Regulation and antitrust enforcement aim to keep markets competitive, ensuring fair prices and innovation. Both in regulation and enforcement, time and again the question comes up whether and how the effectiveness of remedies is actually monitored. A recent report by the European Court of Auditors (ECA) highlights this: The ECA found shortcomings in how the EU monitors its interventions in the digital payments space.
The ECA is the European Union’s external auditor. Its report focuses on two key areas: Price interventions, particularly in payment card fees, and open banking data sharing. It finds a lack of systematic review and data collection when it comes to the EU’s regulatory interventions in this area. I will not go into detail of digital payments regulation, but rather want to focus on the broader point: How can and should the effectiveness of regulatory intervention be monitored, also to avoid over-regulation?
The problem of “Set It and Forget It”
The ECA report points out a fundamental risk: Regulatory frameworks (in this case related to digital payments) might lack clear criteria for assessing whether interventions are justified, how long they should apply, and crucially, how they should be monitored. Often, there is no requirement for periodic reviews of these interventions, creating a “set it and forget it” scenario. This can be a major concern. Markets are dynamic, and what might have been an appropriate intervention years ago could be distorting competition today.
In the case at hand, the ECA specifically questions a fee cap for card payments. While intended to reduce consumer costs, in the ECA’s view the European Commission has not shown that the benefits outweigh potential negative consequences.
Data deficit: A major obstacle
A core issue identified by the ECA is the lack of an effective monitoring system and a lack of access to relevant data. This data deficit hinders the Commission’s ability to assess the impact of its regulation. The question then is how can one determine if ongoing intervention is justified without robust data on market behaviour, pricing, and consumer welfare?
This is not just an issue in the digital payments sector. In antitrust cases and related regulation, there should ideally be at least some framework for assessing and monitoring whether intervention is (still) warranted.
Open banking and the monitoring challenge
The ECA report also highlights potential issues with an imposed need for transparency and data sharing. In the EU’s open banking framework, there is a requirement to provide free access to payment user data. According to the report, such a requirement may actually disincentivize the holders of account data from providing high-quality service. On the other hand, the lack of standardized application programming interfaces (APIs) can hinder third-party providers from making use of the accessible data.
These are issues that should both be taken into account when thinking about antitrust or regulatory requirements to make data available, for example based on the Digital Markets Act, the Data Act, or abuse of dominance rules.
Lessons for regulation and enforcement
The ECA report provides valuable lessons for regulation and enforcement considerations beyond the digital payments sector:
- Periodic reviews: All interventions, in particular price interventions, should be subject to periodic reviews to ensure they remain appropriate.
- Data-driven monitoring: Robust data collection and analysis can help with effective monitoring. Same as clear metrics and access to relevant data.
- Clear monitoring frameworks: Ideally, clear monitoring frameworks are put in place, specifying the responsible parties, reporting requirements, and enforcement mechanisms.
The report is remarkable in that it criticizes the Commission’s approach to intervention in a specific sector and by doing so also makes a broader point. Effective regulation and enforcement are arguably not just about finding infringements and imposing remedies; they are also about double-checking that remedies are still appropriate down the line. This requires robust monitoring, potentially data-driven analysis, and a willingness to adapt interventions as market conditions change.
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