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Mª DEL PILAR PERALES VISCASILLAS ANTONIO ROBLES MARTÍN-LABORDA

Directors

THE DIGITAL ECONOMY: REGULATORY, CONTRACTUAL AND COMPETITION ASPECTS

monografías

978-84-1355-928-5

ALTA CALIDAD EN INVESTIGACIÓN JURÍDICA

Directors

THE DIGITAL ECONOMY: REGULATORY, CONTRACTUAL AND COMPETITION ASPECTS

14 and 15 November 2019, an International Congress entitled “The Digital Economy: Regulatory, Contractual and Competition Aspects” was held at the University Carlos III of Madrid gathering different experts from around the world to analyze the legal challenges posed by digital platforms. This book brings together the contributions then presented by academics, members of regulatory agencies and representatives of the private sector, around four major themes: – The challenges of digitalization for competition policy – Digitalization and the new challenges in contract law – The impact of digitalization on financial markets – The impact of digitalization on energy markets

Mª del Pilar Perales Viscasillas Antonio Robles Martín-Laborda

monografías

THE DIGITAL ECONOMY: REGULATORY, CONTRACTUAL AND COMPETITION ASPECTS

COMITÉ CIENTÍFICO DE LA EDITORIAL TIRANT LO BLANCH María José Añón Roig

Javier de Lucas Martín

Ana Cañizares Laso

Víctor Moreno Catena

Catedrática de Filosofía del Derecho de la Universidad de Valencia

Catedrático de Filosofía del Derecho y Filosofía Política de la Universidad de Valencia

Catedrática de Derecho Civil de la Universidad de Málaga

Catedrático de Derecho Procesal de la Universidad Carlos III de Madrid

Jorge A. Cerdio Herrán

Francisco Muñoz Conde

José Ramón Cossío Díaz

Angelika Nussberger

Catedrático de Teoría y Filosofía de Derecho. Instituto Tecnológico Autónomo de México Ministro en retiro de la Suprema Corte de Justicia de la Nación y miembro de El Colegio Nacional

Eduardo Ferrer Mac-Gregor Poisot

Juez de la Corte Interamericana de Derechos Humanos Investigador del Instituto de Investigaciones Jurídicas de la UNAM

Owen Fiss

Catedrático emérito de Teoría del Derecho de la Universidad de Yale (EEUU)

José Antonio García-Cruces González Catedrático de Derecho Mercantil de la UNED

Luis López Guerra

Catedrático de Derecho Constitucional de la Universidad Carlos III de Madrid

Ángel M. López y López

Catedrático de Derecho Civil de la Universidad de Sevilla

Marta Lorente Sariñena

Catedrática de Historia del Derecho de la Universidad Autónoma de Madrid

Catedrático de Derecho Penal de la Universidad Pablo de Olavide de Sevilla Catedrática de Derecho Constitucional e Internacional en la Universidad de Colonia (Alemania) Miembro de la Comisión de Venecia

Héctor Olasolo Alonso

Catedrático de Derecho Internacional de la Universidad del Rosario (Colombia) y Presidente del Instituto Ibero-Americano de La Haya (Holanda)

Luciano Parejo Alfonso

Catedrático de Derecho Administrativo de la Universidad Carlos III de Madrid

Tomás Sala Franco

Catedrático de Derecho del Trabajo y de la Seguridad Social de la Universidad de Valencia

Ignacio Sancho Gargallo

Magistrado de la Sala Primera (Civil) del Tribunal Supremo de España

Tomás S. Vives Antón

Catedrático de Derecho Penal de la Universidad de Valencia

Ruth Zimmerling

Catedrática de Ciencia Política de la Universidad de Mainz (Alemania)

Procedimiento de selección de originales, ver página web: www.tirant.net/index.php/editorial/procedimiento-de-seleccion-de-originales

THE DIGITAL ECONOMY: REGULATORY, CONTRACTUAL AND COMPETITION ASPECTS

Mª DEL PILAR PERALES VISCASILLAS ANTONIO ROBLES MARTÍN-LABORDA Directors

SUSANA PÉREZ ESCALONA MÓNICA LASTIERI Coordinators

tirant lo blanch Valencia, 2021

Copyright ® 2021 Todos los derechos reservados. Ni la totalidad ni parte de este libro puede reproducirse o transmitirse por ningún procedimiento electrónico o mecánico, incluyendo fotocopia, grabación magnética, o cualquier almacenamiento de información y sistema de recuperación sin permiso escrito de los autores y del editor. En caso de erratas y actualizaciones, la Editorial Tirant lo Blanch publicará la pertinente corrección en la página web www.tirant.com.

