The European Commission has published today an inception impact assessment as well as an open public consultation inviting comments on exploring the need for a possible new competition tool that would allow addressing structural competition problems in a timely and effective manner. Stakeholders can submit their views on the inception impact assessment until 30 June 2020 and respond to the open public consultation until 8 September 2020.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The world is changing fast and it is important that the competition rules are fit for that change. Our rules have an inbuilt flexibility which allows us to deal with a broad range of anti-competitive conduct across markets. We see, however, that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules. We are seeking the views of stakeholders to explore the need for a possible new competition tool that would allow addressing such structural competition problems, in a timely and effective manner ensuring fair and competitive markets across the economy.”
The need for a new competition tool
Over the past years, the Commission has reflected on the role of competition policy and how it fits in a world that is changing fast, is increasingly digital and globalised, and must become greener. This reflection process is part of a broader policy debate about the need for changes to the current competition law framework so that enforcement agencies around the globe can continue to preserve the competitiveness of markets. Different stakeholders have engaged in this debate and contributed with reports and studies, making proposals on how to adapt or extend the competition law toolbox.
Against this background, the Commission has concluded that ensuring the contestability and fair functioning of markets across the economy is likely to require a holistic and comprehensive approach, with an emphasis on the following three pillars:
(1) the continued vigorous enforcement of the existing competition rules making full use of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), including the use of interim measures and restorative remedies, where appropriate;
(2) possible ex-ante regulation of digital platforms, including additional requirements for those that play a gatekeeper role; and
(3) a possible new competition tool to deal with structural competition problems across markets which cannot be tackled or addressed in the most effective manner on the basis of the current competition rules (e.g. preventing markets from tipping).
The parallel impact assessment on platform-specific ex ante regulation, for which a separate stakeholder consultation has been launched today, covers the second pillar, while this stakeholder consultation deals with the third pillar.
The Commission’s experience with enforcing the EU competition rules in digital and other markets, as well as the reflection process on the fitness of the existing competition rules by the Commission and national competition authorities, have helped the Commission identify certain structural competition problems that the current rules cannot tackle or cannot address in the most effective manner.
The new competition tool should enable the Commission to address gaps in the current competition rules and to intervene against structural competition problems across markets in a timely and effective manner.
After establishing a structural competition problem through a rigorous market investigation during which rights of defence are fully respected, the new tool should allow the Commission to impose behavioural and where appropriate, structural remedies. However, there would be no finding of an infringement, nor would any fines be imposed on the market participants.
The Commission is consulting stakeholders from the public and private sector, including competition authorities and government bodies, academia, as well as legal and economic practitioners. Respondents are invited to submit their views on the inception impact assessment until 30 June 2020 and to respond to the open public consultation until 8 September 2020 in any official EU language. Subject to the outcome of the impact assessment, a legislative proposal is scheduled for Q4/2020.
EU competition law can address anti-competitive agreements and concerted practices between companies pursuant to Article 101 TFEU and the abuse by a company of a dominant position pursuant to Article 102 TFEU. However, some structural competition problems are outside the scope of the EU competition rules or cannot be addressed in the most effective manner.
Structural competition problems can arise in a broad range of different scenarios, however they can be grouped into two categories depending on whether harm is about to affect the market or has already affected the market.
- Structural risks for competition: Certain market characteristics (e.g. network and scale effects, lack of multi-homing and lock-in effects) coupled with the conduct of the companies operating in those markets can create a threat to competition. This is particularly the case for markets at risk of “tipping”. The risks to competition arise through the creation of powerful market players with an entrenched market and/or gatekeeper position which could be prevented by early intervention. Other scenarios falling under this category include unilateral strategies by non-dominant companies to monopolise a market through anti-competitive means.
- A structural lack of competition: Certain market structures do not deliver competitive outcomes (i.e. a structural market failure), even without companies acting anti-competitively. For example, markets may display systemic failures due to certain structural features, such as high concentration and entry barriers, consumer lock-in, lack of access to data or data accumulation. Similarly, oligopolistic market structures increase the risk of tacit collusion, including markets featuring increased transparency due to algorithm-based technological solutions, which are becoming increasingly prevalent across sectors.
The impact assessment for a possible new competition tool initiative is without prejudice to existing sector-specific regulation and the existing competition tools currently available to the Commission and the national competition authorities of the EU Member States. It is also complementary to the Commission’s parallel impact assessment on platform-specific ex ante regulation, which is part of the Digital Services Act package announced in the “Shaping Europe’s digital future” Communication.
For More Information