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Competition And Digital Markets: New Stream in Tackling Abuse of Dominant Position

Competition And Digital Markets: New Stream in Tackling Abuse of Dominant Position

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The standard approach in cases involving abuse of dominant position implies that the competition authority determines the market influence of the company due to which it can operate in the relevant market to a significant extent independently of other market participants and, provided that the company has a dominant position, whether its actions result in abuse of such position. The standard approach came naturally in markets that are geographically and economically limited. The core of the principle is that the public authority reacts ex-post (after the event) to abuses, by imposing the obligation to terminate anticompetitive practices or imposing penalties for prohibited behaviour.

However, the standard approach seems unfit to tackle the current market impact of multinational tech companies as Amazon, Google, Apple, and similar. The reaction came as a proposal of a new set of competition regulations across the EU.

Amendments to the German Competition Law

In 2021 came the amendments to the German Act against Restraints of Competition which, amongst others, target operation of digital platforms that affect multiple markets and spillover a number of jurisdictions.

The main novelties introduced by the amendments are:

  • qualification of company’s market position as paramount cross-market significance;
  • the public authority may act ex-ante (prior to an event, instead of ex-post as standard approach);
  • conduct that could be prohibited as abusive by a company whose market position is qualified as of paramount cross-market significance is specified in an exhaustive list;
  • the relevant market is not determined as an admixture of relevant product and geographic market but could consist of several markets determined on the basis of undertaking’s market position.

The status of the company with paramount cross-market significance is to be reviewed every five years by Federal Cartel Office (“FCO”).

Until now, FCO initiated two proceedings for determining companies’ paramount significance for competition across markets, the second being initiated on May 18, 2021, against Amazon in relation to its online markets and particular digital offers.

Proposals of the European Commission

Similar to the German legislator, the European Commission published a Proposal for the Regulation of the European Parliament and the Council on Contestable and Fair Markets in The Digital Sector (“Digital Markets Act”). Proposal tackle market conduct of so-called gatekeepers, i.e., undertakings having a significant impact on the internal market (a); operating as a core platform service or rather an intermediary between business users and end-users (b); whose position on the market is surefooted or there is sufficient certainty in this respect. The Digital Markets Act aims to stipulate complementary obligations to Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) and national competition rules for undertakings qualified as gatekeepers.

Until the legislators worldwide manage to find the optimal approach regarding anti-competitive practices of large tech companies, the public authorities have the task of interpreting existing rules in accordance with changes in market structure on a global level. This would be particularly challenging when it comes to the analysis of possible abuse of dominant position by high-level tech multinationals, whose operations in practice could be hardly restrained by existing regulations.

Abuse of Dominant Market Position – Google vs JuicePass

In a similar vein, the Italian Competition and Market Authority (“AGCM”) fined Google over EUR 102 millionfor abuse of its dominant position. AGCM initiated proceedings against Google on the basis of a complaint submitted by Enel X Italia after Google declined to allow publication of the JuicePass app providing service related to EV charging and navigation regarding charging stations. The application was available on the Google app store from 2018, which implies that it should have been automatically available on Android Auto, the part of the same appsystem.

AGCM analyzed Google’s conduct through the prism of functions of JuicePass and Google Maps and found that there is “an area of ​​overlap” between the navigation apps and the EV charging app services regarding the search and navigation functions. In addition, navigation apps could extend their functions to search for EG charging station services. As a result, although the apps in question are different types of apps, they are competitors from the perspective of services offered to end-users. The only difference is that Google Maps offers navigation services that are wider in nature, while the JuicePass offers specific navigation services, together with booking, managing, and paying for recharging.

The fact that Android is a platform that interconnects manufacturers of smart mobile devices, app developers, and owners/users of smart mobile devices generates a great incentive for app developers to adapt their apps to Android requirements, while this further induces interest of end-users and in turn amplifies incentives for developers to access the platform with such user base. AGCM reasoning concerned the effects of Google’s refusal to include JuicePass on Android Auto on the future operation of Enel X. These effects imply that in the period for which JuicePass was not available on Android Auto, Google had the ability to build a user base at the expense of user base of JuicePass app. In that way, the refusal should be understood not as a barrier imposed to Enel X to enter the market but rather as squeezing out a competitor from the market since it was deprived of access to the user base. Therefore, platforms offering various tech services become liable for both preventing the (possible) competitors to enter the market and impeding them access to the existing platform’s user base.

In a more and more centralized digital economy, the new approach should not be taken as a revolutionary novelty, especially given the words of the chairman of the FCO while explaining the new procedure for assessing anti-competitive behaviour, stating that paramount significance for competition across markets particularly implies an ecosystem which extends across various markets constituting an almost unchallengeable position of economic power. Since the almost unchallengeable position of economic power in a self-sufficient ecosystem provides the basis for undertaking to tailor the market according to its own standards, ex-post reaction to anticompetitive behaviour becomes futile. 

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Milan Novakov, Senior Associate, and Aleksandra Cvorovic, Trainee, Samardzic, Oreski & Grbovic

Serbia Knowledge Partner

SOG in cooperation with Kinstellar is a full-service business law firm in Serbia that provides foreign and domestic clients with premium-quality legal advice and assistance across a wide range of key areas of corporate law. The firm was founded in 2015 by a group of seasoned, internationally-trained lawyers. SOG has developed a distinctively dynamic culture, bringing together top talent, fostering entrepreneurship, and maintaining exceptional relationships with its clients.

SOG has achieved consistent growth in the volume of its business, accompanied by an exponential increase in the number of hired associate lawyers and the firm’s network of business contacts. SOG has a robust client base of multinationals, investment and private equity firms, and financial institutions. Clients praise SOG for being commercially minded, very responsive and knowledgeable.

Establishing permanent cooperation with Kinstellar is part of realising SOG's long-term development strategy to be the leading provider of legal services in the Western Balkans market.

Firm's website: https://www.kinstellar.com/


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