CLIP of the month: the future of digital markets

This month’s CLIP of the month is a double – header: two recent reports on the future of digital markets. This has been an increasingly hot topic in competition law circles, particularly when combined with another new preoccupation, Big Data. The recent reports (commissioned by the UK Government and the EU Commission respectively) consider the role of competition law in digital markets and how/whether the law may need to change to protect and enhance consumer welfare in the digital age. The reports both express concerns that current approaches may not be sufficient in markets in which network effects and the acquisition of very large quantities of data appear to create barriers to entry that are more durable and more difficult to scale than in the non-digital world. Both reports point to the emergence of companies with significant positions in digital markets such as social media, e-commerce, search, and online advertising and consider the potential competition concerns that could ensue. Both reports also identify a significant role for competition law in preventing some of the adverse effects that might flow from the activities of entrenched platforms with significant market power. The reports are a first step, and concrete changes (such as the establishment of a specialist Digital Markets Unit and code of conduct, as proposed by the UK report), will take time to emerge. For any business currently involved in any affected area the reports are, however, a strong signal of the level of concern in policy circles. This has also been a prominent theme in recent comments by key players such as Margarethe Vestager (see, for example here). Taking all of this together the reports are well worth a read as potential signposts to the future of competition law in digital markets. (Copies of the reports are available here and here).

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