.
49 In 2020, the DOJ brought an action against Google, alleging anticompetitive behaviour in search and search advertising. As of September 2021, the lawsuit is still ongoing. See George L Paul, D Daniel Sokol and Gabriela Baca, ‘Key Developments in the United States’ (Chapter 7).