Dynamic Competition and Digital Platforms

Abstract

Submission to the Australian Treasury Consultation on a New Digital Competition Regime
The Australian Treasury’s proposed competition regime for digital platforms is flawed and should not proceed. The policy rationale for an ex ante regime is unjustified. The Competition and Consumer Act 2010 (CCA) already provides a comprehensive framework to address concerns such as market power, unfair contract terms, and self-preferencing. The Australian Competition and Consumer Commission (ACCC) has not demonstrated any compelling reason existing competition laws are insufficient to regulate digital platforms and has not sought to enforce them against digital platforms. The proposed regime is based on a misunderstanding of competition in the digital economy. Digital markets are characterised by dynamic competition, where innovation and technological change are the primary drivers of consumer welfare. The proposed ex ante regime, with its focus on static competition, may dampen innovation incentives and create barriers to technology diffusion, harming Australian consumers and businesses in the long run. Competition policy for digital platforms should be based on a dynamic competition approach that fosters innovation.The proposed regulatory mechanisms are problematic. The reliance on subordinate legislation for crucial policy decisions is inappropriate, reducing parliamentary oversight. This approach lacks transparency and accountability, and may lead to unintended consequences for the digital economy. We urge the Australian Treasury to reconsider its approach to regulating digital platforms. Instead of imposing an ex ante regime, the focus should be on enforcing existing competition laws and fostering a dynamic environment of innovation. This approach would better serve Australia’s long-term economic interests and the continued growth of the digital sector.

Keywords: Ex Ante Competition, Dynamic Competition Policy, Competition Policy, Digital Platform, Digital Platforms Competition Policy