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e-Competitions

Antitrust Case Laws e-Bulletin

Platforms

Platforms and competition law: An overview of EU and


national case law
ANTICO MPETITIVE PRACTICES , ABU S E O F DO MINANCE, AGREEMENT, S EL ECTIVE DIS TRIBU TIO N, FO REWO RD,
MARKET PO WER, INTERNET, O NL INE PL ATFO RMS

Jürgen Schindler, Mark Taylor


e-C o m p etitio n s Sp ecia l Issu e P la tfo rm s

The application of antitrust laws to internet platforms will be one of the key areas of development for antitrust law
over the coming years. Capturing the heart of an issue as important – and multi-faceted – as this in the few short
pages of a foreword is challenging in the extreme. The excellent articles in this special issue of e-Competitions
make our task substantially easier and allow us to raise some of the other questions that merit consideration, safe
in the knowledge that readers will be expertly led through the intricacies of the issues by the more-than-capable
hands of the contributing authors.

Spanning from 2012, with the beginning of the Booking.com saga, to the ECJ’s most recent judgment in the sector,
Coty, [1 ] these articles astutely cover the seminal developments in the thinking of the EU and Member States’
competition authorities and courts as to how best approach enforcement in an entirely new sector. Indeed, the
rapid changes brought on by technological advances could hardly have been envisaged when the foundations of
antitrust laws were laid down. A cursory glance at the timing of the cases, inquiries and working papers that form
the subjects of the articles in this publication shows the increasing urgency with which regulators are scrambling
to address how to apply the tools at their disposal to internet platforms.

Some – Germany’s Federal Ministry for Economic Affairs and Energy (MEA ), for example – appear to have already
concluded that competition authorities are too poorly equipped to face the task before them, and that a wholly new
approach, and regulator, is needed. Why is this? What are the enforcement challenges faced by regulators, and are
the tools available really not fit for purpose? Do we, in fact, need to regulate digital platforms at all?

A. D o Platf orms Really Need to be regulated?

The question of whether platforms need to be regulated is a provocative one, and likely to incite a strong reaction in
the reader, be they in favour of or against intervention. However, this fundamental question must be considered
with the unique nature of digital platforms in mind. Indeed, that unique nature means that the approach to digital
platforms cannot be solely based on how antitrust law has been applied to traditional industries.

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First and foremost, the customer-facing nature of many digital platforms means that they are often in the public
eye. Pricing transparency and data privacy, as regulators have already identi ed, [2 ] are areas of concern among
the public, and raise the question whether these platforms to be regulated to ensure consumers are protected.
However, imposing regulation would not account for the fact that customers are able to act as a consolidated
group (with the buying power that entails) against digital platforms in a far more effective way than against
traditional industries. This consolidated power is facilitated by the ease with which information and views are
shared, and with which they can migrate to a new platform at the click of a few buttons, from the comfort of their
own home. This allows consumers to assume the role of regulator by switching to a new platform at any time and
for any reason, including when concerns are raised in relation to a platform (be they pricing transparency, data
privacy or otherwise).

Politically, the sector’s high pro le is a double-edged sword for regulators: the global nature of many platform
operators means that competition enforcement in the market will often be carried out against companies based in
other jurisdictions. Overzealous enforcement can therefore lead to high-pro le accusations of protectionism –
then-President Obama’s comments in 2015 spring to mind [3 ] – accusations that European regulators risked
rekindling with enforcement action over the tax affairs of Apple and Amazon, [4 ] and will doubtless be keen to
avoid seeing repeated.

The multi-sided nature of platforms means that intervention brings with it complex economic consequences.
Perhaps, therefore, these nascent markets should be given time to mature in the expectation that apparently
signi cant market shares may prove to be unstable. This has been seen before in technological markets – Nokia’s
supremacy giving way to the disruption of the iPhone comes to mind. Although concerns are being voiced that
network effects and the importance of user data may give rst-movers an insurmountable advantage in their
sectors, there are many examples of disruption in these markets that suggest this is not the case. Facebook was
not the first social network, just as Spotify was not the first digital music platform.

