There may soon be a new competition tool available to tackle structural competition concerns in dynamic tech and platform markets. Until then, competition authorities resort to existing tools to deal with these markets.
The Dutch competition authority (ACM) recently subjected the merger of two emerging platforms – without significant market footprint – to behavioural remedies. On 20 May 2020, the ACM cleared the merger between the travel apps of Dutch rail operator NS and transport company Pon.
The combined entity operates a Mobility as a Service (MaaS) platform, integrating various shared methods of transport across different providers and allows users to plan, book, and pay for journeys in a single app. The ACM’s clearance was subject to the condition that the combined entity offers NS’ services to rivals, under equal terms.
Future ex-ante tools may alter this, but for now, merging companies need to anticipate wide-ranging remedies at an early stage in transactions in this field, to avoid protracted and time-consuming merger reviews.
The merger combines the MaaS services of NS and Pon. These services integrate various shared modes of transport (such as shared cars and bikes) provided by NS and Pon, and third party operators. Both apps had a small market footprint before the merger, and did not integrate NS’ own mobility services (i.e. train and bike-sharing).
The ACM was concerned that the deal could negatively affect competition in the markets for bike-sharing and public transport, in particular in light of NS’ position on the rail market and its offer of shared bikes (OV-fiets). The fact that neither service had been integrated into NS’ own app, which instead had chosen to offer the services of rival bike-sharing apps, did not alter the ACM’s conclusion that NS and Pon could have a future incentive to foreclose rival platforms by refusing access to its services, or to offer access on less favourable terms.
To mitigate these concerns, the ACM accepted behavioural remedies ensuring that if and when NS’ services were to be offered to the combined platform, rival apps could also request access on equal terms.
The case illustrates competition authorities’ careful approach in digital platform markets and related activities. What is notable in the present decision is the fact that the combined platform would not hold a significant market position in the downstream market. Requiring a far-reaching behavioural remedy in these circumstances suggests that competition authorities are increasingly using merger control to prevent platforms from achieving market positions that may prove difficult to remedy later through traditional antitrust enforcement tools. Competition authorities’ difficulties in addressing the perceived dominance of tech companies may have led to an increasingly cautious and pre-emptive approach.
This may soon change. Parallel to consulting on platform-specific ex ante regulation, the Commission is seeking views on a new competition tool to tackle (i) structural risks for competition through the emergence of powerful market players (gatekeepers) or (ii) structural market failure. The Commission’s legislative proposal is scheduled for the end of this year.
However, pending more extensive ex-ante instruments or regulations of digital markets, the cautious approach is likely to continue. This means that merging parties with activities in these markets must assess their market position carefully, and anticipate antitrust issues in market circumstances that previously may not have given rise to concerns. This may also make it necessary to offer far-reaching remedies at an early stage, in order to avoid protracted and lengthy merger control reviews.
This article was published in the Competition Newsletter of June 2020.