Swift Enforcement Action Called For In Wake Of CMA Report

Enforcement action against Google and Facebook must be taken as a matter of urgency in the wake of the Competition and Markets Authority report on digital advertising otherwise news media publishers face “a very bleak immediate future,” peers have been told.

The News Media Association welcomed the CMA’s final report of its online platforms and digital advertising market study but urged the Government to act swiftly to restore balance to the digital ecosystem.

Giving evidence to the Lords Select Committee on Communications and Digital for its inquiry into the future of journalism last week, competition lawyers warned of the dangers of delay and called for Google and Facebook to be investigated at the same time as regulators progress work on a new regime to restore competition to the digital marketplace.

Dr Liza Lovdahl Gormsen, director of the competition law forum and senior research fellow in competition law, British Institute of International and Comparative Law, warned that publishers would go bust if swift action was not taken.

She said: “If all goes well, the DMU would be established three years from now. In the meantime, the platforms will have a free pass. Publishers and content providers will suffer immensely. They will leave the market. We all know that they are up against Google and Facebook. They just do not have the granular data. I see a very bleak immediate future.”

Professor Damien Geradin, professor of competition law and economics, Tilburg University, added: “I am very concerned that the industry is not in a position to wait for three years. I agree with Liza. Even if things go well, I see 2022 probably as the earliest time when the DMU could be operational. It will then take more time to do the codes of conduct and more time to adopt remedies.”

Among other things, the report recommended the establishment of a pro-competitive digital regulatory regime, and a Digital Markets Unit which would be empowered to enforce a code of conduct to govern the behaviour of platforms with market power.

The DMU should also have powers to tackle sources of market power and increase competition, including powers to increase interoperability and provide access to data, to increase consumer choice and to order the breakup of platforms where necessary.

In a separate hearing, peers also heard from CMA directors who said they had worked “worked very closely” with the NMA and other bodies for the report which advocated regulatory reform “of the sort we advocate will bring material benefits to newspapers.”

Daniel Gordon, senior director, markets, CMA, said a market investigation was “on the table” if the Government did not take forward their proposals with sufficient speed. “We will think about the range of measures that we might take in the digital and digital advertising sectors. It could be enforcement and it could be further support to Government,” he added.

Professor Geradin said: “I am not in the shoes of the CMA. I suppose they have their own reasons, but I am concerned about the time it will take to create the DMU, to adopt a code of conduct and then to adopt remedies. You can be certain that Google and Facebook, and the other platforms, will do nothing to help.

“Their strategy is one of obfuscation. I am very concerned about nothing happening for a certain period. My recommendation would be to take action on the basis of the evidence, in parallel with the work to put the DMU and the codes of conduct in place. There is a huge amount of evidence. They have a case on their plate, so why not proceed?”

Dr Lovdahl Gormsen added: “I fully agree with Damien’s point that they already have the evidence. I was listening to your earlier session. They said it could take up to 18 months to do the market investigation and then an extension of six months.

“Surely it should not take 18 months with all the evidence they have already gathered; it should be much, much quicker. This could be done in parallel as the DMU is set up and legislation comes into place.

“On top of that, I understand that they say it is not the most agile of things because this is an ongoing issue but, frankly, they could also take enforcement action. Literally nothing is being done at this time if they do not do this market investigation.”