EU Competition Rules in Digital Markets: a difficult fit


1. Introduction

In recent decades, the European internal market has witnessed a major change: new economic players have developed, offering goods and services in different ways from traditional ones. They mainly operate in the digital marketplace, as searching engines, e-commerce platforms, social networks. Most known examples are Facebook, Google, Amazon, Meta. They can be said to have brought novelty, but also new problems. The question that arises is, in fact: are EU competition rules adequate to deal with these markets? Are they able to ensure that the objectives underlying the European framework, such as the strengthening of the internal market, the boosting of innovation, the insurance of consumer welfare are achieved?

On one hand, there are those who claim that art. 101 and art. 102 TFEU, the core of the competition legal framework, have been able, since the 1980s, to survive the growth of the European Union, and thanks to their broad and versatile wording, can also provide adequate regulation for current markets. On the other hand, there are scholars that think a special regime is necessary for digital markets.


2. Potentially At-Risk Competition Law Objectives

Undoubtedly, it can be said that current markets have acted as facilitators for the achievement of certain goals: the existence of online economic players distributing the same products through Europe has certainly benefited the strengthening of the internal market, allowing consumers to have access to a much wider range of products, enriching their choices. Also, the presence of more economic operators acted as a trigger in encouraging companies to improve their products and engage in healthy competition. This resulted in market development and products innovation.

Despite these benefits, other objectives, such as consumer protection, seem to be wavering and put into question the validity of existing competition rules to guarantee them.

Companies’ ways of making profits have changed, and along with it the ways of operating: nowadays, they use consumers’ personal data for targeted advertising through which they make huge gains. Personal data itself has become a source of economic value for companies. This practice affects competition rules, as it harms consumers’ welfare, who are generally unaware they are donating their personal information for free. What is worse, economic players in digital economies, usually, set zero-priced products or services. The lack of cost, however, conceals the fact that the profits made by companies are based on the exploitation of personal data provided free of charge. How, then, can competition rules be used so that fraudulent, misleading deals, abuse of dominance are avoided? Current competition rules are focused on price, which held such a key position in traditional markets, that categories of abuses, such as price fixing, were developed around it. However, in an economy moving to the digital marketplace, where price does not include the value of the personal data being provided, the need arises to rethink the categories of pricing abuses to fit the current scenario.

Another objective at risk in the new market scenario is the very existence of a competitive market in which many economic players operate in fairness. There is an apparent risk of large undertakings carrying out misleading and anti-competitive practices with unknown mechanisms, which can circumvent current regulations and go unpunished. This is likely to happen because of definitions of dominance and abuse that, designed for traditional markets, could not fit perfectly in the new economic reality. Dominance assessment, for instance, requires the definition of the relevant market, which can be extremely hard to identify in the case of online digital firms, as it entails an analysis of the products or services offered, of the price set, of the consumer pool. However, concerns are raised as consumers are not as easy to set apart in the digital market as they were in the traditional one. Price, as mentioned above, is almost irrelevant: companies rather focus on consumer’s personal data.

Provided that digital companies are usually characterized by a two or multi-sided structure, aimed at facilitating interaction between two or more groups of consumers (e.g. Amazon, connecting sellers, distributors, and end consumers), some scholars suggest a platform-type approach when assessing the relevant market. This approach would consider «whether the interaction, facilitated by the platforms for two or more distinct customer groups […] requires the definition of one or more relevant markets»[1]. The relevant market definition would be based on the type of interactions facilitated by the platform, the degree of substitutability of platforms with each other and with other non-platform undertakings from the perspective of consumer groups, allowing an understanding of the reality of competition in the digital economy. In addition to this, the OECD Note on the Concept of Market Power in the Digital Economy, recommends that market power, in multisided markets. is analyzed in relation to «the overall set of prices and other competitive parameters across the platform», in order to assess each side of the platform in relation to the others and not in isolation.[2]