© TIRANT LO BLANCH EDITA: TIRANT LO BLANCH C/ Artes Gráficas, 14 - 46010 - Valencia TELFS.: 96/361 00 48 - 50 FAX: 96/369 41 51 Email: tlb@tirant.com www.tirant.com Librería virtual: www.tirant.es ISBN: 978-84-1355-929-2 Si tiene alguna queja o sugerencia, envíenos un mail a: atencioncliente@tirant.com. En caso de no ser atendida su sugerencia, por favor, lea en www.tirant.net/index.php/empresa/politicas-de-empresa nuestro procedimiento de quejas. Responsabilidad Social Corporativa: http://www.tirant.net/Docs/RSCTirant.pdf

Autores J. Miguel Aguado Palanco Lucila de Almeida Juan Delgado Álvaro García Delgado Íñigo del Guayo Castiella Ignacio Herrera Anchustegui Mónica Lastiri Santiago Agustín Madrid Parra Rob Nicholls Pilar Perales Viscasillas David Ramos Muñoz Agustín Reyna Antonio Robles Martín-Laborda Albert Sánchez-Graells Javier Antonio Tobar Rodríguez Simonetta Vezzoso Fernando Zunzunegui

Summary Introductory Note............................................................................... 11

Section I The challenges of digitisation for competition policy Presentation........................................................................................ 15 Antonio Robles Martín-Laborda

Optimising public enforcement in the Digital Single Market through cross-institutional collaboration.......................................................... 21 Agustín Reyna

Platforms, Privacy and Antitrust: Analysing the Australian Digital Platforms Inquiry................................................................................ 51 Rob Nicholls

(Not so) New Sources of Market Power in the Digital Economy......... 77 Juan Delgado

Keeping European enforcement ahead: the learning curve of the European Commission in enforcing competition rules in the digital environment.............................................................................................. 97 Álvaro García Delgado

Section II Digitalization and the new challenges in contract law Smart Contracts & Blockchain: Crossroad between Technology and Law..................................................................................................... 119 Agustín Madrid Parra

Section III The Impact of digitalization of financial markets Presentation........................................................................................ 151 David Ramos Muñoz

Data Portability: Initial Reflections on an Ex Ante Approach............. 163 Simonetta Vezzoso

Summary

Digitalisation of payment services....................................................... 179 Fernando Zunzunegui

Systematic and conceptual framework for crowdfunding regulation... 219 Fernando Zunzunegui

Section IV The impact of digitalization on energy markets Presentation........................................................................................ 247 Pilar Perales Viscasillas

Digitalization and the electricity markets: ‘Six Building blocks to understand why’ and its implications to contracts and contract law........ 253 Lucila de Almeida

Liberalization process, regulation of network facilities and their impact on energy contracts. With particular reference to the recent European Union normative framework....................................................... 269 J. Miguel Aguado Palanco

Regulatory challenges of new energy technologies............................... 283 Íñigo del Guayo Castiella

Is EU Competition Law a Hindrance for Aggregated Demand Response?................................................................................................. 299 Ignacio Herrera Anchustegui

COMMUNICATIONS Data-driven procurement governance: two well-known elephant tales........................................................................................................ 347 Albert Sánchez-Graells

The principle of coherence of personal data protection rules in the market: a competitive resource in the EU digital economy.................. 351 Javier Antonio Tobar Rodríguez

Challenges of European Union Competition Law in Digital Platforms................................................................................................... 369 Mónica Lastiri Santiago

Introductory Note On 14 and 15 November 2019, an International Congress entitled “The Digital Economy: Regulatory, Contractual and Competition Aspects” was held at the University Carlos III of Madrid gathering different experts from around the world to analyze the legal challenges posed by digital platforms. This book brings together the contributions then presented by academics, members of regulatory agencies and representatives of the private sector, around four major themes: – The challenges of digitalization for competition policy – Digitalization and the new challenges in contract law – The impact of digitalization on financial markets – The impact of digitalization on energy markets The congress was organized within the framework of the R+D+I project “Infrastructures and Institutions of Private Law, National and International, in Networked Markets: between Regulation and Competition. Arbitration of conflicts” (DER2016-78572-P), IP: Professors Pilar Perales Viscasillas and Antonio Robles Martín-Laborda (University Carlos III of Madrid). All members of the team were an important part in the organization of the Congress: Prof. David Ramos, Susana Pérez Escalona, Tatiana Arroyo and Mónica Lastiri. The organizers want to thank the participants for their contributions to the discussions during the Congress, as well as to Virtudes Fresnadillo for her assistance in the administrative tasks. Finally, an special thanks to Tirant lo Blanch for the editing and publication of this book. Madrid, 23 March 2020

