Applicability Of Morocco's Competition Act To Predation And Abuse Of Dominant Positions By Online Platforms
Author: LawSphereX
Category: Technology, Cyber & Privacy
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APPLICABILITY OF MOROCCO'S COMPETITION ACT TO
PREDATION AND ABUSE OF DOMINANT POSITIONS BY
ONLINE PLATFORMS
Khalid Abouelouafa, Hafid Barka, EM2TI, National Institute of Posts and Telecommunications Rabat, Morocco
ABSTRACT
This paper critically reviews the regulatory status of illegal and harmful content on online platforms in Morocco, considering local legal framework and international practices. It examines US and E. U approaches to control illegal and harmful content on online platforms and suggest an institutional approach for the case of Morocco. The finding of this study shows that evolvement illegal and harmful content on platforms could be controlled by coercive, normative, and mimetic mechanisms based on legal instruments, normative endeavor, and mimetic attempt to copy successful international best practices. This paper aims to study the relevance of applicability of Moroccan competition act to the abuse of dominant position by online platforms.
We undertook documentary research to analyze relevant disposition of the Moroccan competition act and associated decrees that we compared to European Unions’ regulation. The finding of this study shows that online platform falls under Morocco competition act provision on abuse of dominant position but my not fall under dumping provision. Therefore, some provision of this low, that we highlighted in this study, should be clarified by additional application decree. Keywords: online platform, competition law, Morocco.
Introduction Over the past two decades, online platforms such as Google, Facebook, and TikTok have become increasingly prevalent in daily life due to their innovative technological frameworks. These platforms have rapidly gained indispensable status, with a growing number of users relying on their services. By 2024, Morocco had 30 million social media users, principally on Facebook and Instagram, 80% of them connecting to these platforms daily with during an average time of 2. 5 hours1. Online platforms are generally characterized as two-sided or multi-sided markets2. These markets are defined by the interdependence between users on the different sides of the market. Accordingly, the definition of the relevant market, typically the initial step in competition analysis, faces challenges arising from the multi-sided nature of platform markets.
The market power of digital platforms stems from their control over vast repositories of personal data, proprietary algorithms, and their influence on the dissemination of information, media, and content. Numerous studies have highlighted the economic and social implications of this dominance, proposing regulatory mechanisms to address market failures and protect consumers. These platforms wield power not only in economic markets but also in shaping political, cultural, and social opinions. Additionally, they have become fertile grounds for the proliferation of illegal and harmful content. Defining Online Platforms The term "online platform" lacks a universally accepted definition, as acknowledged by the European Parliament in its report on the digital single market.
The report highlights the challenges of formulating a legally relevant and timeless definition due to the diversity of platforms and their rapidly evolving digital environments. Scholars such as (Zingales and Srnicek)3 provide varying perspectives on platform characterization. Srnicek (2017) views digital platforms as economic models that intermediate between different user groups, enabling
1 Statista https://www.statista.com/topics/10567/social-media-in-morocco/#topicOverview
2 Rochet, J. C., & Tirole, J. (2003). Platform competition in two-sided markets. Journal of the European Economic Association, 1(4), 990–1029. https://doi.org/10.1162/154247603322493212 3 Srnicek, The challenges of platform capitalism: Understanding the logic of a new business model. DOI: 10.1111/newe.12023
data collection and processing to gain economic and political power. Similarly, Feld4 (2019) describes them as multi-sided services accessible via the internet, allowing users to assume multiple roles, such as content creators and consumers. Typologies of Online Platforms Dittrich5 (2018) categorizes platforms based on services offered, markets served, and economic models. Notable types include:
1. Marketplaces: Platforms like Amazon and eBay, which facilitate transactions between
suppliers and customers, earning revenue through transaction fees.
2. Sharing Economy Platforms: Platforms such as Uber and Airbnb, which connect
individuals wishing to share assets for a fee.
3. Social Media Platforms: Platforms like Facebook and LinkedIn, which derive revenue
from advertising.
4. Search Platforms: Platforms like Google and TripAdvisor, generating income
primarily through advertising.
5. News and Media Platforms: Platforms such as Google News and Facebook, focused
on content dissemination and advertising.
