Presenting his Spring Statement this afternoon, Chancellor Philip Hammond welcomed the Furman review, an independent review of competition in the digital economy. Following its recommendation he has written to the CMA asking it to carry out a market study of the digital advertising market (see here). The Chancellor also announced that the government will respond to calls in the review (and, indeed, from elsewhere) to update the UK’s competition rules for the digital age. This focus on digital and the tech sector is in line with recent announcements in the UK and other jurisdictions (here and here).
The Furman review found that the major digital platforms have become increasingly dominant and there has been little scrutiny and no blocking of platform acquisitions (Google/YouTube, Facebook/WhatsApp) (see here).
The review recommended:
- Setting up a digital markets unit (the Unit) tasked with fostering greater competition and consumer choice in digital markets (likely to be based in the CMA).
- A digital platform code of conduct, based on a set of core principles, which would apply to conduct by digital platforms that have been designated as having a ‘strategic market’ status.
- The Unit should pursue personal data mobility and systems with open standards where these will deliver greater competition and innovation.
- The Unit should be able to impose measures where a company holds a strategic market status and have enduring market power over a strategic bottleneck market (this is akin to ‘significant market power’ test applied to telecoms).
- Updating merger policy and legislation to ensure that it can be more forward-looking and take better account of technological developments.
- Clarify the standards for blocking or imposing conditions on a merger.
- The CMA undertake a market study into the digital advertising market encompassing the entire value chain, using its investigatory powers to examine whether competition is working effectively and whether consumer harms are arising.
The recommendations of the Furman review and the request for a market study into the Digital Advertising Market Study are major developments for the digital economy. The shape of the proposals reflects existing telecoms regulation, particularly the suggestion that conditions might be imposed on incumbents’ ‘significant market power’. As mentioned above, the UK is not the only European jurisdiction grappling with these issues. For example, the EU is still in the process of implementing recommendations and developing policies in pursuit of the ‘Digital Single Market’ (see our previous posts here, here and here). The possible review of EU merger thresholds to deal with and review the possible competition consequences of so-called ‘killer acquisitions’ has also been discussed widely in Brussels. The recommendations in the Furman report, and the Chancellor’s embrace of the need for CMA involvement, bring into focus the wider question of how the UK will navigate the imperative of a pan-European approach to the digital economy with the political turbulence created by Brexit…