Self-Preferencing – Legal and Regulatory Uncertainty for the Digital Economy (and Beyond?)

The growth of digital platforms has focused the minds of policymakers and competition authorities across the world on whether stricter enforcement is required against “self-preferencing.” Competition authorities are taking an increasingly expansive approach. While the abuse of dominance regime provides competition authorities with a great deal of flexibility, their treatment of self-preferencing as a standalone abuse raises fundamental questions and leaves them unanswered: over and above the gating question of “dominance,” where is the dividing line between “competition on the merits” and unlawful commercial practices, and how does the “special responsibility” of dominant firms play into the steps that dominant platforms need to take to ensure they are not crossing that line? There has been increasing pressure to use ex ante regulation to tackle self-preferencing. However, here too many unanswered questions remain: is regulation necessary in light of the flexible approach being taken with antitrust enforcement? Which markets (and which companies within those markets) should be subject to such regulation?

By Rod Carlton & Rikki Haria¹

I. SELF-PREFERENCING IS IN THE SPOTLIGHT IN THE DIGITAL ECONOMY

In principle, an undertaking’s expansion into a vertically-related or complementary business area is more likely to have pro-competitive effects than be anti-competitive. Stakeholders commonly agree on the benefits for competition and consumers, in