Abstract
The significance of consumer protection in achieving sustainable development goals is a critical element in stimulating a more dynamic and competitive digital economy. Consumers are the major economic participants in the economy with an active role in the digital marketplace, the participation of responsible platforms' businesses, and the empowerment of responsible consumers contribute directly toward achieving sustainable development goals. Consumer protection and competition law are intertwined with both focusing on consumers as the key stakeholder. This chapter focuses on the interplay between consumer protection law and competition law in the e-commerce platforms economy, highlighting the trade-off for e-commerce in sustainable consumption and production, and how reconsidering competition law in e-commerce platforms could enhance sustainable consumption and production.
Top1. Introduction
The importance of consumer protection in achieving sustainable development goals (SDG) was highlighted in the 2017 publication of the United Nations Conference on Trade and Development (UNCTAD) entitled “Achieving the Sustainable Development Goals through Consumer Protection.” Many studies have demonstrated that consumer protection and competition law policies are interlinked with both focusing on consumers as the key stakeholder. For one, competition law focuses on fair competition in the market for the ultimate benefit of the consumers and likewise, consumer protection law focuses on the protection of consumer rights in a fair levelled-playing market. Further, competition law is centred on the protection of consumer welfare and competition process to prevent market failure while consumer protection law is centred on ensuring the protection of consumers against the effects of market failure due to inefficient competition (OECD, 2023). In other words, consumer protection law is the reaction to market failure that contributes to equity and social justice by enhancing bargaining equality and the interests of both the consumers and market players (OECD, 2008). Both competition and consumer protection laws and policies play critical roles in supporting sustainability initiatives. Hence, to achieve SDG, it is pertinent for two matters to transpire, i.e., the participation of responsible platforms businesses in the ecosystem of the digital economy and the empowerment of responsible consumers. For example, to attain sustainability advantages, businesses will have to innovate production, distribution, and sales processes. On the other hand, for sustainable choices to be preferred by consumers, clear and accurate information must be transmitted to them in a way that they can understand (UNCTAD, 2023). As vital economic participants with an active role in the surge of e-commerce and the acceleration of digital transformation in the digital economy, empowered customers will become the driving force to encourage business innovation, investment, and sustainable competition (UNCTAD, 2023).
Key Terms in this Chapter
Digital Platforms: Technically, it is a technological software which has a functionality that serves as a foundation upon which complementary participating entities in the e-commerce platforms market can be developed. Non-technically, it is an intermediary connecting two or more groups of users in the multi-faceted digital market.
Consumer Harm: Consumer harms include the economic harms caused to end users or buyers of e-commerce platforms categorised into primary economic harms caused by defective goods and services and unfair contract terms and secondary harms such as time spent seeking refund or redress.
E-Commerce: The production, distribution, marketing, sale or delivery of goods and services over any kind of computer network including the internet, extranet (a private platform that uses internet technology), TCP/IP, or electronic data interchange (EDI) network.
Circular Economy: The economic system/markets that give incentives to reusing products, rather than scrapping them and then extracting new resources, thus, all forms of waste are returned to the economy or used more efficiently.
Market Power: A tool that is integral to competition law enforcement to assess the market size of a firm. The traditional concept of market power focusing on price has been challenged by the complexity of the digital markets wherein platforms employ emerging business models to gain and maintain monopoly power, including via zero-priced goods and services subsidized by ad revenue generated in the markets. Focusing on behavioural futures markets as the main source of profits and market power, subsided consumption via negative mark-ups or zero prices can no longer be an indicator of low market power in a multi-sided digital market.
Network Effects: The situation where the value of a platform increases when the number of users utilizing the platform increases. As platforms offer better-personalised products and services, the platform becomes more attractive and the number of users on the platform increases. Simultaneously, the more users are on the platform, the higher the value of the platform is.
Ex Ante Regulation: A mechanism that seeks to prevent harmful conduct from occurring. This is only possible if the regulation is accessible to its users.
Economies of Scale: The situation where with better-quality data (widespread and more actual) collected, platforms can develop and offer better and improved products/services to consumers as compared to their competitors. Platforms collect data (large population datasets and high dimensional datasets from users in their infrastructure. In time, the data collected led to better insights into user behavioural biases and preferences which platforms can use to provide a richer experience for users and different categories of users including potential users with better personalised algorithms.
Intermediary Platforms: Technological software that brings together or facilitate transactions between third parties on the Internet by giving access to host, transmit and index content, products and services originated by third parties on the Internet-based services to third parties. This includes internet access and service providers, data processing and web hosting providers, internet search engines and portals, e-commerce intermediaries, internet payment systems and participative networking platforms.
Economies of Scope: The situation where due to the better-quality data (large population datasets and high dimensional datasets) collected, platforms can enter new markets and offer new and better-personalised products/services at lower costs as compared to their competitors. Platforms’ complex ecosystems have multiple sides and various categories of users. With the collection of high-quality user data from one side of the market (retail marketplace), dominant platforms can enter and expand into new or adjacent markets (fulfilment and logistics) and offer new and better-personalised products/services.