Playing Catch-Up: European Competition Law in the Digital Age

Comprehensive and effective competition law is vital for any market economy. It’s also good for business. As Robert Kennedy said, “The history of antitrust law enforcement shows that successful antitrust prosecutions have often strengthened and brought vitality to extremely large companies and businesses”.

However, this is easier said than done in an age of giant tech companies and technology that develops and innovates at an exponential rate. Jurisdictions worldwide are struggling to keep up.

A Trio of Dutch Competition Attorneys

The European Union (EU) is no different. But to what extent do the legislation and regulatory regimes of EU Member States lag behind the technology and possible competition-related infringements? What efforts are being made in this regard by competition regulatory bodies, particularly in the largest EU economies?

Those are some of the questions pondered and investigated by Marc Wiggers, Robin Struijlaart and Johannes (‘Joost’) Dibbits in their book, Digital Competition Law in Europe, with a specific focus on the European Commission and on the competition authorities of five EU states, namely the UK, Germany, France, the Netherlands and Belgium.

The three Dutch attorneys are part of the Competition & Regulatory practice group based in the Amsterdam office of law firm Loyens & Loeff and members of the firm’s Digital Competition Team. Marc Wiggers, who holds a Ph.D in EU Competition Law, specializes in EU and Dutch competition law, as well as tech law, whilst Robin Struijlaart and Joost Dibbits focus on European and Dutch competition law.

They advise platforms, business users of platforms and providers and users of digital services and products, thus undoubtedly having the credentials to write this important and overdue book.

A Timely Book

It became clear to all three attorneys that there was a disconnect between emerging technologies and competition law and enforcement in Europe. They also saw that there was a significant gap in the literature regarding digital competition. They decided to set out and write what was initially meant to become an article.

The joke was that this article just kept growing and growing and eventually became a book, that was how many digital competition cases kept emerging during their extensive research of over two years! It also became evident that by 2018 the levels of enforcement across Europe regarding the digital sphere had increased substantially.

They’d also observed how there seemed to have been a collective change of mind in 2018 among European competition authorities that it simply no longer sufficed to let competition in the digital realm just run its course according to market dynamics. Enforcement was clearly needed. For these three attorneys, their book wasn’t only timely, it was essential.

The Tech-Legal Lag

Wiggers, Struijlaart and Dibbits set the tone for their book in the Introduction, where they state, “The competition law landscape is changing rapidly under pressure of the development of artificial intelligence (AI). Digital technologies, such as software, algorithms and robots, together with big data and machine learning, are developing at such a pace that it sometimes appears impossible to keep up.” However, ascertaining just how far behind European countries are in their competition laws and enforcement regarding digital technology is difficult to assess.

They do touch upon this question in the final chapter, by assessing that the European competition authorities need as good an understanding of tech innovation as tech companies do. This will ensure enforcement decisions that keep up (somewhat) with tech’s development pace. The Facebook and Whatsapp merger is mentioned as a case in point, in which there was a nearly three-year lag before Facebook was fined for allegedly providing the European Commission with misleading information that Facebook data could not be combined with WhatsApp data. The European Commission (EC) approved the transaction in 2014, yet imposed a fine of €110-million only in May 2017.

The Larger Players Are Playing Tougher

A striking finding in their book is that the larger economies of the UK, Germany and France have each set a greater number of digital competition law precedents than have their counterparts in the economically smaller Netherlands and Belgium. The investigation and enforcement numbers of the former countries are substantially higher than those of the latter countries.

Why so? Marc Wiggers personally believes that it’s the chairpersons of the various authorities that have a lot to do with how precedents are being set. He contends that countries need to decide whether they want to be at the forefront of enforcing digital competition issues or not. For example, he cites how Belgium has tacitly admitted that it’s not interested in being at the vanguard of this field, given that it’s a relatively small country and that it basically lacks the resources. It also relies on Brussels (in which the EC is headquartered) to ‘take on the big boys’, as well as being bordered by other, bigger countries like Germany and France.

In the Netherlands, on the other hand, there is now a new chairman at the helm who appears to be focused on increasing the number of enforcement precedents, whereas his predecessor showed a tendency to seek a dialogue with companies under scrutiny where possible. This shows that a change in leadership within a national authority can lead to a substantial shift in policy.

Important Attributes For Digital Competition Law

The authors believe that a solid basis for digital-related oversight does exist in existing competition law. They contend that because large tech companies are creating very complex ecosystems, so competition authorities now stand before the challenge of keeping up with these rapid technological changes. Unfortunately, the potential is to consistently lag one step (or more) behind tech.

This means that authorities will need to continue to invest in human and technological resources to keep up. The first means of achieving this is the need for a continued uptake in digital-related research by competition authorities, be they the EC or individual national authorities. They acknowledge that this capacity-building is always most difficult in the beginning, with getting teams together, having people properly trained, and so forth, but they do believe that authorities are intending to close this knowledge gap.

Second is the need to understand that consumer law and privacy law are becoming increasingly intertwined with digital competition law. The EU’s GDPR is a good example of this in the digital realm.

A third attribute the authors believe is needed is that of ethics. How do companies need to behave? What conduct is right and what conduct is wrong? What route will be taken by authorities and countries regarding this area of competition law? Only time will tell.

A Possible European Digital Competition Leader

The attorneys are adamant that competition law remains EU law and there is therefore a necessary overlap between the competition laws of member states. After all, digital competition law obviously extends beyond borders.

It does emerge, however, that enforcement is another matter. Different national competition authorities do take different approaches. The EC in particular is ‘hitting hard’ and struck Google with no fewer than three significant fines for abuse of a dominant position, with a fourth case pending. Google is currently forced to revisit its business model as a result thereof.

The attorneys agree that Germany seems the most able and willing to take on more difficult cases compared to the other jurisdictions surveyed. For example, Germany’s antitrust watchdog did rule in February 2019 that Facebook had abused its market dominance in collecting, merging and using user data, which the Germans stated was in violation of the EU’s GDPR.

In contrast, the Belgian competition authority had handled just one tech case during the period of the analysis by Wiggers, Struijlaart and Dibbits.

Can Europe Lead the Way?

Yes, these three attorneys believe that the EU can lead the way internationally regarding digital competition law and enforcement. However, they believe the best authority to accomplish that is the European Commission, given that it is a supranational authority with enforcement powers with respect to 27 European countries (not including the soon-to-exit UK).

They also believe it’s the European authority most likely to enforce the most stringent fines against tech and other companies in the digital space, as seen by the fact that the EC has by far issued the largest fines against tech companies to date. However, the three attorneys caution that general, clear guidance is required from the EC and that this continues to be lacking.

In addition, the authors believe it equally important that authorities act proportionally, in particular in cases where the law is not yet (fully) clear. In such cases, significant fines may not always be the best possible solution.

They further note how there is a lack of case law from the European Court of Justice (ECJ), so it remains difficult for companies and national competition authorities alike to know what to do in certain instances regarding digital competition. This lack of uniformity is ranked #1 of seven ‘bottlenecks’ to the improvement of digital competition law that the attorneys identified in their investigations for this book.

In Conclusion…

With Digital Competition Law in Europe, Marc Wiggers, Robin Struijlaart and Joost Dibbits have provided the most comprehensive and researched book regarding digital competition law in Europe to date. They remain optimistic about the possibility of the field’s evolution within European jurisdictions and at the behest and with guidance of the EC.

However, the authors acknowledge that the sheer rate of innovation by tech companies keeping up with them will remain a challenge for competition authorities well into the future.