Digital competition policy in Australia

In February 2020, the Australian Competition and Consumer Commission (ACCC) was directed to conduct a 5-year inquiry into markets for the supply of digital platform services. The ACCC is currently working on its tenth and final report for the Digital Platform Services Inquiry, which will focus on global developments, and emerging competition and consumer issues.

The ACCC’s fifth interim report was released in November 2022 and in it the Commission made wide-ranging recommendations, including the introduction of additional competition measures for digital platform services, implemented through mandatory service-specific codes of conduct for ‘designated’ digital platforms.

The report also proposed targeted obligations to support the framework for the mandatory codes to address the key competition issues presented by digital platforms. It listed the issues as:

• anti-competitive self-preferencing
• anti-competitive tying
• exclusive pre-installation and default agreements that hinder competition
• impediments to consumer switching
• impediments to interoperability
• data-related barriers to entry and expansion, where privacy impacts can be managed
• a lack of transparency
• unfair dealings with business users
• exclusivity and price parity clauses in contracts with business users.

In December 2023, the Australian government indicated that it supported in principle those recommendations and, in December 2024, released for consultation a paper for a proposed new digital competition regime.  Though the paper was released after the IIC roundtable meeting, the discussion anticipated the matters included in the government’s consultation.

International developments

Lessons can be learnt from the introduction of the European Digital Markets Act (DMA), with some roundtable participants noting from their experiences that:

• The DMA may be discouraging inventors and hampering innovation.
• Compliance obligations under the DMA are onerous, including various requests for information which demand substantial legal and technical resources, and the sanctions for non-compliance are significant.
• Digital platforms encompass a wide variety of very different businesses, which cannot all be lumped into one category and be subject to the same obligations.
• In addition to the DMA, industry has also been recently subjected to further regulatory obligations under the Digital Services Act and the Data Act in the EU.
• Despite the increase in obligations on industry, it remains to be seen whether there is any consumer benefit. The impact of the DMA is still being considered, as are other legislative measures implemented in other jurisdictions, such as the Digital Markets, Competition and Consumers Act in the UK.

Is there a need for ex ante regulation?

Some roundtable participants noted that there is a need for ex ante regulation given that the ACCC’s existing tools to enforce competition law under the Australian Competition and Consumer Act are inadequate to remedy identified harms in a timely manner. Many competition law cases are complex and lengthy; it is not uncommon for cases to take several years (including appeals). As a topical example, Epic Games filed proceedings against Apple and Google alleging misuse of market power through their restrictive app store practices in late 2020 and early 2021 respectively. A trial in the cases (and a parallel class action) took place between March and July 2024, with judgment reserved. The effectiveness of any remedy that may be imposed arguably declines the longer the period from behaviour to sanction.

Despite the increase in obligations on industry, it remains to be seen whether there is any consumer benefit

However, other participants raised concerns about the potential for unintended consequences by the introduction of ex ante regulation, including the hampering of innovation, and argued that the digital markets should be allowed to develop. Concerns were raised about Australia simply copying the EU’s approach to digital market regulation without careful consideration of the following (among other things):

• Whether the existing tools available to the ACCC already sufficiently address the harms that have been identified in digital markets and whether these can be used without the need for ex ante regulation. For example, the misuse of market power provisions are a powerful tool, where the penalties for a breach can be up to AU$50 million or even more in some cases.
• An appreciation that the digital economy should not be perceived as a separate sector that needs special rules, but rather, as a result of evolution, as a part of every aspect of the wider economy.
• Whether more transparent education campaigns could help consumers understand their rights and the protections that are already in place in the current law and of which they may not be aware.
• Harms should be very well identified before imposing any new ex ante regulation. It would be important to strike the right balance between the high-level principles that may be set out in the law and the granular measures included in any mandatory service-specific codes of conduct. If new regulation is introduced without sufficient detail or clarity, there is a risk of any enforcement action taken under these new rules being contested and dragged out through the courts.

Finally, it was noted that if additional competition measures are introduced to protect and promote competition in markets for digital platform services, then knowledge-sharing and consultation will be key to help digital platforms understand their obligations. This includes ensuring that there are appropriate opportunities to engage with those suspected of being in breach to help them understand their obligations, rather than seeking to take enforcement action immediately.

The roundtable, ‘Contemporary Perspectives on Digital Competition Policy’, was an IIC Australia Chapter collaboration with Amazon and Squire Patton Boggs.