Pro-competition Regulation in the Digital Economy: The United Kingdom’s Digital Markets Unit

• DOI: 10.1177/0003603X221082733
• Published date: 01 June 2022
• Date: 01 June 2022
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221082733

The Antitrust Bulletin

2022, Vol. 67(2) 341 –366

© The Author(s) 2022

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DOI: 10.1177/0003603X221082733

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Article

Pro-competition Regulation in

the Digital Economy: The United

Kingdom’s Digital Markets Unit

Niamh Dunne*

Abstract

The United Kingdom, like many jurisdictions, is introducing more demanding ex ante regulation for the

digital economy. Centered on the work of a Digital Markets Unit located within the existing copetition

authority, the U.K. proposals are defined by an explicit commitment to “pro-competition” regulation.

This article traces the evolution and emerging design of the forthcoming U.K. regime. It then explores

the notion of pro-competition regulation in greater detail. While the concept increasingly transcends

its domestic origins, this article argues that the balancing act between conventional competition

law and traditional regulation that it reflects can be fully understood only when located within the

distinctive circumstances of the wider U.K. regulatory landscape.

Keywords

digital economy, competition law, regulation, U.K. law, pro-competition

[D]igital markets will only work well if they are supported with strong pro-competition policies that open up

opportunities for innovation, and counter the forces that can lead to high concentration and a single winner.1

I. Introduction

Regulating the digital economy is the focal point of the most vigorous and prominent competition policy

debates today. Although reasonable scholars and policymakers continue to debate the finer details of

how best to do so, there is “growing consensus”2 that more ought to be done, and that this should or must

transcend conventional modes of competition enforcement. In the United Kingdom, this is reflected in

ambitious plans to enact a sector-specific regulatory regime for the digital economy, to not only augment

*Law School, The London School of Economics and Political Science, London, UK

Corresponding Author:

Niamh Dunne, Law School, The London School of Economics and Political Science, London WC2A 2AE, UK.

Email: N.M.Dunne@lse.ac.uk

1082733ABXXXX10.1177/0003603X221082733The Antitrust BulletinDunne

research-article2022

1. Unlocking Digital Competition. Report of the Digital Competition Expert Panel (2019), https://assets.publishing.ser-

vice.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_

review_web.pdf, hereafter “Furman Report,” at 5.

2. As argued by the U.K. Government in its Response to the CMA’s Market Study into Online Platforms and Digital Advertising

(2020), https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/939008/govern-

ment-response-to-cma-study.pdf, hereafter “Advertising Study Response,” para. 5. The market study and the Government’s

actions in response are discussed further in Section III.

342 The Antitrust Bulletin 67(2)

but also exceed the existing competition law framework. Centered on the work of a Digital Markets Unit

(DMU) located within the U.K. competition agency, the Competition and Markets Authority (CMA), the

new regime is intended to “pro-actively shape the behavior of digital firms with significant and far-

reaching market power, by making clear how they are expected to behave.”3 Although the United

Kingdom is not unique in its plans to enact more demanding ex ante regulation of large digital firms, it

was a notable early advocate of such an approach, premised on an explicit regulatory commitment to

so-called pro-competition. This contribution explores the notion of pro-competition regulation, by locat-

ing the anticipated digital regime within the distinctive context of the United Kingdom’s competition

system and beyond, and by considering its potential to provide a more effective response to the per-

ceived competition problems of digital markets.

The DMU and pro-competition regime have their origins in a 2019 report prepared by an independent

Digital Competition Expert Panel (DCEP) for the U.K. Government, titled “Unlocking Digital

Competition,” but known colloquially as the Furman Report.4 The Furman Report pitched its prescrip-

tions as lying between two policy extremes: rejecting both the argument that effective competition is

impossible in digital sectors (which would support a regulatory approach of overreaching the market

mechanism through a category of utility-type regulation) and that existing levels of competition are

perfectly adequate (so that no further regulatory intervention would be required).5 The Furman Report’s

pro-competition proposals thus adopted the undergirding logic of conventional competition law—that it

is preferable to support and enhance competition dynamics, rather than to supplant them with top-down

regulation—but anticipated a rather more interventionist prospective approach. In doing so, it implicitly

endorsed concerns about the effectiveness of “more economic” approaches to competition law,6 while

nonetheless reflecting well-established criticism of more static varieties of regulation—the latter being

a particularly acute concern in the dynamic context of the digital economy. The object of this article is

to gain a more nuanced understanding of how the concept of pro-competition is reflected within this

regulatory balancing exercise, and what this means in practice for the digital economy.

The article is structured as follows. Section II sets the scene by examining the specific competition

issues that arise within the digital economy, through the lens of the analysis of the Furman Report.

Section III sketches the proposed structure and anticipated functions of the DMU, the finer details of

which remain unsettled at the time of writing. Section IV explores more directly the notion of pro-

competition regulation, assessing the proposals by comparison with both the current competition law

and sector-specific regulatory frameworks within the United Kingdom. Section V concludes briefly.

II. Setting the Scene: The Distinctiveness of Digital Markets

It is a truism of contemporary competition policy that a well-functioning digital economy has the

potential to deliver extraordinary benefits to consumers,7 but that such advantages are unlikely to be

3. Department for Business, Energy and Industrial Strategy (BEIS) and Department for Digital, Culture, Media and Sport

(DCMS), A New Pro-competition Regime for Digital Markets, CP 489 (July 2021), https://assets.publishing.service.gov.

uk/government/uploads/system/uploads/attachment_data/file/1003913/Digital_Competition_Consultation_v2.pdf, here-

after “Digital Markets Consultation,” para. 17.

4. The Digital Competition Expert Panel (DCEP) was chaired by Professor Jason Furman, hence the report’s better-known

title.

5. Furman Report, at 2.

6. A useful discussion of the so-called more economic approach to competition law is Anne C. Witt, The European Court of

Justice and the More Economic Approach to EU Competition Law—Is the Tide Turning? 64 Antitrust Bull. 172 (2019);

considering criticisms of this approach, see Pablo Ibáñez Colomo, Whatever Happened to the “More Economics-Based

Approach”? 11 J. Eur. CompEt. lAw prACt. 473 (2020).

7. Furman Report, paras. 1.13–1.23, cited the provision of valuable services to consumers (often at no monetary cost),

enhanced efficiency and growth within the U.K. and global economy, and greater innovation as benefits brought by the

digital economy.