Enabling regulatory power by constraining it: Procedural Due Process, Legal Certainty, and the EU’s New Competition Tool proposal

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This paper assesses whether the European Commission was right to abandon its New Competition Tool (NCT) proposal in the Digital Services Act package. The NCT would have allowed the Commission to impose remedies on firms based on concerns about the structure of a market, without a prior finding of infringement of competition law. Specifically, this paper analyses whether the EU could provide the procedural due process and legal certainty necessary to balance (and enable) the tool’s substantive power. The UK’s experience with market investigation tools shows us what safeguards work and what can be achieved with them, while Mexico’s reveals how the tool can be undermined by legal uncertainty and political obstruction. Evaluating the EU and its institutions in light of these experiences, the paper argues that the EU was right not to adopt the NCT. It is ill-equipped to provide the necessary safeguards, and the tool would likely be hamstrung by legal uncertainty and political pressure. Moreover, if the EU decides in the future that it wants the benefits of a market investigation tool, it would need to create new institutions and processes as part of such a proposal.