Daniel Sokol: Competition law reforms are not necessary to meet the challenges of Big Tech

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We are in the midst of a global revolution in competition law and antitrust policy. Many of the world’s largest companies are digital platforms that didn’t exist 30 years ago. This, in turn, has led to calls to dismantle Big Techs, or, at the very least, to have their conduct regulated more strictly than other industries have been in the past. Canada should resist these trends because it does not need to rewrite its competition laws to meet the challenges of the 21st century economy.

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In particular, there has been a global push to dismantle or regulate the largest of these players: Google, Amazon, Facebook, Apple and Microsoft. These providers of search engines, e-commerce marketplaces, social networks and cloud services have been characterized as “gatekeepers” of digital services who have the power, because of their size, to raise barriers to entry and crush their rivals.

Proposed legislation in the United States and Europe seeks to prohibit digital platforms from giving their own products and offers preferential treatment (known as ‘self-preferential’ behavior), prohibiting established players from acquiring their competitors, and to provide better access to data stored online. platforms by requiring interoperability and data portability.

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The Canadian Competition Bureau recently published a report stating that “the federal government should conduct a rigorous and comprehensive review of the Competition Act to ensure that it is fit for purpose.” At the same time, some commentators have suggested that Canada’s competition policy framework should be overhauled to promote much more aggressive enforcement against big tech companies.

In a report I co-wrote for the Macdonald-Laurier Institute , along with Anthony Niblett of the University of Toronto, we conclude that competition law in Canada does not need to be overhauled. We argue that radical changes to the Canadian Competition Act are not necessary to promote competition in the Canadian economy, as the Competition Bureau is an effective enforcement agency that has the tools to fight anti-competitive activities.

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Much of the recent impetus for change in the world is based on a populist idea that ‘big is bad’. Such an objective of competition policy is misguided. “Big is bad” is bad policy. Some commentators claim that Big Tech is responsible for a variety of social and political damage, such as inequality and the degradation of free speech and democracy. Yet these are not damages that competition authorities were designed to remedy.

Calls to change the goals and priorities of competition authorities should be resisted, as history has shown that when regulators seek to appeal to broad populist causes, it often results in higher prices for consumers and consumers. negative effects on innovation.

To the extent that there are genuine concerns about anti-competitive behavior in specific digital markets, we argue that the Canadian Competition Act is capable of addressing them. The law is flexible enough to cover such behavior.

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Anti-competitive self-preference and exclusionary behaviors that limit access to data can be addressed under the prohibition of the Abuse of Dominance Act. Big, dramatic changes – such as those proposed in Europe and the United States – are simply not necessary.

Excessive regulation or wrong regulation leads to real harm. Too broad and drastic regulation of digital platform activities or punitive actions will likely have unintended negative consequences on competition and innovation, including for small entrepreneurial businesses.

However, the rise of digital markets raises interesting questions for competition policy. Issues such as economies of scale, ecosystems, self-preference, privacy, network effects and data control are rightly receiving more attention than ever before. But these questions are not particularly new. Even in Canada, where competition law cases are relatively rare, we have examples of cases that have explored the issues of two-sided markets, that is, platforms with two distinct groups of users.

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We suggest that the toolkit for addressing these concerns does not need to be drastically changed. Prohibitions on these types of potentially anti-competitive behavior are found and are enforced under Canadian competition law. In particular, Article 79 of the Competition Law prohibits the abuse of a dominant position. Under this flexible provision, dominant firms in a market are not allowed to engage in a practice of anti-competitive acts which significantly prevents or lessens competition.

Canadian authorities should work to combat anti-competitive behavior where it exists. However, there is a difference between enforcement and regulation – and regulation can hurt Canadian competitiveness at a time when Canadian innovation in an increasingly digital economy is flourishing.

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Daniel Sokol is Professor of Law at USC Gould School of Law. This is based on his recent MLI report (co-authored with Anthony Niblett) titled “Up to the Task: Why Canadians Don’t Need Drastic Changes in Competition Policy to Manage Big Tech”.