The jury is still out as to whether there is a need for platforms to be regulated. However, we cannot lose sight of the
fact that platform providers often do not view the markets they operate in through the same national – or even
supra-national – prism as competition authorities. More than ever, therefore, a consistent cross-border approach
will become increasingly important in maintaining clarity for the businesses, practitioners and authorities involved
in these sectors. The divergent approaches taken by national competition authorities in the EU following the online
hotel bookings cases has already provided an excellent example of the need for clarity and consistency.

B. T ime f or a rethink ?

Germany has been at the forefront of developing thinking in relation to digital platforms, with the MEA having
already considered the issues at hand in its Green Paper, [5 ] followed by a White Paper [6 ] setting out its
recommendations for how to tackle these issues. Meanwhile, the Bundeskartellamt also published its own
Working Paper on the Market Power of Platforms and Networks, [7 ] (the W ork ing Paper ) including its own
recommendations, a number of which have now been implemented in the recent revision of German antitrust law.

A key question is whether existing legal provisions are su cient to regulate digital platforms. Both the
Bundeskartellamt and the MEA have highlighted the speci c nature of digital platforms and the challenges faced
by competition authorities. While the two largely agree on these points, it is telling of the complexity of these
challenges that there has been some divergence in their recommendations on how best to address them.

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For its part, the Bundeskartellamt suggested in its Working Paper that the antitrust tools available to it were
su cient for it to assess and successfully regulate digital platforms, subject to a few amendments and
clari cations. As regards merger control, the Bundeskartellamt suggested that “ market activities” should also
encompass non-monetary transactions, and that merger control thresholds should be amended to capture high-
value transactions in which the parties do not (yet) generate significant turnover. This proposal was reflected in the
recent revision of German antitrust law. This is a direct consequence of a recent phenomenon in this sector, which
has seen the growth and size of a platform eclipse the importance of short-term pro tability – demonstrated by
Facebook’s 2014 acquisition of WhatsApp.

The Bundeskartellamt also considered the need to reassess how market power is characterised. Turning away
from the traditional criteria on which market power is traditionally de ned, the Bundeskartellamt suggested
competition authorities should take account of a platform’s (a) direct and indirect network effects, (b) economies
of scale, (c) prevailing type of use (single-homing/multi-homing), (d) access to data and (e) the innovation
potential of digital markets. While these criteria may be unusual in the context of a more traditional market, the
assessment itself would not stray from established assessments.

These changes and proposals are conservative and represent more of an evolution than a revolution. In contrast,
while the MEA has identi ed similar challenges in the assessment of digital platforms under antitrust law, such as
the importance of indirect network effects and scale effects, its suggestion in how to address these challenges is
far more radical – the creation of an entirely new authority to regulate digital markets (the New D igital Agency ).

The suggested remit of this agency goes beyond simply antitrust enforcement. The MEA has proposed that the
New Digital Agency would actively monitor markets, allowing “rapid intervention” in the case of competition or
other regulatory infringements. It would have the power to carry out market investigations (based on consumer
complaints or of its own initiative), and would not be required to prove a dominant position exists before
intervening. Meanwhile, the MEA highlighted the need for a clear legal framework to govern the use of personal and
non-personal data to enable growth of digital platforms in the EU, as well as to establish rules for access to data in
order to prevent data monopolies.

The danger of amending and clarifying existing approaches to antitrust regulation so that they better apply to the
latest innovative business model is that there will be, in all likelihood, a lack of clarity in how those clari cations
apply to the next innovative model that falls into a gap between current regulations. We are already starting to see
this in some examples of enforcement in this area. In that regard, calling for an entirely revised approach – as the
MEA is suggesting – is interesting.

However, there must still be some caution here. The MEA’s suggestion that establishing dominance should not be
a prerequisite for intervention is aimed at facilitating rapid intervention. This may be an understandable concern,
but removing a cornerstone of establishing jurisdiction would have serious implications for legal certainty.

