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The Antitrust Horizon

Digital Economy

09 March 2018

There is a growing public perception around the world that markets have become excessively concentrated and that some businesses are too powerful. Some are calling for antitrust laws to pursue wider aims, such as fairness and the protection of employment and small businesses. Enforcers are responding with stricter merger control, the use of unusual theories of harm, a focus on excessive pricing and new scrutiny of the gathering and use of data. In addition, heightened hostility to foreign takeovers has spurred new laws allowing Governments to intervene on ever-broader national security grounds. Many of these themes are playing out in the digital economy. Sophisticated compliance will be required to achieve and maintain a competitive edge in the coming year.

The trends we are seeing
  • Antitrust authorities are ramping up their scrutiny of the role and use of data in various technology markets. The German, French, Japanese, Australian, and Canadian authorities all recently launched studies or cases on the impact that data could have on competition.
  • In its paper ‘Building a European Data Economy’, the EC asked whether firms should be compelled to grant access to their data on, e.g., Fair, Reasonable, and Non-Discriminatory (FRAND) terms; this continues to be a vivid discussion. The EC has looked into the impact of data on competition in various cases, including its investigations into Google and its review of the Microsoft/LinkedIn merger.
  • The Canadian Competition Bureau warned in its September 2017 paper “Big data and Innovation” that exclusively focusing on consumer prices could fail accurately to capture market power created by data.
Pricing algorithms
  • Self-learning pricing algorithms, and their potential to collude or facilitate collusion, are of continued interest to global antitrust regulators. At a recent OECD roundtable, the FTC and DOJ stressed that US antitrust law is sufficiently robust to cover algorithmic pricing collusion, pointing to the successful prosecution of an e-commerce retailer who used algorithms to fix the prices of posters sold online in late 2016.
  • The entering into force of the General Data Protection Regulation (“GDPR”) in May 2018, which will strengthen data protection rules across the EU, is likely further to prompt adjustment of data protection policies of firms targeting EU customers.
  • The extent to which concerns around personal data should be regarded as a data protection law issue or also as a competition law issue will be a key question. In an investigation into Facebook, opened in 2017, the German FCO is probing whether Facebook abused a dominant position by conditioning the use of Facebook's social networking service on acceptance of terms that permit Facebook to collect user data from across various different websites. The FCO takes the view that conduct harming users' privacy can constitute an antirust infringement independently from the application of data protection rules.
  • Similar investigations by the Australian and Korean antitrust regulators into Facebook's and Google's sway over their users' data illustrate this increased appetite to push the boundaries of antitrust.
  • In Japan, the JFTC has suggested it may rely on antitrust rules to pursue companies that use a dominant position to extract user data and in China a 2017 cybersecurity law, which heavily regulates data collection by tech firms, is being increasingly enforced by the authorities.
  • Consumers' dependence on a few large internet companies, including Google, Apple, and Facebook, is inspiring calls for tougher antitrust enforcement against such companies, as network effects and economies of scale may leave little room for competitors.
  • Antitrust agencies around the world have investigated online intermediaries, including in India, Mexico, Taiwan, Korea, Australia and various European jurisdictions. However, the EC is arguably taking a lead role. It is soon expected to rule that Google has abused a dominant position by conditioning smartphone makers' use of Google Android on acceptance of anticompetitive restrictions that exclude Google's rivals in the mobile space. The EC also completed its long-running investigation into Google's preferencing of its own shopping service in its general search results – imposing a record €2.4bn fine - and has said it is actively considering applying that precedent to other digital markets. A third investigation into Google's AdSense online advertising service is pending.
  • The Dutch Authority for Consumers and Markets (ACM) recently concluded in a study that fintech companies risk being foreclosed by existing banks. It proposes to team up with other regulators to ensure that these drivers of modernisation are not hindered unlawfully by others. The ACM is exploring both ex ante regulatory solutions as well as ad hoc competition enforcement options.


  • The EC’s e-commerce sector inquiry (completed in May 2017) found that many suppliers impose anticompetitive restrictions on online retailers. There have been a number of subsequent investigations and infringement decisions, such as the £1.45m fine that the UK CMA imposed on Ping for banning online sales of its golf clubs, despite recognising that the ban pursued a legitimate commercial aim of promoting in-store fitting.
  • In its Coty judgment, the CJEU ruled that suppliers who prohibit retailers in their selective distribution network from selling their products using online third-party marketplaces do not necessarily act contrary to the competition rules.
  • Competition authorities around the world continue to take an interest in ensuring that owners of standard essential patents (SEPs) honour their commitments to license on FRAND terms and do not unilaterally prevent others from implementing the standard. Qualcomm, a major holder of SEPs, has been subject to enforcement action by competition authorities in the US, Korea, China, Taiwan and the EU.
  • The EC published guidance on interpreting FRAND principles in November 2017. The debate on what constitutes FRAND terms is likely to intensify as SEPs are incorporated into a host of interconnected devices that form part of the Internet of Things, including cars, smart TVs, and home appliances.
What's next for antitrust in the digital economy?
  • Increasing public and policy concerns about high levels of concentration (see the “Politicisation” section) are having a particular impact in the technology sector. Some view antitrust laws' current focus on effects on consumer harm – in short, prices and innovation – as ill-suited to deal with consumers' dependency on a few large online technology companies, such as Google, Facebook and WhatsApp, many of whose products are free: could consumers' dependency on large online companies be harmful even if prices do not increase and even if there is sufficient innovation? Should antitrust laws be amended – or additional legislation enacted – to empower enforcers to address dependency issues?
  • Antitrust enforcers will want to be seen as being responsive to these concerns. While we do not foresee a fundamental overhaul of antitrust laws in the near future, we do believe that incremental changes to antitrust laws are likely, and that enforcers will want to make maximum use of their existing powers to deal with perceived issues of digital “bigness”.
  • An example of incremental changes is the recent amendment to German and Austrian merger notification thresholds to capture deals that exceed a certain transaction value. This change could capture big-ticket purchases of successful technology companies that have already amassed a large number of users and data but that do not yet generate significant revenue. The EC is also looking into the possibility of relying on a transaction value-based threshold.
  • Another example is found in the priorities of the newly formed government coalition in Germany, which include efforts to “modernise competition law” to respond to the 4.0 digital world and, in particular, “abuses by platform companies”. They call for antitrust procedures to become quicker and for more aggressive use of interim measures at an early stage of investigation.
  • In terms of using existing enforcement tools, in a recent speech the EU Competition Commissioner, Margrethe Vestager, emphasised the EC’s power to scrutinise dominant companies' "exploitative" abuses, or abuses consisting of dominant firms imposing unfair terms on consumers. Although the EC has historically not relied on its power to prohibit pure exploitative conduct, its renewed interest in this category of conduct – which includes a focus on excessive pricing cases – may well be driven in part by the perceived harm caused by online dominance.

To read the full report "The Antitrust Horizon" please click here.