EU/Competition: Digital agenda and Telecom

Newsletter 1/2021

The two proposals were made public 15.12.20. The Digital Services Act: The Digital Services Act will introduce a series of new, harmonised EEA-wide obligations for digital services, graduated on the basis of those services’ size and impact, such as: (i) Rules for the removal of illegal goods, services or content online; (ii) Safeguards for users whose content has been erroneously deleted by platforms; (iii) New obligations for very large platforms to take risk-based action to prevent abuse of their systems; (iv) Wide-ranging transparency measures, including on online advertising and on the algorithms used to recommend content to users; (v) New powers to scrutinize how platforms work, including by facilitating access by researchers to key platform data; (vi) New rules on traceability of business users in online market places, to help track down sellers of illegal goods or services; (vii) A cooperation process among public authorities to ensure effective enforcement across the single market. Platforms that reach more than 10% of the EU’s population (45 million users) are considered systemic in nature, and are subject not only to specific obligations to control their own risks, but also to a new oversight structure. This new accountability framework will be comprised of a board of national Digital Services Coordinators, with special powers for the Commission in supervising very large platforms including the ability to sanction them directly. The Digital Markets Act: The Digital Markets Act will (i) Apply only to major providers of the core platform services most prone to unfair practices, such as search engines, social networks or online intermediation services, which meet the objective legislative criteria to be designated as gatekeepers; (ii) Define quantitative thresholds as a basis to identify presumed gatekeepers. The Commission will also have powers to designate companies as gatekeepers following a market investigation; (iii) Prohibit a number of practices which are clearly unfair, such as blocking users from un-installing any pre-installed software or apps; (iv) Require gatekeepers to proactively put in place certain measures, such as targeted measures allowing the software of third parties to properly function and interoperate with their own services; (v) Impose sanctions for non-compliance, which could include fines of up to 10% of the gatekeeper’s worldwide turnover, to ensure the effectiveness of the new rules. For recurrent infringers, these sanctions may also involve the obligation to take structural measures, potentially extending to divestiture of certain businesses, where no other equally effective alternative measure is available to ensure compliance; (vi) Allow the Commission to carry out targeted market investigations to assess whether new gatekeeper practices and services need to be added to these rules, in order to ensure that the new gatekeeper rules keep up with the fast pace of digital markets. The European Parliament and the Member States will discuss the Commission’s proposals in the ordinary legislative procedure. Visit the proposal for a Digital Services Act here. Visit the proposal for a Digital Markets Act here.

The Commission approved 17.12.20 the acquisition of Fitbit by Google. The decision follows an in-depth investigation of the proposed transaction, which combines Google’s and Fitbit’s complementary activities. Fitbit has a limited market share in Europe in the fast-growing smartwatch segment where many larger competitors are present, such as Apple, Garmin and Samsung. The proposed transaction leads to very limited horizontal overlaps between the activities of Google and Fitbit. The Commission’s investigation focused on the data collected via Fitbit’s wearable devices and the interoperability of wearable devices with Google’s Android operating system for smartphones. Following its investigation, the Commission had concerns that the transaction, as initially notified, would have harmed competition in several markets. In particular: (i) Advertising: By acquiring Fitbit, Google would acquire the database maintained by Fitbit about its users’ health and fitness; and the technology to develop a database similar to that of Fitbit. By increasing the already vast amount of data that Google could use for the personalisation of ads, it would be more difficult for rivals to match Google’s services in the markets for online search advertising, online display advertising, and the entire “ad tech” ecosystem. (ii) Access to Web Application Programming Interface (‘API’) in the market for digital healthcare: A number of players in this market currently access health and fitness data provided by Fitbit through a Web API, in order to provide services to Fitbit users and obtain their data in return. The Commission found that following the transaction, Google might restrict competitors’ access to the Fitbit Web API. Such a strategy would come especially at the detriment of start-ups in the nascent European digital healthcare space. (iii) Wrist-worn wearable devices: The Commission was concerned that following the transaction, Google could put competing manufacturers of wrist-worn wearable devices at a disadvantage by degrading their interoperability with Android smartphones. To address the Commission’s competition concerns, Google offered a set of commitments pursuant to which the transaction was approved. Visit the case dossier here.

The Norwegian Competition Authority (NCA) warns in a Statement of Objections (SO) of 15.12.20 that it is considering imposing fines totaling NOK 21 billion on Norgesgruppen, Coop and Rema 1000. The NCA’s preliminary assessment is that the three grocery chains have cooperated in a way that may have led to higher grocery prices. The cooperation concerns the chains’ so-called price hunting practices. According to the NCA, the grocery chains have allegedly agreed to allow their employees to access each other’s grocery stores with a view to scan shelf prices. These employees, referred to as “price hunters”, have collected a substantial amount of price information. The Authority’s preliminary assessment is that the grocery chains have used the price information collected to coordinate prices. This may, according to the NCA, have resulted in higher grocery prices to the detriment of consumers. These practices have been ongoing since 2011. The NCA’s preliminary view is that the practices in question have restricted competition by object, and that fines should be imposed. The NCA has informed the grocery chains in a Statement of Objections that it is considering imposing a fine of NOK 8.8 billion on Norgesgruppen ASA, a fine of NOK 4.8 billion on Coop Norge AS and a fine of NOK 7.4 billion on Rema 1000 AS. The level of these fines, if adopted, will be record high not only in Norway but even from a global perspective. The grocery chains have been invited to submit their comments on the SO by 15.04.20.