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1. The Impact of Increased Mass Litigation in Europe

Author:
Fredrik Erixon, Oscar Guinea, Dyuti Pandya, Vanika Sharma, Elena Sisto, Oscar du Roy, Renata Zilli, and Philipp Lamprecht
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The purpose of this study is to better understand the growth of mass litigation in the European Union (EU) and its economic consequences. European authorities have long encouraged consumers to seek redress through private litigation in European competition law and, more recently, they have shifted their focus towards collective actions in a broad range of areas, including data privacy and product liability. Facilitating access to justice through collective actions is not a cost-free option. Unfortunately, there is a lack of economic analysis on the consequences of an increase in collective action cases in the EU. It is crucial to understand the economic consequences of a “mixed regime” – that is, a regime based on both ex-ante public enforcement through regulation and ex-post enforcement through private litigation. The combination of these two enforcement models raises questions about how the system is intended to work together and what the consequences might be for the economy. This study examines the economic implications of these developments in the EU.
Topic:
Law, European Union, Regulation, Regional Economy, and Litigation
Political Geography:
Europe

2. Regulating the Working Conditions of Platform Work: What Can We Learn from EU Member States?

Author:
Oscar Guinea, Elena Sisto, and Oscar du Roy
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Policymakers in Estonia, France, Greece, and Spain share the common objective of enhancing the working conditions of platform workers. However, variations in their labour markets, legal frameworks, and political landscapes have led to four distinct approaches in achieving this goal. Predominantly, the Spanish regulation has been geared towards attempting to reclassify platform workers from self-employed to employees. In contrast, the regulatory strategies in France and Greece have focused on retaining the sector within the realm of independent work, while simultaneously improving the working conditions of platform workers. Estonia adopted a broader perspective, emphasising the enhancement of working conditions for all freelancers, not exclusively those categorised as platform workers. This Policy Brief offers a comprehensive evaluation and comparison of the regulatory frameworks governing platform work in four European countries. The comparative analysis draws upon research conducted by the OECD and the World Economic Forum (WEF) on the principles of good regulation. Adapting this research to the context of digital platforms, three key principles for assessing the regulation of working conditions on these platforms were identified: (i) the consistency with the policy objective of improving the working conditions of platform workers; (ii) the feasibility of implementing the regulatory requirements; (iii) the presence of regulatory dialogue and appeal mechanisms. The evaluation of the four countries’ regulations against the three outlined principles offers valuable insights into the regulation of platform work. In Spain, the primary aim of the regulation regarding platform workers was not solely the improvement of working conditions but predominantly the reclassification of platform workers from self-employed to employees. This distinction is crucial, as platform workers highly value the benefits of self-employment, such as access to work, income opportunities, flexibility, and autonomy. Evidence presented in this study suggests that a majority of Spanish delivery workers preferred to maintain their self-employed status, while only about one-third expressed a desire to be classified as employees. Moreover, the Spanish regulation is characterised by a broad formulation of the conditions defining employment for digital delivery workers. This lack of specificity has led to an uncertain application of the regulation, with digital platforms adopting diverse strategies to achieve compliance. Ultimately, the Spanish regulatory framework has been marred by a profound disregard for the interests of, and a notable lack of communication with, those directly impacted by the regulation: the digital platforms and the platform workers. Greece has demonstrated that it is possible to enhance working conditions for platform workers while preserving the advantages of self-employment. The Greek regulation mandates that digital platforms adhere to the same welfare, health, and safety obligations for platform workers as they would for employees. Additionally, Greece has established clear criteria to define the presumption of self-employment for platform workers. This clarity offers legal certainty and enabled platform workers to accurately assess their employment status. Consequently, there has been a notable reduction in court cases regarding the classification of platform workers. France has progressively developed a comprehensive legal framework that has systematically enhanced the rights of platform workers. This development culminated in six pivotal agreements, addressing some of the most challenging aspects of working conditions on digital platforms, such as account deactivation and minimum revenue. These agreements were reached under the auspices of the Autorité des Relations Sociales des Plateformes d’Emploi (ARPE), a public entity instrumental in facilitating effective social dialogue between digital platforms and trade unions. The establishment of clear administrative procedures governing the negotiations within ARPE has been crucial in formulating measures that digital platforms can effectively implement. Estonia’s primary focus is on ensuring adequate working conditions for all freelancers, including platform workers. A considerable number of platform workers in Estonia engage in a contract-for-services (töövõtuleping) with digital platforms. This contract offers a social safety net, including unemployment benefits, sick pay, and healthcare services, while retaining the self-employed status of platform workers. Moreover, this framework provides clarity regarding the rights and responsibilities of both platform workers and digital platforms, facilitating the implementation of a clear and unambiguous regulatory system.
Topic:
Labor Issues, European Union, Regulation, Digital Economy, and Labor Market
Political Geography:
Europe

