Telesemana | Using Antitrust Policy to Scrutinize Big Tech: Developments in Latin America

Telesemana | Using Antitrust Policy to Scrutinize Big Tech: Developments in Latin America

Over the last year, the so-called Big Tech have been the target of increased scrutiny from lawmakers and competition authorities from several G20 countries who, by resorting to antitrust regulation, want to curb what they perceive to be inordinate influence over market dynamics in the digital space and beyond.

With the rise of the digital economy, the unprecedented growth of the e-commerce sector during the Covid-19 pandemic, and changes in political leadership (i.e., Biden antitrust crackdown, including Lina Khan’s – a staunch critique of Big Tech market dominance – appointment to the Federal Trade Commission (FTC)), the apprehension over the clout of social media, online advertising, and ecommerce platforms has grown.

Latin America is no exception to this trend, with competition agencies across the region considering how they can regulate big players of the digital economy and receiving encouragement by Khan’s narrative on Big Tech.

Brazil – CADE’s new leadership adapting antitrust to the digital age

In Brazil, the competition authority, the Administrative Council for Economic Defence (CADE), has opened investigations into digital platforms and commissioned studies to better understand the competitive dynamics around digital markets.  CADE has acknowledged the particularities of these markets and recognized that existing remedies and enforcement tools may not be appropriate in addressing the challenges to which they give rise.

For instance, in Mosaico and Buscapé, a merger case between two multisided digital platforms, CADE recognized that traditional aspects of antitrust analysis (specifically the definition of relevant market) do not neatly apply to data-driven markets. Despite this, thus far, CADE has continued to apply traditional competition theories of harm to cases involving digital platforms and has not yet accounted for the impact of data in assessing market power.

As an example, CADE approved the acquisition of Grupo Zap (an online real estate marketplace) by OLX (a multinational online marketplace), despite acknowledging the potential risk of it being a killer acquisition (a transaction intended to ultimately kill innovation). With the recent nomination of CADE’s new president and new General Superintendent, CADE’s new leadership will need have at hand the major task of deciding how Brazil will adapt its antitrust tools to the digital age.

Mexico – Jurisdictional feud between COFECE and IFT slowed the process

Competition issues in Mexico have been plagued by jurisdictional disputes between agencies. In October 2020, the Federal Telecommunications Institute (IFT) opened an investigation into monopolistic practices in digital markets (online search engines, cloud computing services, social networks, mobile operating systems and “related services”). Soon after, the procedure was suspended by virtue of a jurisdiction conflict initiated by the Federal Economic Competition Commission (COFECE) who maintained that digital markets were within its jurisdictional reach; an argument that, apart from the mobile operating systems market, was later upheld by the Specialized Court in a decision that led to the termination of IFT’S market inquiry.

The decision gave COFECE the greenlight to conduct its own market enquiry into digital platforms – a move that would be seen as a logical step after the creation of its General Directorate of Digital Markets. That said, the entity will likely run out of time to initiate any enquiry before the mandate of the entity’s head, Alejandra Palacios, comes to an end in September 2021.

Therefore, the decision of whether to keep digital platforms high in its agenda and, if so, which approach it should take to regulate them, will fall on COFECE’s new leadership. The influence that the United States FTC approach to digital markets under Chairwoman Khan can have on COFECE should not be understated.

Colombia – Using data protection enforcement powers to understand competition dynamics

Colombia is a bit of an outlier – the Colombian Superintendency of Industry and Commerce (SIC) involvement with digital platforms has been framed under a ‘privacy’ and ‘consumer’s right’ angle: SIC opened investigations into e-commerce platforms for potential violations of consumer rights, ordered platforms such as TikTok to comply with data protection standards, and has issued a mandatory order for WhatsApp to implement its new terms of service in line with Colombia’s national treatment of data law.

In a recent interview, SIC’s head, Andrés Barreto, stated that housing three missions under the same roof (SIC is one the very few agencies worldwide with antitrust, consumer protection, and data privacy jurisdiction) allows them to use its data protection enforcement powers to obtain insight into how digital platforms operate. In this view, this would be an advantage as the SIC analyses antitrust cases, especially those involving digital markets.

Argentina and Chile – Antitrust discussions picking up

In both countries, recent developments have revealed an increased attention from antitrust authorities towards digital platforms. Argentina’s National Commission for the Defence of Competition (CNDC) reaction to WhatsApp’s privacy policy update led to a precautionary measure against its parent company, Facebook. Interestingly, although this issue pertains to the privacy domain, the CNDC put it under the scope of the competition debate arguing that Facebook uses citizens data to increase its market dominance, which, in turn, leads to negative impact on competition. Although this was the first time Argentina’s competition authority has engaged in the topic, it is evident that it will not be the last.

In Chile, the President of the Free Competition Defence Court (TDLC), Enrique Vergara, has declared that digital platforms antitrust regulation is a priority for the authority. During the TDLC’s annual accountability report, Vergara emphasized that the current tools for addressing competition in digital markets are insufficient. Given that the country is currently drafting a brand-new constitutional text, emerging issues such as data protection, data localization, and digital markets regulation are likely to be included in the constitutional debate and be a propeller for new policy and regulatory measures, including on antitrust.

What’s next?

Despite being at different stages and advancing at different paces, recent national developments across Latam demonstrate that the interest in applying antitrust law and policy to digital platforms is steadily increasing in the region. The impending regulatory wave – motivated by the general understanding that our old antitrust regulations no longer address present day competition concerns – is unquestionably inspired by the EU-led discussion that gave rise to the European Digital Markets Act and more recently to Khan’s nomination (seen as one of the most serious regulatory threats to tech companies yet).

Similar to the EU’s General Data Protection Regulation (GDPR), we are likely to witness a domino effect across the Latin American region, with regulators and legislators rushing to adapt existing antitrust regulations to the digital age. To avoid any unpleasant surprises in the not-so-distant future, those who wish to have a say in the process must act now.

The Spanish version of this article was published on Telesemana on 14 October 2021.

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