UK sets up new digital markets taskforce
13 March 2020
As we have previously reported, governments and antitrust authorities around the globe are in the midst of a fierce policy debate over whether and how antitrust rules should be adapted to deal with rapidly-evolving digital markets.
In the UK, the Furman Report (published in March 2019), made a number of far-reaching recommendations on this front, including the creation of a new Digital Markets Unit with powers (i) to set a code of conduct for companies with ‘strategic market status’; (ii) on data mobility and open standards; and (iii) to secure access to non-personal anonymised data, as well as adaptations to the merger control rules and strengthening antitrust enforcement powers (see our alert for more details). The Furman Report was followed by an independent report on past merger decisions in the digital sector (the Lear Report) and the launch by the Competition and Markets Authority (CMA) of its own digital strategy and a market study into online platforms and digital advertising.
In its 2020 Budget on 11 March the UK Government announced it was accepting the Furman Report’s recommendations. In order to consider the application of these measures and to build-on the Furman Report’s findings, the Government has launched a dedicated ‘digital markets taskforce’. The taskforce will sit within the CMA, and will be headed by a senior CMA official. But it will be composed of officials from across regulators – from the CMA, from the UK’s communications regulator, Ofcom, and from the Information Commissioner’s Office.
The taskforce will provide advice to the Government on how to promote competition in digital platform markets, and how to address any anti-competitive effects that can arise from the exercise of market power in these markets. The Government notes that this includes e-commerce platforms, peer-to-peer platforms, social media networks and search engines. The key areas of focus for the taskforce are:
- A potential methodology to designate digital platforms with ‘Strategic Market Status’ (SMS). This will be crucial – the Furman Report was clear that SMS designation should be reserved to “particularly powerful companies” but it is not yet clear how wide or how narrow the net will be cast. The taskforce will also advise on whether intervention to promote competition is justified in relation to platforms (or their activities) that “do not fall in scope of a potential definition for SMS, but in some other ways exhibit characteristics that may have adverse effects on competition”.
- Advice on the form that a code of conduct to promote competition could take, including whether separate codes/guidance are needed for individual platforms or markets, the content of the any such code, the powers and processes needed to operate and enforce the code, and interactions between the code and other relevant regulations, such as the Platform to Business Regulations.
- Whether there is a case for remedies relating to data access and interoperability outside of search and social media markets, and whether such remedies should be captured through a code(s) of conduct or through more specific additional powers.
- Whether additional supporting functions and associated powers beyond those proposed by the Furman Report may be needed to effectively promote competition in digital markets.
- How a pro-competitive regime might interact with existing regulatory regimes/objectives, including economic growth and innovation, privacy, data protection, and intellectual property rights.
- Where international cooperation would be most valuable or necessary, and how this cooperation can be achieved in practice.
The taskforce will report to the Government by September 2020. Its work is intended to complement and be informed by the CMA’s on-going market study, which may itself generate recommendations on potential governmental interventions in digital markets when the CMA issues its final report in July 2020. The taskforce will also take account of previous studies and reports, academic and industry expertise and its own research. And it will engage with the digital platforms themselves, as well as consumer and business groups. The Government is clear that it expects to be in regular contact with the taskforce as it pulls together evidence and advice, including providing steers on prioritisation as well as evidence of its own. After the report is issued, the Government will consider if and how to implement the taskforce’s advice. In doing so, the Government notes that “any future interventions must strike the right balance between promoting competition and innovation on the one hand, and avoiding disproportionate burdens on business on the other”.
At this stage the taskforce is only temporary – it will operate until September 2020 unless the Government agrees otherwise. But, depending on how the Government decides to take its advice forward, it is possible that it could form the basis of the more permanent Digital Markets Unit envisaged by the Furman Report.
Put in a global context, the establishment of the UK taskforce chimes with developments in other jurisdictions. In France, for example, a new ‘Digital Economy Unit’ under the national antitrust authority was announced earlier this year. It will be responsible for developing expertise in the digital sector, will provide support in digital merger and enforcement cases, and will focus initially on new tools to enable the authority to understand the economics of digital platforms. Taskforces looking at various aspects of antitrust policy and enforcement in digital markets are also being contemplated or established in Austria, Portugal, Australia, Japan and South Korea. With international cooperation on these issues high on the agenda of many authorities and governments, we may well see more jurisdictions follow suit in the coming months.