Dear Readers,

Classically, the competition rules are known as an ex post instrument, whereas (sectoral) regulation is known as ex ante. In reality, however, the lines between the two categories are frequently blurred. Ex ante competition rules are laid out in general terms in legislation (in the EU, in the Treaty, Regulations, and Guidelines issued by the EU Commission; and in the U.S., in Acts of Congress and the various guidelines issued by the FCC, FTC, and DOJ, among others). Competition authorities (and judges) take decisions that establish past behavior as having infringed those rules or not (and such decisions are typically regarded as ex post)

Yet these decisions and judgments establish precedents and conventions that can reasonably be deemed to then form part of the corpus of ex ante rules, which are then used by companies and their advisors to guide their future advice and actions. As such, both ex ante rules proper and ex post actions by the authorities, in some sense, form part of a broader set of ex ante guidance for corporations in their commercial conduct.

That said, recently, particularly in the context of the regulation of the “platform economy” (including notably the EU Digital Markets and Digital Services Acts, and similar initiatives worldwide) the question of ex ante regulation proper has been gaining greater prominence. There has also been an evolution in the respective roles of ex ante regulation v. ex post competition enforcement in telecommunications markets as the rollout of universal fiber broadband access has continued apace. The pieces in this Chronicle take a contemporary look at these and other developments and assess the role of what is classically seen as ex ante regulation in the modern landscape.

To open, Stephen Kinsella & Karla Perca Lopez explore the new powers the UK’s Competition and Markets Authority (“CMA”) is to receive to regulate digital companies with Strategic Market Status (“SMS”). Once the new regime is in place, the nature of the relationship between the newly regulated companies and the CMA’s Digital Markets Unit (“DMU”) will significantly change. The first challenge for both will be to navigate the transition towards this new relationship, which will be a continuous, long-term relationship. This shift may be a challenge for both given the often-confrontational nature of their interactions so far. The second challenge will be for the CMA to choose between its different enforcement powers. The authors contend that it would be reasonable to assume that the CMA will have an incentive to choose to use its ex ante powers. This raises the question of what space will be left for abuse of dominance cases in digital markets, especially as behaviors addressed under both tools can be similar.

Indeed, policymakers, regulators, and commentators alike have criticized antitrust enforcers’ attempts at constraining “Big Tech” through ex post tools as excessively lenient and far too slow. Ben Bradshaw, Peter Herrick & and Sheya Jabouin discuss how this perceived failure have led to calls for a revamped approach to competition in digital markets, including expansive new regulatory structures like the European Union’s Digital Markets Act (“DMA”). But, as the authors note, ex ante regulations carry some risk, as unintended consequences may do more to impede competition in dynamic markets. 

Following on from this, Alberto Quintavalla & Leonie Reins discuss the connection between the timing and the locus of a regulatory intervention. In their view, it should excite considerable interest in the study of ex ante regulation. To illustrate their argument, they draw analogies with the so-called “precautionary principle.” Timing is clearly important when legislation is being drafted. However, time is not the only relevant variable in decision-making. For example, policymakers should address both when it is the right time to regulate new or emerging technologies and at which governance level. Addressing such questions would allow them to strike a balance between facilitating the development of new technologies and addressing the legitimate concerns of consumers.

Taking a Canadian perspective, John Pecman & Huy Do examine the debate around ex ante regulations for Big Tech platform companies. They explore the need for, and costs associated with ex ante regulation and conclude that pursuing such regulations in Canada would be ill-advised. The paper contends that no empirical evidence has been offered with respect to actual market failure. The paper provides a brief overview of international policy developments aimed at addressing vertical issues stemming from the network effects and scale economies in the EU, the U.S., and elsewhere. It then focuses on recent Canadian competition policy developments, and in particular on calls for ex ante regulation of Big Tech platform companies. The paper argues that the expressed goals of ex ante regulation are often amorphous and that there are significant costs associated with its implementation, as well as potential legal and constitutional hurdles in the Canadian context. 

Turning more sociological and humanitarian concerns, Mignon Clyburn looks to the implications of the passage of the Martha Wright-Reed Just and Reasonable Communications Act of 2022. Signed into law by President Joe Biden on January 5th, this legislation requires the Federal Communications Commission to ensure that charges for payphone services, including advanced (e.g. audio or video) communications services in correctional institutions are “just and reasonable.” The article explores the potential for the legislation to improve conditions for the families of incarcerated persons, but underlines the need for continued vigilance in its enforcement.

Looking at the potential for regulatory divergence in the new world of ex ante regulation, Will Leslie & John Eichlin note howthe new wave of potential rules has sparked intense debate on both sides of the Atlantic and worldwide. In their view, the potential challenge to consistent transatlantic policy and regulation requires detailed consideration. The potential introduction of myriad new regimes across Europe, Germany, the UK, the U.S., and other jurisdictions could put significant strain on an area of competition policy that until now, at least, has seen signs of increasing convergence. The authors explore the degree to which such divergence is likely to result in regulatory conflict or impose practical costs on market participants.

Finally, on a related theme, Cristina Poncibò & Laura Zoboli’s piece focuses on the ever-evolving relationship between EU Competition Law and ex ante regulation by specifically analyzing the case of so-called regulatory sandboxes, i.e. varying approaches to introducing experimental ex ante regulation. It also provides some case studies of regulatory sandboxes and questions their impact on the goals of promoting competition and innovation in the EU. Among other things, the article concludes that regulatory sandboxes, if properly designed, could well create a level playing field for new entrants and mitigate barriers to entry. On the other hand, regulatory experimentalism has the potential to exacerbate risks for both consumers and competition. 

As always, many thanks to our great panel of authors.


CPI Team

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