C. Enf orcement to date

A relatively small number of decisions and judgments have been delivered in Europe in which the application of
current regulations to digital platforms is tested, and divergent approaches have already started to emerge. While
the ECJ’s recent judgment in Coty [8 ] may form the foundation for a consistent approach by national competition
authorities, the ECJ’s judgment is open to interpretation – as recognised by Christian Ritz and Mariya Sera mova in
their article on the matter within this issue. It therefore remains to be seen to what extent national competition
authorities align their approaches following this judgment.

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i. Coty and selective online distribution – the luxury of the few?

Many of the judgments and decisions to date relating to digital platforms focus on their implications for the
distribution of physical products. In this regard, Coty is no different, as it considers whether a selective distribution
system that prohibits the use of third-party platforms for the internet sale of goods (i.e. online marketplaces) is
permissible. Ostensibly applying primarily to luxury goods, Coty builds neatly on existing principles for selective
distribution for “ high quality and technically advanced consumer durables”, [9 ] as set out in Metro I . [10 ] In doing
so, the ECJ has found that prohibiting distribution through online marketplaces does not fall foul of Article 101(1)
TFEU, as long as the same objective conditions that apply to selective distribution via brick-and-mortar outlets are
also met.

Key among the questions raised by the judgment is whether the ECJ has limited the luxury of such selective
distribution online to only high-end goods. While the judgment itself focuses on such products, without mentioning
‘non-luxury’ goods, it can be reasonably interpreted from the judgment that prohibiting sales through online
marketplaces is not a “by object” restriction. Following this train of thought, an effects-based analysis is required –
and there does not seem to be a reasonable platform on which to argue that only online sales restrictions for luxury
goods should benefit from this.

The ECJ was, in fact speci cally asked by the referring court whether certain articles of the Vertical Block
Exemption Regulation [11 ] (VBER ) should be interpreted as meaning that a prohibition of sales through third-party
platforms constitute a “by object” restriction of a retailer’s customer group, or of passive sales to end users.
Although the ECJ did consider these questions, its conclusion – that the conduct in question did not constitute a by
object restriction under the relevant VBER provisions – was speci cally limited to “luxury” goods, even though the
referring court did not include this qualifier in its questions.

It would therefore be helpful for the European Commission to issue guidance on how it understands the ECJ’s
judgment in Coty, particularly as regards the discussions surrounding the possible distinction between luxury and
non-luxury goods, and VBER, in order to avoid a divergence of interpretations in the European Union.

ii. Bundeskartellamt and Asics – room for consistency?

Coty appears to have already caused some tension with the approach taken to date by the Bundeskartellamt.
Shortly after the ECJ’s judgment was handed down, the Bundeskartellamt stated that “ Our preliminary view is that
[non-luxury goods] manufacturers have not received carte blanche to impose blanket bans on selling via
platforms”. [12 ] The German authority has, to date, shown more willing than other national competition authorities
in the EU to intervene where there are prohibitions on sales through online platforms – notably in its Asics [13 ] and
Adidas [14 ] decisions.

Its practice to date has been to stop goods manufacturers from preventing sales through online markets, such as
Amazon or eBay, primarily in a bid to keep these sales platforms open to smaller retailers. However, the
Bundeskartellamt’s decisions to date could be distinguished from the ECJ’s Coty judgment, in that they have
focused on non-luxury segments. It is therefore conceivable that Coty would have little impact on the
Budeskartellamt’s decisional practice. [15 ]

On the other hand, this would disregard the possible interpretation that Coty supports an effects-based analysis of
restrictions of sales through online platforms that would also apply to non-luxury products. Going forward, other
national competition authorities will need to decide whether to take this approach, or whether they will lean

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towards an effects-based interpretation of Coty that would potentially allow manufacturers of non-luxury goods to
benefit from selective distribution arrangements with online platforms.

iii. Uber – falling through the cracks

Uber has the unfortunate privilege of being perhaps the clearest example of a digital platform falling between
existing regulation. The recent ECJ judgment [16 ] – and the opinion of AG Szpunar that forms the basis of Rafael
Allendesalazar’s article in this issue – focused on the question of whether Uber constitutes an “Information
Society service”, [17 ] or merely a transport service. If it were classi ed as the former, Uber would bene t from the
freedom to provide services enshrined in Article 56 TFEU. [18 ] Were it to be classi ed as the latter, its services
would be regulated by the law of the relevant Member State.

