In the second episode “Relevant Market Definition and Theory of Harm” of our podcast series Competition Law in Digital Markets in Latin America, we discuss the role of the relevant market definition as the framework to analyze potential market failures in the Digital Markets context.
In this section, D. Daniel Sokol explains the issues that we should consider in order to define the relevant market of digital platforms when we are talking about regulation and enforcement of Digital Markets between different jurisdictions.
We also explore the impacts of platform ecosystems. Elisa Mariscal explains the effects Latin America is having on business, consumers and all sorts of goods and services being provided in a fast-growing industry.
In the last segment, Krisztian approaches the broad range of issues that regulators and authorities are trying to identify in the theory of harm for Digital Markets.
“Unfortunately, we do not have a consistent way of thinking about this across cases and is an area of concern.” D. Daniel Sokol
“Do we have the same definition across industries? Even when the type of network effects may be different? The answer is, not really.” D. Daniel Sokol
“This idea of wanting to define everything as a platform has brought problems.” Elisa Mariscal
“The fact that they (Fintech’s) are not regulated makes them increasingly interesting for consumers and that´s why they are willing to use their services.” Elisa Mariscal
“We had the Fintech Law in Mexico which tried to regulate FinTech’s in the same way as banks, so then what was the purpose of having this new entrance trying to do something different and disrupting.” Elisa Mariscal
“Sometimes government intervention can do more harm than good and this sort of crowding out impacts innovation and the region and that´s a concern.” Elisa Mariscal
“We have to not forget that there´s a global competition for investment. How do jurisdictions and individual economies want to position themselves in this global raise for investment?” Krizstian Katona
“It´s important to keep in mind that in order to regulate competition you must first attract it.” Krizstian Katona
To begin addressing the issues presented on our last episode, we need to understand what are we talking about? What is the framework to analyze digital economy issues.
The definition of platforms, ecosystems, two-sided markets, and other elements became pivotal to address our questions. What is the subject of regulation or enforcement. There is no consensus regarding these categories and how to classify each business within them.
Given the globality inherent to digital markets, having a standardized approach is key between regulators, enforcers, lawmakers, practitioners, and academia.
The benefits of competition laws, which are innovations and consumer welfare in jurisdictions which embrace free competition markets, requires certain consensus and certainty. Compliance of companies to competition law is essential in this for these benefits to occur, and essential to compliance in turn is certainty in how laws are interpreted, constructed, and enforced.
Timing of the enforcement and regulation is key. Latin America is still developing digital markets and sometimes, given the globality of the services, competition is occurring in other jurisdictions. Innovation takes place in different countries and such innovation later impacts other countries.
Therefore, what is the theory harm? Is the theory of harm applicable to these jurisdictions as in the United States, European Union or in Asia? And those theories of harm regard a competition matter. Are the frameworks enacted in IP or data privacy generating barriers to entry the market? Is there a state failure in adapting regulations of general regulations on different sectors which are making traditional non-digital players outdated.
Co-Director of the USC Marshall Initiative on Digital Competition
Vice President of Global Competition and Regulatory Policy at the CCIA, Washington D.C
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