Furthermore, some scholars have questioned the suitability of the definition of market power held by the undertaking in relation to digital firms. Traditionally, there are several tools that competition authorities have been using in this regard, such as market shares in the relevant market, presence of effective competitors, barriers to entry to the market. These tools should be adapted to the functioning of new markets: in fact, the European Commission called for a careful case-by-case analysis that takes into account consumers’ powers, presence of “unavoidable trading partners”, and data assets held by companies. The latter factor has been the focus of the World Economic Forum’s White Paper[3], which lists, among the competition law tools that need to be rethought also «the relevance of data for establishing market power»[4]. As suggests the Organization for Economic Co-operation and Development-OECD, the relevance of data in relation to market power should be assessed based on «the importance of a dataset for competing in a market; the quality and accuracy of the data in question; whether the value of data can expire; and whether scale or other datasets are needed to use data effectively»[5]. Some authors claim that «a dominant position through data power may be considered if the data-holding company can influence competition through its decision. This may be the case where access to data constitutes a market entry threshold or where competitors can otherwise be excluded»[6]. Going further, some believe that it should also be defined a relevant market for data where to assess dominance. The definition of such a market would enable authorities to evaluate and analyze the competition reality not only in the relevant markets for end products and services, but also in the ancillary market of data[7]. Dominance assessment should not only consider the value of the dataset in itself, but also the ability of the provider to process the data in an efficient and profitable way.

Undoubtedly, there have been cases in which European authorities have proven satisfactory in handling abuses of dominant position with 21st century economic operators. For instance, we have witnessed the development of new forms of exclusionary conduct in the digital market, such as self-preferencing. It consists in giving «preferential treatment to one’s own products or services or one from the same ecosystem, when they are in competition with products and services provided by other entities»[8]. This abuse was recognized in the case of Google Search[9], where the search engine was condemned for infringement of art. 102 TFEU. Indeed, Google’s conduct amounted to an abuse of dominant position, by systematically favoring its own comparison-shopping product, while lowering the results for competition products.


3. Conclusion

In conclusion, competition law in the digital era poses a major challenge. It is an area that crosses many law disciplines, such as data protection, the regulation of artificial intelligence, IP rights. Difficulties are enhanced due to the dynamic nature of digital markets, which are constantly changing.

It seems that the European Union has succeeded in meeting some of the challenges, attempting at developing a system better suited to deal with them. In this regard, an important step taken by the European Union should be mentioned, namely the Digital Market Act[10], regulation meant as complementary to competition rules, not to replace them. This legal text provides that companies that qualify as gatekeepers (mostly big tech companies) are to be subject to ex ante obligations, concerning transparency rules, rights and duties, consumer protection. The DMA is thought to be able to overcome difficulties in market analysis, by lifting the burden of defining relevant markets, proving the dominance of the undertakings, the abusive conducts or assessing anticompetitive effects in case of gatekeepers.

Nevertheless, there are still problems to be solved, involving a rethinking of the definition of dominance and market power, the building of an effective sanctioning system, the understanding of the relevance of personal data in the dominance assessment.


[1] D. Mandrescu, Applying (EU) Competition Law to Online Platforms: Reflections on the Definition of the Relevant Market(s), inWorld Competition: Law and Economics Review, 41-3, 2018, 459.

[2] OECD, The Evolving Concept of Market Power in the Digital Economy: OECD Competition Policy Roundtable Background Note, in, 2022, 30.

[3] World Economic Forum, White Paper on Competition Policy in a Globalized, Digitalized Economy, in, December 2019, 15.

[4] P. Akman, Competition Policy in a globalized, digitalized economy, in, December 2019, 5.

[5] OECD, The Evolving Concept of Market Power in the Digital Economy, cit., 21.

[6] S. Louven, Shaping competition policy in the era of digitalization- Access to Data, in, 2018, 4.

[7] I. Graef, Market definition and market power in data: the case of Online Platforms, inWorld Competition: Law and Economics Review, 38-4, 2015, 493 ff.

[8] European Commission, Competition policy for the digital era, in, 2019, 66.

[9] European Commission, Decision AT.39740, Google Search (Shopping), 2017.

[10] Regulation (EU) 2022/1925 of the European Parliament and of the Council on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act), OJ L 265/1.

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