A Comprehensive Insight from the Tech Antitrust Conference
At the January 2024 Concurrences Tech Antitrust Conference in Palo Alto, USA, Sarah Cardell, CEO of the Competition and Markets Authority (CMA), delivered a profound statement on the CMA’s approach to digital market regulation.
The conference provided a platform for a fireside chat with Sharis Pozen, Regional Managing Partner, Americas, Chair Emeritus Global Antitrust Group at Clifford Chance, offering valuable insights into the evolving digital landscape.
Understanding the CMA’s Role
Overview of the CMA
For those less familiar, the CMA serves as the UK’s principal competition and consumer protection authority. With responsibilities akin to the US Federal Trade Commission and the Antitrust Division of the US Department of Justice, the CMA’s remit includes merger control, competition law enforcement, and consumer protection, alongside conducting market studies and investigations.
Since the UK departed from the EU, the CMA’s role in international antitrust and merger cases has become increasingly prominent, particularly for US companies operating in the UK.
The UK’s New Competition Regime for Digital Markets
Addressing Digital Transformation Challenges
The digital sector’s rapid growth and market power concentration have led to global concerns about the adequacy of existing competition law regimes. The UK’s response includes the introduction of new pro-competition digital market measures.
The proposed legislation, the Digital Markets, Competition and Consumers Bill (DMCC Bill), currently under review in the UK Parliament, is designed to keep pace with fast-moving digital markets and complement existing powers.
Strategic Market Status (SMS) Designation
A core element of the new regime is the designation of firms with Strategic Market Status (SMS) in digital activities. The regime targets firms with substantial, entrenched market power linked to the UK, focusing on those with significant global or UK turnover.
The approach involves Conduct Requirements and Pro-Competition Interventions to guide SMS firms’ behavior and address market power.
CMA’s Approach to Digital Markets Regulation
Implementing the New Regime
The CMA commits to a targeted, evidence-based, and proportionate approach in implementing the new digital markets regime. Principles guiding this approach emphasize promoting competition, ensuring coherent regulation, and engaging with a range of stakeholders. The CMA’s detailed operational overview is available on its website.
Working with Strategic Market Status Firms
Collaborative and Transparent Approach
The CMA emphasizes the importance of understanding the technical and commercial aspects of digital markets. The approach involves productive relationships with SMS firms and input from various stakeholders, including businesses, consumers, and third parties. The CMA also assures confidentiality and whistleblower protection in handling sensitive information.
The CMA’s Work on AI Foundation Models
Prioritizing Emerging Markets
The CMA’s initial review of AI foundation models (FMs) highlights the potential benefits and risks associated with AI development. The focus is on ensuring competitive and consumer-friendly markets for FMs from the onset, with guiding principles covering access, diversity, choice, flexibility, fair dealing, transparency, and accountability.
AI Partnerships and Investments
Balancing Benefits and Competition Risks
While recognizing the benefits of partnerships and investments in AI FMs, the CMA remains vigilant about potential risks to competition. The approach includes monitoring the impact of such partnerships on competition in AI FMs and related markets, ensuring access to key inputs like computing power and expertise.
The CMA’s Proposed AI Principles
Guiding the Development and Deployment of FMs
The CMA proposes principles to influence competitive markets for FMs, focusing on access, diversity at the development level, choice, flexibility, and fair dealing in downstream markets, and principles of transparency and accountability for consumer use of FMs. Additionally, these principles aim to strike a balance between fostering innovation and ensuring market fairness.
A Forward-Thinking Approach
Moreover, the CMA’s participation at the Concurrences Tech Antitrust Conference is part of a broader engagement program in the US. This participation not only emphasizes the agency’s commitment to adapting and evolving but also highlights its proactive stance in the face of digital market challenges.
Significantly, the approach outlined by CEO Sarah Cardell at the conference represents a pivotal step in ensuring fair competition and consumer protection within the rapidly evolving digital landscape.
Sources: THX News, Competition and Markets Authority & Sarah Cardell.
