New pressure points as lawmakers and antitrust authorities intervene in the digital economy

Digital markets continue to be a clear focus for competition authorities globally and regulatory scrutiny is expected to increase even more over the coming months. While this general trend is not a new one, there are some new pressure points to be aware of:

• Widening the net for merger control scrutiny. 

Dealmakers in the tech space should expect to face a hostile regulatory environment, with authorities planning to deal decisively with past criticisms of underenforcement. They will also have to contend with expansionist plans to intervene in smaller deals which don’t meet the thresholds to trigger a merger review – especially acquisitions designed to remove a nascent competitive force (so-called killer acquisitions).

• China follows Europe and US in stepping up antitrust enforcement. 

Traditional antitrust enforcement shows no sign of slowing down, especially in Europe and the US. While enforcement against Chinese domestic tech players has traditionally been light touch, SAMR’s new antitrust guidelines cover a broad range of conduct and tech platforms must actively audit their compliance with them. This is a huge shift in policy, and we expect to see more antitrust investigations in China as a result.

• European journey towards tech regulation continues. 

Progress towards radical regulation of digital platforms is underway, with the hotly debated EU Digital Markets Act slowly but surely making its way into law. Other initiatives are progressing too, like the CMA’s new “shadow” Digital Markets Unit.

• Heading for a big US break up? 

A wholesale regulatory “break up” of digital platforms as mooted in the US is still far afield. But the focus on structural remedies over more regulatory alternatives permeates the US enforcement environment, including in order to break up exclusivity arrangements and remove potential conflicts across a platform operator’s business lines. As President Biden’s administration has appointed outspoken critics of Big Tech in key policy and enforcement roles, these trends are likely to accelerate with the potential for greater collaboration with the state enforcers and their counterparts overseas.

What does all this mean for businesses attempting to successfully navigate the heightened scrutiny and changing global regulatory landscape? First, factor in potential merger control reviews despite deals being non-notifiable. Second, prepare for greater scrutiny of commercial behaviours. Finally, monitor new regulation carefully and consider the opportunities as well as the challenges.

For more information, visit our Summer’s Top Antitrust and Foreign Investment Stories 2021, which brings together insights and practical guidance from our global experts.