The digital economy poses enormous challenges for policymakers in terms of innovation, competition and regulation. How can digital markets be regulated properly, how can innovations be fostered and competition be made fair at the same time? These and many other questions were discussed by around 190 participants from science, politics and business at this year’s annual conference of the Mannheim Centre for Competition and Innovation (MaCCI) at ZEW Mannheim.

Picture of Professor Frédéric Jenny.
Professor Frédéric Jenny in his keynote on current challenges of competition law and policy in digital markets.

Following two virtual editions since the beginning of the COVID-19 pandemic, this year’s conference took place as a hybrid format, attracting many participants to Mannheim who were looking forward to face-to-face exchange. About 120 people participated on site, while about 70 guests joined virtually. This also made the eleventh MaCCI conference the largest ever organised at ZEW in cooperation with the University of Mannheim.

Digital markets are a particular challenge for competition authorities

The first day of the conference focused on various aspects of the digital economy, innovation economics and market structure. Frédéric Jenny, chairman of the OECD Competition Committee and professor at the ESSEC Business School, addressed the current challenges of competition law and policy in digital markets in his keynote speech. He emphasised that the markets currently considered relevant are not the markets that should attract the attention of competition authorities. Concentration measures for these markets are inappropriate indicators of market power. A better approach would be to focus on companies’ business models, which are determined by transaction costs and network externalities, among other factors. Furthermore, he stressed that competition authorities do not take dynamic efficiencies and data availability as barriers to market entry sufficiently into account when evaluating market power in digital markets.

Critical assessment of the Digital Markets Act in the panel discussion

In the subsequent panel discussion on “The DMA – A Critical Appraisal”, Silke Hossenfelder (head of General Policy Division at the German Federal Cartel Office), Inge Graef (professor of competition law at Tilburg University, the Netherlands) and Simonetta Vezzoso (professor at the University of Trento, Italy) discussed the Digital Markets Act (DMA) together with Professor Jens-Uwe Franck from the University of Mannheim & MaCCI, who organised and moderated the panel. The panel pointed out that the DMA is part of a larger legislative construct to regulate digital markets. However, it is not an antitrust law in the traditional sense, but should be understood as complementary regulation to existing legislation. In addition, the DMA differs from many other laws in several respects. For example, the burden of proof for so-called gatekeepers – operators of key platform services – is reversed: tech giants must prove that they comply with the rules from the DMA. This ushers in a new type of regulation. The presentations prompted a spirited debate between the panel and the audience.

How high is the economic damage caused by the OPEC cartel?

John Asker during his presentation on the damage caused by the OPEC cartel.

The second day of the conference included insightful presentations on topics such as vertical market structures, environmental economics, markups and common ownership. In his keynote speech, Professor John Asker from the University of California (UCLA) presented results from a joint study with Professor Allan Collard-Wexler (Duke University, USA) and Professor Jan De Loecker (KU Leuven, Belgium). The co-authors developed an economic model that simultaneously takes into account both welfare losses and inefficiencies in production – normally economic models focus on only one of the two phenomena. Applying the model to the OPEC cartel, the economists have been able to show that the damage caused by the cartel in 2014 is equivalent to a global revenue tax of about 0.15 per cent, or five trillion US dollars. After his presentation, John Asker engaged in a lively exchange with the audience.

About MaCCI

MaCCI – short for “Mannheim Centre for Competition and Innovation” – is a research alliance between ZEW and the School of Law and Economics at the University of Mannheim which encourages the exchange of knowledge between economists and legal experts. In doing so, it inspires new approaches to issues relating to competition, regulation and innovation policy. Core topics analysed by MaCCI include vertical competition restraints, abuse of market power, merger control, public and private enforcement of competition law, and regulations in the telecommunications and energy market.

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Date

13.04.2022

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