March 2022
Aaron Chen and Sally Yang
In view of the ever-changing competition issues of the digital economy, the Taiwan Fair Trade Commission (hereinafter, the “TFTC”) has long assigned a task force to prepare for the digital economy issue, released the initial draft of the White Paper on Competition Policy in the Digital Economy (hereinafter, the “Initial Draft White Paper”) on March 2, 2022, and posted the same on the TFTC website to solicit public opinions. Any opinion on the content of the Initial Draft White Paper can be submitted to the TFTC by March 31, 2022.
Competition issues concerning the digital economy
The competition issues concerning the digital economy that are explored in the Initial Draft White Paper are broad and include relevant market definition and the measurement of market power, the abusive conduct of dominant market position, merger, algorithms, concerted action, false online advertising, and other aspects. In particular, there are several specific issues related to the abusive conduct of dominant market position by large digital platforms, including:
- Self-preferencing and search bias: the conduct of a large platform in using the platform ecosystem it has established to favor its own goods or services (e.g. when a search engine is used, its own products and services appear prominently in the search results) so that competitors cannot get the same treatment.
- Most-favored-nation clauses: the conduct of a platform operator in requiring its suppliers not to conduct any sales in other platforms or channels with lower prices or more favorable terms of transaction.
- Data privacy: disputes over infringement of privacy rights which may arise when a digital platform does not have the consent of the user or when the two parties have different cognition on the scope of use of data or personal information.
- The issue of digital advertising revenue sharing and news charges: the issue of whether a digital platform should share revenues with news media when it attracts the attention of users and obtains network traffic through contents produced by news media.
Proposed direction of adjustment for the current laws and regulations
It is also noteworthy that the TFTC proposed a few recommendations concerning the direction of adjustment to the current laws and regulations in the conclusions of the Initial Draft White Paper as follows:
- For an enterprise with less than 15% market share that engages in conduct that restricts competition, it is proposed that Article 25 of the Fair Trade Act be used to regulate such conduct, and that the existence of a “relative advantageous position” should no longer be used as a consideration factor to determine whether it constitutes the “likelihood of restraining competition” under Article 20 of the Fair Trade Act.
- The regulation of resale price maintenance in Article 19 of the current Fair Trade Act should be reviewed, and the TFTC should include the “market power” of an enterprise as an assessing element for cases involving resale price maintenances.
- In order to regulate the circumstances where a platform operator abuses its market power by requiring its suppliers to enter into the most-favored-nation clauses and causing the consistency of product prices, when the Fair Trade Act is amended in the future, it should be considered that vertical collusion be included in the regulation of concerted action under Article 15 of the Fair Trade Act.
The TFTC emphasized that the content of the white paper only reflects the current position of the TFTC, and did not rule out future adjustments in response to the development of digital economy and industry changes.