Unlocking digital competition April 2019

Article Synopsis :

The report of the Digital Competition Expert Panel in the UK has concluded that digital markets will work best under strong pro-competition policies. These will open up opportunities for innovation and counteract the momentum that can lead to a single company being the last man standing and claiming the spoils.

Unlocking digital potential 

The times are changing

Merger and antitrust enforcement alone won’t be sufficient, says the report. These lead to delays and uncertainty which can have negative impacts upon both large incumbents and small entrants.

It will take intensive work in order to bring about the required level of competition to make it easier for consumers to move and control their own data. And making it possible for new digital businesses to interact with established platforms won’t be achieved overnight.

Competition and innovation are the key objectives

The report suggests these pro-competition tools will make it easier for new businesses to enter digital markets, give greater clarity about the rules and standards that apply, generate innovation and offer consumers better quality and more choice.

The panel recommends the establishment of a digital markets unit, with the power to use these tools and frameworks to support greater competition and consumer choice in digital markets. The unit will also need new powers in legislation to ensure it has the necessary muscle to over see these developments.

Key recommendations

In addition to 20 general recommendations, the panel proposed six strategic recommendations.

The first four were:

– That government should establish and resource a pro-competition digital markets unit, tasked with securing competition, innovation, and beneficial outcomes for consumers and businesses.

– The Competition and Markets Authority (CMA) should take stronger action more frequently to challenge mergers that might reduce future levels of innovation and competition, changing legislation where necessary.

– The CMA’s enforcement tools against anticompetitive conduct should be updated.

– The government, CMA and the Centre for Data Ethics and Innovation should continue to monitor machine learning algorithms and the evolution of artificial intelligence to prevent future anti-competitive activity or consumer detriment, particularly in regard to vulnerable consumers.

The next step

The final two key recommendations concerned what should happen next.

The first is that a market study into digital advertising across the entire value chain should be undertaken by the CMA in order to determine whether competition is working and consumers are being protected from harm.

Then, whatever recommendations the government adopts from the paper should be used internationally to encourage closer cross-border cooperation between competition authorities to share best practice and develop a common approach to policing international digital markets.

The paper takes an in depth look across digital markets, and how to best build a regulatory framework that is not only efficient at promoting competition to protect consumers, but to do this for a digital market that will have international scope.

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