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Evolving digital markets require speedier enforcement of competition rules, says UK government


The European Commission must move faster to erode unfair competition restrictions in the market for digital services, the UK government has said.

Speedier action by the competition regulator is necessary to ensure innovative new services are not "frozen out of established markets", it said. 

In a report outlining its 'vision for the EU’s digital economy' (8-page / 305KB PDF), the UK government called on the Commission to "carry out an assessment of competition in online services markets". The findings should help determine "whether the competition framework meets the needs of the data-driven economy", it said. 

"The importance of data has changed the dynamic of the online economy," the UK government said. "The EU needs to look again at whether the competition framework remains fit for purpose, but we need an accurate understanding of online markets before jumping to conclusions." 

"The European competition regime has a history of robust enforcement which breaks down incumbent power where there is abuse, and we need to continue to deliver these benefits in the context of a data-driven economy. If, and only if, the economic evidence shows that there are unacceptable distortions of the market, then the Commission should of course consider all the remedies available to it to stop abuse. And as digital markets change rapidly, it should conclude cases much more quickly," it said. 

The report highlighted a number of legal issues that the UK government believes needs to be addressed by EU law makers to allow businesses based in the trading bloc to compete globally. 

"The UK proposes that the EU take bold steps to create an open, flexible market with a regulatory framework that reflects the dynamic nature of the digital economy," it said. "We must avoid knee-jerk reactions to the risks that accompany change, managing these by establishing a clear, simple set of rules that safeguard the rights of all those legitimately taking advantage of the online economy." 

Among the measures called for by the UK government is the abolition of "copyright levies in all forms", and legislative reforms that will facilitate the publication and sharing of anonymised data by public bodies in the EU. 

On the copyright levies issue, a spokesperson for the Department for Business, Innovation and Skills (BIS) told Out-Law.com: "We think levies such as those for private copying are an inefficient and unfair form of consumer taxation and that we will continue to oppose mandatory levies at EU level. Narrow and technologically-neutral personal copying exceptions are the best way to meet consumer needs." 

Changes are also needed to EU data protection rules, according to the government's paper, and should give consumers greater transparency and control over how their data is used. However, the new regime "must be in a form that doesn’t suppress growth, supports data-driven innovation, and guarantees the protection of consumers’ data". The UK government also called for EU telecoms market reforms to end mobile roaming charges for consumers. 

Technology law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said that differences in the way individual EU countries apply EU rules provides a challenge for businesses looking to operate across the trading bloc. However, he said there are a number of other barriers companies must overcome when looking to operate outside of their home market too. 

"The fragmented market is a real problem – most organisations have international plans and anything that can ease that would be welcomed," McFadyen said. "Opportunities will also bring challenges in the form of increased cross-border competition. However, we shouldn’t pretend that fragmentation of the market is purely a legal issue. It goes much deeper. The root causes of fragmentation can range from tangible factors like currency and national legislatures, to less tangible ones such as protectionism and cultural differences." 

In its report, the UK government also said the EU should do more to help European businesses become "early adopters" of new technology, and backed EU action on the development of new technical standards which can help with system interoperability. 

It also called for the EU to cut red tape to ensure businesses do not need to have a "physical address" in every EU country that they register a country-specific web address. 

The BIS spokesperson said: "This is about ensuring that domain name registrars do not require a physical address in their country for registering the relevant national domain name e.g. .co.uk or .de. In the UK .co.uk is available to any business, no matter where they are based." 

There should also be "a single process, valid across the EU, for … navigating national identity requirements through a secure, business-friendly, cross-border electronic identity process", the government said in its paper. 

The BIS spokesperson clarified what the government meant by this statement.

"Cross-border electronic identity (eID) is an important part of the digital single market, as there are some services that can only be offered digitally if providers know who the user is. This is the case for both public and private services. Recently, a regulation has been passed in Europe to allow this for public sector services - the eIDAS Regulation. The Regulation is an important first step. It sets up the framework for using eIDs across borders for public services." 

"We now need to look at how people can also prove who they are when accessing private sector services online across the EU (e.g. financial industry, insurance, airlines etc). It also means engaging with industry to understand what they need to design useful services for people. The Commission is moving in the right direction by engaging with the private sector and exploring how identity enables new types of cross-border services. We need to work with them to ensure that future work is based on real user need," it said. 

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