This slide presentation reviews the much awaited 2019 report "Competition Policy for the Digital Era" written by Jacques Crémer, Yves de Montjoye and Heike Schweitzer. The report sets out a rich list of options for future EU competition policy in the digital sector. Given the close involvement of DG COMP in the fact finding process, it is likely that the report will make impact in decision making circles. This presentation critically reviews the main suggestions of the report, and tries to identify those items that are most likely to inform future EU competition policy evolutions.

1. A Review of « Competition
Policy for the Digital Era »
(A Report by J. Crémer, Y. de Montjoye and H Schweitzer)
Professor Nicolas Petit
University of Liege
Nicolas.petit@uliege.be
14 May 2019, Brussels, Mardis du droit de la concurrence

2. Outline
1. Overview of Report
2. Economics of Digital Markets
3. Error Costs & Presumptions
4. Anticompetitive Conduct
5. Data
6. M&A in Digital Field
7. Conclusion
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3. 1. Overview
• Context
• Goals
• Methods
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4. 1. Overview (Cont’d): Policy
Recommendations
1. Extreme incumbency advantages
2. « Digital ecosystems »
3. Shift burden of proof of « procompetitiveness » on incumbent
4. Increase competition enforcement agst « platforms as regulators »
5. Less focus on market definition, more focus on strategies
6. Competition for the market: MFNs and other things
7. Competition in the market/on the platform: leveraging & self preferencing (effects analysis)
8. Personal data portability: SSR or Art 102
9. Data sharing/pooling: individual guidance and BER
10. Data access from dominant firms: Art 102 or SSR
11. Machine generated data and aftermarkets: research and doctrinal update
12. New theory of harm updating conglomerate merger analysis
13. New jurisdictional thresholds: wait and assess
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5. 1. Overview (Cont’d): Uncovered Issues
• Out of scope
• Algo pricing
• Interim measures
• Rejected following review
• Breakups
• Goals
• Jurisdictional thresholds
• Monopsony power
• Revival of potential competition analysis
• Innovation (cross sectional)
• Not discussed
• Retrospectives
• Institutional reform
• exploitative abuses (« data as currency »)
• Faster ex post enforcement
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6. 1. Overview (Cont’d)
• Quite high level
• No empirical comparison with
• US: home of big tech, « lax »
antitrust
• China: home of China tech,
coordination > competition
• No impact assessment of
whether/what a change of EU
antitrust law can achieve
• Not driven by ideology (><
US)
• Not in the « headlines »
business
• Multidisciplinary
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7. 2. Economics of Digital
Findings
1. « Extreme » returns to scale
(costs)
2. « Very strong » network
externalities (utility)
3. Role of data in as an
increasingly relevant competitive
parameter (> engineers and
computing power)
 socially « concentration is
desirable »
 policy focus on competition « for
the market »
Analysis
• 1+2 are source of « incumbency
advantage »
• « Subtelty »: 1 is due to
technological conditions, 2 is due
to collective action problem
• Implicit is idea that policy should
focus on network effects driven
incumbency advantage
• But isn’t the normative economics
implication of 1+2: absence of
short term deadweight loss, growth
v profits, and unstable equilibria?
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8. 2. Economics of Digital (cont’d)
• Heterogeneity amongst platforms
• Competition amongst ecosystems
(across markets)
• Competition on innovation
• Competition for the market, and
limited competiion in the market
• Fresh thinking (// moligopoly
competition)
• But zeroes in on classic policy
prescriptions
• Incumbency advantage for first mover
• Multi homing and interoperability
• And what about
• Fast second dynamics in digital?
• Bypass competition in digital?
• Relevant econ question: are
phases of competition for the
market coming at sufficiently rapid
pace?
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9. 3. Error Costs and Presumptions
• How should agencies act in situations of uncertainty?
• Claim 1: traditionally, legal tests seek to avoid false positives and more
tolerant false negatives
• Due to belief in self correcting markets
• Claim 2: « specificities of many digital markets have arguably changed the
balance of error cost »
• Policy implications
• Modification of allocation of burden of proof and definition of standard of proof
• Shift burden of proof on defendent to show pro-competitiveness
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10. 3. Error Costs and Presumptions
(Cont’d)
• Really?
