The rise of e-commerce
The rise of the digital economy in general and e-commerce in particular is a truly global phenomenon which provides a rich backdrop to this comparative Guide to recent legal developments in the sector. In 2012 consumer spending online exceeded $1 trillion for the first time.The number of digital buyers worldwide is expected to continue to rise to over 2 billion in 2020.
This Guide is replete with evidence of how these rapid changes in consumer and business behaviour are playing out globally. China has become the largest e-commerce market internationally, with the number of online payment users in China reaching 531 million by the end of 2017 – an increase of 310 million users compared to 2012.In India the e-commerce sector has grown from $14 billion in 2014 to $39 billion in 2017 and it is expected to reach $200 billion in 2026. In the EU 68 per cent of people using the internet had ordered goods or services online by 2017.
What does this mean for competition enforcement?
A powerful force in favour of competition
The emergence of e-commerce has been a powerful force in favour of increased competition across a wide range of products and services. As noted in the European Commission’s E-commerce Sector Inquiry, price transparency has greatly improved with online trade.The ability to compare prices with ease across online retailers has not only promoted competition online but has fundamentally affected the level of competition faced by businesses offline. The Competition and Consumer Commission of Singapore (CCCS) has similarly noted that e-commerce has intensified competition in Singapore ‘enabling businesses, consumers and even the government to benefit from more choices, lower prices and better services.’ A 2017 market study by the Canadian Competition Bureau found that innovations in fintech created opportunities to increase choice and convenience for consumers and lower costs for businesses.
The challenges for competition enforcement
Much has also been said about the challenges of the digital economy for competition enforcement. Some commentators have even gone so far as to question whether the current competition rules are fit for this purpose.
It is clear from the submissions to this Guide that these claims are exaggerated and that our established competition tools can be readily adapted to deal with the online world. Across the jurisdictions covered by the Guide there are many examples where regulators have drawn upon experience in more traditional sectors and applied it to e-commerce. A good example is multisided markets which may be a particular feature of the online sector but are not a new phenomenon – they have been considered in antitrust cases for many years, for instance in relation to the business models of credit card companies.Another relevant example is ‘big data’ – analysis of the importance of data has featured in many competition cases over the years. For example, in 2007–2008, the merger of Thomson Corporation and Reuters Group – two of the world’s largest financial data providers - required both the US Department of Justice (DOJ) and the European Commission to consider data markets. Access to and use of data has also featured in many behavioural cases. I was glad to be reminded that customer data played a factor in the Commission’s and the European Court of Justice’s finding of a dominant position in the Hoffmann-La Roche case in 1979 – the IMS Health case in 2004 also centred around the right to access a valuable sales database.
The traditional tools for competition analysis may nonetheless require some adaption or refinement for online markets. For example, the application of tools for market definition, such as the SSNIP test, may require adjustment in to deal with multisided marketsor to capture qualitative considerations (the Small but Significant and Non-transitory Decrease in quality or SSNDQ test). As noted by the European Commission in the Microsoft/Skype case, in highly dynamic online markets market shares may also only provide a limited indication of competitive strength. However, it seems clear from the contributions in this Guide that this is just a case of an evolution of the existing tools, not revolution. Indeed, given the rapid and largely procompetitive nature of technological innovation, you might argue that it is all the more important that a cautious, evidence-based approach should be taken to competition enforcement in this area.
Extent and nature of competition enforcement so far
So what is the scorecard in terms of enforcement in the e-commerce sector to date? An admittedly rather crude analysis of the European Commission’s decisional practice relating to e-commerce suggests that the extent of competition enforcement has been increasing but is congruent with the growth of the digital economy (see Figure 1.2 over the page).A similarly restrained approach can be found among other agencies, as is discussed in various chapters of this Guide.
In general, while many agencies maintain a vigilant attitude towards the digital economy, they are also well aware that any regulatory overreach could have negative effects on the development of these markets.
A number of agencies have decided to address this challenge in a more holistic way by commissioning market studies or appointing experts in the digital field to prepare industry reports, or both. The European Commission, for example, launched its E-commerce Sector Inquiry in May 2015, which resulted in a final report two years later. Based on its findings, it then initiated a number of antitrust investigations, which are discussed in chapters 3 and 5. Other examples of recent market studies or similar initiatives include:
- the French competition agency’s sector inquiry on e-commerce, published in September 2012, and its study on the online advertising sector, published in March 2018;
- the Singaporean agency’s studies on e-commerce in Singapore (2015) and data as an engine for growth (2017) as well as its recently announced market study into the online travel booking sector and the issue of data portability;
- the joint study of the French and the German agencies in May 2016 on data and its implications for competition law and a similar joint project on algorithms, announced in June 2018;
- a report of a Japan Fair Trade Commission (JFTC) study group on data and competition policy, released in June 2017, and a JFTC sector enquiry into e-commerce, launched in January 2018; and
- the hearings that the FTC in the US has been holding to consider competition and consumer protection in the twenty-first century including the ‘intersection between privacy, big data and competition’, which are scheduled to last into 2019.
