By Francine Cunningham, Senior Public Affairs Manager, Bird & Bird and Baptist Vleeshouwers, Associate (Brussels).

In these final months of Margrethe Vestager’s mandate as European Competition Commissioner, she is pursuing a serious reflection on whether or not traditional competition rules and principles are fit for purpose in this new, digitised era. The most comprehensive input to this discussion to date has been the publication of a Report on 4 April 2019, prepared by three special advisors appointed by Commissioner Vestager to explore how competition policy should evolve to continue promoting pro-consumer innovation in the digital age.  

The authors of this 133-page report entitled “Competition policy for the digital era” are three academics:  Jacques Crémer, professor of economics at the Toulouse School of Economics; Heike Schweitzer, professor of law at the Humboldt University of Berlin; and Yves-Alexandre de Montjoye, assistant professor of data science at Imperial College London.  Their final Report, which is a culmination of one year spent as special advisors to the Commissioner, asserts that the fundamental goals of competition law remain the same in the context of the digital environment. However, they recommend significant changes to the manner in which the EU enforces competition rules, especially in relation to online platforms, data-sharing and mergers and acquisitions in the digital field. They also suggest a re-evaluation of certain established concepts in competition law.

The advisors make suggestions regarding the application of competition rules to online platforms, data and mergers and acquisitions, including so-called “killer” acquisitions of promising start-ups in the technology sector.

While not challenging the fundamental goals of EU competition law, this Report does propose significant changes to the way in which the Union enforces the current rules. If implemented, such proposals could lead to more companies being deemed dominant and thereby subject to more stringent rules about the services they provide and their pricing strategy. Notably, the advisors suggest re-visiting certain established concepts of antitrust law that may need to be recalibrated for the digital environment.

One of the overarching themes is the authors’ insistence on the so-called “error cost” of competition law enforcement in the digital sector. The authors argue that, in the context of highly concentrated markets characterised by strong network effects and barriers to entry, authorities should err on the side of disallowing types of conduct which are potentially anti-competitive, and to shift the burden of proof for showing pro-competitiveness on the incumbent. If adopted, this highly controversial recommendation would constitute a Copernican revolution in EU competition law. 

Commissioner Vestager has praised the Report for being “full of important insights” into the way that markets are evolving and how competition policy can respond to such changes. She stated that she will take time to discuss and debate its suggestions before any conclusions are reached. However, if Commissioner Vestager and her eventual successor are minded to respond proactively to the challenges outlined in this Report, it could be used to justify adjustments to the way competition law is applied to the digital economy.

The Report on Competition Policy for the Digital Era can be accessed here

The full article by Francine and Baptist has been published on twobirds.com and can be accessed here.