Out-Law News 2 min. read

UK panel on competition in digital markets begins work

A panel of academics, led by a former economic advisor to the US government, has been given a few months to come up with recommendations on how the UK's competition regime could be updated to better account for developments in digital markets.

The expert panel on competition in digital markets has been commissioned by the UK government. It met for the first time on Wednesday in Downing Street.

The independent panel, which was first announced by the Treasury in the summer, has been asked to "consider the potential opportunities and challenges the emerging digital economy may pose for competition and pro-competition policy, and to make recommendations on any changes that may be needed", according to its terms of reference.

The government said that the panel will consult with "a wide range of academics, businesses and representative groups" as part of its review, and that a 'call for evidence' exercise would also shortly be commenced. A final report of recommendations is due to be submitted by the panel to the UK chancellor and business secretary in "early 2019". The recommendations will be used to inform the government's work and in particular its competition law review, the government said.

Alan Davis, competition specialist at Pinsent Masons, the law firm behind Out-Law.com, said: "This is a timely review of whether the UK competition regime is fit for purpose to address the new antitrust challenges arising from digital markets. The government is committed to reviewing and if necessary updating the UK competition rules by April 2019 to ensure they are effective and the panel's findings will helpfully feed into that process."

"The issue of how competition law can and should be applied to online markets, the use of algorithms and data is a hot topic amongst competition authorities and governments around the world, from the European Commission's e-commerce sector inquiry to its recent announcement of a preliminary investigation into Amazon's use of data from online retailers selling on its platform. In Germany, a new body tasked with proposing reforms to competition law to better support digital companies based in Europe has been set up by the German government and in the UK, the CMA has launched a dedicated 'data unit' employing data scientists and computer experts to enhance its understanding and capabilities to take on 'big digital cases'," he said.

The panel contains five members and includes leading UK academics in areas of economics, technology and law. It is being led by Harvard professor Jason Furman, who previously served as former US president Barack Obama's top economic advisor.

UK chancellor Philip Hammond said: "Our digital economy is one of the UK’s great strengths, employing two million people across the country. But people are concerned that the big players could be accumulating too much power in our new digital world. The work this panel is doing will help ensure we have the right regulations so that our digital markets are competitive and consumers are protected."

Eight "key questions" have been posed for the panel to answer. According to the terms of reference, there are four central topics that the panel's work will look into.

"[The panel] will look at: the impacts of the emergence of a small number of big players in digital markets such as social media, e-commerce, search, and online advertising; appropriate approaches to mergers, takeovers and anticompetitive practices in digital markets; opportunities to enhance competition to increase business innovation and expand consumer choice; how best to assess consumer impacts in ad-funded products and services that are 'free' to consumers," it said.

The panel will also "consider what further economic policy tools and frameworks are required to best understand and assess online markets; what if any changes may be required to the powers, functions and resources of the UK’s competition authority; and what approaches should be pursued at the international level in order to address the challenges of the digital economy".

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