OECD Handbook On Competition Policy In The Digital Age

Competition authorities face a complex environment when addressing potential misconduct in digital markets. In particular, many concerns relate to conduct, strategies and innovations that are ambiguous in their effect because they hold significant procompetitive potential, such as seamlessly integrated services, greater transparency, dynamic pricing, lower searching costs from price comparison websites, and the convenience of e-commerce. Businesses also benefit, including small businesses that enjoy greater access to consumers and the ability to leverage large platform network effects. However, these benefits may also have a corresponding competition harm. Algorithmic pricing may be a tool for collusion. Network effects and economies of scale and scope can increase the effectiveness of exclusionary conduct by dominant firms. The centrality of digital platforms in certain markets can enable vertical foreclosure, or the imposition of restraints that limit the intensity of competition. And the underlying characteristics of digital markets could give rise to tipping, meaning that the effects of abusive conduct may be particularly serious in these markets.

Thus, dealing with potential misconduct in digital markets will often require a careful balancing act. The grey zone between clearly procompetitive and clearly anticompetitive conduct seems to have become bigger, while the risks of not intervening have become more serious. Further, there are concerns that novel forms of misconduct, such as algorithmic collusion, can be difficult to detect, and in some cases harder to prosecute under current competition laws. This has led to questions about whether certain concepts must be revisited, ranging from the definition of a collusive agreement, to the application to digital markets of theories of harm focused on vertical integration in network industries.

In sum, the OECD’s work on misconduct in digital markets has found that many of the core principles, analytical concepts, and areas of concern continue to be relevant. However, authorities will need to be on the lookout for new forms of misconduct and new tools for detection and analysis. At the same time, there is growing consensus that some concerns cannot be addressed under current enforcement frameworks, either because they do not apply, or they may not be effective in rapidly-changing markets, and as such might need a degree of ex ante regulation.

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