This presentation by Ania Thiemann, OECD Secretariat, was made during the discussion “Ex-Ante Regulation and Competition in Digital Markets” held at the 136th meeting of the OECD Competition Committee on 2 December 2021. More papers and presentations on the topic can be found out at oe.cd/rcdm.

1. HEARING ON EX ANTE
REGULATION OF DIGITAL
MARKETS
HEARING OF THE OECD COMPETITION COMMITTEE
2 DECEMBER 2021
ONLINE
Ania Thiemann and Gaetano Lapenta
OECD Competition Division

2. • Certain characteristics of digital markets pose
particular challenges for (competition) authorities:
– Speed of change in digital sector and rate of innovation
– Network effects and important economies of scale and scope
– Winner-takes-all dynamics with consequent tendency to tip
– The existence of structural barriers to entry (e.g., large
datasets as necessary inputs to compete; use of machine
learning and AI in positive feedback loops; use of behavioural
biases to lock-in consumers)
– The difficulty in curbing entrenched market power, once
obtained.
2
Concerns about entrenched market
power in digital platform markets
This has spurred a debate about the best way to
regulate digital markets.

3. • Some have called for an adjustment of currently used
competition enforcement tools.
– Due to the features of digital markets, some tools are not easily
transposable to the analysis of digital platforms
– Need to consider competition on innovation and quality in
addition to competition on price
– Perceived lack of effectiveness of competition law enforcement
• Others call for ex ante direct regulation of the largest
digital firms  address structural barriers to entry and
asymmetric entrenched market power, and ensure timely
intervention
3
Adjustment of existing competition tools
or new ex ante regulations?

4. 4
The objectives of regulations
•The initiatives on ex ante rules enacted or proposed so far
have some common objectives. They broadly aim to ensure
•Fairness
•Contestability
•Innovation
•Transparency
•But some of the initiatives also seem to seek
objectives beyond improving market conditions.
•Their exact definition would provide guidance on
interpretations of the obligations and prohibitions

5. • These initiatives have some aspects in common:
– They apply to a limited set of firms, identified ex ante based on several
qualitative and/or quantitative criteria;
– They aim to speed up proceedings and try to ensure a speedy process (both in
terms of identification of the obligations, and their application);
– They set rules of conduct;
– There are special rules concerning intended concentrations; and
– They allow for the imposition of remedies in case of breach.
• They also differ on several points:
– How to designate the firms subject to the new rules;
– the scope and the level of details of prohibitions and obligations;
– the room left for case-specific analysis of conducts and effects;
– and the possibility or the way for designated firms to submit objective
justifications.
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Convergence and divergence

6. The Hearing today presents an opportunity for competition authorities to reflect on these
regulations that may be national or regional, but that aim to address a global phenomenon.
These are some of the issues that the paper identifies as still outstanding
 What ought to be the precise nature of the relationship between regulation and
competition enforcement in digital markets? Are ex-ante regulation and ex-post
enforcement complementary or antagonistic in this context?
 What general principles and goals should underpin the new rules?
 What should be the prohibitions and obligations within the regulations, in view of the
rationale and objectives we have discussed?
 Is it possible to have competition in the market, or should the rules focus on enhancing
competition for the market?
 Is there a need for new institutional capabilities and inter-institutional co-operation,
including co-ordination both nationally with other regulators, and globally?
 Where do issues such as consumer protection and data privacy protection fit in?
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The questions seeking answers