A non-governmental advisor at the International Competition Network has warned Asian antitrust agencies to ensure the general public can understand theories of harm against Big Tech companies, while an official at Korea’s Fair Trade Commission revealed his agency is preparing guidance on self-preferencing.
ICN advisor Christian Bergqvist, who also works as an associate professor at the University of Copenhagen, said on Friday that it is harder to win an abuse of dominance case against a large technology company based solely on self-preferencing, as such conduct is harder to explain to the public and national courts.
Instead, agencies should focus on discrimination and malicious conduct, which are much easier to demonstrate to a court, he said. Bergqvist spoke on a panel during the third annual Asia-Pacific Competition Community international symposium.
Bergqvist has studied the self-preferencing cases against Google by the US Federal Trade Commission and the European Commission, which were based on identical facts but differed on theories of harm.
During the panel, he noted that the FTC decided not to advance its case against Google in 2013. The agency based its investigation on self-preferencing but it became obvious from the evidence that selling that theory to the public and explaining to conservative judges why it was detrimental to consumer interests would be difficult, he added.
Meanwhile, the EU initially proceeded on similar grounds but changed its theory of harm to include discrimination and maliciously downgrading competing offerings – conduct that is much easier to understand as problematic, Bergqvist said.
If Asian authorities decide to pursue similar cases against large digital platforms, Bergqvist said they must be able to explain why the conduct is bad for consumers. They must also understand that the risk of losing such cases on appeal is inflated, especially if they are built on a weak theory of harm, he added.
Asian authorities must assess whether they are willing to suffer a major setback in the courts or receive negative media coverage, Bergqvist said. If they decide that a loss would be detrimental, it might not be worth pursuing such cases, he advised.
Speaking on the same panel, Seong-Wook Yu, the director general of the antimonopoly bureau at Korea’s Fair Trade Commission, said his country is charting a different course from the US and EU. The authority has concluded that not all self-preferencing is problematic and is in the process of formulating guidance on the issue, Yu said.
Still, Yu said its abuse of dominance case against Naver was a “milestone”. The KFTC fined the local digital platform 26.7 billion won (€19.2 million) for manipulating search results in the online shopping and video sectors by displaying its own products at the top. The Seoul High Court dismissed Naver’s appeal against those findings last week.
The KFTC wants to be “very balanced” and neutral with a mix of enforcement and regulation, Yu said. He noted that Korea tried to implement the Fair Intermediation Transactions on Online Platform Act, which would have required platform operators to outline their standard for any self-preferential treatment in contracts with business users.
Yu said the law failed to pass legislative muster partly because of how difficult it was to delineate “platforms” as a market. There were also issues about deciding which platforms would be regulated under the law and what the thresholds would be, he said.
But Yu noted that Korea has passed digital market regulation, including the high-profile amendment to the Telecommunications Business Act. That law, which took effect earlier this year, forces dominant application marketplace providers to allow access to third-party payment providers.
Anderson Mori & Tomotsune partner Etsuko Hara said Japan’s Fair Trade Commission has adopted a similar approach to the KFTC on digital market cases and diverges slightly from the US and EU. The JFTC allows companies to self-regulate through the Act on Improving Transparency and Fairness of Digital Platforms, she noted.
Under the law, companies must disclose the terms and conditions of trade, take measures to enhance mutual understanding with businesses selling products on their platforms and submit yearly reports providing an overview of their activities.
This gives companies a lot of flexibility and discretion to implement measures to enhance the transparency of their platforms, she said. That is preferable from their perspective to more targeted regulation and enforcement, Hara added.
Diana Moss, the president of the American Antitrust Institute, said regulatory approaches to tackle systemic market problems must be complemented with antitrust enforcement.
Regulation must identify and target the core problem in the digital economy, which is any form of self-preferencing, Moss said. Some jurisdictions are implementing very generalised access regimes for digital markets but this is the wrong approach and will not solve the issue on its own, she said.
The panel was moderated by Freshfields Bruckhaus Deringer partner Ninette Dodoo and also included Seoul National University associate professor Yong Lim. The APCC conference concluded on Friday.
