Antitrust and digital markets: Three themes from three conferences
Given the pace of recent events, it now feels like the distant past, but just a month ago in the first week of March there was a bumper crop of conferences on whether - and how - antitrust can cope with the challenges thrown up by digital markets. Regulators from across Europe and the US, academics and practitioners gathered over three separate events to discuss topics ranging from the best approach to tackling tech mergers to the potential tools for addressing collusion via algorithms. In this post, we summarise some of the highlights from across the three days.
Mergers up for debate on Monday
On the Monday, the GCR TMT Live Conference was dominated by the - now very familiar - calls for tougher enforcement in the tech sector, with a particular focus on mergers. While there were some dissenting voices throughout the day, keynote speakers, Andrea Coscelli (CEO of the CMA) and Rebecca Slaughter (FTC Commissioner), spoke proudly of their respective agencies’ intervention records in mergers in recent years.
Andrea Coscelli outlined how the CMA is focusing more than ever on internal documents, deal valuation materials, interviews with senior staff and learnings from recent policy reports to help identify potentially problematic mergers. This, he felt, was critical in the tech space. He sees false negatives (i.e. allowing anti-competitive deals to go through) as particularly costly for consumers. This is due to the propensity of digital markets to “tip”, network effects and economies of scale. Commissioner Slaughter also highlighted her concern with acquisitions of nascent competitors by large tech (and non-tech) companies. She cautioned against becoming myopically focussed on an individual acquisition where the increment is small and losing sight of the bigger picture, where the acquisition may fit into a larger pattern.
Technocrats talking on Tuesday
The CMA’s Understanding Digital Markets conference took place the following day. The audience attended virtually, but one particularly interesting panel brought together in one room the heads of the German and French authorities, Commissioner Slaughter, as well as academics from Yale and Cambridge to gaze into the “crystal ball”.
The perceived need for greater intervention was again the theme du jour. There were calls for agencies to become more confident in “shaping markets”, rather than inadvertently shaping them through inaction. Interoperability was said to be a key regulatory issue in digital markets because incumbent players can seek to entrench their market position through a lack of interoperability. There was also agreement on the need for closer coordination of consumer protection, antitrust and data protection and the need for significantly more international cooperation with Andreas Mundt (head of the German authority) mentioning a “future international architecture”.
Future-antitrust on Friday
Friday took us to St Mary’s University (Twickenham). The inaugural Algorithmic Antitrust Conference, sponsored by Linklaters, brought together academics, regulators and practitioners to consider the particular challenges posed by the ubiquity of algorithms. Contrary to digital markets more generally, there has been less enforcement to date in relation to algorithms, so the event provided an opportunity for theoretical as well as practical discussion.
The conference included a particularly interesting discussion of how businesses might collude through algorithms and whether the current tools are sufficient to address potential anti-competitive behaviour. Recent enforcement has focussed on traditional forms of collusion executed through algorithms (as demonstrated in the CMA’s Posters case). It was recognised that, in principle, there is no reason why a hub and spoke approach could not be applied to algorithms which facilitate collusion between users. However, given limited enforcement in this area and the strict requirements of the case-law (requiring an awareness on behalf of participants of the anticompetitive aim), it was suggested that this may be challenging for regulators in the near term.
Panellists (including the authors of this post – Verity Egerton-Doyle and Jonathan Ford) also discussed algorithms in merger control and blockchain respectively. On the mergers panel, it was remarked that although algorithms-based theories of harm have been contemplated (e.g. by the CMA in Amazon / Deliveroo, where it considered but rejected in its Phase I decision a “behavioural discrimination” theory of harm), they have not yet been used to ground intervention. With respect to blockchain, panellists were in agreement that permission-less / open blockchains are less likely conduits for collusion than permissioned / closed consortia (such as Facebook’s Libra cryptocurrency which the EC has been closely monitoring).
The conference concluded with a keynote address by Stefan Hunt, the head of the CMA’s new DaTA unit, who outlined the multiplicity of ways in which the CMA is using the technical expertise within the unit across its functions. The DaTA unit has built tools to improve efficiency (e.g. in local market mergers and large document reviews) and also plays a role assisting with substantive assessment of cases by having DaTA team members embedded in case teams for data heavy or otherwise technologically complex cases. The team is growing rapidly and its remit and importance seem certain to continue to increase, given the CMA’s strategic focus on digital markets.