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New directions in Australian antitrust enforcement in digital markets

The final report of the Australian Competition and Consumer Commission (ACCC) Digital Platforms Inquiry (DPI) foreshadows a sustained escalation in ACCC scrutiny of digital platforms. 

There are strong indications, however, that the ACCC’s attention is going to be focused not on market power (dominance) cases, but on consumer law enforcement and less conventional causes of action. For the global platforms and other digital businesses operating in Australia, the threats will be no less significant, and the ACCC’s approach will present some unique challenges. 

In some respects, the final report of the DPI was anti-climactic. After an 18-month inquiry, the report was lacking in substance in some areas – no doubt reflecting the huge breadth of its Terms of Reference which traversed competition, consumer, media and privacy laws across platform, traditional media and digital advertising markets. The ACCC uncovered no new anti-competitive conduct justifying either prosecution or further investigation. Instead, it referenced European Commission investigations as the basis for both concerns about potential discrimination against rivals in adjacent markets and seeking to replicate in Australia interim remedies (related to mobile search app and browser choice) offered by Google in Europe. The final report also defers much of the difficult policy-making by recommending no fewer than six separate protocols or codes of conduct still to be developed. 

What is clear from the final report is that sustained scrutiny by the ACCC – including through a new dedicated digital platforms branch – is the new normal for Facebook, Google and other large digital businesses operating in Australia. It is also clear that the ACCC intends to be an important participant in both the escalating global regulatory investigation of the major digital platforms and the associated international policy debate. 

Beneath the surface of the DPI final report, there are clear signs that the ACCC’s continuing work in relation to digital platforms will not simply be more of the same. Rather than focus on market power or dominance cases (complex cases in which the ACCC’s record has been mixed in recent years), it is likely to pursue a range of less conventional enforcement approaches as it seeks to change common practices in digital markets. 

  • First, while the ACCC was apparently careful to avoid any perception of a ‘land grab’, the Government’s response to the DPI final report may well result in broader authority being delegated to the ACCC. The ACCC’s recommendations propose granting a range of additional oversight and enforcement responsibilities to other regulators, including the Australian Communications and Media Authority and the Office of the Australian Information Commission, that are not natural repositories of broad enforcement obligations of that sort.

    The final report also reflects a confident and assertive ACCC that is very comfortable analysing issues outside the scope of its core competition and consumer law mandate. In that context, it is foreseeable that the Government’s response to the final report may reorganise the institutional architecture, resulting in the ACCC assuming ever-broader responsibilities and powers.
     
  • Second, irrespective of future reforms, the ACCC regards data privacy as a consumer law issue and will use existing consumer laws to prosecute matters that are fundamentally privacy concerns. A prominent theme throughout the final report is the interconnection between data privacy, competition and consumer law issues – indeed, the final report begins with a large Venn diagram to illustrate the point.

    Three of the four new ongoing investigations disclosed in the final report relate to whether representations made by digital platforms about data privacy issues contravene consumer laws. These cases are likely to involve the ACCC relying on arguments relating to consumer expectations of platforms’ handling of their data, default biases, the use of bundled consents and click-wraps, and the extent to which consumers read and engage with online terms and policies – all issues discussed at length in the draft report. All indications are that the ACCC will continue to test the limits of its consumer law authority to drive change in standards of online communication, disclosure and consent.
     
  • Third, a new prohibition on ‘unfair practices’ is being sought aggressively by the ACCC and is likely to expose a range of practices to ACCC action. There are various subtle forms of conduct by global platforms to which the ACCC and other regulators object but that do not fit easily into existing prohibitions or conventional theories of harm. They include, for example, offering terms on a take-it-or-leave-it basis, changing terms without notice, collecting data under vague consents, requiring the provision of unnecessary information, implementing commercial practices that enhance network effects or increasing switching costs and providing distorted information to consumers making product or consent decisions.

    In Europe, there is greater potential for novel ‘exploitative’ abuse of dominance theories (as seen in the German competition regulator’s February 2019 finding against Facebook’s data collection practices). However, such conduct is difficult or impossible to fit within Australian market power laws. The broad prohibition on unfair practices sought by the ACCC would side-step any requirement to prove market power or an anti-competitive purpose or effect, and allow the ACCC (and Courts) to make subjective judgments about the fairness of particular conduct. In that context, the proposed unfair practices prohibition is much more than a modest extension of existing laws voiding unfair terms in standard form contracts, and will likely lead to a substantial escalation in ACCC enforcement action in relation to a broad range of conduct.

  • Fourth, the DPI final report reveals a willingness to entertain radical solutions or remedies, and expressly identifies further work for the ACCC in relation to data portability as a way to enhance competition in digital markets. What is perhaps of most concern for digital businesses is that the ACCC already has statutory authority for a data portability regime that could be readily applied to digital platforms (with only a Ministerial designation).

    In particular, the ACCC is the lead regulator in relation to the ‘Consumer Data Right’ regime, which is initially intended to allow consumers to transfer their banking and then energy data to alternative providers to facilitate price comparison, switching and innovation. In the DPI final report, the ACCC states that it will consider the benefits of applying the Consumer Data Right to digital platforms in the course of its ongoing work in relation to data portability. Given the stridency of the ACCC’s conclusions around platform power, and with an existing policy framework for data portability already operating, change in this area may arrive much sooner than many expect.

Authors

MCCOWAN-mark-highres_SMALL
Mark McCowan

Head of Competition


Tags

Competition/Antitrust Regulation

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