EU policy/consultations/Feedback Notice on market definition

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Free Knowledge Advocacy Group EU

Feedback on Evaluation of the Commission Notice on market definition in EU competition law (2020)

 

The market definition consultation is a planned European Commission public consultation on the method, established in 1997, to define what's the "market" a business operates in. This is normally a crucial step in determining things such as whether a business has a large or small market share, whether a business is dominant, whether a merger would reduce competition and cause harm.

Purpose of the Feedback

The European commission calls for a feedback on how it should conduct an evaluation of the Commission Notice on on market definition (adopted in 1997).

The roadmap of evaluation and fitness check that the European Commission requests the feedback on is a beginning to better define the concepts of ‘relevant product market’ and ‘relevant geographic market’. The European Commission presents the parameters of the evaluation: effectiveness, efficiency, relevance, coherence, EU added value. Everyone can provide a feedback on whether the parameters they Commission outlines are the right ones.

Regulatory context

• an overview of the EU Antitrust policy
• an overview of the EU mergers policy

The matter has enormous implications for the Wikimedia projects and the Wikimedia values, in particular free software and all it entails. We have witnessed in the past the harmful effects of Microsoft's dominance on websites like ours (forced to support Internet Explorer until recently); nowadays the European Commission needs new tools for matters such as the Facebook/WhatsApp merger, the Google Android antitrust case and other similar cases which will presumably come up in the near future around proprietary software and technological oligopolies, which deeply affect the ways users use Wikimedia projects.

Important deadlines

Feedback period: 03 April 2020 - 15 May 2020 (midnight Brussels time)

Relevant EU positioning by Wikimedia

• New Competition Tool - Inception Impact Assessment Feedback and Consultation 2020
• to come: response to public consultations (planned: second quarter of 2020)

Feedback on Evaluation of the Commission Notice on market definition

Feedback by FKAGEU

The update of market definition notice is needed in respect of changes on the market happening since the inception of the notice, especially regarding the emergence of the Digital Single Market and what we now call the “attention economy”.

The analysis of a relevant market should be centered around user behaviour and how the results of examining that behaviour can be integrated in the market definition. The scope of the evaluation should include a human-centered approach, and examine how current rules serve the assessment of the benefits of platform economy, and its dominant actors, to the users of online services - such as consumer freedom.

Therefore, the definitions of demand substitutability should include restrictions to switching (incl. portability of content, personal data, and identity), as well as substitutability of digital services.

The analysis of supply substitutability should include the availability of technologies - such as those automating content moderation - that make online platforms use to effectively manage their legal obligations and risks as a condition of competitiveness.

We are looking forward to the upcoming public consultation on the matter.

Submission by Free Knowledge Advocacy Group EU

Feedback by Wikimedia Foundation

The evaluation of the Market Definition Notice should verify if its instruments of analysis are adequate for the digital sphere/markets. There is a need to update the competition rules and definitions in general to better include platforms hosting user-generated content. Many of those that make this content publicly available do not operate on a market as much as they create their own market by being on the forefront of digital innovation that aims at building what we now call the “attention economy”.

The analysis of a relevant market should be centered around user behaviour and how the results of examining that behaviour can be integrated in the market definition. Particularly, the scope of the evaluation should include the above aspects into the analysis of effectiveness, relevance, and EU added value.

The proposed shape of the evaluation should fulfill, among others, the following objectives related to the definition of relevant market in the digital realm:

1. The evaluation should explore vertical integration of markets and its results, including the impact of network effects on competition, e.g. the need for structural remedies based on openness and consumer freedom, rather than only the number of direct competitors.

2. For the relevant product market aspects, the analysis of demand substitutability should include restrictions to switching (incl. portability of content, personal data, and identity), as well as substitutability of digital services. Substitutability can be affected by consumers’ important non-monetary interests, such as the ability to participate on a platform anonymously, pseudonymously, or with a limited audience.

3. For the relevant product market aspects, the analysis of supply substitutability should include the cost of complying with applicable laws, including the availability of technologies (variety and pricing) that make it possible for services to effectively manage their legal obligations and risks as a condition of competitiveness (for example, the affordability or accessibility of content moderation tools, based on machine learning and/or artificial intelligence influences the ability to compete in the market where some companies can afford such technologies and others cannot).

4. The evaluation should consider the multi-jurisdictional nature of the internet, which has several effects:

a. It can favor competitors with the resources to comply across national boundaries, raising market entry costs.

b. It can favor competitors willing to provide uniform products or services that meet the lowest common denominators across jurisdictions (e.g., production in jurisdictions with the lowest labor or environmental standards, enforcement of content moderation policies according to the most speech-restrictive regimes, etc.)

Many of these above effects lead to the conclusion that markets dealing with informational goods and services are frequently natural monopolies, suggesting that effective remedies are not limited to increasing the number of horizontal competitors, but to ensure that consumers and other marketplace actors in these ecosystems are treated fairly and given appropriate choice and freedoms.

Submission by Wikimedia Foundation

Partners' response

The response by the Free Software Foundation Europe, co-authored with Wikimedia Italia (which is also a FSFE member), see brief news.

The FSFE proposed an additional criteria of "inclusion" to the 4 criteria proposed by the European Commission for the consultation itself. The inclusion of civil society actors and other entities more experienced in software and free software will improve the European Commission's decision-making.

The FSFE acknowledges the Commission's initiative to evaluate fundamental terms of Competition Law in the light of the developments of digital technologies in the European markets.

We advocate to broaden the objectives of the consultation in order to permit a better evaluation of civil society and grassroots organisations' positions on market definition as a whole and the functioning of market definition in EU Competition Law. In order to contribute to a fair and inclusive assessment on the on the functioning of the Market Definition Notice, the FSFE would like to highlight the necessity of adding "Inclusion" as evaluation criteria in the Commission's feedback purpose.

For further information about our position, please see the document attached.

Other responses

Other responses focused on software include:

• a response claiming nothing significant happened since 1997, so there is no need for changes;
• Google;
• Developers Alliance (arguing for the inclusion of software developers, plus «engineers, computer scientists, venture capital consultants, financing and investment experts, or innovators and entrepreneurs», among stakeholders an experts to be consulted);
• professors Nicolas Petit and Thibault Schrepel (asking to consider «competitive pressure stemming from non-substitute products» like Android v. iOS, service lock-in, a new fact-finding process and an open-access database of product and geographic markets)

Actual consultation

If the roadmap is upheld, the actual consultation will start sometime in 2020.