Objectives of antitrust laws
El competition law It acts as an essential shield to protect consumers from the unbridled power of corporations.
These standards, commonly known as antitrust laws (from the English, "antimonopoly"), seek to maintain a balance in the markets by avoiding abusive practices that may harm both consumers and free competition.
The historical context of Antitrust Law
With the dissolution of the USSR in December 1991, the capitalism It was consolidated as the predominant economic system in the majority of States in the international community.
This change marked a before and after in the way markets and government policies were structured, directly impacting the daily lives of millions of families.
La market economy and the mixed economy system They were adopted as main formulas in much of the world, especially in Europe and the United States.
However, countries like Cuba y North Korea They remained exceptions by maintaining their closed and statist economic models.
The role of competition law in capitalism: balance between companies and consumers
El capitalism It is based on the existence of private companies that satisfy the needs of consumers through free competition in the market.
In this context, the competition law, Or the antitrust laws, play an essential role in seeking a balance between the free market and the protection of both small businesses and consumers from the power of large corporations.
Objectives of Competition Law
Competition law has two main objectives:
1. Promote the birth and growth of emerging companies.
These laws allow companies with fewer resources to compete on equal terms with those that are already established, promoting innovation and diversity in the markets.
2. Protecting consumer rights.
When there is healthy competition, consumers benefit directly, as companies are encouraged to improve their products and services, offer more competitive prices and ensure better quality.
The impact of monopolies
Un monopoly, which can arise in any economic sector, has a double harmful effect:
- In the competitors: By eliminating or hindering the entry of new players into the market, monopolies limit innovation and restrict the choices available to consumers.
- In consumers: Without alternatives in the market, customers face higher prices and lower quality in the products or services offered.
Therefore, the fight against monopolies It is a priority for governments in the international community, including those traditionally in favour of the free market, such as United States.
The presence of multiple competitors on a level playing field not only stimulates the economy, but also ensures better outcomes for consumers.
Why is Competition Law important for your company?
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Technology companies in the spotlight of EU antitrust laws
Although Europe is governed by a system of free market and a liberal economic current, the European Union (EU) has decided to take firm measures against monopolies, especially in the technology sector.
This is due to the growing influence that these companies exert on markets, governments and the population in general.
The rise of technology companies
Data published by Visual capitalist illustrate this paradigmatic shift.
- In 2001, the five companies with the largest market capitalization included oil companies, a financial institution, a hypermarket chain and only one technology company: ecosystem.
- By 2011, three of the main companies were still oil companies, accompanied by a banking entity and Apple .
- However, in 2016, the five largest companies in the world were technology companies: Apple , A (Google's parent company), ecosystem, Amazon, and Facebook.
This shift demonstrates how technology companies have gained ground to dominate the global market in just five years.
The European Union's response to Big Tech
The EU has taken significant steps to regulate the power of these companies and protect both markets and the rights of its citizens.
Beyond tackling anti-competitive practices, the EU has also stood out as an advocate for Data Protection through legislation such as the General Data Protection Regulation (GDPR).
An example of the effectiveness of these measures is the sanction imposed on Google by General Court of the EU in 2022.
The court upheld a substantial fine for unlawful restrictions and obligations that Google imposed on Android device makers to consolidate its dominant position in the search engine market.
Are EU antitrust sanctions effective?
La effectiveness of sanctions against big tech remains a topic of debate.
Although the EU has managed to impose multi-billion-euro sanctions and regulate some abusive practices, the long-term impact of reducing the power of these companies remains to be seen.
The penalty imposed on Google In 2022, the number of anti-competitive practices rose to 4.125 millones de euros, an impressive figure at first glance.
However, for a company of its size, this amount represents a negligible fraction of its global revenue.
To put this into perspective, this fine amounts to approximately a quarter of Navarra's GDP, one of the autonomous communities with the lowest Gross Domestic Product in Spain, according to data from Datamacro.com de Expansion.
Despite the magnitude of these figures, the real impact on Google is questionable.
Big tech companies may find it more profitable to break EU rules than to comply with them, given that current sanctions are not proportional to their turnover.
This case is not isolated: other companies in the sector have also faced fines that, although apparently severe, do not seem sufficient to modify their behavior.
The disproportion between sanctions and power of Big Tech
The Google case highlights a structural problem in the application of the antitrust laws by the European Union.
The fines, although multi-million dollar, fail to reflect the true economic scale of the technology companies, whose global dominance puts them in an advantageous position vis-à-vis regulatory bodies.
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Legal basis of antitrust laws in European Union law
Competition regulation in the European Union is based on the Treaty on the Functioning of the EU (TFEU), which lays down the powers of the EU and its Member States in matters relating to the internal market and competition law.
Shared and exclusive competences of the European Union
El article 4 of the TFEU classifies matters relating to the internal market as a shared competence between the EU and the Member States.