As for the appointment of experts, it is worth mentioning the UK agency’s appointment, in May 2018, of a Chief Data and Digital Insights Officer to head up its new data unit and the intention of the Canadian Competition Bureau to shortly hire a Chief Digital Enforcement Officer.Also in the UK, HM Treasury has asked an expert panel to conduct an independent review of the state of competition in the digital economy.
Overall, it is clear that while competition agencies have been considering carefully the challenges and opportunities posed by online markets, they have not found cause to justify a departure from the traditional analytical framework. In Singapore, the CCCS has concluded that its current toolbox is sufficient to deal with the new challenges presented by the rise of e-commerce and the digital economy.The contributors of the chapter on the Canadian Competition Bureau’s decisional practice also conclude that the Bureau has ‘largely taken the traditional framework of Canadian competition law and applied it to the e-commerce industry’. The Chairman of the ACCC is confident that Australian competition laws, as they stand, can deal with anticompetitive pricing algorithms.
Competition agencies across the globe have found that the current competition rules are sufficiently flexible to deal with a range of anticompetitive restrictions in an e-commerce environment, including third-party platform bans, online sales restrictions, dual pricing, most-favoured nation (MFN) clauses, and algorithmic collusion. For example, in two cases concerning the online sales of posters and frames, the authorities were able to rely on correspondence between the cartelists describing efforts to use a pricing algorithm to implement the pricing agreement.
From a procedural perspective, regulators have also shown that they can use existing frameworks to resolve e-commerce cases via commitments. For example, the European Commission Apple e-books case was settled, in December 2012, through commitments which included one that Apple would not enter into or enforce any retail price MFN clauses in agreements with e-book retailers or publishers for a period of five years. In May 2017, the Amazon e-books case ended in a similar manner, with Amazon offering not to enforce or include MFN clauses in respect of any e-book distributed in the EEA for a five-year period.Several European national competition authorities also accepted commitments from Booking.com to replace wide with narrow MFNs (in April 2015). Similar tools have been used to deal with authorities’ concerns about vertical restrictions in online markets in other regions of the world such as Japan.
Merger enforcement in digital markets has also not uncovered a need for a new framework. Legislative changes have remained limited to refinements to the jurisdictional tests in certain countries to address the perceived concern that low turnover, high value transactions may otherwise escape review. 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.
Enforcers have been notably hesitant to use the merger review process to address issues of consumer privacy that are not grounded in antitrust law. Without evidence that the merging parties compete on privacy, generally, enforcers have preferred to address privacy and consumer protection issues separately from competition issues through inquiries into the parties’ compliance with privacy and data security rules.For example, the FTC Bureau of Competition reviewed Facebook’s acquisition of WhatsApp using standard competition analysis, while the FTC Bureau of Consumer Protection considered the transaction’s impact on Facebook’s consumer privacy obligations. Similarly, the European Commission’s review of this transaction analysed potential data concentration issues only to the extent that they could hamper competition in the online advertising market. The Commission said that ‘any privacy-related concerns flowing from the increased concentration of data within the control of Facebook as a result of the transaction do not fall within the scope of EU competition law but within the scope of the EU data protection rules’.
Competition agencies have also considered any potential foreclosure issues from the use of data as an input in a standard way. For example, in the Microsoft/LinkedIn case one of the potential issues that the European Commission considered was related to data used as an input to ‘improve’ a service, through developing and offering improved functionality. The concern was that Microsoft could restrict access to LinkedIn data and thus harm competition in the market for customer relationship management (CRM) software solutions. However, the Commission concluded that the merged entity would not have the ability to implement a foreclosure strategy for a number of reasons, including because the data was not ‘an essential input’ for enhanced CRM functionality and there were many other possible sources of data that could be used for these purposes.
