The responsibilities of Big Tech that come with Super Dominance
This summer, the EU passed the Digital Markets Act (DMA), new rules for a fair and competitive digital sector. Researchers Alessia D’Amico and Baskaran Balasingham are hopeful this will give competitors a fair chance. They recently presented a paper on the concept of Super Dominance and Google Shopping at ASCOLA, the biggest competition law conference in the world.
Your paper is called: Super-dominant and super-problematic? The degree of dominance in the Google Shopping judgement. What happened in ‘Google Shopping’?
Being dominant, or even super-dominant, in itself is not a bad thing. But with this super-dominance comes a special obligation: do not disrupt the market functioning. In the Google Shopping judgment, the General Court refers to Google’s super-dominance and with it its stronger obligation not to allow its behaviour to impair effective competition.
In the internet search market other comparison websites could no longer compete with Google’s own comparison shopping service. Google shopping images were displayed on top of the page and competitors’ website could not be found on the first result page. Users usually don’t go to page 2 or 3 to find what they are looking for. So this behaviour was excluding other services from the market and therefore anti-competitive.
The concept of super-dominance suggests that certain conduct could breach Article 102 of the Treaty on the Functioning of the European Union. Article 102 prohibits companies who hold a dominant position from abusing that position. As already mentioned, the existence of super-dominance in itself is not enough to show that an abuse exists. Nonetheless, once effects are established, the position of the dominant undertaking on the market can move the needle when it comes to finding an infringement. There is a greater responsibility not to impair effective competition, imposed on undertakings that are not only super-dominant, but also have a gatekeeper position in the market. In the context of digital markets, these are typically large online platforms.
Users usually don’t go to page 2 or 3 to find what they are looking for. So Google Shopping's behaviour was ruled anti-competitive.
The Digital Market Act establishes new rules for large online platforms: gatekeepers. What is the difference between super-dominance and gatekeeping?
Like super-dominance, gatekeeping in itself is not bad, it just means that you are the gate through which other companies reach their consumers. And as a gatekeeper, you need to give competitors on the market a fair chance. Under the DMA, gatekeepers cannot treat their services and products more favourably in ranking than similar services or products offered by third parties on their platform. Gatekeepers also have to allow their business users to access the data that they generate in their use of the gatekeeper’s platform.
The definition of gatekeeper will mainly capture so called Big Tech companies but other large companies active in digital markets may also fall within the scope of the new Act. The DMA comes with sharp teeth. If a gatekeeper violates the rules laid down in the DMA, it risks a fine of up to 10% of its total worldwide turnover.
In the conclusion of your paper, you write: The Digital Market Act might be able to supplement competition law: can you explain how?
The DMA is a hybrid between competition law and regulation – it has elements from both .The DMA works “ex ante”. It provides a framework to regulate gatekeepers’ behavior and prevent failures before they become a reality. Such regulation is unlike ordinary competition law, which normally allows only “ex-post” investigations and remedies. Competition law cases are often time consuming and it can sometimes take many years until the Commission concludes a case. By that time, competitors might already be out of business. The DMA provides a number of quantitative thresholds in addition to market shares and if those are exceeded a digital platform falls within its scope and will be subject to certain obligations. A hybrid instrument like the DMA may not only allow the European Commission to regulate a wider number of companies but also to intervene much earlier.
The DMA may not only allow the European Commission to regulate a wider number of companies but also to intervene much earlier.
You also write: competition law intervene often carries risks of over- or under-enforcement. Are you positive or negative about the DMA?
It’s positive that the DMA sets out various quantitative thresholds other than market shares that give the Commission more possibilities to go after large digital platforms. At the same time, we don’t think there is a risk of over-enforcement. On the contrary, as it stands now there is concern that the Commission is understaffed in order to enforce the DMA effectively.
What were the reactions to your paper and presentation on Super Dominance?
The concept is underexplored, it only appeared in a handful of cases and hasn’t attracted a lot of academic attention.