This means that countries can legislate and adopt binding legal acts only in areas where the Union has not yet intervened.
However, the article 3 of the TFEU grants the EU exclusive powers to establish the competition rules necessary for the functioning of the internal market.
Therefore, although States can regulate certain aspects of the internal market, it is the EU that acts as the exclusive protector of competition in the markets of its member countries.
The role of the European Commission in the defence of competition
La European CommissionAs the guardian of EU law, the European Commission is responsible for ensuring compliance with antitrust rules.
Within the Commission, the Directorate General for Competition specifically oversees compliance with antitrust laws, sanctioning companies and citizens who violate the rules.
In recent years, the EU has focused its efforts on regulating large US technology companies, taking measures against anti-competitive practices affecting European markets.
Limits to business freedom: protection of consumers and competitors
Although the EU encourages trade and business activity within its borders, there are clear limits to protect consumers and competing companies.
In particular, the following are punishable:
- Horizontal agreements: Those between competing companies at the same level of the supply chain, such as setting prices or limiting production of a product.
- Vertical agreements: Those between companies at different levels of the supply chain, such as the manufacturer and distributor of a product.
These measures ensure a balance between the business freedom and protection of European markets against unfair practices.
What is the Digital Markets Act (DMA)?
La Digital Markets Law (Digital Markets Act, DMA) It is one of the greatest advances in the regulation of technology companies by the European Union.
Although it is officially a regulation, it is commonly known as Digital Markets Law.
This text establishes unprecedented restrictions and obligations for companies considered gatekeepers, that is, those that act as digital intermediaries between companies and consumers.
For instance, Amazon is a gatekeeper, as it connects companies that sell products on its platform with the end consumers who purchase them.
The DMA seeks to limit the digital monopolies and promote a more fair and competitive market.
Who is affected by the Digital Markets Act?
The regulation applies to the gatekeepers that meet one or more of the following criteria:
- Market capitalization at least 75.000 millones de euros.
- Annual turnover de 7.500 millones de euros or more.
- Offer services such as browsers, messaging or social networks with at least 45 million monthly end users in the EU.
These requirements place companies such as Google, Meta, Apple , ecosystem, and Amazon at the centre of regulation, as its size and global reach meet these conditions.
What is the objective of the Digital Markets Law?
The main objective of DMA es prohibit unfair practices of large technology companies that affect both their competitors and end consumers.
Among the practices that will be regulated or eliminated are:
- Self-preference: Favor their own products or services over those of third parties on their platforms.
- Access restrictions: Impose conditions that hinder competition in their ecosystems.
In short, the DMA aims to balancing the digital market, ensuring fair competition and aligning with the main objectives of the competition law: protect consumers and promote business innovation.
Main changes introduced by the Digital Markets Act (DMA)
La Digital Markets Act (DMA) brings with it important changes in the way in which the gatekeeper companies operate in the European Union.
These new regulations seek to mitigate the impact of digital monopolies and ensure fairer competition in the market.
Below we highlight the main changes introduced by this regulation:
- Restriction on the promotion of own products:
Companies may not display their own products above those offered by third parties on their platforms, solely because they are their own products. - Uninstalling pre-installed apps:
Users will be able to uninstall pre-installed applications on devices, something that was not possible until now with brands such as Samsung. - Access to third-party stores and applications:
Gatekeepers will not be able to prevent users from accessing third-party app stores or installing apps from external sources. For example, Apple must allow its users to download Android applications on their devices. - Interoperability of messaging services:
Messaging platforms will need to ensure interoperability, allowing users of different services, such as WhatsApp y Signal, can communicate with each other. However, this change poses significant technical challenges, especially in terms of privacy and message encryption.
Penalties for non-compliance with the Digital Markets Act
The sanctions established by the DMA are severe and seek to ensure compliance with the regulations:
- Fines of up to 10% of the global turnover of the non-compliant company, which may increase by 20%in case of recurrence.
- Growth restrictions: Companies may face a ban on acquiring new companies for a certain period.
Although these penalties seem high, the European Commission estimates that it will cost the affected companies approximately 1,41 million euros per year adapt to the regulations.
This figure is insignificant compared to the annual revenues of these tech giants.
How can DMA impact your business?
La Digital Markets Law represents a significant change in the regulations of the European digital market.
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Conclusion: Can antitrust laws stop Big Tech?
The competition laws, antitrust laws, are designed to protect both businesses and consumers, promoting more balanced and fair markets.
However, confronting the power of tech giants with vast resources and global influence remains a considerable challenge for regulators.
La European Union, aware of this problem, has taken a step forward with the entry into force in 2023 of the so-called Digital Markets Law (DMA).
This regulation seeks to reduce the impact of large technology companies on the European market by imposing restrictions and sanctions aimed at curbing abusive and monopolistic practices.
Despite progress, the success of these laws will depend on their effective implementation and the ability of regulatory bodies to adapt to the ever-evolving digital environment.
