On November 8, 2023, the Japan Fair Trade Commission (“JFTC”) held the G7 Joint Competition Enforcers and Policy Makers Summit (the “Summit”) in Tokyo.  The focus of the Summit was for the G7 competition authorities and policymakers (the “Authorities”) to discuss effective approaches to enforcing and promoting competition in digital markets.  At the Summit, the Authorities adopted the “Digital Competition Communiqué[1] (the “Communiqué”) and updated the “Compendium of approaches to improving competition in digital markets”[2] (the “Compendium”). 

Key takeaways from the Communiqué

The Communiqué recognizes that digital markets can raise particular competition concerns, as markets characterized by network effects, economies of scale, digital ecosystems, and accumulations of large amounts of data can be prone to increasing or creating barriers to entry, tipping, and dominance.[3] It sets out the Authorities’ initiatives and commitments to promote and protect competition in digital markets.

Expansion of institutional capabilities.[4]  The Communiqué sets out a commitment to continuously expand the Authorities’ capabilities and resources.  Concrete forms of such institutional expansion include the creation of new tech-focused task forces as well as undertaking horizon scanning, research, and market inquiries to better understand new technologies and the accompanying evolution of competition.

Focus on emerging technologies.  The Communiqué identifies a number of emerging technologies that may facilitate the rapid growth of a few market participants, thereby opening the door for potential harm through consolidation of market power.  These technologies include generative artificial intelligence (“AI”), blockchain, and the metaverse.  The Communiqué focuses specifically on generative AI: it describes the benefits and risks associated with generative AI, emphasizing that competition authorities are in a position to enforce competition laws in this space.  This spotlight on AI follows the G7’s commitment to develop guidance for AI policymaking, after establishing the Hiroshima AI Process in May 2023 and publishing a Code of Conduct for Organizations Developing Advanced AI Systems and Guiding Principles for Advanced AI Systems in October 2023.[5]

Internal and international cooperation.[6]  The Communiqué emphasizes the need for national and international cooperation among government departments, authorities, and regulators, as digital markets affect not only competition law, but a range of other regulatory and policy areas. 

Key takeaways from the Compendium

The Compendium describes the current digital markets developments, competition enforcement, and policy initiatives by different competition authorities.  It provides a cross-jurisdictional analysis that can identify commonalities and coherences in approaches, to work toward a consensus view on key challenges.[7]  The first edition of the Compendium was published in 2021, after a meeting of G7 leaders held by the UK Competition and Markets Authority (“CMA”).  As part of the G7’s goal to offer the Compendium as a tool for authorities and policymakers, it was updated in 2022, and now again in 2023.[8]

Challenges that digital markets present for competition enforcement and policy.  The Compendium describes the unique features of digital markets, which allow for rapid growth and bring about unprecedented challenges for competition authorities globally.[9] For example, the Compendium highlights the difficulty of applying traditional theories of harm to digital markets, as well as the challenges for market definition posed by zero price markets and other multi-sided markets.  In describing such challenges, the Compendium uses language that is reflected in some of the new legislative initiatives around the world.  For example, the Compendium describes powerful actors in digital markets as ‘gateways’ (similar to ‘gatekeepers’ in the EU Digital Markets Act) or ‘essential trading partners’ (similar to ‘critical trading partners’ in the U.S. American Innovation and Choice Online Act).[10]  This reflects the G7’s goal to achieve commonality and create coherence in the Authorities’ approach to these issues.[11]

Areas of focus based on the Authorities’ experience with competition enforcement in digital markets.  The Compendium identifies four key areas requiring special attention  in digital markets: (i) digital advertising; (ii) companies’ use, processing, and sharing of data and algorithms; (iii) online marketplaces and app stores; and (iv) mergers and (killer) acquisitions.[12]  As these areas can require new resources, competition authorities have taken steps to strengthen their institutional capacity by establishing new units and onboarding experts who can assist in handling complex digital cases.[13]

Next steps

The Authorities emphasize the need to stay alert on whether the competition instruments currently at their disposal remain up to the task of protecting competition in the digital sector, or whether new tools are necessary to address new challenges.  The Communiqué sets out a commitment to continuously share updates on enforcement approaches to promote competition in digital markets, with the goal of revisiting the topic in the 2024 digital competition summit.[14]  While the G7s commitment to global cooperation may lead to more legal certainty and facilitate competition law compliance in the global digital market space, it remains to be seen whether leading competition regulators accept global competition law reference frameworks, or whether more local industrial policies and enforcement priorities may override the interest of global enforcement alignment.

[1]             The Digital Competition Communiqué is accessible here.

[2]             The Compendium of approaches to improving competition in digital markets is accessible here.

[3]             Communiqué, p. 1.

[4]             Ibid., p. 2.

[5]             For an overview of the Hiroshima AI Process, the Guiding Principles, and the Code of Conduct, see our alert memorandum “G7 Leaders Publish AI Code of Conduct: A Common Thread in the Patchwork of Emerging AI Regulations Globally?”, November 1, 2023.

[6]             Communiqué, p. 4.

[7]             Compendium, pp. 2-3.

[8]             Ibid., p. 2.

[9]             Ibid., pp. 7-9.

[10]            Ibid., p. 9.

[11]            Ibid., pp. 9-10.

[12]            Ibid., pp. 12-25.

[13]            Ibid., p. 27.

[14]            Communiqué, p. 5.