Ref. Ares(2021)2073312 - 24/03/2021
Upstream meeting RSB-COMP
New Competition Tool (‘NCT’)
10 September 2020
The purpose of RSB upstream meetings is for report authors and Board members to informally
discuss questions concerning how to prepare the best possible report on the issue at hand. Board
members give their advice in a personal capacity and advice is not binding for the subsequent
Board meeting.
List of participants:
COMP:
JRC:
,
RSB: Veronica Gaffey; Mona Björklund;
SG:
DG COMP explained ongoing work streams under the remit of DG CNECT and COMP aiming
to ensure that competition functions in the context of digitalisation and market
concentration.
The NCT initiative tackles structural risks or a structural lack of competition resulting from
problems that cannot be addressed effectively under Articles 101 and 102 TFEU
(e.g. monopolisation strategies of non-dominant companies; tacit collusion in oligopolistic
markets where there is no direct coordination). It also tackles practices covered under
existent rules but not in the most efficient way (e.g. leveraging strategies into adjacent
markets). Similar tools exist in some Member States and non-EU jurisdictions. The aim is to
ensure suitable and proportionate remedies or to prepare legislative action, but not to find
breaches of competition rules that would result in the imposition of damages or fines.
The NCT initiative is complementary to the Digital Services Act package which includes an ex
ante regulatory instrument for very large online platforms acting as gatekeepers. Public
consultations ran separately for the two work streams. However, there is an imminent
decision to be taken at Commissioners’ level on whether there wil be one single proposal
covering both issues or two separate proposals.
Points raised in the discussion
The decision on the merging of the two proposals (NCT and ex ante regulation under
Digital Services Act package) wil inter alia depend on the legal basis for the two issues.
Whether to deal with these two initiatives in a single impact assessment or in two
separate ones was discussed. If there is a single legislative proposal, it would be difficult
to have two impact assessments. However, if the legislative proposals are not merged, it
would be possible to either keep two separate impact assessments (one for each
proposal) albeit with closely coordinated and aligned analyses, or to have one single
impact assessment for both initiatives.
Having a single impact assessment would increase the coherence between the two
initiatives, explaining better the interrelationships between the two. In the case of two
impact assessments, the context section should explain the interrelationships in detail.
However, drafting a single impact assessment could pose additional chal enges in the
short time frame. DG COMP and DG CNECT would need to merge in a single impact
assessment the problem description, the scopes, the options, the analytical approaches,
concepts and the language used.
The single impact assessment would need to clarify on which points the evidence
gathered from the two separate open public consultations is consistent and on which
issues it diverges, through a mapping of the different stakeholders consulted for the two
initiatives.
On the scope, the choice for structuring the options depends on whether the impact
assessments are merged. In a merged impact assessment, DG COMP’s analysis should
focus mainly on the digital scope, with less details on the broader horizontal topic than if
the analysis were to be conducted in a separate impact assessment.
In a merged impact assessment, the DG COMP and DG CNECT options should be
compared to see if they are complementary or not.
In general, it is important to identify options that are real alternatives to each other
focusing on political choices; sub-options should be presented where relevant.
Independently of whether the impact assessments are merged, Board members advised
that it should be clearly explained how the initiatives are interrelated, their respective
scope and expected outcomes, and the different sources of evidence.
The timing may be adjusted in case the proposals are merged, because the Digital
services Act package is due to the board two weeks earlier than the NCT.
The Digital services Act package wil be more specific (about ex ante requirement) than
the DG COMP proposal (about remedies), which aims to provide flexibility in order to be
futureproof. The NCT initiative should define the process that wil specify suitable and
proportionate remedies in response to structural competition problems.
The analysis should include an estimate of the burden for enterprises that would be
investigated under the NCT, in particular for investigations that turn out to be undue.
JRC comments on the upstream meeting of DG COMP with the RSB on the New
Competition Tool, 10 September 2020
The JRC.I1.CC-ME indicated that they have already discussed some aspects of this initiative
with the COMP col eagues working on the New Competition Tool (NCT). The JRC.I1.CC-ME
made the fol owing additional comments in view of future monitoring and evaluation.
1. What success would look like. The Inception Impact Assessment (IIA) states in the
problem definition that structural competition problems “ultimately result in
inefficient market outcomes in terms of
a) higher prices,
b) lower quality,
c) less choice and
d) less innovation”
The proposed tool aims at correcting these adverse effects, in a proportionate
manner. Are these the main outcome indicators foreseen for the monitoring and the
evaluation of the NCT, if and when the tool wil be used? For instance, is innovation
going to be measured in terms of input (expenditure in innovation) or output (patent
applications)? While these indicators need to necessarily be market-specific, it would
be important to state in the IA what “success” would look like for the NCT and “how
it wil be measured”, at least along broad categories, such as a), b), c), d).
Incidental y: is the NCT expected to have any “deterrence effect”? If so, is there a
plan to measure this effect?
2. Monitoring and implementation. In the section “Preliminary assessment of expected
impacts”, the IIA states that “these remedies would increase costs for the companies
concerned. The proportionality of the costs incurred would be ensured by the fact
that such remedies have to be limited to ensuring the proper functioning of the
market under scrutiny.” Proportionality of behavioural or structural remedies may be
better ensured if data on prices and price distortions due to structural competition
problems are available. In this sense, monitoring and evaluation would be blended
with the implementation details of the NCT. Is this what is foreseen? It would be
important to state this in the IA.
3. Cost and benefits. The same section of the IIA states that “consumer benefits deriving
from the timely intervention under al policy options should outweigh those costs.”
This analysis seems to be relevant for the ex-post cost-benefit analysis. How are
inputs for this exercise going to be col ected?
4. Synergies and complementarities with other initiatives in this area. The present
initiative appears wel integrated and coordinated with other initiatives like the DSA
of DG CNECT.
a) It would important to understand how the present initiative complements
and reinforces these other initiatives, also in its intervention logic, possibly
towards the same expected outcomes.
b) Moreover, the monitoring and evaluation plan for the set of these initiatives
could benefit from a joint plan, where some data is col ected / accessed via
the same systems / procedures / technologies.
c) Could this monitoring and evaluation plan be co-designed and shared with
competition authorities in Member States?
d) From the evaluation perspective, the above points would help to identify
ways to measure the specific contribution of the present initiative towards
common goals (a more competitive internal market), as wel as if/how the
present initiative may act as an enabler for benefits coming from other
related policy initiatives (interactive effects).
JRC.I1.CC-ME would be happy to discuss or give further input if deemed useful.
Electronically signed on 23/03/2021 15:26 (UTC+01) in accordance with article 11 of Commission Decision C(2020) 4482