Keystone’s Expert Cristina Caffarra discusses digital markets regulation and the inflection point in global enforcement

June 10, 2023

Keystone’s Expert Cristina Caffarra has been sharing her insight and expertise in competition economics, taking a close and critical look at regulatory developments in the digital world, and commenting on the global inflection point in antitrust enforcement.

She has discussed efforts to shift from competition to ex-ante regulation to oversee the vast and growing global digital economy at multiple recent events:

• A panel on implementation of the Digital Markets Act (DMA) in Europe, hosted in March by the Mannheim Centre for Competition and Innovation in Germany.
• A webinar on June 8 on EU and UK approaches to digital markets regulation, organized by the Kelkoo Group.
• A workshop on competition and regulation in digital markets on June 9, sponsored by the Competition and Markets Authority and the University of London – in discussion with the CMA’s Chief Economist Mike Walker (with Keystone colleague Stefan Hunt).
• A panel on New Developments in Competition Economics organized in Brussels on 9 June by the Toulouse School of Economics Executive Education Seminar: Recent Developments in Competition Policy | TSE (tse-fr.eu)

The DMA, adopted by the European Union to regulate the digital market, is “an amazing democratic project” achieved in record time, but it is built upon previous cases and decisions where enforcement failed to deliver, she said. “This major pivot to ex-ante regulation has come about because of the dramatic failure of antitrust enforcement across the board”. The UK has recently issued its own Draft Bill, the DMCC (Digital Markets Competition & Consumers Bill), aiming to create an equivalent regulatory regime for the UK.  There are parallel initiatives around the world, with the EC in the lead.  Will it work?

It’s early to tell. Rules are general (a list of “dos and donts” taken from the antitrust case law), and so far the “designation” of gatekeepers (the “easy part”) has shown the process is fraught with difficulties and complications.  Implementation of the rules, post-designation, will be even more complicated and is likely to be delayed by multiple appeals and challenges.  Furthermore,

“Regulation may achieve some more fairness at the margin, create some opportunities for competition on the platform, but when it comes to really dispersing power, … it cannot do it” she said. Change will come “from within

Caffarra also spoke about ecosystem theories of harm in digital mergers at a Harvard Business School summit on “Regulating Big Tech” on 23 April.

She further spoke at the 2023 Stigler Chicago Booth Antitrust and Competition Conference, also in April, on the need to move on from the religion of the “consumer welfare standard”.  Europe’s antitrust tradition has been rooted in concepts like ordoliberalism, fairness and the preservation of decentralized decision-making, though it has evolved in the direction of the US by embracing what was thought to be a “scientific”, efficiency-based approach of enforcement.  She is critical of some of this progress, which has led at times to a combination of “alchemy and creative accounting”.  The recent inflection in the US with the new generation of Biden enforcers, back to the original animating value of antitrust, is a major positive change.

She spoke about AI and monopoly power at an “Anti-Monopoly Summit” organized in DC by the American Economic Liberties Project in May ADD LINK , and will chair an online discussion on “Gen AI & Market Power: What Role for Antitrust Regulators?” held by the Centre for Economic Policy Research, with Daron Acemoglu, Andreas Mundt, Susan Athey and Joshua Gans on July 12.

Later this summer, she will appear at the annual Competition and Regulation Summer School and Conference (CRESSE) where she will speak about ecosystems theories of harm in digital mergers, as well as on the progress of digital regulation in Europe (28-31 July, Rhodes).