The Competition authorities of the G7 countries (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.) and the European Commission have reached a common agreement on the opportunities and challenges arising from the growing digital economy. The agreement was reached on June 5, and adopted by the Finance Ministers and the Bank of Governors of the G7 and the European Commission on July 18.
The competition authorities agreed on four primary principles:
- Competitive markets are key to well-functioning economies.
- Competition law is flexible and can and should adapt to the challenges posed by the digital economy without wholesale changes to its guiding principles and goals.
- Governments should assess whether policies or regulations unnecessarily restrict competition in digital markets or between digital and non-digital players, and should consider procompetitive alternatives where possible.
- Given the borderless nature of the digital economy, it is important to promote greater international cooperation and convergence in the application of competition laws.
The agreement notes that the digital economy has fundamentally changed the way that goods and services are produced and sold, and that the accumulation of data can aid in the improvement of existing products, or the formation of new ones. These benefits assist in evaluating how the digital economy has affected competition over time. The authorities noted that innovation facilitates economic growth and allows new entrants to enter the market and increase competition, while competition law enforcement has an important role to play in safeguarding consumer trust in the marketplace.
The authorities also noted the competition-related challenges that the growing digital economy presents, including factors that make market definition, market power assessment and competitive effects analysis more difficult, requiring closer analysis of non-price aspects of competition. They also discussed that an increased awareness for the identification of anti-competitive behaviour by dominant firms might be necessary as digital markets become more concentrated. The authorities agreed that these challenges are not outside of the reach of competition law, and that many features of digital markets are already being addressed by existing frameworks.
The agreement notes that in order to have effective enforcement, competition authorities need to be consistently improving their understanding of the competitive effects of new business models.
The agreement also highlights the importance of advocacy and of competition impact assessments of policies. The authorities agreed that governments should avoid using competition law enforcement to address non-competition objectives. They also noted that regulations can increase the cost of entry and entrench incumbents, and therefore have anti-competitive effects. They agreed that governments should monitor the competitive impact of prospective regulations and review the existing ones to ensure that they promote competition and maintain competitive markets.
Finally, the authorities confirmed their agreement on the importance of cooperation with their international counterparts.