Edinburgh Roundtable on Digital Competition Regulation: Early Lessons and Institutional Limits

A diverse group of competition enforcers, scholars, and legal experts gathered by the International Center for Law & Economics (ICLE) for a recent roundtable event in Edinburgh, Scotland, explored competition in the digital realm and the challenges inherent in implementing ex-ante regulatory regimes like the European Union’s Digital Markets Act (DMA) in highly differentiated and rapidly evolving markets that demand deep sector-specific expertise.

Participants highlighted that the dynamics observed in traditional markets often do not translate neatly to two-sided digital platforms, where business-model innovation and quality competition frequently eclipse price as key differentiators. The conversation explored the complexities of regulating these evolving markets and the crucial role of international cooperation in fostering effective enforcement.

FIVE NOTABLE THEMES:

• Nuances of Digital Competition: The discussion emphasized that competition may operate differently in dynamic digital markets (or other platform markets, such as the newspaper industry) than it does in more static markets. Unlike conventional sectors focused on price competition, digital platforms see firms compete by adopting diverse business models (e.g., subscription vs. advertising-supported) and prioritizing quality and innovation to attract users and businesses on both sides of a two-sided platform. This race to differentiate may lead policymakers to mistake robust competition for separate markets and market power.
• Caution on Ex-Ante Regulation: Concerns were raised about the proliferation of DMA-like ex ante regulations for digital markets in a growing number of jurisdictions. Some participants suggested that such prescriptive regulations might be ill-suited for competitive digital markets. In addition, some noted the motivations for erecting such regimes are frequently protectionist. Participants notably discussed whether ex ante regulations may deter platforms’ investments in smaller jurisdictions and what the appropriate policy response should be.
• Resource Constraints in Developing Economies: Participants acknowledged the significant constraints that developing-market competition agencies face, as inadequate financial and human resources limit their enforcement capacity. This scarcity of resources underscores the need for tailored approaches and highlights the potential benefits of international collaboration to augment local expertise and capacity.
• Importance of Institutional Cooperation: A strong consensus emerged on the need for greater institutional cooperation among competition agencies globally, with participants citing the European Competition Network and the International Competition Network as valuable models. Enhanced collaboration could also lead to more consistent enforcement, prevent duplicative efforts, and address the inherently cross-border nature of many digital-market issues.
• Flexibility in Legal Frameworks for Cooperation: The discussion also highlighted that successful international cooperation does not necessarily require identical laws or regulations across jurisdictions, as agencies can collaborate effectively even with differing legal frameworks. Just as cooperation exists in other complex legal domains, competition authorities can find common ground for joint investigations and information sharing without complete harmonization of substantive law.