In July this year the CMA launched its digital markets strategy, which sets out how the CMA will continue to protect consumers in rapidly developing digital markets. A key element of this strategy was the launch of a market study into online platforms and digital advertising and the CMA has now published its interim report, with an update on the work carried out so far, the CMA’s initial views and potential interventions.
The aim of the market study, in common with the approach of all market studies, is to assess whether specific markets are working well – in this case whether the markets for digital advertising and consumer-facing services funded by digital advertising (such as search and social media) are working well.
Market studies may lead to a range of outcomes such as a clean bill of health, encouraging business in the market to self-regulate, steps to improve the quality and accessibility of information for consumers, recommendations to Government, or a market investigation reference. The CMA has the power to make a market investigation reference if it has reasonable grounds for suspecting that any feature, or combination of features, of a market in the UK prevents, restricts or distorts competition and where a market investigation reference appears to be an appropriate and proportionate response.
The market study notice was issued on 3 July 2019 and the CMA has received five representations in support of a detailed market investigation reference. The CMA is therefore required to consult on whether to make a market reference and section 8 of the interim report sets out the consultation questions, requesting interested parties to respond by 12 February 2020. The consultation includes a number of potential interventions with a view to improving competition in the market for online platforms funded by digital advertising, including a code of conduct to govern the behaviour of platforms with market power, rules to give consumers greater control over their data and interventions to address concerns relating to any market power (including data access remedies, measures to increase interoperability and structural interventions).
In its statement of scope the CMA indicated that it considered recommendations to Government as the most likely outcome of the market study, as opposed to a “one-off” intervention through a market investigation. Following the initial investigation, the CMA continues to hold this view and it has concluded to consult on not making a market reference at this stage, based on the following key factors:
- the Government has been committed to regulatory reform in this area, and if this remains the case it is likely that any recommendations made as a result of the market study will be implemented in practice
- the concerns identified regarding online platforms are a global challenge and changes that could efficiently be pursued unilaterally by the UK are limited
- a considerable amount of work still needs to be done in order to understand the nature and the extent of the issues and the appropriate remedies to address them
The CMA will revisit this conclusion in light of the consultation responses, its assessment of market developments (including engagement with international counterparts) and the Government’s position on regulatory reform in this area. The final market study report will be published by 2 July 2020.