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‘Decision to Leave’: From Traditional Competition Law to New Digital Regulation and Potential Problems

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Given the priority of digital competition and innovation, competition policy for the platform economy has developed in a noteworthy way in the past decade. Among other things, public support for a policy against large platforms has influenced vigorous enforcement of competition rules as well as adoptions of or, at least, discussions on a new sector-specific regulation in some countries. One of the key arguments for this is the present difficulty in applying competition rules to platforms. The distinctive feature of a multisided market with free services has become a notable hurdle in the implementation of competition law in the digital sector. Moreover, the emergence of various business models used by platforms has brought a debate on novel types of abusive conduct, such as self-preferencing and exploitative abuse of data privacy. The new categorisation of abuses of digital dominance, which involves new theories of harm, has become one of the burdens on enforcement agencies. Considering the complexities in applying competition rules, policymakers across the globe have considered a digital-sector regulation that contains formalistic legal measures. This trend seems a decision to leave from the existing competition law tools to new sector-specific regulations. The objective of this article is to discuss the recent developments in enforcement of competition law and the adoption of sector-specific regulations for the digital economy, especially for the EU and Korea. This article aims to suggest an appropriate direction for future policy on digital competition, with a focus on innovation and dynamic efficiency through criticism of the provisions in the EU’s Digital Markets Act.

Abstract

Given the priority of digital competition and innovation, competition policy for the platform economy has developed in a noteworthy way in the past decade. Among other things, public support for a policy against large platforms has influenced vigorous enforcement of competition rules as well as adoptions of or, at least, discussions on a new sector-specific regulation in some countries. One of the key arguments for this is the present difficulty in applying competition rules to platforms. The distinctive feature of a multisided market with free services has become a notable hurdle in the implementation of competition law in the digital sector. Moreover, the emergence of various business models used by platforms has brought a debate on novel types of abusive conduct, such as self-preferencing and exploitative abuse of data privacy. The new categorisation of abuses of digital dominance, which involves new theories of harm, has become one of the burdens on enforcement agencies. Considering the complexities in applying competition rules, policymakers across the globe have considered a digital-sector regulation that contains formalistic legal measures. This trend seems a decision to leave from the existing competition law tools to new sector-specific regulations. The objective of this article is to discuss the recent developments in enforcement of competition law and the adoption of sector-specific regulations for the digital economy, especially for the EU and Korea. This article aims to suggest an appropriate direction for future policy on digital competition, with a focus on innovation and dynamic efficiency through criticism of the provisions in the EU’s Digital Markets Act.

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