By Ania Thiemann & Sophie Flaherty
Recent work indicates that the current competition framework is flexible enough to be adapted to address the challenges arising from digitalization. Key features of the digital economy such as economies of scale and scope, network effects and the role of data, can provide significant advantages to incumbents and help market players gain, entrench, and exploit market power. The acquisition and use of data by digital platforms, for example, influences the competitive landscape, affecting consumer trust and competition for and in the relevant market. In terms of enforcement, completion authorities may need to consider new theories of harm, while traditional analytical tools will have to be modified for the digital world. At the same time, a more pro-active competition policy will be required to deal with fast-moving markets. Referring to recent EU reports and OECD work, this paper discusses the continued relevance of the consumer welfare standard and stresses the importance for enforcers to better understand how digital markets work. It analyses important supply and demand side considerations in digital markets and focuses on the application of these within two central areas, the use of data and digital mergers.