6. Communication Platforms: Platforms like WhatsApp and Telegram, which rely on
user data collection for their economic model. These diverse categories present unique challenges in terms of competition, consumer protection, and regulation, necessitating differentiated analytical and regulatory approaches. Economic and Social Impacts of Dominant Platforms in Morocco Platforms like Google and Facebook dominate their respective markets due to network effects,
4 Fled, The Case for the Digital Platform Act: Market Structure and Regulation of Digital Platforms,
https://www.publicknowledge.org/assets/uploads/documents/Case_for_the_Digital_Platform_Act_Harold_Feld_ 2019.pdf%0A%0A 5 Dittrich, Online platforms and how to regulate them: an EU overview, https://www.bertelsmannstiftung.de/fileadmin/files/user_upload/EZ_JDI_OnlinePlatforms_Dittrich_2018_ENG.pdf
economies of scale, and minimal marginal costs. For instance, Google holds over 88% of the global search engine market, while Facebook captures 60% of social media usage in the U. S. This dominance raises barriers to entry for competitors and enables these platforms to leverage their position across related markets. Additionally, their collection of user data often under opaque terms raises concerns about privacy, consumer autonomy, and data monetization. While the extraterritorial application of competition laws is theoretically possible, its practical implementation remains challenging. At the international level, regulatory efforts are underway in the European Union and the United States. However, to our knowledge, there is a significant lack of localized studies addressing the implications of platform dominance for Morocco.
Key questions include the extent of market power exercised by foreign platforms in Morocco and their impact on competition. Online platforms are two-sided or multi-sided markets. A key feature of two-sided markets is the network effect, which creates a relationship of interdependence between the two sides. Specifically, an increase in the number of users on one side of the market affects the value of the service provided on the other side. (Filistrucchi6 et al. ) argue that users on both sides of the market are subject to externalities (factors not accounted for in the individual decision-making processes of each category of users). For instance, a consumer purchasing a newspaper does not consider that their purchase makes the newspaper more attractive to advertisers.
Similarly, the consumer is indifferent to the price paid by advertisers to publish their advertisements in the newspaper. Another primary tool used in defining relevant markets is the SSNIP test (Small but Significant and Non-Transitory Increase in Price). This test evaluates the impact of a small but significant and non-transitory price increase on buyers’ behavior regarding the substitutability of products or services. However, the application of this test is challenging in the context of online platform services, which are often priced at zero or at extremely low levels on at least one side of the market. Rochet and (Tirole)7 note that the price structure that optimizes platform usage is often
6 Filistrucchi, L., Geradin, D., & van Damme, E. E. C. (2012). Identifying Two-Sided Markets. SSRN
Electronic Journal. https://doi.org/10.2139/ssrn.2008661. 7 Rochet, J.C., and Tirole, J. (2004). Defining Two-Sided Markets; Rochet, J.C. and Tirole, J. (2006). Two Sided Markets: A Progress Report. RAND Journal of Economics, 37(3).
asymmetric. For example, users of an online search engine pay nothing, whereas advertisers are charged for placing their content on the platform. Additionally, beyond the zero-cost pricing observed on many online platforms, network externalities often result in user lock-in, making it difficult for users to switch between competing platforms. Furthermore, digital platforms collect substantial amounts of user data. The impact of access to such data on markets constitutes another key feature of online platforms that must be considered in market analysis. Finally, the concept of the geographic market may need to be revisited, considering the cross-border nature of online platforms. The European regulatory framework for online platforms represents one of the most comprehensive and evolving legal structures globally.
It addresses the complexities of digital markets, balancing innovation promotion with fair competition and consumer protection. Further legislative developments, such as the DMA and DSA, signify the EU’s commitment to ensuring a robust and equitable digital ecosystem. To what extent Moroccan competition low can address platform market power? Moroccan competition Law8 applies to “all natural or legal persons, whether or not they have their headquarters or establishments in Morocco, insofar as their operations or conduct are aimed at or may have an effect on competition within the Moroccan market or a substantial part thereof.
” Moroccan competition Act address concerted actions, agreements, arrangements, or coalitions when « they have the object or may have the effect of preventing, restricting, or distorting competition in a market, all, whether explicit or implicit, in any form and for any reason whatsoever”. It also addresses the abuse of dominant Position and economic dependency. The abusive exploitation by an enterprise or a group of enterprises of a dominant position in the domestic market or a situation of economic dependency in which a client or supplier has no equivalent alternative are prohibited by the competition act.
8 Competition law 104-12
https://adala.justice.gov.ma/api/uploads/2024/03/01/Libert%C3%A9%20des%20prix%20et%20de%20la%20co ncurrence-1709283060147.pdf
Similarly, are prohibited, offers or practices involving consumer sale prices that are abusively low in relation to production, processing, and marketing costs, where such offers or practices have the object or may have the effect of ultimately eliminating an enterprise or one of its products from a market or preventing access to a market. Nevertheless, these provisions shall not apply if the authors of concerted practices and abuse of dominant position can demonstrate that they contribute to economic and/or technical progress, including the creation or maintenance of jobs, and provide a fair share of the resulting benefits to users, without enabling the involved enterprises to harm competition for a substantial portion of the goods, products, or services concerned.
