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Focus on Regulation

Digital Antitrust – Outlook for the European Antitrust Year 2018

With the New Year only a few days old, we want to present a short outlook what to expect from European antitrust enforcement in 2018, with a particular focus on Germany. One theme that is likely to feature even more than last year is the impact of antitrust law on digital markets. Antitrust law has become a force for disruption in the world of tech. Multi-billion fines for online platforms which are considered not to be sufficiently neutral. Dawn raids for denied access to data. Transactions blocked or unwound if a unicorn is acquired by the wrong player.

What started with the French-German Joint Paper on “Competition Law and Data” in May 2016 has developed into a trend that has sometimes been branded as “hipster antitrust”, referring to the uneasiness some academics and enforcers show with growing concentrations in the digital economy, and in particular in the field of digital platforms. While the term has been coined in the U.S., it seems that antitrust authorities in Europe are particularly attached to this concept.

In 2017, we have seen discussions about the need for a digital antitrust enforcer as proposed by the German Federal Ministry for Economic Affairs in its White Paper “Digital Platform”. Germany has continued to take a pioneer role with the 9th amendment of the German Act Against Restraints of Competition adapting its competition law to the digital age and introducing a new Size-of-Transaction test to German merger control. Finally, the German Federal Cartel Office (“FCO”) has published a thought leadership paper on “Big Data and Competition”.

Further, in December 2017 the FCO has launched a sector inquiry into smart TVs manufacturers to take a close look at how “smart TVs” handle user data. In this context, Andreas Mundt, the president of the FCO, stated that “the fate of consumer data once released and their commercial use will certainly keep us busy beyond the current sector inquiry.” Also in its 2017 Review the FCO reiterated that “the digital economy is becoming increasingly important” to its work.

On European level, we have heard Johannes Laitenberger, Director-General for Competition, repeatedly talking about the need for fair competition, especially in digital and innovations markets. For 2018, the EU Commission has announced a study collecting data on the market power of internet giants with a specific focus on potential market concentration and the impact of digital technologies. In this context, Tommaso Valletti, EU Commission’s chief competition economist, has recently talked about the EU Commission bringing its own contribution to the “hipster antitrust” debate.

So far, the focus of antitrust enforcement in the digital world has been on questions regarding “big data” and large, consumer-facing platforms. For 2018, we expect the debate to expand into other tech areas including Artificial Intelligence (AI), algorithms and blockchain. Andreas Mundt has just recently stated on the FCO’s review of Lufthansa’s pricing model that companies cannot hide behind an algorithm when it comes to potential antitrust violations. We also expect that the more blockchain technology evolves and penetrates into almost all industries, the more it will attract the competition law and regulatory authorities’ attention.

With the final decision of the FCO in the Facebook case and the EU Commission’s study to raise awareness about algorithms ahead, 2018 will see a continuation of this pattern of aggressive enforcement.

The challenge for companies in this field is to deal with different priorities of antitrust authorities: while the antitrust approach of the U.S. administration seems less clear than ever, Europe takes the lead with investigations into tech platforms that often have an U.S. background. A recipe for continued global disruption. More than ever, the tech sector needs to plan its competition law strategy for the road ahead.

Happy New Antitrust Year 2018!

Falk Schöning / Christian Ritz