Today (12 October 2018), the Furman review has announced a call for evidence to inform its study of competition in digital markets. As we reported previously, this panel of experts is considering whether competition law policy and enforcement tools in the UK need to be reconsidered for the particular characteristics of digital markets.
The call for evidence sets out 10 questions, split into two categories: “Understanding the effects of digital markets” and “Policy and implementation solutions”. The questions are closely linked to the eight issues on which the panel’s terms of reference have asked it to make recommendations
This consultation runs for eight weeks with a deadline for submitting evidence on Friday 7 December. It is possible to request confidential treatment of some or all of a response.
Understanding the effects of digital markets
The first set of questions in the call for evidence asks about the substantive analysis of competition in digital markets and considers:
- the tendency of digital markets to concentrate down to one or a few big firms and the associated pros and cons;
- the benefits and harms of those big firms being present in a number of related markets;
- the ability of those firms to accumulate and concentrate data, and whether that hinders competition by others;
- whether the acquisition of smaller firms by larger ones has a different economic impact in the digital sector to other sectors;
- the business model whereby customers “pay” for products and services with their data, including how this impacts on advertisers; and
- artificial intelligence tools and their impact on competition, including whether algorithmic pricing raises new competition concerns.
Policy and implementation solutions
The second set of questions is focused on policy considerations and practical issues and asks about:
- whether the UK competition regime (merger control and antitrust enforcement more generally) offers the right tools for timely, effective and far-sighted enforcement in digital markets;
- whether wider tools could be used to facilitate competition in digital markets, such as sector-led initiatives to make data more accessible;
- initiatives in other countries which the UK might learn from, and whether policy changes should be at UK level or pursued through international co-ordination.
The list of questions closes with an invitation to raise any other issues.
Osborne Clarke comment – this review matters
This review was launched by the UK Treasury and is also sponsored by the Department for Business, Energy & Industrial Strategy and the Department for Digital, Culture, Media and Sport. It is focused on key aspects of the business models and competitive strategies in digital markets and whether they need to be treated differently to traditional ways of doing business.
Its recommendations are likely to influence UK competition policy and enforcement significantly for the future and it is notable that this is a government initiative, separate to the work of the Competition and Markets Authority in relation to digital markets. The fact that the review is chaired by a respected economics advisor from the USA, plus the high standing of the UK within the global competition enforcement community, means that it may well be influential beyond the UK, particularly as similar issues are being considered in a number of other jurisdictions, including Germany and the EU.