3. In Support of Market-Driven Standards

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, and Vanika Sharma
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU published its new Standardisation Strategy in 2022. The strategy contains some good ideas to improve the way European standards are set. However, in its attempt to gain more control over technical standards, the EU risks killing the goose that lays the golden egg. The primary motivation behind the strategy is the belief that the process governing the way CEN, CENELEC, and ETSI – the three European Standardisation Organisations – take decisions over EU standards favours non-EU multinationals. To address this perceived imbalance, EU National Standardisation Bodies will have the exclusive power to accept standardisation requests, and adopt, revise and withdraw European technical standards. These changes are particularly significant for ETSI, Europe’s Standardisation Body in charge of telecommunication standards and one of Europe’s most successful organisations. ETSI is a prime example of EU normative power since it hosts companies from more than 60 countries, while retaining a large membership of EU firms. The regulatory changes included in the strategy are not risk-free. There could be unintended consequences that may undermine a standardisation system that has delivered significant economic benefits for the EU and the world. First, giving more responsibility to EU’s National Standardisation Organisations will turn a European discussion into 30 (EU and EEA) national debates. As a consequence, small companies will not be able to contribute to each and every one of the National Standardisation Organisations, diluting their contribution, while multinational companies, with the resources needed to cooperate with a larger number of bodies, will benefit from an expanding role in the EU standard setting process. Second, if standards are fragmented along national borders and companies must multiply their efforts to take part in several Standardisation Development Organisations, there will be less resources for Research and Development spending. Finally, if each and every National Standardisation Organisation needs to have a position with regards to the acceptance of a standardisation request, or adoption, revision and withdrawal of European technical standards, the time period required to adopt a technical standard may be extended rather than shortened, which is the exact opposite of what the European Commission wants to achieve. The regulatory changes included in the EU Standardisation Strategy are akin to cracking a nut with a sledgehammer. If the European Commission is concerned about the influence of non-EU companies in European Standardisation Bodies, it does not need to overhaul their governance systems. Supporting greater participation of European firms in the European standard system will ease EU’s concerns without the downside risks associated with changing the rules of the game that govern Europe’s Standardisation Bodies. The success of the European standardisation system, which is market-driven and based on consensus, has had significant economic benefits in the development of specific industries, like the European Information and Communication Technologies (ICT). Technical standards in ICT have shaped a European industry that is not only dynamic and international but also enjoys some of the highest levels of wages and Research and Development spending. Moreover, if technical standards are not developed through an open, consensus-based, and industry-led voluntary process, they will be developed in different ways. For instance, governments and private companies can develop standards by themselves. Both solutions are inferior to the current market-driven approach that governs European standards. However, the European market-driven approach to set standards is voluntary, and its success and continuation must not be assumed. European policymakers should be worried about tinkering with a European standardisation system which has produced economic specialisation and innovation to the benefits of EU firms and consumers.
Topic:
Markets, European Union, Regulation, Economy, and Standardization
Political Geography:
Europe

4. The EU Digital Markets Act: Assessing the Quality of Regulation

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, Erik van der Marel, and Vanika Sharma
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The proposed Digital Markets Act (DMA) is an opportunity to prevent and remedy anti-competitive conduct by large digital platforms. If the Act is designed in an adequate manner to target specific problems, it can improve the contestability of platform services markets and markets that rely substantially on digital services. However, the DMA takes a novel approach to regulation, and novelty in concepts and regulatory requirements can lead to outcomes that later have to be corrected. Fortunately, the EU is not alone in experimenting with new regulations that specifically target the market power of large digital platforms. There is a great scope for policymakers to learn from similar frameworks in Europe and the United States. In this study, we compare key parts of the DMA proposal with similar legislation implemented or proposed in Germany, the United Kingdom and the United States –– in light of established principles for good regulatory design. We analyse the structure and quality of these regulations, not if they go in a certain ideological, political or commercial direction. We find that there are some areas where the EU could learn from other proposals to make the DMA more fit for purpose, and avoid unintended consequences on Europe’s economy.
Topic:
European Union, Regulation, Digital Economy, and Digital Markets Act (DMA)
Political Geography:
Europe