Section I The challenges of digitisation for competition policy

Presentation ANTONIO ROBLES MARTÍN-LABORDA

Commercial Law Professor at Carlos III of Madrid

The first section addresses the concerns raised by the special competitive dynamics of digital platforms, which represent a challenge from a competition policy perspective and have consequently attracted the interest of competition authorities worldwide. Digital platforms operate in multisided markets providing services through the internet to two or more distinct groups of users, between which there are indirect network effects.1 They have improved consumer welfare putting forward significant efficiencies, minimizing search and transaction costs and contributing to the dynamic development of an increasing number of markets. They have already brought undeniable efficiency gains, increased consumer choice, improved competitiveness and enhanced consumer welfare in activities like advertising, search engines, communications services, payment systems and platforms for the collaborative economy. However, the characteristics of digital markets (i.e., network effects might, reinforced by the use of information and communications technologies to collect and process large amounts of data, along by their capacity to reach their

From a competition law perspective, see Bundeskartellamt: “Working Paper Market Power of Platforms and Networks” (2016), p. 13. Direct network effects are also frequently present within each group. Direct network effects arise if the users of one service (i.e., one side of the platform) directly benefit when more people use the same service as well (e.g., communication or social network services). Indirect network effects exist when the value of a service for a specific group of users increases with the number of users of another group (i.e., platforms with more users of each group are more valuable to the other groups). Therefore, online platforms usually present both direct network effects, between individual members of the same group, and indirect network effects, between members of distinct groups. See M. Katz and C. Shapiro, “Network Externalities, Competition, and Compatibility”, American Economic Review 75(1985): 424-440; M. Katz and Carl Shapiro, “Systems of Competition and Network Effects”, The Journal of Economic Perspectives, 8(1994): 93-115.

Antonio Robles Martín-Laborda

users almost instantly) may erect barriers to entry or expansion and lead to a higher level of concentration. These characteristics present new challenges to competition authorities. Thus, the definition of the relevant market and the assessment of market power are usually the starting point for their analysis. Absent exceptional circumstances, large market shares are in themselves evidence of market power. However, since digital markets are highly dynamic and their market structure is usually unstable due to innovation and growth, a high market share only provides a limited indication of competitive strength, but it is not a reliable indicator of market power in the case of online platforms.2 For this reason, market power should be assessed giving a particular weight to the specifics of platform and network markets, notably the relevance of direct and indirect network effects, the economies of scale, the prevailing types of use on the opposite market side (single-homing/ multi-homing) and the degree of differentiation, the access to data and the innovation potential of digital markets.3 In particular, to determine the assess the market power of digital platforms, one has to take into account the interrelated effects on both customer groups served by the platform. The interdependency between their distinct sides means that the adjustment of the price charged to one group of users affects the demand level of the other groups; i.e., the platform may influence the production level not only changing the price level, but also its structure. This link between the users of distinct sides affects the price elasticity of demand and, consequently, the profitability of a price increase on either side of the platform. An increase in the price (or a reduction of quality) to one side reduces the value that the costumers of other sides receive from the platform, which, therefore, reduces in

See Commission Decisions 7 October 2011, M.6281 - Microsft/Skype, paragraphs 78, 98; 3 Oct. 2014, M.7217 - Facebook/Whatsapp, paragraph 99; Judgement of the General Court, 11 December 2013, Case T‑79/12, Cisco Systems Inc., paragraph 69. See Bundeskartellamt, “Market Power of Platforms and Networks”, 43-85. In the case of networks, the same assessment criteria should be taken into account along with direct network effects. See Bundeskartellamt, “Market Power of Platforms and Networks”, 86-102.

