A workshop under the label Blockchain Technology in International Trade and Shipping would actually have taken place in Edinburgh on 31.3.2020. I got invited to present a speech under the title of this paper. Everything should have been like this, but unfortunately and responsibly this event also had to be cancelled. Since I would like to share my thoughts for discussion, I will try to sort them here.
Very shortly: What’s this about?
The main aim is to show the differences between the three approaches. Some time ago I already wrote an article under the label “Antitrust by Design (PDF)“. In this I try to define a conceptual framework for an antitrust technology related compliance for algorithms, blockchain and platforms. The dogmatic and also technical basis for this article was an essay I wrote in close cooperation with David Saive and published in the NZKart in summer 2018. The topic was the prohibition of concerted practices under antitrust law and the related technical questions regarding the circumstances under which it is still legal to cooperate in the use of so-called Distributed Ledger Technologies (DLT).
More complex factual contexts are also the reason for this discussion. Indeed, it is often no longer sufficient to generally refer to the prohibitions under competition law. I had already summarized my idea of Antitrust by Design in an older blog post:
Antitrust by Design thus refers to the fundamental statement “anti-trust” and is intended to prevent anticompetitive behavior by companies that leads to trust that is no longer allowed. In practical terms this might possibly mean that measures have to be found prophylactically which in any case are illegal under competition law. In addition, the technical systems and software must be designed in such a way that they are already compliant at a proactive level and do not merely represent a reaction to coordination or information exchange that has already taken place.https://louven.legal/2019/06/21/was-kann-antitrust-by-design-sein/
What are the differences from a legal perspective?
There are conceptual, political and legal-dogmatic differences between the three scopes. Here I mean “Antitrust by Design” in the literal sense of “no trust”. What this means dogmatically, I will explain in more detail later. Competition by Design and Compliance by Design are in the nexus of the debate. I once tried a categorization on Twitter some time ago. Very shortened, before I explain it a bit more detailed:
- Competition by design: competition is shaped; state intervention in the competitive process; regulation or competition policy; can be applied by companies as mitigating measures under strict conditions if necessary
- Compliance by Design: Effectively designed standards to avoid legal infringements; “real” design thinking in a business environment
- Antitrust by Design: competition is not designed; implementation of technical conditions leading to competitive conditions in the sense of “no-trust
Supporters of an approach to competition by design focus primarily on parallels with Art. 25(2) 1 GDPR and the principle of Privacy by Design contained therein. Nevertheless, in my view there is a significant difference between Privacy by Design and Competition by Design, particularly with regard to this provision. The differences can already be described in very global terms with the different protection purpose methods and regulatory policy orientation. In competition law, fundamental freedoms apply, which only find their limits in the prohibition rules of antitrust law. The opposite applies to data protection law: there is a general prohibition with reservation of permission. Thus, in antitrust law, any competitive activity is allowed unless it is prohibited by way of exception; in data protection law, any processing of personal data is therefore prohibited unless it is allowed by way of exception. However, the object of protection under antitrust law is far more unspecific and difficult to define than that of data protection law. Some colleagues from the field of data protection law will certainly take a more differentiated view of this
from their own perspective. For the purpose of this article, however, it is enough to know that it is difficult to define competition positively, absolutely and finally. And if that is already impossible, how should competition be designed? Only in a few cases the state takes responsibility for this task, for example in regulated areas of welfare and in network industries. This means that, in general, competition cannot be shaped by the state under antitrust law.
Antitrust by Design would not initially adopt the protective object approach, but would instead focus on the prohibitions under antitrust law. I take this idea from my contributions on the use of so-called consensus algorithms, as they are increasingly used in newer technologies. These can facilitate coordination of any kind between companies by automation in a relatively simple way. However, if coordination becomes easier, anti-competitive concerted practices can be implemented more easily. As a consequence, it must be ensured that such algorithms are designed in such a way that they only allow applications within the applicable antitrust law. In the case of the prohibition of concerted practices under Art. 101 TFEU or Section 1 ARC, this would mean that cooperations are limited to what is permissible under competition law and collusive practices are prevented. The undertakings involved would continue to be exposed to the general risk of competitive uncertainty and lack of competitive confidence in the market behaviour of competitors. With regard to the control of abuse of market power, a company with market power could proactive impose necessary and appropriate self-restrictions on itself precisely in order to avoid accusations of abuse of its position and thus no longer be regarded as a “trust” restricting competition.
Finally, Compliance by Design is a general program that includes design thinking methods. In this respect, there may be considerable overlaps with Antitrust by Design. After all, the principle of effective compliance will also be measured by the extent to which violations of the law are prevented. Consequently, appropriate measures can be taken at a very early stage of the business design process. Much of this general principle is reflected in Antitrust by Design. However, “design” here is not only a method, but follows directly from the substantive law provisions.
What does this mean in practice?
Compliance by Design includes the recommendation to take effective measures to avoid antitrust infringements, which are designed with the respective company and its entire processes in mind. Here the company is at the centre of attention. In practice, this is usually completely correct and often sufficient. Well designed, effective compliance will already identify and eliminate many risks. What makes Antitrust by Design so special here? First of all, the substantive approach is to introduce the necessary compliance measures strictly according to the respective requirements of the prohibition regulations. The focus is therefore on the possible infringement and its prevention. In addition, this approach seeks not only to recognise the prohibition as merely something that is to avoid, but also to take it as a requirement for design processes. Consequently, the focus is on the design itself. Advice on how to avoid legal infringements should be taken into account from the very first idea for new processes within the company or together with competitors. Legally required and effective measures can vary from time to time. For example, a mere possibility of objection may be sufficient for one process, while there must be active masking mechanisms for the next. It may also be necessary to set up clean teams and stand-alone data rooms with limited access rights.
Although I have written above that competition by design is not possible in antitrust law, this applies in any case to state measures. This is because antitrust law presupposes that competition exists at all, or it is merely intended to maintain it. Competition is organised by companies and consumers by using their competitive freedoms. It is only in exceptional cases that a competition authority or a court can use compulsion within its legal powers and thus take an active role in shaping the situation. But even in this case there are limits. Thus, the state cannot derive any legal authority from the applicable antitrust law to extensively plan and design competition, even in the context of individual decisions. If an authority makes use of its prohibition powers, it can only take action to stop the competition infringements that have been identified, but not to control the desired course of competition. This may be different for companies. This is where voluntary Competition by Design offers a chance. Companies could thus deliberately take proactive measures not to restrict competition, but to enable it. Information exchange is a typical case, but it can also benefit all competitors without exception. On the other hand, companies with market power could take effective self-binding measures to open up new competitive opportunities for other companies. These may also be marketed. Another example is the granting of voluntary access rights to data held by a dominant company. Nevertheless, the creation of a new competitor in the form of an independent company can also be a solution.