The Digital Markets Act’s (DMA) objective is to limit so-called gatekeepers’ control over the markets in which they do business. What are the competition authorities’ current means to control digital markets, and why do they need to evolve? How does the DMA consider the relationship between competition authorities on the European and national levels? In this second article of our series on the Digital Markets Act, we ask Emmanuel Combe, Vice President of the French National Competition Authority, and Anne Perrot, Economist, to answer our questions.
In your view, do European regulators currently have the means to control digital gatekeepers?
Emmanuel Combe: Firstly, the ability of competition authorities to respond quickly when regulating the dominance of digital gatekeepers raises questions. Everything evolves rapidly, and the damage caused to the market can become irreversible, especially when it relates to exclusionary abuses. For example, some decisions were issued by the European Commission six years after the beginning of an investigation. This is undoubtedly too long, although it can be explained by these decisions’ innovativeness. Nevertheless, in some cases, competition authorities also have the means to act quickly. For instance, they detain the power to impose emergency measures where there is a reasonable market harm presumption. This happened with relative success in France with the neighboring rights’ case. This ability to act quickly will be further strengthened with the right to take immediate action when protective measures are needed.
Secondly, competition authorities’ expertise on digital matters is problematic. For example, an abuse taking the form of a "self-preferencing" practice requires an in-depth analysis of the algorithms at play, which implies having dedicated technical teams. It is clear, as highlighted in several recent reports, that competition authorities need to acquire such expertise. This is what we started to do at the French Competition Authority.
Anne Perrot: The European Commission Directorate-General for Competition (DG Comp) and national authorities have instruments at their disposal to address both issues of concentration - through the control of proposed mergers that exceed specific turnover thresholds - and issues of anti-competitive behavior - such as abusing a dominant position. However, these tools were created at a time when technologies were not digital yet, consequently revealing several types of malfunctions (or failures) in their ability to detect, analyse, and sanction competition problems posed by platforms.
Indeed, so-called gatekeepers rely on network effects, which drive growth and can lead to monopolies in particular services. The main difficulty is that their large size allows them to increase their services’ quality. The path between, on the one hand, having a better control of their market power and, on the other, preserving their efficiency, is therefore narrow. As a result, the current tools’ limitations are plural. Some of the companies that raise concentration problems have low revenues, but would gain substantial network effects by acquiring a company, therefore strengthening their dominant position. Although those types of concentrations are not subject to control based on revenue thresholds, they can still deteriorate the market’s competitiveness. At the same time, analyzing the possible abuses of gatekeepers’ market dominance is complex, because it requires understanding the algorithms and data collection methods on which they rely. These analytic procedures are inherently time-consuming, which is sometimes incompatible with maintaining a competitive situation in the market. As a result, the idea that competition authorities need to adapt their tools to these new challenges gradually emerged, leading to the draft of the Digital Markets Act regulation.
How will these tools evolve with the DMA ? In your view, are these evolutions going in the right direction ?