EU Competition Commissioner Addresses 2017 Web Summit

New Vestager Doctrine of Competition Law beginning to Emerge Highlighting the Relationship between Competition, Innovation, Trust and Enforcement

European Competition Commissioner Vestager gave a wide-ranging speech, entitled "Clearing the Path for Innovation", at the Web Summit in Lisbon on 7 November 2017.

It was an interesting speech covering diverse topics such as innovation, fairness and trust.  These are topics which would traditionally have not been mentioned in a speech on competition law.  However, they are concepts which are becoming increasingly prominent in the thinking and speeches of Commissioner Vestager and are a key part of an emerging Vestager Doctrine of EU Competition Law.  The exact scope of the doctrine is not yet clear but the concepts of innovation, fairness and trust are critical components.

The Commissioner begun by saying that "competition makes innovation work".  She extolled the virtues of competition saying that it "drives us to get better. It helps us achieve things we had no idea we could do. And that means it's a problem when successful companies, which dominate the market, decide to use their power to shut down competition. Because that can end up closing the door to innovation."  She then said (echoing the sentiments of the Court of Justice of the European Union in various abuse of dominance cases over the last forty years ) that dominant companies have a special responsibility not to undermine competition and such companies will be fined if they do not "live up to that responsibility".

The Commissioner then touched on big data and competition.  In essence, she said that there is a "need to make sure mergers don't undermine competition, and make it harder for innovative businesses to succeed. And the more important data becomes for competition, the more closely we need to look at mergers that bring together large sets of data. That doesn't mean we’re suspicious about big data itself. We know data can help us do wonderful things. Like building autonomous cars, which could help us cut pollution and spend less time in traffic jams – and give people with disabilities more mobility than ever before. Or helping wind farms to operate more efficiently, making the shift to renewable energy easier. But controlling large amounts of data shouldn't become a way to shut rivals out of the market.  We looked at that issue last year, when Microsoft bought LinkedIn. We wanted to know whether bringing the companies’ data together would make it too hard for others to compete. In the end, we found that this wasn't an issue in that case.   Because other companies still had access to plenty of data. But if data does become an obstacle to competition, we have the tools we need to stop that."

The third part of her address turned to "special tax treatment".  Here, she moved the focus away from companies saying "and it’s not just companies that can undermine competition".  She targeted governments: "when a government gives special tax treatment to a few companies, that makes it hard for anyone else to compete on equal terms. That’s why we’ve taken action against selective tax benefits. We are also working towards changing rules on taxing the digital economy – to make sure our tax systems are fair. Our hope is to agree a new international approach by spring 2018."

Turning back to abuse of dominance, the Commissioner reiterated that the EU has no objection to success, size or even dominance but it has a concern when the dominance is abused: "So we’ve never objected to [a company dominating] the market. We just don't want it to use that dominance to squeeze out innovation.  Because we don't think success should depend on a company’s size, or its connections with government. It should depend, quite simply, on the merits of its products."

The penultimate part of her speech touched on the "importance of trust".  This is an interesting development and part of a developing and emerging Vestager Doctrine of Competition which is emphasising, more than ever, concepts such as trust, fairness and so on.  In regard to trust, she said "that's more important today than ever before. Because the Internet has become part of people's everyday lives.  And that means that all of us – whether we’re fans of technology or not – are being asked to put our trust in a new digital world.  Of course, technology can help us to trust each other more. We can use the reviews on sharing economy apps to know whether we can trust people we’ve never even met.  But more and more, we’re being asked to put our trust not just in other people, but in computers and algorithms. Algorithms most of us don't fully understand. Whose workings might be a mystery even to those who use them to run their businesses.  So today, the biggest challenge to the future of innovation isn't whether we have enough ideas. It's whether that new technology can succeed in winning the public’s trust.  And we need to listen carefully when less than a quarter of Europeans say they trust online businesses to protect their personal information. When only 7% of Europeans say they consider that stories published on social networks are generally trustworthy. To change that, we need the right rules in place. Like the new privacy rules that will apply in Europe from next May. We need businesses to take these issues seriously, and build systems that can earn people’s trust."  This is a relatively new angle in EU competition law and policy but one which could become even more significant as part of the  Vestager Doctrine.  Indeed, the Commissioner widened the topic further in the context of "competition and trust" saying that "competition enforcement can also make a difference. Because it can give people confidence that online businesses are playing fair. Of course, the market is only one part of our lives. It certainly isn't the same thing as society. But we all deal with the market every single day. And the way companies treat us affects our whole view of the world around us.  So it matters when people see that businesses treat them fairly."

Commissioner Vestager's term is due to complete in 2019 but it is clear that since her appointment in 2014, she has helped influence and shape EU competition law policy and there is no doubt that this influence will continue over the remainder of her term and could be intensified if she remains part of the next European Commission – she has been described by as "the liberal underdog with star power" in the race to be the European Commission President in 2019. 

For more information, contact Vincent Power or any member of the EU, Competition & Procurement Group at A&L Goodbody.

Date published: 13 November 2017