Although the ECJ recognised that Uber provides “ an intermediation service consisting of connecting, by means of a
smartphone application, a non-professional driver using his or her own vehicle with a person who wishes to make
an urban journey” [19 ], the ECJ held that Uber provides “ more” than just this service. A key element in the ECJ’s
reasoning appears to have been the fact that drivers would not be able to provide transport services without Uber,
and passengers unable to use drivers’ services. [20 ] Further, Uber is able to exercise “ decisive in uence ” over the
how drivers provide their services – from the types of cars they must drive to “ at least the maximum fare”
charged. [21 ]

While any case that reaches the ECJ is by de nition debatable, it does seem that Uber’s business model presents
something of a hybrid scenario. AG Szpunar drew a similar conclusion, identifying Uber as a “composite
service” [22 ] that combined electronic (i.e. the location of the passenger/driver) and non-electronic (i.e. the
provision of transport) elements. His conclusion was that this removed Uber from the scope of an “Information
Society service”. That said, there is also clearly an argument that Uber is not providing an “urban transport service”
since this is provided by the “ non-professional driver using his or her own vehicle”.

As with many other digital platforms, Uber’s role is one of matchmaker that never provides a physical service or
product itself. Nonetheless, the ECJ has managed to squeeze its business model into the existing legislative
framework using decades-old de nitions without providing wider guidance as to how the business models of
digital platforms should be assessed. Does Airbnb provide accommodation? Is Deliveroo a restaurant? In the
absence of speci c regulation – or at the very least, guidelines – as to how the business models of such digital
platforms should be interpreted, it seems inevitable that we can look forward to further litigation on these
questions as these innovators continue to disrupt established markets.

iv. Facebook’s (alleged) market power

In addition to its decisions focusing on distribution of goods via online marketplaces, the Bundeskartellamt has
also considered how market dominance can be assessed for digital platforms. The Bundeskartellamt’s Working
Paper on the Market Power of Platforms and Networks set out its proposed criteria that should be taken into
account in assessing this – as discussed above.

The approach taken by Bundeskartellamt’s rst example of such an assessment is consistent with its proposal. In
March 2016 – some three months prior to publication of the Working Paper – the Bundeskartellamt initiated
proceedings against Facebook, on the suspicion that Facebook had abused its potentially dominant position. [23 ]

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The Bundeskartellamt has now released a background paper [24 ] setting out its preliminary assessment, [25 ] in
which it announced a preliminary nding that “ Facebook has a dominant market position in the German market for
social networks”.

The background paper refers to a number of concepts that were also identi ed in the Working Paper as being the
relevant criteria for an assessment of dominance. The Bundeskartellamt notes, for example, the number of
Facebook users in Germany, the importance of network effects, the lack of multi-homing (i.e. the parallel use of
other social networks), and Facebook’s access to personal data. Although the Bundeskartellamt makes a passing
reference to Facebook’s high market shares, there is little analysis on this. Rather, the core of the
Bundeskartellamt’s reasoning appears to be the aforementioned aspects that are unique to digital platforms –
underlining its reasoning in its Working Paper that current concepts in antitrust law can equally apply to digital
platforms; all that is needed is a refining of the criteria through which the regulator applies those concepts.

D . W here next f or antitrus t enf orcement?

It is not so long ago, and likely within the recollection of many readers of this issue, that antitrust law was the niche
focus of a select few practitioners. From there, this obscure area of law has spread to have global relevance. It is
encouraging to see the continued development of our practice area as it turns to address new challenges. The
antitrust community is at a crossroads in deciding how it faces the challenges of enforcement in the digital era –
one path being to simply tweak existing tools and concepts to better reflect a new reality, the other requiring a more
radical rethink about how the regulatory landscape (including beyond competition law) should look in the coming
years and decades. Whichever path is chosen, ensuring clarity, predictability, legal certainty and cross-border
consistency will be pivotal in ensuring innovation is not unnecessarily restricted in this new sector.

