Shaping future competition law enforcement in digital markets | Furman Review recommends shake-up of UK competition rules for the digital age
Published on 13th Mar 2019
On 13 March 2019, an independent panel of experts published its recommendations for the government following its review of UK competition policy.
As we have previously reported, the panel – chaired by US economist Professor Jason Furman – was instructed to examine the impact of digital markets on competition and consumers, and to consider whether competition law policy and enforcement tools in the UK require reform. The findings have recommended that reform to UK competition law and policy is indeed necessary to adequately manage the challenges and opportunities posed by digital markets.
The "central" conclusion of the Furman Review is that markets need to be supported by competition tools that open up innovation and tackle the forces that result in markets with "high concentration and a single winner". The review concludes that the reliance on existing merger and antitrust enforcement is not sufficient for digital markets and that, although sector regulation is not necessary, a new "pro-competition" approach is required. The report proposes taking action to ensure markets are competitive, rather than waiting to remedy sustained market failures that distort competition.
The report consists of six"strategic" recommendations:
- Setting up a new "digital markets unit", which will be tasked with securing competition, innovation and beneficial outcomes for consumers and businesses. The report sets out various recommended actions for the digital markets unit, including:
- promoting greater openness of data, (considered a key driver of concentration and a barrier to competition);
- supporting greater consumer choice of digital services through data portability; and
- establishing a code of conduct for digital platforms.
The report also proposes that the new unit could actively impose requirements on digital businesses designated as having a "strategic market status".
- The CMA taking more frequent and firmer action to challenge digital sector mergers that lead to consumer detriment, accompanied by changes to legislation if necessary. This includes a requirement that all intended acquisitions by businesses designated as having "strategic market status" should be notified to the CMA. The report also recommends a change to the substantive test for assessing mergers to allow the CMA to take into consideration the scale of possible harm from a merger, as well as how likely it is.
- Updates to the CMA's enforcement tools to deal with anti-competitive conduct, including streamlining the CMA's processes to facilitate greater and quicker use of interim measures and introduction of a more limited review process by the Competition Appeals Tribunal.
- Monitoring of developments in relation to machine learning algorithms and artificial intelligence by the government, the CMA and the Centre of Data Ethics and Innovation, with a view to ensuring that developments do not lead to consumer detriment or anti-competitive activity.
- The CMA conducting a market study into the digital advertising market.
- International engagement by the government on the measures it chooses to adopt from the review, in order to increase cross-border cooperation
Osborne Clarke comment
The recommendations of the Furman Review are no more than that. Whether, and to what extent, they are adopted by the government remains to be seen. Nevertheless, they are likely to prove influential, particularly because a number of the proposals are aligned with the CMA's recommendations in its February submission to BEIS. Any adopted proposals can be expected to go through further rounds of public consultation and take some time to implement. Many would require a new Act of Parliament to reform the existing competition law framework.
But many of the panel's recommendations are challenging and far-reaching, and propose a potentially significant shake up of competition law enforcement in the UK. Indeed, the report is consciously presented as a thought leadership piece, with a view to influencing the global debate on how best to shape the digital economy.
If you would like to discuss the Furman report in more detail, please do not hesitate to contact us.