Trade, investment, and competition in the digital age: Competition in the digital age

Event report

[Read more session reports and live updates from the OECD Going Digital Summit]

The session explored one of the OECD’s Going Digital Policy frameworks: fostering market openness in the digital age, with a specific focus on fostering competition in the digital age. Reflections focused on the use of the existing tools and mechanisms, and on the adjustments of regulations to meet the challenges posed by the digital economy.

The event was moderated by Mr Antonio Gomes (Deputy Director for Enterprise and Financial Affairs, OECD) and introduced by a keynote speech of Ms Laurence Boone (Chief Economist, OECD). She explained that the topic of competition in the digital age has increasingly been moved from academic discussions to the political agenda. Countries such as the United Kingdom and Germany have established specific working groups in order to tackle the issue in a more structured and effective way. Nonetheless, the process is still at its early stage due to the fact that the digital market represents a unique case. Three factors underline these unique features. First, the network effects show that as the number of users grows the value of the market increases. Second, this environment is deeply characterised by economy of scale. Third, the role of users’ data represents both an input and a competitive asset. In this complex – and to a certain extent unprecedented – context, there is a need to improve the existing competition laws, help policymakers in identifying the limits of the existing legislation, while creating new policy solutions addressing data concerns that are not undermining competition.

Ms Amelia Fletcher (Professor of Competition Policy, Norwich Business School) gave an overview of the key areas where there could be a better use of the existing toolkits and where adjustments could improve the current situation. With regard to the existing toolkits, there is a need to enhance agencies’ experience and specific expertise to better understand the evolution of digital markets. Moreover, the attention should be focused on long-term effects rather than only on the short-term ones, as well as the paradigm of analysis should not be limited to the narrative of creative disruption. With regard to the adjustment of the existing frameworks, instead, one of the most urgent problems that should be tackled is the current insufficient speed of intervention. In this context, the OECD’s role could be to find ways of creating competition tools that would complement the existing and future laws and rules, while finding new ways of examining the mergers at the international level.

Mr Geoffrey Manne (President and Founder, International Center for Law and Economics) explained that the scenario is featured by a need for more and more information, and the urgency to act and legislate. Moreover, competition in the digital age is different from its predecessors due to the poor information on the market reality available. Stressing the economic and social harm of digitalisation, he finally argued that rushed policy based on a complete understanding of the phenomenon can create more harm than solving the issue.

Ms Cristina Caffara (Vice-President, Charles River Associates) questioned the point stressed by Manne arguing that the current level of understanding of the issue is not absolute but high. To support her statement, she recalled the Microsoft vs. Commission (2007) case brought by the European Commission against Microsoft for abusing its position in the market, which resulted in the European Union ordering Microsoft to release certain information about its server products. Finally, she stressed the importance of developing coherence over the conceptualisation of exploitation in the market, as well as of developing significant screens when it comes to mergers.

Mr Cecilio Madero Villarejo (Deputy-Director General for Antitrust, European Commission) stressed the role and influence that digital platforms can have on the democratic society: with their market power, they may affect democratic society fundamental pillars such as freedom of expression. Furthermore, he argued that despite not solving all problems, the antitrust enforcement can play a significant role. Moreover, due to the new nature of the market, there is a need to be able to reinforce good behaviour through a court control system that respects the rights of defence of the parties subject to the court scrutiny.

By Stefania Grottola