Opportunities for bringing the digital world into competition enforcement
The digital age presents clear opportunities for competition enforcers to develop their own working practices. Some agencies have introduced, or are contemplating the introduction of, digital enforcement tools. For example, in 2017, the UK Competition and Markets Authority introduced a cartel screening tool, which helps procurers screen their tender data for signs of illegal bid-rigging activity. In September 2018, the European Commission announced the release of a study into how it can make greater use of algorithms to supervise what is happening in the marketplace and stop online collusion. Announcing the study, Competition Commissioner Margrethe Vestager said: ‘We’re trying to be part of the digital revolution.’
Keep calm and carry on . . . in a global way
This Guide should provide reassurance that technological innovation is largely procompetitive and that the existing competition rules are, and will continue to be, flexible and robust enough to deal with the challenges of the online world. A radical overhaul of the current rules is therefore unnecessary. On the contrary, careful, evidence- and precedent-based enforcement in individual cases continues to be the best approach.
A globally coordinated approach to the challenges raised in competition law by the digital age is, however, important wherever possible. Not only are the substantive issues similar across jurisdictions but remedies should be coordinated where possible to avoid undermining the cross-border competition which the online world has facilitated. I hope this Guide is a useful step forward in encouraging competition enforcers and practitioners to act and think globally when it comes to the enforcement and practice of competition law in the online world.
 Claire Jeffs is a partner at Slaughter and May.
 ‘Analysis on Online Payment Users in 2017: Mobile Payment Users Reached 527 million’ (1 February 2018), as referred to in chapter 17 on E-commerce and China’s Antimonopoly law, p. 169.
 IBEF Report (2018), as referred to in chapter 18 from the Competition Commission of India, p. 181.
 Eurostat data on online shoppers and e-purchases.
 ‘Final report on the E-commerce Sector Inquiry’, European Commission (10 May 2017), p.4.
 ‘E-Commerce in Singapore - How it affects the nature of competition and what it means for competition policy’, Competition Commission of Singapore (2 December 2015), p. 4.
 Micah Wood, Laura Weinrib, Kevin MacDonald and David Dueck, chapter 13, p. 141.
 Josh White, Antoine Chapsal and Aaron Yeater, chapter 9, p. 86–87.
 Both agencies cleared the transaction after the parties had offered commitments. See EC Case No COMP/M.4726 – Thomson Corporation / Reuters Group and United States v Thomson Corp, Final Judgment at 23 (D.D.C. 17 Jun 2008) (as discussed by Thorsten Mäger and Philipp Neideck, chapter 6, p. 57).
 See further Thorsten Mäger and Philipp Neideck, chapter 6, p. 56 and Miranda Cole, chapter 7, p. 64.
 See also, for example, Josh White, Antoine Chapsal and Aaron Yeater, chapter 9, p. 87–88; Rebecca Kirk Fair, Nikita Piankov and Emmanuel Frot, chapter 12, p. 125; Yung Yung Janet Hui, Xuefei Bai and Huting Li, chapter 17, p. 172 and Daren Shiau and Elsa Chen, chapter 24, p. 235.
 Case No COMP/M.6281 – Microsoft/Skype, para. 78.
 Figure 1.2 was compiled by performing a search of EUR-lex with the following search criteria: Domain: All, Subdomain: All documents, Author: European Commission, Type of act: Decision, Results containing: online shopping in title and text. The graph shows turnover from EU enterprises as a percentage of turnover received by enterprises in the EU28 and is available from Eurostat: https://ec.europa.eu/eurostat/statistics-explained/index.php/E-commerce_statistics#Share_of_turnover_from_e-sales_around_18.C2.A0.25_in_2016.
 For example, the Mexican Federal Commission for Economic Competition opened its first investigation in relation to digital markets in 1 February 2018 (Carlos Mena Labarthe, Jorge Kargl Pavia and Aleine Obregon, chapter 14, p. 144). The authors of the chapter on e-commerce and China’s Antimonopoly law note that ‘there have been few competition cases related to the e-commerce sector in China’ (chapter 17, p. 172).
 For example the CCI in India. Smita Jhingran (CCI Secretary) notes in chapter 18, p.185 that the CCI is ‘adopting a cautious approach and accepts that a one-size-fits-all approach does not work. A nuanced assessment, based on the facts of the case and the market and technology in question, is the strategy that the Commission has adopted’. See also specifically in relation to big data, Paul Eckles and Jeremy Koegel, chapter 11, p. 118) reports that ‘a consistent theme in public remarks by officials at the [US} enforcement agencies has been that an overzealous reaction to unspecified concerns about big data could be counterproductive and actually stifle potential innovations that would be beneficial to consumers’.
 Pierre Honoré and Guillaume Fabre, chapter 5, p. 46.
