Online platforms and the new challenges of antitrust law
1-Existing competition laws: competency and capacity
Nowadays, online platforms have an important social and economic role in our daily life. This can be a positive sign of growing communication and services facilities as people are able to reach their request easier faster and with cheaper prices. These digital platforms, such as Uber, Amazon are increasing the economy by allowing new entrants to offer their goods and services as well as by creating new market opportunities, including some labor real jobs.
However, there is no doubt that this digitalization of our society has also had some negative repercussions by affecting some areas in our economy and most of it has challenged our existing laws which were not yet ready enough to respond to all its needs. In our actual research, we are mainly focusing on the area of competition or ‘antitrust’ law and policy.
Nowadays this field is facing big issues. We are more and more confronted with important questions in antitrust domain. One of the main questions is about how competent that antitrust law is to deal with these innovations. Furthermore, how capable is it to cover all their aspects?
There is no doubt that our competition laws are based on principles that can be applied to the different stages of development of our economies, even though some new situations are being more complicated and are confronting our legal system with unsolvable issues.
2-Spanish courts supporting the online platforms or postponing the answer?
By facilitating the communication between suppliers and users, platforms allow new users to operate at the detriment of traditional operators which provoked the latter’s and pushed them to start suing these competitive operators.
This is what happened in the particular case of taxi companies as explained here below:
In details, the bus industry Confabs sued Blablacar company who has been operating in the Spanish territory for seven years, before the Spanish courts alleging unfair competition on the basis that the digital platform acts as intermediary in the passenger’s transport market without the required administrative authorization and in breach of applicable regulations. On the contrary, BlaBlaCar claims to be a not professional transport service, but a mere social network which connects drivers and travelers who want to share city-to-city car journeys.
In this context, the bus industry requested the immediate cessation of BlaBlaCar’s activities, the Court dismissed this request by pointing out that the request for interim measures aims to somehow anticipating the outcome of the court decision.
Similarly, another innovative transport service, Cabify, has also been sued, this time by the Madrid Taxi Federation. Cabify is a Spanish company established in 2011, that allows users to order, through its app or website, an executive chauffeur-driven vehicle, who will then drive them to their pre-indicated destination for an estimated price that is known in advance.
The Madrid Taxi Federation applied for an injunction, calling for the immediate suspension of its services, alleging unfair competition against the taxi sector; Cabify, however, argues that they operate with chauffeur-driven transport licenses complying with all legal conditions. The Court decided not to order the precautionary suspension of Cabify’s activity in Spain, justifying its decision basically on the same grounds as the judge did in relation to BlaBlaCar’s case.
These Court decisions gives as a first impression a big encouragement to these new platforms and transport business models and come in a moment of strong support from the Spanish Competition Authority, CNMC.
Nevertheless, the courts have only refused to order the precautionary suspension against these virtual operators but did not take yet a decision concerning the legacy of their activity which shows to be competitive to the activity of the operators in real life.
3- The German proposition: Another German achievement or another European challenge?
The fast growth of the market’s boundaries is causing an unclear view of the global outlook. If the constant dynamism caused by new innovative business models is to salute on one hand, it shall be accused on the other hand of creating complicated situations that our fixed laws cannot always cover. A pressing regulation seems to impose itself in this area; Germany has greatly understood the need of this intervention and is pushing for a new regulation in digital markets.
The German Federal Ministry for Economic Affairs and Energy has prepared a proposition, The White Paper “Digital Platforms” published on the 20 March 2017, that presents the different possibilities of digital regulatory policy in Germany. It also contains the proposal to establish a new “Digital Agency” which aims to control the market through an “early warning system” to guarantee compliance with competition law rules.
Furthermore the White Paper aims at creating the foundation for fair competition conditions in order to strengthen competition in digital platform markets in Germany and Europe. It also proposes an efficient investigation system that should be able to prohibit any behavior which is suspicious from an antitrust or unfair competition law perspective before the closure of on-going investigations in order to prevent damage to consumers and competitors.
However the main problem resides in finding the competent agents that are capable to follow the constant innovations with the same speed otherwise they will be left behind on the way!
Nevertheless, the European Commission doesn’t seem convinced yet of any new intervention. So far it considers existing competition rules and enforcement agencies as being sufficient to address new antitrust challenges posed by platforms.
Is the German proposal going to see the light?
Is it going to be sufficient and efficient?
What will be the reaction of the European commission? Shall it welcome this proposal or reject it? The courts positions will depend big time on the answers to these questions..