5. After the DMA, the DSA and the New AI regulation: Mapping the Economic Consequences of and Responses to New Digital Regulations in Europe

Author:
Fredrik Erixon, Oscar Guinea, Erik van der Marel, and Elena Sisto
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Union (EU) has pursued an ambitious agenda for regulating the digital economy, and it is now planning to establish a new package of regulations, including the Digital Markets Act (DMA), the Digital Services Act (DSA), and a new regulation of Artificial Intelligence (AI). These regulations build on an already established structure of digital and business regulations in Europe that is comparatively restrictive but that varies substantially between EU member states. In this study, we take stock of the new incoming regulations and review their effect on EU member states’ economies. More precisely, the paper considers how different countries in Europe will be affected by the regulations and how they should balance these effects with policies that help the economy to prosper. The European Commission’s economic analyses and impact assessments of the new regulations are thin. In fact, they are grossly inadequate for the purpose at hand: to better understand how the economy will change because of these regulations. The Commission identifies some benefits – for instance, positive competition outcomes from reduced network effects and more trust in AI-based goods and services. There are good reasons to think that these benefits are real. However, these regulations will also lead to new costs and have broader consequences for firms and resource allocation in the economy. Remarkably, the only costs identified in the impact assessments are direct compliance and administrative costs. Obviously, for far-reaching regulations such as the DMA, the DSA and the AI regulation, the main costs will not be the direct compliance burden, but the dynamic and downstream economic effects spurred by their implementation. This is because these regulations will prompt firms and markets to change their current and future behaviour: these changes are likely to define the most important costs. Furthermore, it is important to get a better idea of the distribution of these costs. It is highly unlikely that all sectors and countries will be affected equally. Some sectors will be more affected than others just as some countries will experience economic consequences that are bigger than in other countries. The question is: what factors will lead to the expected variation in the costs and consequences of the three new regulations? In this paper, we argue that two factors are important for grasping the distributive patterns of costs from digital regulations. First, the industry structure of a country is key. In the economy, countries have different endowment structures, and the modern European economy is defined by factor endowments such as data and digital competences. These factor endowments are exploited in the economy by firms and organisations that use them to create different comparative advantages. In turn, these advantages influence how a firm and a country market, sell and trade. Second, the existing structure of a country’s business and digital regulations will influence how an economy will respond to new and additional digital regulations. In fact, the restrictiveness of regulations that we know to impact on the digital economy vary substantially in the European Union – both between countries and between sectors. This variation will have consequences for the distribution of the costs of the three new regulations that are going to be implemented. This paper maps countries and country groups in the digital economy: their endowments, advantages, and flows. Especially, it evaluates the digital performance of countries in a number of key indicators and data points, and anchors the analysis in the academic literature. The paper points to some specific consequences of the DMA, the DSA and the AI regulation, and how different regulations will affect endowments structures and advantages. One key finding is that the distributive effects of the regulations will depend on size advantages and disadvantages. In short, small economies and small firms will likely carry a disproportionate part of the cost of new digital regulations. Furthermore, countries that have used their endowments to specialise in the digital economy will be more affected than others. On this score, there is a vast difference between EU countries. For instance, countries in Europe’s North – generally small, competitive, and open economies – will be most affected by these new regulatory burdens. Countries in Central and Eastern Europe will also be negatively affected, especially through risks of market exclusion effects for small firms. It is important for European policymakers to now consider how they can avoid that these new digital regulations continuously reinforce size advantages for big economies and big firms. There are some policy strategies that should be considered. First, regulations can be changed to better fit the overwhelming evidence that young, dynamic, and innovative firms drive a substantial part of productivity growth in the economy. Second, EU and national policymakers can pursue policies that make the transition into a more size-balanced economy easier, for instance by taxing and regulating small firms differently. Smaller economies can also be helped by having corporate taxes that are lower than in big economies. Third, EU and national policymakers can reform other digital and business regulations and make them less burdensome. Fourth, the EU can help to support the build-up of digital advantages in smaller economies.
Topic:
Markets, European Union, Regulation, and Digital Economy
Political Geography:
Europe