Abuse of Relative Dominance by Digital Platforms: A Law and Economics Perspective

In the age of AI, digital platforms are likely to hold significant market power, giving them a superior bargaining position over their business partners and enabling them to impose unfair trading terms. However, proving that a platform holds a dominant position under Art. 102 of the Treaty on the Functioning of the European Union (TFEU) is challenging. The multi-sided nature of platforms complicates the definition of the relevant market, and their innovative digital business models makes it difficult to assess lasting market power. This could lead to false negatives, resulting in under-enforcement from an economic perspective. To address this market reality, the Digital Markets Act (DMA) has been adopted as an ex ante instrument to, inter alia, complement competition law enforcement. However, since the DMA’s quantitative thresholds remain high, numerous platforms with superior market power vis-à-vis their trading partners may not qualify as ‘gatekeepers’, leaving the risk of under-enforcement unresolved. This article explores the desirability of introducing a prohibition on ‘abuse of relative dominance’, drawing on this long-standing concept in some EU Member States. Such a measure could help tackle the concerns arising from the superior bargaining position of digital platforms.