Application decree, of the competition act9 clarify some administrative aspects of the competition act enforcement but does not elucidate the modalities to be adopted for market definition neither for market dominance assessment. How the E. U regulation addresses abuse of dominant position by online platform Since the Treaty on the Functioning of the European Union10 (TFEU) came into force on November 1, 1993, it has established, among other things, the foundational principles of EU competition law, particularly regarding concerted practices and abusive exclusionary practices. These principles remain applicable to both goods and services markets, including online service markets, such as online platforms.
However, technological evolution has significantly transformed market dynamics, particularly in terms of access to audiovisual content, online services, and digital services increasingly offered via online platforms. Consequently, the European regulatory framework has been progressively enriched over the past decade, mainly with DSM11, DMA12 and DSA13
9 Decree n° 2-14-652 of low 14.12 (1st December 2014)
https://adala. justice. gov. ma/api/uploads/2024/10/24/d%C3%A9cret%20pris%20pour%20l'application%20de%2 0la%20loi%20n%20104- 12%20sur%20la%20libert%C3%A9%20des%20prix%20et%20de%20la%20concurence-1729769037248. pdf 10 Consolidated version of the treaty on the functioning of the european union https://eurlex. europa. eu/LexUriServ/LexUriServ. do? uri=CELEX:12012E/TXT:en:PDF 11 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC 12 Regulation (EU) 2022/1925 on contestable and fair markets in the digital sector (Digital Markets Act) https://eur-lex. europa. eu/EN/legal-content/summary/digital-markets-act.
html 13 Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) https://eurlex. europa. eu/legal-content/EN/TXT/? uri=celex%3A32022R2065
regulation. In this section we provide a synthesis of the European legislative and regulatory framework through the analysis of regulations, directives, and judicial practices stemming from the European Court of Justice’s (ECJ) rulings. The principles of E. U competition law are anchored in Articles 101 and 102 of the TFEU14. These articles articulate the general prohibitions against anticompetitive practices. Their application has been detailed through ECJ rulings and communications from the European Commission. Article 102 of the TFEU prohibits practices constituting abuse of a dominant market position. Such practices can be carried out by one or more enterprises, constituting either individual or collective dominance. Relevant market definition15 delineates the competitive boundaries between enterprises in terms of the products or services offered and their geographic distribution.
It serves as a prerequisite for evaluating market shares and determining dominance. Market dominance is defined by a EJC jurisprudence16 “as a position of economic strength enabling an enterprise to act independently of competitors, customers, and ultimately consumers. Dominance is linked to significant market power, assessed primarily through competitive constraints, including existing competitors, potential competitors, and buyer power”. The ECJ presumes dominance when market share exceeds 50%. However, market share alone may not suffice to establish dominance, particularly in markets with low entry barriers, auctionbased markets, or those characterized by successful innovation. Dominance itself is not prohibited; only its abuse is.
14 TFEU treaty
15 Communication from the Commission – Commission Notice on the definition of the relevant market for the purposes of Union competition law https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AC_202401645
16 Judgment of the Court of 14 February 1978.
United Brands Company and United Brands Continentaal BV v Commission of the European Communities. Chiquita Bananas. Case 27/76 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A61976CJ0027
Discussion The European regulatory framework for online platforms represents one of the most comprehensive and evolving legal structures globally. It addresses the complexities of digital markets, balancing innovation promotion with fair competition and consumer protection. Further legislative developments, such as the DMA and DSA, signify the EU’s commitment to ensuring a robust and equitable digital ecosystem. We chose to compare the E. U regulatory framework to the Moroccan one because of the richness of the E. U regulation and because of the economic and geographical proximity to Morocco. Indeed, Moroccan competition act is widely inspired by the European legal disposition.
We show that competition law in Morocco address the questions of abuse of dominant position and concertation, but does not specify main notions like market definition, relevant market, market power and that it applies to companies, even when based outside Morocco, since they have effect of preventing, restricting, or distorting competition in a market in Morocco. Abusively low prices are prohibited by the competition act. This my raise an issue for digital platforms that sell a product or service to the final user at no cost on the first side market, but they are remunerated by businesses for advertising services at the second side market.
Nevertheless, online platforms may probably benefit from an exemption provided for by the competition act if such online platforms can demonstrate that they contribute to economic and/or technical progress, including the creation or maintenance of jobs, and provide a fair share of the resulting benefits to users » which seems to be a defensible position considering the economic model of online platform. lake of jurisprudence defining relevant market, market power and dominance criteria unlike in the E. U where ECJ provided necessary definitions and criteria by multiple ruling. Conclusion Online platform falls under Morocco competition act provision on abuse of dominant position and on concertation but my not fall under the disposition concerning excessively low prices dumping provision.
We suggest amending the Moroccan competition act to clarify relevant market definition and dominance criteria. EJC jurisprudence and case law might be used for this purpose. The E.U regulatory frameworks has been substantially enriched by various regulation during the last decade. Future research could address the question of adapting Moroccan regulatory framework per consequent.