In recent weeks, the debate around the future of competition law in Europe has intensified. This is due not only to new investigations by the European Commission into tech companies, but also because of upcoming proposals to regulate large online platforms and add new investigative powers to the toolbox of its competition Directorate General – proposals that have ruffled feathers and prompted skeptical reactions from some corporate stakeholders. However, in this debate we should not lose sight of the primary goal of competition policy, namely promoting consumer welfare, as we highlighted in a recent report.
Competition law enforcement must serve consumers
Especially when it comes to digital markets, we need to take a holistic approach to consumer welfare and reflect on how certain practices can not only push prices up but also undermine consumer choice and reduce the quality of goods and services in both the short and longer term. Even if many tech companies provide very valuable and convenient services to consumers, this cannot come at the expense of competition. A healthy competitive process is crucial to provide incentives for rival companies to innovate.
Even if many tech companies provide very valuable and convenient services to consumers, this cannot come at the expense of competition.
We have seen this in the context of recent abuse of dominance cases regarding Google’s practices in the market of comparison shopping sites and the Android operating system, and most recently with the investigation into Apple’s practices, which include making it difficult for providers of payment solutions to offer mobile contactless payments to consumers as an alternative to Apple Pay. Our Danish member already lodged a complaint concerning Apple Pay with the Danish competition authority in 2017.
Widening the competition toolbox
Whilst existing competition rules must be actively used to tackle illegal behaviour by market players, BEUC shares the Commission’s view that additional investigation powers are needed. This is particularly important in digital markets given their structural characteristics which show that competition rules are sometimes ill-suited to effectively address problems caused by, for example, monopolisation strategies of non-dominant companies or parallel leveraging strategies of dominant companies into multiple adjacent markets. Furthermore, antitrust investigations under the current rules can be too slow to prevent irreparable harm on the market. In the light of this, giving the Commission the possibility to intervene before it is too late, would reduce the risks of consumers being permanently harmed by anti-competitive practices.
It is important to highlight that a market investigation tool enabling the Commission to impose behavioural or structural remedies not necessarily linked to a specific company, is already a recognised tool in some Member States. Therefore, adding new strings to the Commission’s bow makes total sense to protect competition and consumer welfare across the EU in the face of the new challenges.
Enforcement and regulation working in tandem
However, competition law enforcement is not the only solution to tackle market failures and can be insufficient given the characteristics of some digital markets (e.g. strong network effects, data accumulation, gatekeeping, and inequality in bargaining power). It is important to note the complementary role played by regulation, which can provide a more effective instrument to target practices (e.g. self-favouring by a dominant platform under specific circumstances) that harm our markets. Practices that reduce incentives for companies to innovate and compete by offering better products and services to consumers.
BEUC’s objective is to ensure that healthy competition safeguards the interests of consumers, and, ultimately society as a whole, to obtain a fair share of the considerable benefits of digitisation of the economy. The notion that ‘the market will self-correct’ is no longer credible. The very real threats to competition in future markets require enforcers to adapt. Failure to do so may result in the continued tipping of markets in favour of tech giants, exacerbating consumer harm and long-term distortions of competition.
The notion that ‘the market will self-correct’ is no longer credible. The very real threats to competition in future markets require enforcers to adapt.
This is why we believe that regulating platforms and granting new competition powers to the Commission represent an evolution rather than a revolution of EU competition law. An evolution based on the fact that failure to take action in a timely manner can be as bad as no taking action at all. Thus, to prevent consumer harm in an increasingly digitalised and fast-moving economy, it is crucial agencies are sufficiently equipped for immediate and swift intervention.