Commission has never evaluated ‘deterrence effect’ of antitrust fines, auditors say

EU auditors have questioned the effectiveness of antitrust fines dished out by the European Commission, as part of a landmark audit of the EU executive’s role as an enforcer of competition rules.

The probe, published on Thursday (19 November), notes that over the past decade, the Commission has failed to assess whether any of the fines it has imposed for antitrust violations have had any deterrence effect at all on the behaviour of those accused of infringements.

Some of the largest fines to date have been imposed on firms operating in digital markets. Google is currently appealing a series of fines totalling €8.2 billion for alleged self-preferencing activities and for stifling competition with rivals.

US chipmaker Intel also came in for a €1.06 billion fine in 2009, by offering rebates to computer manufacturers as an incentive to wade them off from purchasing from their competitor, Advanced Micro Devices.

“There have been some record-breaking fines imposed, and we’re seeing that the Commission has not yet evaluated the deterrent effect of these penalties,” said Alex Brenninkmeijer, the European Court of Auditor’s member who led the report.

“We believe that these fines are a tool, not a goal, in themselves,” he added, speaking ahead of the publication of the report, the first of its kind investigating the Commission’s role as an enforcer in the areas of merger and antitrust.

Responding to the concerns, the executive conceded that there had indeed been no review of the effectiveness of the penalties thus far imposed.

Other shortfalls in EU antitrust operation identified by auditors on Thursday include the difficulty of addressing the challenges of enforcement in digital markets, the lengthy process of launching actions, and limited resources for monitoring.

The EU executive, Brenninkmeijer noted, “now needs to scale up-market oversight to be fit for a more global and digital world.”

“It needs to get better at proactively detecting infringements and select its investigations more judiciously,” he added.

Vestager: Amazon has illegally abused market position with Big Data tactics

Amazon has violated EU antitrust rules in its use of non-public merchant data, cementing the platform’s dominance in the eCommerce market and marginalizing third-party sellers, the European Commission’s Vice President for Digital, Margrethe Vestager, has said.

Digital Markets

Digital markets, in particular, have become a regular source of concern for Brussels antitrust regulators.

Apple has found itself in the Commission’s crosshairs for restricting competition on the App store, while EU regulators are also probing Facebook’s use of data in apps, as well as how the company operates its online marketplace.

More recently, Amazon has been accused of violating EU antitrust rules in its use of non-public merchant data, cementing the platform’s dominance in the eCommerce market and marginalizing third-party sellers, according to the executive’s Vice-President for Digital Margrethe Vestager.

Her comments came as the Commission arrived at a preliminary decision on an investigation opened last year, probing Amazon’s use of sensitive data from independent retailers.

Vestager said that granular, real-time business data relating to third-party sellers’ listings and transactions on the Amazon platform, systematically feed into the algorithm of Amazon’s retail business, thereby stifling fair competition.

Commission mulls restrictions on platform data use in Digital Services Act 

Platform giants will be prohibited from using the data they collect online unless they make this data available for use by smaller platforms, according to a draft of blacklisted practices, seen by EURACTIV, as part of the European Commission’s forthcoming Digital Services Act.

Many such issues that have arisen across digital markets are set to be addressed in the Digital Markets Act, which the Commission will present on 9 December.

The framework will introduce a list of ex-ante prohibited practices by digital gatekeepers, as well as a market investigation tool that could be used to examine how certain markets are prone to failure.

A recently leaked copy of potentially prohibited activities under the new rules would outlaw some of the above practices that have led to antitrust investigations.

Such includes a prohibition on the exclusive use of data by gatekeeper platforms unless such data is shared with smaller competitors, as well as a prospective prohibition on certain ‘self-preferencing’ activities, including a ban on preferential ranking in online search engines or online intermediation services.

Apple’s olive branch

In the run-up to the presentation of the Digital Markets Act in early December, some of the platforms have been attempting to revise some of their alleged ‘anti-competitive’ behaviour.

At the beginning of October, a conglomeration of French and European publishers’ organizations, led by the Alliance de la Presse d’Information Générale (APIG) wrote to Apple’s Tim Cook, highlighting their concerns over the company’s terms of service in the App store.

“Content publishers are in a situation of absolute economic dependence on Apple for the distribution of their content on the iPhone, since the only store available on this device is the AppStore,”  said the letter sent to Cook.

The letter adds that Apple’s 30% commission on sales made through apps on the platform, in addition to the prohibitions on ‘alternative forms of payment outside the application’, only leads to further market concentration.

In order to assuage concerns such as these, on Wednesday (17 November), Apple announced it will slash its App Store commission rate to 15% for app developers with less than $1 million in annual net sales.

For their part, those in the SME app arena were quick to applaud the move on Wednesday.

“The app economy is constantly evolving and the reduced commission for SMEs will allow them to put additional resources towards scaling up and innovating new products and services,” said Mike Sax, chairperson of the Brussels-based app trade association ACT.

“The developer services offered by the App Store enable our members to reduce overhead, access a global customer base, and compete alongside larger companies.”

After Google copyright win, French publishers set sights on Apple

After having successfully struck a deal with Google, French publishing groups have now set their sights on fighting for better terms with another one of the Big Tech giants: Apple.

[Edited by Zoran Radosavljevic]

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