The Dutch Liberal-Democrats (D66) launched a plan to restrain (mainly US) tech companies. In a 17-page document published earlier this month, the Lib Dems propose to cap market power by companies such as Facebook, Amazon, Apple, Netflix and Google (dubbed ‘FAANGS’) by adjusting current competition laws. The Parliament will discuss the plan with the Cabinet at the end of March, but not before the parliamentary fractions have had the chance to provide input on the Lib Dem initiative.
Decreasing support for digital platforms
The most striking fact is that D66 has always embraced tech firms as many of their voters find their way in the new digital economy. When even the Lib Dems are decreasing their support for the digital platforms, big tech could expect an increase of political pressure in the upcoming EP elections and probably in other elections as well.
The initiative by Mr. Kees Verhoeven MP consists of 14 measures to constrain the ‘Techgiants’. Notably, all the measures refer to revising current Dutch and European competition laws which, dating back to as early as the 1890 U.S. Sherman Antitrust Act. The 5 most eye-catching proposals are highlighted below:
1) Enable ex ante obligations in tech M&A’s
To prevent incorrect market definitions, competition regulation needs to adapt to the fact that platforms operate in multilateral markets;
2) Include privacy legislation in the scope of competition rules
D66 wants to oblige data-sharing to prevent tech platforms from gaining an unfair competitive advantage or raising the bar for market entrants;
3) The European Commission should investigate future market potentials when assessing acquisitions
This should prevent a continuous acquisition of start-ups by tech-platforms;
4) Introducing a new limit regarding the marketshare definition in the competition law
Article 102 VWEU should be adapted. D66 suggests the market shares of major tech companies should be below 50%;
5) Lowering turnover threshold for acquisitions
Based on the example of the Facebook takeover of Whatsapp. Following Germany and Austria, the initiator suggests to oblige companies to notify when a ‘target’ has substantial activities in NL;
For those who read carefully it is clear that the foundation for these issues was outlined in the earlier published D66/ALDE election program for the EP elections. The issue was discussed extensively between world and business leaders during last January’s World Economic Forum in Davos as well, where Big Tech was even compared to the Tobacco Industry. These developments could probably make it one of the main issues during the campaigns of the European Parliament elections in May.
Protectionism in the Netherlands
The initiative can be seen as part of a larger trend of protectionism in the Netherlands similar to the introduction of a ‘cool-down period’ for (hostile) takeover bids on Dutch companies. As the initiative is now primarily targeted at the US-tech companies, it would be even better if the plan would be linked to an ambition to stimulate Dutch (tech) companies to build up similar positions. When one decides to adjust competition law, it can never be adjusted based on developments in the tech-sector solely however. Therefore – and as the Cabinet has to formally react to the D66 plan – we assume that the competition directorate of the ministry of Economic Affairs will investigate the effects in a variety of business sectors.
As the Dutch government faces an unstable 2019 and Dutch competition law has not changed for a while, many of the measures proposed in the paper are expected to be input for the next Dutch coalition agreement or at least the next D66 election program. During a debate on competition in Dutch Parliament last week, a first introduction of Mr. Verhoeven’s plans was supported by both opposition and coalition. Parliament now has a month to comment on the Lib Dem initiative. After 21 March 21 the ministry of Economic Affairs will provide its view.