Insights from TSE Alumnus Thibaud Vergé on Competition and Regulation

'Economists can help regulators to nurture competition'

TSE alumnus Thibaud Vergé has worked at prestigious universities in the UK, Paris, Switzerland, and Norway. He has also chaired the Association of Competition Economics and been an adviser to DG Competition since 2020. Thibaud was appointed Vice-President of the French Competition Authority (Autorité de la concurrence) in December 2022, having previously served as Chief Economist between 2010 and 2013. He talks to us about the role and ambitions of the national regulator, and the benefits of collaboration with our researchers.

In a context of globalized markets and multinational tech giants, how can national competition authorities stay relevant?

Although most of the abuses of dominance by the major tech platforms concern the whole of the European market, national competition authorities – and in particular the French Competition Authority (FCA) – have intervened in cases where practices may have had a more local dimension.

In July 2021, the FCA fined Google €500 million for not respecting the injunctions imposed in 2020 concerning the remuneration of publishers and news agencies for the use of their protected content. Furthermore, although no interim measures were imposed on Apple for its ATT (App Tracking Transparency) privacy changes, which some advertisers and app makers have decried as anti-competitive, the FCA decided to continue its investigation on the merits.

The FCA also collaborates with the European Commission and other NCAs within the European Competition Network on these matters. In France, it will be one of the agencies (with DGCCRF) able to investigate competition issues related to the implementation of the Digital Markets Act.

How are French and European regulators responding to other competition concerns?

In addition to these investigations aimed at preventing and sanctioning anti-competitive practices by the major platforms, the FCA will soon be releasing the conclusions of its sector inquiry into the cloud computing market. 

In this period of high inflation, the FCA continues to ensure the proper functioning of competitive markets, particularly in the energy sector, public procurement, or the distribution of consumer goods. Several important decisions are expected this year concerning these markets. The competitive situation is often in the overseas territories as they are small economies: a quarter of the FCA’s antitrust decisions in 2022 were focused on these regions! 

The FCA will continue its commitment to climate change and green transition. First, by sanctioning anti-competitive practices aimed at limiting innovation or new products in this area. But it will also consider the extent to which horizontal agreements promoting ecological transition could be exempted if they generate significant efficiency gains, in line with recent work by the European Commission and some national competition agencies.

Recently, the Autorité launched two sectoral inquiries to study competition in mobility markets, with a particular focus on land transport for passengers and recharging stations for electric vehicles.

How can economists help to tackle these challenges? 

Economists can help regulators by suggesting the types of behavior (or contractual arrangements) that may generate anti-competitive effects. In the recent past, this has been the case for behavior banned by competition authorities such as price-parity clauses imposed by intermediation platforms or self-preferencing abuses by dominant platforms. 

But economists should primarily aim to identify the conditions under which such practices are more likely to be anti-competitive, especially as some may not always be harmful. In this case, economists will help agencies to identify the kind of information or evidence required to test the robustness of the theories of harm that they intend to develop. In that sense, economists should not stop at proposing “possibility theorems”. 

Economists should not hesitate to contribute to public consultations by competition agencies in relation to either proposed regulatory changes or current sector inquiries. 

What have your experiences – working in academia, consulting and for regulators – taught you about the way these sectors interact? In particular, what is the dynamic of the relationship between the FCA and TSE? 

Economic consultants and agencies’ economists bring their practical knowledge about cases, industries, and how the “tools” produced by academic economists can be used in cases. Academic economists bring their wider knowledge of the literature and can thus help to build robust theories of harm. 

In the past, the relationship between the FCA and TSE has been very active. When I was Chief Economist, 13 years ago, we started a fruitful collaboration with TSE, which offers economic training to all our case handlers. The first two sessions took place in Toulouse (with about 80 case handlers attending), then in Paris on the third occasion. These are opportunities to learn about the economics of specific issues, such as multi-sided markets, and to discuss how theoretical insights could be used in cases. TSE’s Patrick Rey participated in brainstorming sessions with case handlers on issues related to active cases and we hope to reinforce such interactions in the future. 

FCA staff are regularly involved with TSE’s competition policy workshops: our current president Benoît Coeuré will most likely come very soon to TSE. Pascale Déchamps (Head of an antitrust unit and TSE alumna) is also teaching in some of the Executive Education modules. The FCA regularly welcomes interns from TSE and has also hired several TSE alumni in the chief economist’s team and the merger unit. 

You completed your PhD at TSE. What do you think of this research two decades later?

My research focused primarily on the competitive effects of vertical restraints, especially price restraints. I have continued working on this topic, collaborating in particular with Patrick Rey on several papers. I hope that my work with Patrick (on the impact of vertical restraints in markets with interlocking relationships) or with Bjørn Olav Johansen from the University of Bergen (on the effect of platform price-parity clauses) has had at least a minimal influence on Europe’s guidelines on the application of antitrust rules to vertical agreements that were revised in 2010 and more recently in 2022. 

Do you have any advice for TSE graduates?

Believe in your abilities and try to work on topics that interest you but can also be of practical interest. If you continue as an academic economist, find connections with the “real world” and see how your research can be used by practitioners. If you work for a public institution or private practice (economic consultancies), keep in touch with the academic world and don’t hesitate to read what academics have to say about the topic you are working on!