Abstract/Summary

Large free high technology (FHT) companies such as search engines can bring immense benefit to consumers. Only the largest FHT company is likely to be able to maximize innovation. Beyond this, any further innovation can only be brought by completely new and disruptive technologies that replace the product of the incumbent. However, whilst consumer welfare is purportedly the main objective of EU competition law, it presumes that more competition creates increased consumer benefit. This thesis explores this conflict by analysing how it manifests in a limited and uncertain approach on the part of the EU Commission. It then proposes a test that resolves the problems of the approach. First, the thesis explores the tension between FHT economics and the presumptions of competition law. Next, it evaluates the EU Commission’s approach to analysing FHT markets against literature and its conflicting approach in other technology cases. We conclude that the EU Commission’s proclamation that FHT markets are competitive is based on a limited approach that does not give due consideration to factors such as network effects. Subsequently, based on the above evaluation, the thesis hypothesizes that the EU Commission’s true belief is that dominant FHT companies are good for consumers even with reduced competition. However, the EU Commission can justify dominant company expansion only by showing that there is enough competition in the market; this is required by the analytical framework of competition law investigations. The EU Commission therefore ends up stating rationale based on limited reasoning. Finally, a test based on Magill and innovation markets, which focuses analysis on competing innovation projects in the market instead of the current relevant market, is proposed. This way the EU Commission bypasses arguments regarding network effects and simply focuses on making sure that there is a sufficient level of competition in the innovation market which ensures future innovation.