Digital Single Market

Note to the European Commission: no need for a new competition tool

As the European Commission is seeking to introduce a new competition tool to better handle market issues surrounding digital platforms, there is an urgent need to provide a pro-consumer and a pro-innovation perspective on the matter.  We, at the Consumer Choice Center, believe that amending the existing antitrust legislation – articles 101 and 102 of the EU Treaty – shouldn’t be seen as the goal in itself. Instead, the Commission should consider the underlying issues affecting the conditions leading up to the anticompetitive behaviour in the digital market. 

For the market to ensure the most efficient outcome, competition has to be fair so that all respective parties can compete under fair conditions. While antitrust laws play an important role in safeguarding competition, they shouldn’t be seen as a panacea. Instead, the goal should be to create and sustain a framework that doesn’t pick winners and losers, but safeguards intellectual property rights, keep taxation low to encourage returns, limit barrier of entry and make investment easy.

There are many outdated laws in the EU that make it burdensome to create new and innovative digital services before they ever hit the market. One example is the lack of a European-wide license for audiovisual services, forcing service providers to apply in every Member State if they want to show their content. It is the same for most other digital services in the EU, including music streaming or news collection.

Anti-competitive monopolisation where one market player may rapidly acquire market shares due to its capacity to put competitors at a disadvantage in the market unfairly is probably one of the most important factors hindering competition. However, what is crucial here isn’t the dominance of one player but the fact that they resort to unfair competition practices to impact the behaviour of other players. One issue that requires more attention on the side of regulators is that the notion of “unfair competition” provides a lot of discretion which often leads to misleading assessment and unjustified antitrust proceedings. The mechanisms for determining what is “unfair competition” have to be more specific.

In terms of highly concentrated markets where only one or few players are present, which allows to align their market behaviour, the solution is once again to liberalise the digital market so such a situation doesn’t occur in the first place. 

In our opinion, non-structural remedies such as an obligation to abstain from certain commercial behaviour would be most effective. An obligation to abstain from using unfair trading practices, especially those leading to anti-competitive monopolisation is crucial. Businesses should be made aware of the consequences of engaging in unfair practices and obliged to comply, The notion of obligation is linked to personal or business responsibility whereas bans have a preventive and prohibiting nature. Bans would alter the behaviour of businesses: they would be primarily incentivised to avoid the penalty instead of complying with the rules.

The existing antitrust rules do not discriminate between various sectors of the economy, and there is no need to come with rules specific to the digital market. The antitrust rules should be the same for all sectors of the economy to be effective. Sector-specific antitrust legislation will unfortunately only add more confusion, and make it harder for new businesses to get their head around new regulations. It is very hard to draw a clear line between all sectors, not least because the future of innovation is uncertain, and we simply cannot predict what new business will emerge. In the spirit of the rule of law, rules have to be unified.

In conclusion, there is no need for a new competition tool. Antitrust proceedings are costly and drive businesses out of the market. Instead, we should liberalise the European digital single market to make it easier for small business to enter and for the existing ones to operate on equal terms with the more successful ones, and that will ensure that there is no possibility for a single player to monopolise the supply of digital services.

By Maria Chaplia, European Affairs Associate at the Consumer Choice Center

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