• In art 102 TFEU
• Disputable doctrinal reality (Michelin, Intel, etc.)
• + Inconsistency with general principle formulated at p39 (“Potentiality’ or the
‘tendency’ should be evaluated with the same rigour as loss of consumer welfare is
computed in traditional competition enforcement”)
• In merger control
• More empirically and doctrinally right: no merger prohibited or remedied within 400
transactions in last decade (see Furman report, §3.44)
• But only a problem if : (i) markets dont (self) correct in long run; and (ii) Gov can’t
remedy ex post
• Granted, interim measures not in cards
• But DG COMP could apply stricter internal deadlines for conduct investigations
• Section neither based on doctrine or evidence (“arguably”)
• Main problem of uncertainty has to do with limited precedential value of
competition decisions in digital (see Furman report)
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11. 4. Anticompetitive Conduct
• Promoting competition for the market
• Mergers
• MFNs
• Stricter requirements on data portability for dominant firms
• Presumptions in favor of a duty on dominant firms of (i) protocol and data
interoperability (p51 and 60); and (ii) against restrictions on multi homing (p57)
• Promoting competition on the platform
• Platforms write rules
• Duty on dominant platforms to ensure that competition is fair, unbiased and pr users
• « Level playing field » v « selling monopoly positions » (// with sports leagues)
• Transparency v « selling monopoly power »
• Note possible dominance below 40% due to intermediation power?
• Leveraging and self preferencing
• Self preferencing as an application of the essential facilities doctrine, and even below
• Effects-based approach
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12. 5. Data
• Thorough analysis on data, technology and legal framework
• Useful discussion of interplay with GDPR
• Scenarized: 1 & 2 about firms seeking data access for complementary or
competing services; 3 about seeking data access for research purposes
• Lockin’ of a machine user into the data controller aftermarket service &
foreclosure => aftermarkets doctrine needs an « update » though little
econ analysis
• Data exchange, sharing & pooling => guidance through guidance letters,
art 10 decisions and perhaps BERs
• Duty to grant access under Article 102 TFEU => not scenario 3
• Discussion on indispensability + balance of interests
• Weird argument: no pbs to mandate access bc digital platforms « do not vitally
depend on data driven leveraging of market power » to additional markets, but
recognition that digital firms specifity is to efficiently convert into conglomerates
• For continuous access, regulation more appropriate
• Experimental role for competition enforcement: eventually, « mandated data access »
will be a « sector specific regime »
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13. 6. M&A in the Digital Field
Stated problem
• « acquisition of small, but
successful start-ups, with a
quickly growing user base
and significant competitive
potential by dominant
platforms » (p111)
• « early elimination of potential
rival » (p111)
Policy Issues
• Jurisdictional (wait and
assess)
• Substantive (p112)
• « constrained » theories of
harm
• input foreclosure and
coordinated effects
• No clear horizontal overlap
• Vertical/conglomeral
efficiencies
• « Gap » (p117)
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14. 6. M&A in the Digital Field (Cont’d)
• New theory of harm needed
• Not a killer acquisition scenario
with shutdown
• Instead, acquisition by dominant
firm of startup operating within
« zone of interest »
• « Strenghtening » of a dominant
position
• Shield ecosystem by building
barricades against attacks in core
market (moat theory?)
• Innovative: second best type of
theory
• SIEC if counterfactual shows
possibility of stand alone growth or
M&A with another competitor
• Is move from first to second best
outcome a « significant
impediment to effective
competition »?
• Open questions
• Efficiency offence? New services
add value to consumers
• Reverse FFD? merger enables
acquirer to limit user churn
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15. 7. Conclusion
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16. 7. Conclusion (Cont’d): The core COMP
of the Iceberg?
• Relevant presumptions and
revised error costs framework
• Restorative remedies
• Disqualification of « potential
competition » analysis
• New theory of harm under
EUMR?
• Aftermarkets doctrine?
• Data interoperability on
dominant firms, with joint
competition law and SSR
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17. And now, the discussion
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