Presentation

turn the demand and price they are willing to pay.4 It can therefore be concluded that that some of the traditional tools for competition law analysis do not apply unless appropriately reformulated to account for the special characteristics of the digital markets.5 As Juan Delgado points out, the sources of market power in the digital economy are neither new nor unknown from an economic perspective. What is new in digital markets is the scale and scope of those effects, the interaction between them and the speed of change of the markets concerned. As the strength of each factor depends on the characteristics of each market, the assessment of market power in digital markets and the design of the optimal remedies have to be addressed on a case-by-case with a dynamic approach, without reducing the incentives to innovate and without missing the positive externalities. In particular, innovation effects should constitute an integral part of the analysis of mergers, anticompetitive conducts and regulation, taking into account that the rapid speed on change and innovation of digital markets requires that the interventions in digital markets be fast and timely and avoiding the adoption of simple decision rules to address complex problems. When addressing the market power of digital platforms, regulators and competition authorities should not miss the positive aspects of big data analytics, network externalities and innovation.

See J. C. Rochet and J. Tirole, “Platform Competition in Two-Sided Markets”, Journal of the European Economic Association 1(2003):990-1029; B. Caillaud, and B. Jullien, “Chicken and Egg: Competition among Intermediation Service Providers”, RAND Journal of Economics 34(2003):309-328; D. S. Evans, “The Antitrust Economics of Multi-Sided Platform Markets”, Yale Journal on Regulation 20(2003): 325-381; D. S. Evans and Richard Schmalensee, “The Industrial Organization of Markets with Two-Sided Platforms”, Competition Policy International 3(2007):151-179. See Julian Wright, “One-sided logic in Two-sided Markets”, Revue of Network Economics, 3 (2004): 44-64. But see also Dirk Auer and Nicolas Petit, “Two-sided Markets and the Challenge of Turning Economic Theory into Antitrust Policy”, The Antitrust Bulletin 60 (2015): 426-461. For a review of the practice of the European Commission in relation to merger control of digital platforms, see A. Robles Martín-Laborda: “Merger Control and Online Platforms: The Relevance of Network Effects”, Market and Competition Law Review, volume 1, number 2 (2017): 69-100.

Antonio Robles Martín-Laborda

Some of these ideas are also present in Álvaro García-Delgado’s contribution, which analyses them from the point of view of the regulatory and competition agencies. As he explains, the dynamic and constantly evolving nature of digital markets presents significant challenges for regulatory and competition authorities, including changing business models and novel types of business conduct, strong network effects or economies of scale. However, none of the above market characteristics are entirely new. In fact, over the past years the European Commission has gathered substantive experience in the field, positioning itself as one of the most active antitrust enforcers in digital markets. In addition to ongoing and past investigations, a report on “Competition policy for the digital era” has been published and Margrethe Vestager has been nominated by Ursula von der Leyen, the new President of the European Commission, as Competition Commissioner and as Executive Vice-President responsible for coordination tasks on a Europe fit for the Digital Age; in the near future we will see the results of this new role. Since the new market dynamics created by digitisation of the economy raise important questions from the point of view of enforcement, Agustín Reyna looks at various proposals to optimize public enforcement in digital markets by enhancing co-operation between competition, data protection and consumer agencies, trying to avoid the risk of divergent and inconsistent outcomes across Member States and to ensure more consistent and efficient enforcement. Competition, consumer, and data protection laws have different objects of protection and follow different legal methodologies. However, co-operation amongst authorities might be desirable at least on defining which authority is best placed to investigate, gathering input from other regulators and authorities, and designing interim measures and remedies. In this sense, as recent cases have demonstrated, the input of different authorities will be increasingly necessary to ensure that remedies —and in particular data sharing remedies— are effective and do not worsen the situation of consumers. In this sense, three models of collaboration can be distinguished based on the different degree of integration: one based on informal and voluntary ad-hoc dialogue between authorities, one defined in a legal instrument establishing structured and formal dialogue, and one that to the previous

Presentation

one adds rules on evidence-sharing and an integrated dialogue with shared powers and competences. In the same vein, Rob Nicholls examines some of the key recommendations of the Australian Competition and Consumer Commission’s report, focusing on the interaction between both privacy and data rights and the role of antitrust enforcement. Big data analytics to create new and disruptive applications mostly leads to economic enhancement by improving competitiveness, but it also encompasses some competition risks and presents some privacy concerns. While he ACCC does not have responsibility as the relevant regulator under the Privacy Act 1988, its dual nature as both antitrust and a consumer regulator is reflected in a series of recommendations that went beyond pure antitrust to address privacy issues in the context of market power of platform players, including the introduction of a private right of action in respect of privacy as well as a new statutory tort of “serious invasion of privacy”.