March 14, 2016

The CMA says that it “fully supports” the aims and ambitions underpinning the Commission’s Digital Single Market Strategy.  Given the pivotal role of platforms in the digital economy, the CMA considers it is of “vital importance that open and contestable markets enable competition to deliver greater consumer choice and spur further innovation”.  It therefore strongly supports the focus on platforms in the Commission’s Digital Single Market Strategy.

In its response to the consultation on online platforms, the CMA says that online platforms are a key part of the digital economy and have brought very significant and numerous benefits to consumers and that it is important that these benefits are not lost through “hasty, inappropriate or disproportionate intervention”.  In the CMA’s view a “one size fits all” regulatory response is not appropriate given the diversity of online platforms.

The CMA says that economic activities conducted on online platforms are not necessarily novel, nor do they only appear in online markets: the principal issues are familiar in offline markets.  As such, existing competition and consumer law applies to online platforms as it does to other businesses both online and offline.

In terms of competition, problems are most likely to arise from market power, but the market power of online platforms may be transitory and fragile, the CMA says.

In the CMA’s view, the current merger regime and market tools could be used to address potential competition problems.  More use could also be made of sectoral inquiries to enable a better understanding of emerging competition problems in fast moving markets, it says, and competition enforcement should be targeted at specific harms based on a thorough analysis of the market.

As for the consumer, online platforms have already increased price transparency and enabled consumers more easily to compare products and services of competing suppliers, thereby improving quality and choice.  In the CMA’s view, the existing consumer protection regime is substantially able to address consumer concerns, in particular under the Unfair Commercial Practices Directive (2005/29/EC) and the Unfair Commercial Terms Directive (93/13/EC).  However, it says, there is scope to offer more guidance to clarify the application of consumer law to online platforms.  Enforcement action, if needed, should be tightly focused in the light of specific and evidenced harm, it says.

Finally, the CMA says, in some areas, the Commission may wish to explore if further improvements could be made, for example in relation to the definitions of trader and consumer, platform/third party liability issues, transparency (for example regarding data collection policies) and notice and take down procedures.  To access the CMA response, click here.