Special rules and exemptions
Do any special rules or exemptions apply to the assessment of anticompetitive agreements between competitors in digital markets in your jurisdiction?
There are no special rules or exemptions that apply to the assessment of anticompetitive agreements between competitors in digital markets in the UK. The standard competition rules apply. In May 2022, the UK government published its proposals for a new ex ante pro-competition regime that will aim to shape the behaviour of digital firms with significant market power. An enforceable code of conduct, governing the behaviour of firms designated with strategic market status (SMS), will make it clear how they are expected to behave. Pro-competitive interventions will aim to address the root causes of digital firms’ substantial and entrenched market power.
Access to online platforms
How has the competition authority in your jurisdiction addressed horizontal restrictions on access to online platforms?
The issue of horizontal restrictions on access to online platforms was considered in the OnTheMarket case, a private competition enforcement case involving the online property portal OnTheMarket. The online property portal was established by Agents Mutual, a mutual association owned by its estate agent members, to compete with the existing duopoly of Zoopla and Rightmove. Agents Mutual brought proceedings against estate agent Gascoigne for breach of contract, which in turn argued that various provisions in its contract with OnTheMarket were in breach of the Chapter I prohibition of the Competition Act (prohibition on anticompetitive agreements). One of the restrictions at issue related to the ‘one other portal’ rule under which an estate agent member was only permitted to list its properties on one other portal. The Competition Appeal Tribunal (CAT) concluded that the rule was not an absolute exclusivity rule but akin to a semi-exclusive purchasing obligation and was not in breach of the competition rules. It was not a restriction by object as it did not, by its very nature, reveal a sufficient degree of harm to competition. The CAT concluded that the rule was objectively necessary to the arrangements as a whole, which were pro-competitive as they enabled new entry and were aimed at reducing costs for estate agents, and did not infringe the Chapter I prohibition by object nor by effect. This was upheld on appeal by the Court of Appeal in January 2019. The case demonstrates how platform restrictions will be assessed in their wider legal and economic context rather than solely in the context of the particular platform.
Has the competition authority in your jurisdiction considered the application of competition law to the use of algorithms, in particular to algorithmic pricing?
The Competition and Markets Authority’s (CMA) most notable case involving computer-powered algorithms and automated pricing software is the ‘online sales of posters and frames’ case in which the CMA investigated a cartel relating to sales of posters and frames by two competing online sellers on Amazon’s UK website. The agreement was implemented using automated repricing software that the parties had each configured to monitor and enforce the cartel.
In 2018, a new Data, Technology and Analytics unit was established within the CMA to help it stay ahead in this area of competition law, using the latest in data engineering, machine learning and artificial intelligence techniques. The unit’s work will enable the CMA to better understand how firms are using data, what their machine learning and AI algorithms are doing, the consequences of these algorithms and, ultimately, what actions authorities need to take.
In January 2021, the CMA published a report on ‘Algorithms: How they can reduce competition and harm consumers’. The report recognises that algorithms have enabled considerable gains in efficiency and effectiveness, but that they can also be used in ways that reduce competition and harm consumers. It marks the launch of a new CMA programme of work on analysing algorithms, which aims to develop its knowledge and help it to better identify and address harms. The report reviews the potential harms to competition and consumers from the use of algorithms, focusing on those the CMA or other national competition or consumer authorities may be best placed to address.
Data collection and sharing
Has the competition authority in your jurisdiction considered the application of competition law to ‘hub and spoke’ information exchanges or data collection in the context of digital markets?
In 2010, the Office of Fair Trading (OFT) (now the CMA), carried out an investigation into indirect information exchanges between private motor vehicle insurers using a specialist market analysis software tool called WhatIf. The OFT had concerns that the insurers were able to access information about their competitors’ future pricing intentions that could be used to coordinate pricing. The investigation was closed following commitments from a number of insurers and from the IT software and service providers that addressed these concerns, by ensuring that any pricing information exchanged through the analysis tool complied with a number of principles agreed with the OFT. Any information less than six months old was required to be anonymised and aggregated across at least five insurers.
Have any other key issues emerged in your jurisdiction in relation to the application of competition law to horizontal agreements in digital markets?
No other key issues have emerged.