Does digitalisation affect fair competition in the marine industry?


What is competition law?
Competition law is the field of law that regulates protection of the structure of the market as a means to protect competition as such. Certain types of anti-competitive behaviour are prohibited. It aims at promoting healthy competition between businesses operating in a market and this should enhance consumer welfare. One example of anti-competitive behaviour can be an abuse of a dominant position, such as ‘predatory pricing’. This could lead to monopolization of a market when there remains only one producer offering a product. There can be other producers but because they are so small, they are not effectively competing.

Who benefits from fair competition?
Fair competition in general means that all the players operate on a level playing field and are obliged and enabled to compete on price, quality, innovation and customer service. It serves end-user welfare to regulate competitive behaviour of companies instead of letting competition only be ruled by supply and demand and the market. This further helps to ensure cheaper prices, promote innovation and provide the end-user with more options. Lastly, it can protect smaller companies from unfair trade practices.

Can competition be perfect?
To have perfect competition would require a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent, and the market price of a product is beyond the control of individual buyers and sellers, while no collusion takes place. However, perfect competition is a utopia. Because perfect competition does not exist, economists and the Court of Justice of the European Union defined a healthy competition as being a ‘’workable’’ competition. This means that even if a degree of monopolistic power exists, there is enough competition that protects consumers from being abused by the existing monopoly.

In reality, a big issue for independent companies are misconceptions, such as the one that high-quality spare parts can only be bought from the original manufacturer, although the manufacturer sources them from independent suppliers. The marine industry and regulators should aim at enabling fair competition. Independent operators play a crucial role in the market structure and form a source of innovation. High quality, variety, and innovation are drivers of progress towards a future where the marine industry will be at the forefront of transportation.

The threats of digitalisation
Unfortunately, with digitalisation competition in the marine industry becomes increasingly distorted. With the rapidly increasing importance of the Internet of Things (IoT), OEMs have the opportunity to become gatekeepers of the aftermarket. Through digital technology, they can make access to an engine difficult or impossible. Examples include secret passwords for engine software, restricted access to machine-generated data, no interoperability, etc. This way shipowners can get locked in.

With digital foreclosure, independent offers can become impossible on the marine diesel engine aftermarkets, which means that independent market players will disappear, badly affecting shipowners as the end-user.

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