Margrethe Vestager says EU will review competition rules in light of increasing digitalisation

The EU will review its rules on how it defines markets to react to increasing digitalisation, EU competition chief Margrethe Vestager said today.

Vestager said it was time to review the EU’s market definition notice which has been in place since 1997. 

“Changes like globalisation and digitisation mean that many markets work rather differently from the way they did, 22 years ago,” Vestager said.

“So the time has come to review the market definition notice. We want to be sure that the guidance it gives is accurate and up to date, and sets out a clear and consistent approach to both antitrust and merger cases across different industries, in a way that’s easily accessible,” she said.

How regulators define markets can help them measure a company’s pricing power in a merger or its power to shut out rivals in an antitrust case.

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Vestager cited the example of Google’s licensing of the Android operating system where it was decided that the existence of Apple’s own operating system would not make users change if Android’s quality fell, because of the expense and hassle of switching over to a new phone.

Bruce Kilpatrick, head of competition at law firm Addleshaw Goddard, said there was a question whether the current rules were “analogue powers operating in a digital age”.

“You can read it in terms of the Commission looking at whether the traditional approach to market definition needs to be adapted to deal with the challenge of applying antitrust in digital industries, particularly where some services are provided for free and some services are aligned to particular ecosystems,” he said.

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The review will also look at the geographic scope of markets. Alstom and Siemens, whose merger was blocked by the EU in February, had argued that the Commission should take into account Chinese rivals and the wider global market.

“There was a debate after that decision about whether competition law needed to be tweaked to facilitate industrial policy at a European level,” Kilpatrick  said.