Who really benefits from Big Tech antitrust enforcement?

17 December 2020

How can consumers benefit more from competition authorities’ aggressive action against tech companies?

The French competition authority’s recent €1bn fine against Apple is an eye-catching example of a trend we have been seeing for a number of years. Competition authorities are getting tough on Big Tech. But who is really benefitting from this?

The European Commission’s Microsoft and Intel cases show technology companies have been a focus for competition authorities since the late 90s – indeed those cases helped set DG Comp’s reputation on the international stage. In more recent years the pressure on Big Tech has been turned up. Under Joaquín Almunia the Commission launched high profile investigations into Google, culminating in fines of €2.4bn, €4.3bn and €1.5bn (in the Shopping, Android and AdSense cases) which were issued under the equally uncompromising Margrethe Vestager. More recently in late 2019 the Commission launched an antitrust investigation into Amazon and in June 2020 it announced further investigations into the rules governing Apple’s app store.

In Germany, under Andreas Mundtz, the Bundeskartellamt’s ambitious investigation into Facebook in relation to its misuse of user data has shown one authority that is willing to take risks and use innovative theories of harm to pursue Big Tech. While the Dusseldorf courts had initially suspended the Bundeskartellamt’s 2019 decision, in June 2020 the German Federal Court of Justice backed the Budeskartellamt’s original stance. The antitrust policy position in Germany therefore seems clearly geared towards curtailing the power of these businesses. France’s recent findings against Apple and Google also show it is intent on reining in the tech giants. In the UK too, we have seen increased rhetoric around the need to police Big Tech (see for example Andrea Coscelli’s 20 February 2020 interview with the FT) but this has not led to any headline-grabbing fines as yet.

But where do consumers fit in? In theory, the EU Damages Directive should mean that consumers who have suffered harm are able to obtain redress – but the system for consumer compensation remains fragmented. At the European level, in spite of recent positive noises (see for example this press release about the future EU representative action regime) the creation of an EU wide opt-out class action regime that has real teeth appears to remain a distant (and unlikely) prospect. While there are some welcome steps, the recent representative action proposals currently only allow for actions to be brought by not for profit representative bodies and is to be country specific rather than EU-wide.  The introduction of the loser pays principle and certification requirements (no doubt partly a result of industry lobbying) are also likely to deter the kinds of class actions that could realistically be expected to provide meaningful consumer redress.

It can be argued that the multi-billion euro fines paid to the European Commission by Google and other Big Tech companies may ultimately find their way back to consumers through increases in EU budgets and spending. But there is no direct link between those consumers who have suffered harm and the payments made by the perpetrators of anticompetitive conduct. In any case, the fines imposed by competition authorities are supposed to act as deterrents, rather than being compensatory in nature. If the EU’s Google fines were meant to be the end of the matter then Google could just write these off as a cost of business (and one which only needs to be paid when it gets caught). Individual consumer redress can still be sought on a country by country basis – but that brings its own issues.

In Germany, while the Bundeskartellamt is taking risks in its investigations into Big Tech, it seems the courts are more conservative and arguably doing everything they can to make collective redress difficult. The Munich court’s recent decision to strike out a Trucks class action is a slightly depressing reminder of this. Of course, there are other models for collective actions in Germany, and we would hope that some of these will yield positive results for consumers soon.

The aggressive enforcement action by the French competition authority is to be welcomed – the €1bn fine against Apple is particularly large for a national competition authority. But the legal framework for consumer redress in France is still lacking. The French Apple case has all the hallmarks of a case where individuals have suffered specific harm due to Apple’s illegal conduct – (consumers have been found to have been overcharged for their iPads). On an individual basis, it makes little sense for consumers to claim compensation as the quantum of each claim is relatively low. Even using an opt-in approach, it would be incredibly difficult to bring a class action given the number of people involved and the resultant administrative and evidential difficulties. But if there were an opt-out system, a damages claim would make sense and the wrong could be righted. Unfortunately, we are not there yet in France.

In the UK, the existing legal framework coupled with the CAT’s opt-out regime is probably fit for the purpose of compensating consumers. Initial teething problems (see the Merricks saga) may be abating somewhat. Adverse costs risks and the expense of getting claims certified remain barriers, but nonetheless it does seem that consumers could obtain redress if the right case came up. Outside of a pure competition setting, we have seen in Lloyd v Google that the UK courts are willing to allow creative approaches – namely the use of CPR 19.6 – to help consumers fight back against Big Tech. In the UK then, it seems we await enforcement action from the competition authorities rather than there being a significant problem with the legal framework for bringing private actions in the courts.

We will need both bold competition authority enforcement decisions and sensible collective redress frameworks to ensure the right outcome for consumers. Absent this combination, there is a risk that people start to see competition authority decisions as a form of political grandstanding which does not ultimately help compensate those who have suffered harm.

There is much to welcome in the trend towards greater enforcement in the technology space. Different jurisdictions can point to different positive steps. But it remains to be seen how long it will take for the benefit of all this public enforcement to be properly allocated to the affected consumers.

Contact David Gallagher

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