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11 February 2021

Coscelli: We Cannot Wait For Digital Markets To ‘Self-Correct’

The risk of consumer harm from under-enforcement is high in many digital mergers, and "self-correction" in the digital market is unlikely, Competition and Markets Authority chief executive Andrea Coscelli has warned.

Delivering the Bannerman Competition Lecture, Dr Coscelli said: “In many digital mergers the risk of consumer harm from under-enforcement is high. We know that many markets in this space can ‘tip’ towards monopoly. We know that can happen quickly.

“We know that ‘self-correction’ through market forces is unlikely; and correction through antitrust enforcement is often too slow to avoid irreversible harm.”

The News Media Association has previously called for Government to act quickly and to bring forward the legislation underpinning a new regulator for the tech giants, the Digital Markets Unit, which the CMA will be responsible for. This will ensure that news media publishers will be fairly rewarded for their journalistic content.

Governments and regulators globally are taking action to protect consumers from the harmful practices of the tech giants. The European Parliament have warned new laws could compel big tech firms to pay for news, following in the footsteps of the Australian competition regulator, the ACCC. Microsoft has recently supported Australia’s news media bargaining code, intended to restore balance between news publishers and the tech giants, calling news publishers "vital to the country's democracy."

Dr Coscelli spoke of the CMA’s recommendations to Government, particularly “changes to the merger regime for the most powerful digital platforms — that is, those we think carry the highest risk of consumer harm from under-enforcement.

He added: “The additional concerns we might reasonably be expected to have about acquisitions by such companies (such as the risk of further cementing their market power for many years) could be reflected in a lower standard of proof than we would normally apply before intervening, and this is what we have recommended to Government.”

Between 2008 and 2018, Coscelli noted that none of the 400 global acquisitions by the five largest digital firms were blocked by competition authorities: “It is very hard to look at those numbers, to look at the state of the relevant markets today, and conclude with hindsight that the balance has been struck correctly," Dr Coscelli added.

“Many of the challenges arising from the digital revolution are shared. There is also a shared idea of what we need to do; that, for the largest digital platforms, robust competition policy needs to be bolstered by ex-ante regulatory tools.

“That has been the conclusion in the EU, in the UK, in Germany, in Australia, and elsewhere. The task now is to achieve coherence.

"That’s why, as part of our advice to Government, we made clear the importance of the new Digital Markets Unit being able to share information and forge networks with international competition and consumer agencies.

“I look forward to continuing to work closely with the ACCC as we seek, together, to stay ahead of the curve; and to make markets – new and old – work well for consumers.”