The Fairness Principle in Competition-Related Economic Law

The evolution of the digital economy in recent years has sparked tremendous legislative activity by the European Union. In the course of its endeavours to tame the power of tech giants, foster data-driven innovation, and protect consumers from new dangers arising out of technological disruption, the EU’s regulatory efforts repeatedly refer to and incorporate the notion of ‘Fairness’—a legal concept that is both intuitively appealing and considerably fuzzy. The Digital Markets Act, which aspires to set the new fundamental framework for the business of digital gatekeepers, relies on Fairness as a core principle besides Contestability. The Data Governance Act requires access to data intermediation services to follow a ‘fair, transparent and non-discriminatory’ procedure, an obligation evidently reminiscent of the FRAND standard (‘fair, reasonable and non-discriminatory’) from the standard essential patents  (SEP) realm. The further refinement of this standard is currently subject to the COM proposal (2023)232. With its proposal COM/2022/68 final for a Data Act, the Commission aims to establish harmonised rules on fair access to and use of data, thus again setting a Fairness standard at centre stage. And finally, it goes without saying that Fairness has for many years been serving as the guiding paradigm in regulating Artificial Intelligence applications with a view to preventing data analysis results from being biased and discriminatory.

For a legal order pursuing an ideal of systematic consistency, it is key to achieve a coherent doctrinal alignment of the Fairness notions pervading these different areas of law and regulation. To this end, it is indispensable not to interpret the respective norms in isolation, but  instead to remember that Fairness is a long-standing concept of considerable legal tradition. For approximately 100 years, Article 10bis para 2 of the Paris Convention on the protection of Industrial Property has set the basic tenet for subjecting modern markets to a Fairness standard, defining ‘unfair competition’ as any act of competition contrary to ‘honest practices in industrial or commercial matters’. This standard has repeatedly been referred to and adopted by other areas of economic law, in particular the law of trade secrets (Article 39 TRIPS; Article 4 para 2 (b) Directive (EU) 2016/943) and trademarks (Article 14 para 2 Regulation (EU) 2017/1001). Furthermore, fairness notions pervade contract law, which deals with unfair contractual conditions; antitrust law, where Article 102 (a) TFEU prohibits imposing unfair purchase or selling prices or other unfair trading conditions; data protection law, where Fairness constitutes a key programmatic pillar of privacy protection (Article 5 (1) a) GDPR); and anti-discrimination law, where the prohibition of unfair bias lies at the heart of regulating AI. When widening the view towards the Anglo-American legal sphere, the concept of ‘fair use’ is a cornerstone for the balancing of conflicting interests between copyright holders and third parties, and in this capacity has often served as a reference point for the European legal discourse as well.

But can this wide array of norms and the meanings ascribed to them in the respective field of law ultimately be united under one common legal principle? The answer I find in my current article, which summarizes key insights of my doctoral thesis ‘Fairness als Rechtsprinzip’, is ‘Yes’. After analysing and rejecting a variety of alternative options, the article ultimately offers an overarching theory that (re-)constructs the Fairness principle as a normative bridge between law and society. Following the characteristic legal-theoretical trait of legal principles to incorporate initially extra-legal influences into a legal order, a uniting feature of Fairness norms in all areas of law examined is their interrelation with societal norms and influences. To understand the precise characteristics of the latter, theories of ‘legal pluralism’ provide an insightful theoretical lens, on which I draw to understand the Fairness principle.

Legal pluralism denotes the assumption that besides state law, human behaviour and society are also and have always been governed by ‘norms’ of other provenance. Such reflections, which in the German legal sphere have been substantially shaped by sociologist Eugen Ehrlich’s theory of ‘living law’, have gained considerable new importance in light of two fundamental societal developments: globalisation in the 20th century, and digitization in the 21st century. In the view of many scholars, globalization has led to a decline of importance of the nation state with a view to market regulation, as the power of nation states is confined to their respective territory, and a corresponding rise of importance of non-state actors, who set transnational rules for transnational commerce. Digitization not only plays a significant role in further strengthening globalisation, but also leads to unprecedented regulatory power in the hands of private actors. These actors gather tremendous amounts of knowledge through AI-driven data analysis, and they control the algorithmic infrastructure of a digital society in which code has become ‘law’ (as Lawrence Lessig famously put it) and programmers aspire to be the new legislators.

The careful and differentiated normative reflection of these sociological developments appears as a key task of the Fairness principle in its capacity as bridge between law and society. Its role within the legal order is to normatively moderate the interplay of state and non-state rules of  market order towards the common good, acknowledging ‘honest’ commercial practices while dismissing and fighting ‘dishonest’ ones. Incorporating the insights of legal pluralism theory, the Fairness principle can then convincingly be reshaped and understood as follows: On the one hand, phenomena of non-state market order influence the interpretation of Fairness clauses as a substantive benchmark of statutory law, ie they interpretatively assist in the hermeneutic endeavour to concretise what is legally ‘(un-)fair’. Such reception presupposes that the non-state norm is normatively legitimate and that its incorporation is advantageous, eg by enriching the state legal order through superior economic and technological knowledge from the private realm. On the other hand, as regards the meta-dimension of the Fairness principle, the state is invited to use techniques known as meta-regulation, co-regulation or regulated self-regulation in order to establish ‘honesty’ where it is factually lacking. This means employing regulatory strategies that steer observed non-state norms towards the common good, especially by establishing positive and negative incentives for market actors to act in the desired way. Thus, the evident dangers of private ordering, in particular its focus not on the common good but on the interests of the norm setters, can be effectively addressed also in instances where traditional command-and-control regulation has proven unsuccessful, in particular in the transnational realm. By thus selecting and enforcing the binding and just rules out of the sociological array of regulatory offers, the Fairness principle safeguards the ‘honesty’ of commercial practices in the digital society.

Stefan Scheuerer is a civil servant in Germany. This post is based on research he conducted previously as a Junior Research Fellow at the Max Planck Institute for Innovation and Competition in Munich.