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Monopolising proceedings?

Over recent weeks, we have witnessed the latest, and thus far most public chapter in the ongoing attempts of the US competition community to get their teeth into the ‘big tech’ companies.  CEOs Mark Zuckerberg of Facebook, Jeff Bezos of Amazon, Tim Cook of Apple, and Sundar Pichai of Google were summoned to appear, virtually at least, before the House of Representatives’ anti-trust sub-committee.  Summarising what went on over the 6 hours of fierce interrogation and 500+ pages of evidence is not the work of a moment, especially as the specific competition concerns vary between each company, but beyond the inevitable grandstanding and accusations of political bias by its members, the sub-committee amply demonstrated the growing conviction state-side that Silicon Valley needs somehow to be reined in, that some of its best-known companies have been able to build positions of excessive dominance over their competitors and over consumer interests, positions that they are now defending using questionable means.  What will happen next is unclear until the sub-committee reports back, but the stage does appear to have been set for formal anti-trust proceedings to be launched, and/or for specific regulation curbing ‘big tech’ power to be proposed.

Whilst it was reassuring for the rest of us to see some of the world’s most powerful individuals struggling with their WebEx audio settings, the fact that the committee was able to meet virtually in this way, with its proceedings streamed around the world in real time, is just one more reminder of the benefits that ‘big tech’, online platforms, and connectivity have brought to society.  But at the same time, there is a growing conviction, and not just in the US, that the power and the rewards that flow from the digital economy are being overly-concentrated into the hands of the (very) few, and that the resulting inequalities need to be addressed with growing urgency.

On this side of the pond, digital competition and the power of the major online platforms and retailers are also the key themes in the ongoing process of reviewing and replacing the European Block Exemption regulations which govern franchise distribution across all sectors, including automotive.  The European Commission is keen to understand how brand owners of all shapes and sizes have responded to the greater price transparency and customer reach digital channels have brought over recent years with greater direct downstream involvement, new requirements and restrictions on their distributors, and much closer (and increasingly automated) price monitoring.  Are there risks to competition in these developments that should be addressed in changes to the Block Exemption rules, and how can these be reconciled with other policy objectives, such as avoiding the ‘desertification’ of the High Street as e-commerce displaces ‘bricks and mortar’ shops?

At the same time, a great deal of thought is being put into how to handle in Europe the continued growth of the major online platforms, including the very same names that have been exercising the Congressional committee members in the USA.  For instance, the European Commission currently has three different additional competition consultations running; one would introduce specific regulation covering situations where online platforms build significant ‘gatekeeper’ positions within markets.  Another would create an extremely powerful new investigatory ‘tool’ for addressing competition issues in markets either where practices have eluded the regular competition rules, or where there is a risk of ‘tipping’ (so where one type of player could take advantage of network effects to build a strong position very quickly).

For the automotive sector, keen to learn how the rules governing new car, after-sales, and spare parts distribution networks might change, there are two dimensions to consider.  Firstly, as networks become more ‘omni-channel’, and cars and surrounding services more ‘connected’, any new rules related to digital competition will increasingly also apply to the sector directly, even if ‘big tech’ is the main target.  And secondly, in the Block Exemption renewal debate, those players (such as dealers or independent aftermarket operators) who might have ‘traditional’ (or ‘bricks and mortar’) competition concerns to express may need to shout much louder to make themselves heard, as otherwise issues around digital competition risk totally monopolising the debate.

We will be exploring these and other related issues in more detail at our Block Exemption workshop, to be held as part of the virtual ICDP Autumn Meeting, on Tuesday 13th October (more details HERE).  This will give our research programme members a valuable opportunity to catch up on the latest developments in the automotive distribution regulatory debate, and to consider where things might be headed in the future.  Contact the Project Office to secure your place!

Image source: Washington Post

Andrew Tongue