 Daren Shiau and Elsa Chen, chapter 24, p. 235–237.
 Pierre Honoré and Guillaume Fabre, chapter 5, p. 45.
 Hideki Utsunomiya and Mori Hamada, chapter 21, p. 206–209. This contribution also mentions various other recent reports by government agencies, including the Ministry of Economics, Trade and Industry (METI).
 Daniel S Bitton, chapter 10, p. 97. The FTC press release announcing the hearings is available here: https://www.ftc.gov/news-events/press-releases/2018/06/ftc-announces-hearings-competition-consumer-protection-21st. The hearings calendar is available here: https://www.ftc.gov/policy/. -c
 The related press release (available here: https://www.gov.uk/government/news/) explains that, as part of his role, the Chief Data and Digital Insights Officer will help ‘develop and deliver an effective data and digital insight strategy to allow the Competition and Markets Authority (CMA) to better understand the impact that data, machine learning and other algorithms have on markets and people’. For more details on the Canadian Officer, see Micah Wood, Laura Weinrib, Kevin MacDonald and David Dueck, chapter 13, p. 131. - - -
 Daren Shiau and Elsa Chen, chapter 24, p. 248 and Rachel Lee and Ping Leow, chapter 23, p. 233–234.
 Micah Wood, Laura Weinrib, Kevin MacDonald and David Dueck, chapter 13, p. 132.
 Rod Sims, chapter 16, p. 168.
 US District Court Northern District of California, USA v David Topkins, 6 April 2015 and Decision of the Competition and Markets Authority, Online sales of posters and frames, Case 50223, 12 August 2016. These cases are, for example, discussed by Pierre Honore and Guillaume Fabre in chapter 5, p. 42–43, and Paul Eckles and Jeremy Koegel in, chapter 11, p. 117.
 See Phillippe Chappatte, Kerry O’Connell and Sarah de Morant chapter 4, p. 29.
 See Phillippe Chappatte, Kerry O’Connell, and Sarah de Morant chapter 4, p. 28–29 and Nelson Jung, chapter 3, p. 23–24.
 The Japanese contribution to this Guide mentions three JFTC investigations relating to such vertical restrictions (i.e. parity clauses and exclusive dealing) that started with dawn raids and ended with ‘voluntary measures’ (Hideki Utsunomiya and Mori Hamada, chapter 21, p. 204–205).
 Proposals to this effect have also been put forward in Korea (Youngjin Jung, In-Sang Kim and Hee Won Marina Moon, chapter 22, p. 219). The USA already has a size-of-transaction test in place. The European Commission is contemplating whether to propose such a test – see effectiveness of the turnover-based jurisdictional thresholds of the EU Merger Regulation is one of the topics included in the EC consultation on evaluation of procedural and jurisdictional aspects of EU merger control (consultation paper is available here: http://ec.europa.eu/competition/consultations/2016_merger_control/index_en.html). It should be noted, however, that 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.
 Edith Ramirez, ‘Deconstructing the Antitrust Implications of Big Data’, Keynote Remarks at the 43rd Annual Conference on International Antitrust Law and Policy, Fordham Competition Law Institute, 22 September 2016, p. 8–9 (available here: https://www.ftc.gov/system/files/documents/public_statements/1000913/ramirez_fordham_speech_2016.pdf). See also Daniel S Bitton (chapter 10, p. 103) who notes that US agency officials have generally rejected both in speeches and in matters (e.g. in the Google/DoubleClick case) that antitrust merger review should be used to protect user privacy.
 See Deborah Feinstein, ‘Big Data in a Competition Environment’, CPI Antitrust Chronicle, May 2015, p. 5 (available here: https://www.competitionpolicyinternational.com/assets/Uploads/FeinsteinMay-152.pdf).
 Case No COMP/M.8124 - Microsoft/LinkedIn – discussed by Miranda Cole, chapter 7, p. 70–71. See also the European Commission’s review of Facebook/WhatsApp (Case No COMP/M.7217) and Apple/Shazam (Case No COMP/M.8788). In the latter case, the European Commission found that the integration of Shazam’s and Apple’s datasets on user data would not confer a unique advantage to the merged entity in the markets on which it operates. Any concerns in that respect were dismissed because Shazam’s data is not unique and Apple’s competitors would still have the opportunity to access and use similar databases (see its press release, 6 September 2018, available here: http://europa.eu/rapid/). - .htm
 Speech, ‘European Competition Day: Competition law – thinking outside the box’, Vienna, 24 September 2018.