Let's talk antitrust – The “digital era” report – the shape of EU competition policy to come?

Video | July 2019 | 5:37

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Let's talk antitrust – The “digital era” report – the shape of EU competition policy to come?
Shaha El-Sheemy  Hello Richard. I wanted to talk to you today about the report which was recently published, which was prepared by a group of experts for the European Commission on competition policy in the digital era. So, ultimately the drivers for this report are the increased digitisation of the economy and there are a number of people querying whether competition policy is keeping up with that, so I wondered what your thoughts are on this and if you could set the scene a bit by telling us the context for why the report?
Richard Whish QC Well yes, certainly. I mean, obviously in recent years there’s been radical, rapid transformation of markets because of the digital era and I think all of us are trying to understand the ways these markets work, what similarities, but more importantly, what dissimilarities there are from other markets and so, of course, this report, which is a very extensive document and a very interesting document, is one of a number of initiatives. So this is the EU digital era report but we’ve had a report in Germany to the Minister on abuse of market power in digital markets, in the UK we’ve had the Furman report, which reported fairly recently on digital markets, in the States, the Stigler Institute has published its own report and it’s really about all of us learning, understanding the way the markets work and more particularly, what kind of economic analysis we should apply in those markets.
Shaha El-Sheemy  So, a very high level conclusion that seems to be coming out of the report is that, actually, a lot of the principles that already exist seem to be working and there is no need for a major rethink of the fundamental goals of competition and I wonder whether you agree with that or if you think that perhaps a radical change would be appropriate?
Richard Whish QC No, well I fundamentally do agree with that. I don’t think that we should be tearing up our competition laws and starting all over again. You know, let’s think of our three rules. There’s a rule that says you can’t agree to restrict competition, there’s a rule that says you can’t abuse substantial market power and there’s a rule that says that mergers mustn’t significantly impede competition. Those words are very broad and they’re very adaptable so I don’t think we need a change in the law. What I think all of us have to do is to go on thinking and understanding markets, thinking, understanding the economic analysis of those markets, adapting theories of harm, for example. But I don’t think we need a root and branch reform of the law.
Shaha El-Sheemy  And, I mean, as you say, it’s quite a lengthy report and there’s a lot in there, a lot of very useful analysis and recommendations. Are there any specific points that you think jump out or important points that we should bear in mind, given the focuses that they had within the report?
Richard Whish QC
Well, I mean, one thing I would say about it is that there is a chapter simply on digitisation and competition and I think it’s a very good chapter to read because that’s where they describe features of these markets that require particular attention, and they refer to extreme returns to scale, the network externalities and the role of data in understanding these markets and I find it a very helpful chapter to put the whole debate in context. Subsequently they go on to talk about particular issues like online platforms, data, the merger review process and, as you say, it’s lengthy and there’s a lot to be said about each of those particular topics.
Shaha El-Sheemy  And was there anything that you would say was quite surprising or – so given the focus areas you have, there’s a section on merger control and the approaches to be taken and theories of harm, similarly on access to data, also on online platforms. Was there anything in there that you thought seemed a little surprising?
Richard Whish QC
No, I wouldn’t go so far as to say surprising. There is this interesting question in this debate generally, it’s not just particular to this report but other reports I’ve seen, where there’s the debate about type 1 errors and type 2 errors or false positives and false negatives and the suggestion that maybe competition authorities need to be a little bit – what shall I say – a little bit braver. Do competition authorities need to take more risks? Might one intervene in a merger more readily in a digital market case than in others? That is a very interesting debate. I wouldn’t want to see a change in the law but I do understand the idea that a competition authority sometimes has to, as it were, test the limits of its jurisdiction, let’s put it that way. And perhaps some competition authorities will be a little bit more courageous in some of these markets than they would be in more traditional markets.
Shaha El-Sheemy  Were there any particular areas where you found that there almost seems to be a signal to competition authorities to perhaps take a more bullish approach?
Richard Whish QC
Well, I wouldn’t go so far as to say that, I mean, this is just a report as the Furman report in the UK is just a report. Clearly what’s going to happen in Brussels now is that within DG Comp, a lot of thought will be given to this report and in other parts of the Commission as well, but we have to remember that in due course there’s going to be a new Commissioner and I would assume that the future of this report will have to be determined by that new person in October/November once he or she is in place.
Shaha El-Sheemy  Thank you Richard, that was very helpful.