Note from th e Ed itors : alth ou gh th e e-C ompetition s ed itors are d oin g th eir bes t to bu ild a
compreh en s ive s et of th e lead in g EU an d n ation al an titru s t cas es , th e completen es s of th e d atabas e can n ot
be gu aran teed . Th e pres en t foreword s eek s to provid e read ers with a view of th e exis tin g tren d s bas ed
primarily on cas es reported in e-C ompetition s . Read ers are welcome to brin g an y oth er relevan t cas es to
th e atten tion of th e ed itors .

[1 ] European Court of Justice, 6 December 2017, Case n° C-230/16 , C oty German y GmbH
v. Parfü merie Ak z en t GmbH . See And rz ej Kmiecik , The EU Court of Justice hands down
an anticipated judgment on the possibility for a producer of luxury goods to restrict the selling of
goods on third party online platforms outside of its selective distribution network (Coty), 6
December 2017, e-Competitions Bulletin December 2017, Art. N° 85459; And rz ej Kmiecik , The
EU Court of Justice rules in favour of restrictions on the use of platforms in a selective distribution
system for luxury products (Coty), 6 December 2017, e-Competitions Bulletin December 2017,
Art. N° 85787; C h ris tian Ritz , M ariya Serafimova , The EU Court of Justice holds that
suppliers of luxury goods may under certain conditions restrict authorised retailers in a selective
distribution system not to sell their goods via third-party online platforms to preserve their
products’ ‘luxury image’ (Coty Germany), 6 December 2017, e-Competitions Bulletin December
2017, Art. N° 85410

[2 ] German Fed eral M inis try for Economic Affairs and

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[2 ] German Fed eral M inis try for Economic Affairs and
Energy, https://www.bmwi.de/Redaktion/EN/Pu... White Paper on Digital Platforms of the
Economic Affairs Ministry , 20 March 2017 .

[3 ] M u rad Ah med , Du ncan Robins on and Rich ard


Waters , https://www.ft.com/content/41d968d6... Obama attacks Europe over technology
protectionism , 16 February 2015, Financial Times .

[4 ] Roch elle Toplens k y, Arth u r B ees ley and Ad am Sams on , EU takes Ireland to court
over Apple taxes , 4 October 2017, Financial Times .

[5 ] German Fed eral M inis try for Economic Affairs and Energy , Green Paper: Digital
Platforms , May 2016 .

[6 ] German Fed eral M inis try for Economic Affairs and


Energy, https://www.bmwi.de/Redaktion/EN/Pu... White Paper on Digital Platforms of the
Economic Affairs Ministry , 20 March 2017 .

[7 ] B u nd es k artellamt , Arbeitspapier - Marktmacht von Plattformen und Netzwerken , 09


June 2016 .

[8 ] European Court of Justice, 6 December 2017, Case n° C-230/16 , C oty German y GmbH
v. Parfü merie Ak z en t GmbH .

[9 ] European Court of Justice, 25 October 1977, Case n° 26/76 , M etro SB -Großmärk te v.


C ommis s ion , para. 20.

[10 ] European Court of Justice, 25 October 1977, Case n° 26/76 , M etro SB -Großmärk te v.
C ommis s ion .

[11 ] Commission Regulation (EU) n° 330/2010 of 20 April 2010 on the application of Article
101(3) of the Treaty on the Functioning of the European Union to categories of vertical
agreements and concerted practices.

[12 ] M atth ew Newman , Comment: Luxury brands’ EU court win shifts fight over online-
sales bans to national authorities , 6 December 2017, Mlex .

