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Rising To The Challenge of Competition Enforcement in Digital Markets

 |  February 28, 2022

By: Philip Marsden (OECD On The Level)

One of the most debated topics in digital competition concerns ex ante rule-making. One argument that arises alleges that those proposing regulation lack humility; that they lack evidence that such rules are needed to prevent harms, and that their hubris also risks harming innovation. I take the opposite view: the evidence-base for intervention is already strong and growing. Those trotting out the rhetoric that we need to ‘learn to walk before we can run’ are vastly behind the pace. If their argument was that new rules would only possibly benefit competition, but would probably harm innovation, then that would merit caution. But the evidence goes completely in the opposite direction. Real harm is happening.  Clear ‘do’s and don’ts’ would prohibit the most exclusionary and exploitative practices, while providing a better legal and economic system for true innovations to thrive. Critics of such ex ante pro-competitive rules ignore the fact that innovation flourishes in economic diversity, fed by a plurality of ideas, and competing methodologies, not monoliths to convenience, data silos and consumer somnambulism.  

The OECD is peerless as a platform for learning from a diversity of economic systems and plurality of approaches to rule-making. Discussion papers and exchanges of views here are an incubator for rational, evidence-based developments in competition law and regulation around the world. Based on the OECD’s vast experience and wealth of research, discussions here could most help in ensuring debates catch up with actual developments. Many so-called experts are fighting yesterday’s battles, or raising straw men about utility regulation as a bad model for digital, none of which are remotely relevant to the problems and proposed solutions of today and tomorrow. Without forward momentum towards ‘how’ to regulate – rather than ‘whether’ to do so – government discussions will just spiral into irrelevance – maintaining the status quo to the benefit of the digital giants and their well-paid acolytes.  The governments that are regulatory innovators are not the problem; it is the ones that sit back, doing nothing. Such economies will not only continue to suffer from having anti-competitive markets, or innovation set at the level of duopoly. They are also prey to being blind-sided by stronger and truly populist regulatory movements that are not evidence-based and likely would genuinely harm innovation. Like it or not, some regulatory control of digital markets is here and much more is coming. I for one would rather be (and see the OECD be) part of ensuring that reforms are targeted to the real problems, and that they foster rather than harm pro-competitive business models.   

After all, most OECD countries and others are not sitting back and studying whether ex ante regulation is needed or wise. We have had years of studies and reports. Legislation is being developed. Ex ante regulation is already being applied in some jurisdictions. Many governments have already decided to ‘learn by doing’, and the OECD’s greatest contribution – as ever – is to bring participants together to learn from one another, about what works best and what does not, so that governments all over the world can make their own better-informed decisions on how to adapt their own laws and policies. International co-operation in enforcement itself will be crucial to handle problems caused by global agents and the OECD has a wealth of experience in that regard. Helping to maintain the forward momentum, and to channel thinking into sensible substantive rules and effective enforcement initiatives is where all of our attention on digital competition should be focused…