Error Costs, Platform Regulation, and Democracy

Abstract

Competition law has long favoured an error-cost framework which advocates for non-intervention under the assumption that market power self-corrects but judicial errors do not. The prevalence of monopolies in today’s digital markets - and competition law’s inability to tackle them - has shown this framework to be misguided. In this context, the New Platform Regulations (NPRs) were crafted to foster fair and contestable digital markets. While these instruments differ across jurisdictions, they share a common feature: a precautionary error-cost framework which permits intervention to protect competition before harm occurs. This article examines how the NPRs’ precautionary approach to error costs allows the competition regime to pursue the value of democracy, alongside others. Building on historical and theoretical accounts of the competition-democracy nexus, it identifies three mechanisms through which a precautionary conception of error costs, as adopted by the NPRs, can pursue democratic ideals: ensuring that powerful firms do not exist beyond regulatory control, shielding consumers from domination by platform monopolies through contestable markets that protect consumer choice, and reclaiming the role of ‘architecting’ markets from private actors as to reflect the public interest.

Keywords: antitrust, competition law, digital markets act, new platform regulations, democracy, DMCC Act, regulation, Big Tech