[13 ] Bundeskartellamt, 26 August 2015, Case n° B2-98/11 , Un lawfu l res triction s of


on lin e s ales of ASIC S ru n n in g s h oes . See German C ompetition Au th ority , The German
Competition Authority condemns a manufacturer of running shoes for restricting the online sales
activities of small and medium-sized authorised dealers (Asics), 27 August 2015, e-Competitions
Bulletin August 2015, Art. N° 75442; Gabriele Accard o , The German Federal Cartel Office
condemns an athletic equipment company for restricting online sales of its small and medium-sized
authorized dealers (Asics), 26 August 2015, e-Competitions Bulletin August 2015, Art. N° 78327

[14 ] Bundeskartellamt, 27 June 2015, Case n° B3-137/12 , ad id as aban d on s ban on s ales


via on lin e mark etplaces .See Gregor Sch roll , The German Federal Cartel Office takes actions
against restrictions of sales via online marketplaces (Adidas), 27 June 2014, e-Competitions
Bulletin June 2014, Art. N° 70602; German C ompetition Au th ority , The German

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Competition Authority closes proceedings after the company amended its conditions for online sales
of sport shoes in such a way that they comply with competition law (Adidas), 2 July 2014, e-
Competitions Bulletin July 2014, Art. N° 67566

[15 ] M atth ew Newman , Comment: Luxury brands’ EU court win shifts fight over online-
sales bans to national authorities , 6 December 2017, Mlex .

[16 ] European Court of Justice, 20 December 2017, Case n° C ‑ 434/15 , As ociación


Profes ion al Élite Taxi v. Uber Sys tems Spain SL . See Rafael Allend es alaz ar , EU Court of
Justice Advocate General Szpunar delivers his opinion in a case regarding the concept of information
society service (Uber Spain), 11 May 2017, e-Competitions Bulletin May 2017, Art. N° 84886

[17 ] Directive (EC) n° 98/34 , Article 1(2) (now repealed) and Directive (EU) n°
2015/1535 , Article 1(1)(b) provide that: “For the purposes of this Directive, the following
meanings shall apply: […]“service”, any Information Society service, that is to say, any service
normally provided for remuneration, at a distance, by electronic means and at the individual request
of a recipient of services.”.

[18 ] Consolidated Version of the Treaty on the Functioning of the European Union , Article 56.

[19 ] European Court of Justice, 20 December 2017, Case n° C ‑ 434/15 , As ociación


Profes ion al Élite Taxi v. Uber Sys tems Spain SL , para. 37.

[20 ] European Court of Justice, 20 December 2017, Case n° C ‑ 434/15 , As ociación


Profes ion al Élite Taxi v. Uber Sys tems Spain SL , para. 39.

[21 ] European Court of Justice, 20 December 2017, Case n° C ‑ 434/15 , As ociación


Profes ion al Élite Taxi v. Uber Sys tems Spain SL , para. 39.

[22 ] Opinion of Advocate General Szpunar, 11 May 2017, Case n° C ‑ 434/15 ,


As ociación Profes ion al Élite Taxi v. Uber Sys tems Spain SL , para. 28

[23 ] B u nd es k artellamt , Bundeskartellamt initiates proceeding against Facebook on suspicion


of having abused its market power by infringing data protection rules , 2 March 2016 . See
Tim Kas ten , The German Competition Authority initiates proceedings in the social network
market (Facebook), 2 March 2016, e-Competitions Bulletin March 2016, Art. N° 78992; Silk e
Heinz , The German Competition Authority indicates in its preliminary assessment of a possible
abuse of dominance case that data collection and use from third-party sources is abusive
(Facebook), 19 December 2017, e-Competitions Bulletin December 2017, Art. N° 85789;
German C ompetition Au th ority , The German Competition Authority opens a proceeding
against a social network company suspected to have abused of its dominance by infringing data
protection rules (Facebook), 2 March 2016, e-Competitions Bulletin March 2016, Art. N° 78506;
Fred eric Depoortere, Ingrid Vand enborre, Simon B axter , The German Competition
Authority initiates proceedings against a social network company regarding potential abuse of
dominance (Facebook), 2 March 2016, e-Competitions Bulletin March 2016, Art. N° 78512

[24 ] Bundeskartellamt, Background information on the Facebook proceeding, 19 December


2017 .

[25 ] B u nd es k artellamt , Preliminary assessment in Facebook proceeding: Facebook’s collection

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[25 ] B u nd es k artellamt , Preliminary assessment in Facebook proceeding: Facebook’s collection
and use of data from third-party sources is abusive , 19 December 2017 .

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