The European digital strategy, current EU initiatives and their impact on EU competition law

EU, Member States and US regulators are increasingly scrutinising the effect and antitrust behaviour of Big Tech in the digital age and by reference to Big Tech's use of data.

There is a related and significant proliferation of EU measures and digital legislation to try to manage data, the digital age and, in that context, the European digital strategy as it will impact EU competition law. Commissioner Vestager recently expanded upon this EU approach in her 7 December 2020 speech.

Drawing together some of the strands of these initiatives, what is the current digital state-of-play in the EU?

1. EU digital policy - On 19 February 2020, the European Commission released a number of papers aimed at putting some parameters around the EU's digital future.

  • The EU strategy for data aims at creating a single market for data that will ensure Europe’s global competitiveness and data sovereignty.
  • One of these papers, "A European strategy for data" (sets out how the EU's digital strategy is to evolve over the next 5 years.
  • A concern was that: "Currently, a small number of Big Tech firms hold a large part of the world’s data. This could reduce the incentives for data-driven businesses to emerge, grow and innovate in the EU today, but numerous opportunities lie ahead." The paper sets-out the EU's strategic response to this issue.

2. The EU digital strategy – broadly, this is the aim of the EU to create a single EU data space (i.e. a single market for data and open to data from across the world) where all data, including sensitive business data, are secure and businesses have easy access to high-quality industrial data to boost growth and create value, while minimising the environmental footprint. EU rules and enforcement mechanisms should be designed to ensure that:

  • data can flow within the EU and across sectors;
  • EU rules and values (including competition law but also personal data protection and consumer protection) are respected
  • the rules for access to and use of data are fair, practical and clear with clear data governance mechanisms in place.

In this context, the EU has been developing a number of specific initiatives to underscore this EU digital strategy.

These include:

3. The Digital Services Act (ex ante rules) - The Digital Services Act package (due to be published this week) aims at modernising the current legal framework for digital services by setting-out:

  • rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights – the legal obligations ensure a modern system of cooperation for the supervision of platforms and guarantee effective enforcement.
  • ex ante rules covering large online platforms acting as gatekeepers, which now set the rules for their users and their competitors. This is designed to ensure that those platforms behave fairly and can be challenged by new entrants and existing competitors, so that consumers have the widest choice and the Internal Market remains competitive as well as open to innovations.

4. The New Competition Tool (intervention rules) – this is designed to ensure that competition policy and rules are fit for the modern economy as well as to strengthen competition enforcement in all sectors.

  • The New Competition Tool will fill a gap in the current EU competition rules and allow for effective intervention against "structural" competition problems across markets.
  • The Commission’s enforcement experience in competition law and merger cases in various industries points to the existence of structural competition problems that cannot be tackled under the EU competition rules while resulting in inefficient market outcomes.
  • Increasing digitalisation has attracted much attention under competition policy (both in the EU, at Member State level and in the US). The Commission believes that a few large platforms have become gatekeepers for many digital and non-digital products and services.
  • The New Competition Tool dealing with these structural issues is going to be complementary to Articles 101/102 of the Treaty on the Functioning of the European Union (but will likely have less immediate punch than the UK Competition and Markets Authority market studies remedies).
  • The New Competition Tool is due to be published this week and is likely to result in new companies being designated as gatekeepers, while introducing prohibitions or requirements for those companies and regulating certain new practices.

5. 2018 Geo-blocking regulation – The EU has made it easier for European consumers to shop online and has resulted in particular in new rules to stop unjustified geo-blocking – geo-locking prevents consumers buying from a website based in another Member State.

  • This creates barriers for consumers in cross-border shopping.
  • New rules entered into force on 3 December 2018, across the EU which end online discrimination on the basis of nationality or place of residence.
  • The rules remove unjustified barriers such as being re-routed back to a country-specific website, or having to pay with a debit or credit card only from a certain country.
  • Also, online sellers must treat all EU consumers equally regardless from where they choose to shop

With the impending Digital Services Act, the New Competition Tool, on-going initiatives in this area and an EU commitment to focus on Big Tech, the application of EU competition law to the digital society promises to be active over at least the next 5 years. The interaction between the initiatives under the EU's digital strategy and the UK's similar digital age strategy will be of much interest.

Also, the role of the Competition and Consumer Protection Commission in light of the measures on cooperation under the ECN and the impact of ECN+ will make 2021 a lively year.

For more information on this topic please contact Alan McCarthy, Partner or any member of the EU, Competition & Procurement team.

Date published: 14 December 2020