Adventures in Brazil: discussing creativity and innovation with competition law audiences

Discussing creativity with competition law audiences

An event at FGV São Paulo brought together academics and experts from FGV and USP – Caio Mario S. Pereira Neto, Rodrigo Fialho Borges, Anna Lygia C. Rego and Juliana Oliveira Domingues, to discuss my thoughts on creativity, innovation, and competition law. During the talk, I presented on the perhaps underexplored role of creativity in competition policy, building on the work being done at CREATe on innovation and creativity. This work is illustrated particularly by the Cloud Gaming project (with Amy Thomas, Kenny Barr, Ayse Gizem Yasar, and myself) but covers other ongoing work as well and has a clear link with the Law of Innovation research theme in CREATe.

A key theme of the presentation was the distinction between creativity and innovation. In competition policy, we are increasingly considering innovation in the theories and enforcement of competition law and becoming more and more nuanced in our methods to integrate innovation into the analysis. A facet we do not explore in most competition policy, however, is creativity.

Typically, copyright is more associated with incentivising creativity, whereas competition is more concerned with innovation. Traditionally, we consider that creativity involves generating original ideas, while innovation occurs when those ideas are commercialised. The question I posed to the competition law audience during the talk is this: should we care only about innovation in a traditional sense, or is there another facet – the elusive concept of ‘creativity’ – we should consider? And if so, what does that concept mean and can you operationalise it?

Creativity is largely process-orientated and is concerned with the generation of original ideas. Innovation is, by contrast, outcome orientated, and is concerned with the successful commercial implementation of the original ideas created. Not all creativity will inevitably lead to innovation, as some ideas do not make it to the end stage of commercialisation. Because of this, the creative process can be relatively invisible and is more subjective to measure; innovation, by contrast, can be evidenced through tangible outputs, such as the creation of new products. Indeed, in competition policy, most of the work on innovation focuses on the development of new products – the outcomes of innovation. Where there is a focus on the assets/capabilities/resources to innovate, these are still considered traditionally with reference to a particular target product or demand – and in many cases identifying this is done by reference to the big players (those being investigated).

In the talk, I therefore queried whether our existing legal environment (including intellectual property law as well as competition law and market regulation) creates the necessary environment to support creativity as an outcome, not measured as the number of outputs but as diversity of original content. The answer to this is likely to vary, and will raise the follow-on question whether this is an interest competition policy should even consider.

I emphasised that questioning whether we should consider creativity (as a facet of innovation) in cultural markets may have parallels with questions about market resilience in other industries such as, for example, energy. This is a question which is also on the radar of other scholars, such as among others Stavros Makris. Is there a risk that an excessive focus on output may inadvertently lead to market structures which are vulnerable to external shocks or which fail to achieve the collective interest markets are meant to achieve? If so, there may be need to consider how to ensure the resilience of markets: ‘creativity’ in creative industries or different measures of resilience in other industries.

This talk raised a set of first questions, at the early start of an avenue for research. It allowed for an interesting conversation with participants during and after the talk. Unsurprisingly, the conversation turned to the objectives of competition law and the search for a system which broadens what the law can achieve, without sacrificing the clarity and structure needed in a system based on the rule of law.

This discussion also highlighted inequality in access to creative industries. Where access to education and technology disproportionately benefits wealthy privileged individuals, diversity in creative fields can be limited. This is not a matter for competition policy, yet an important issue to resolve. This concentration of resources can hinder not only innovation but also diversity of creation. For more insight in the gaps in earnings of creators, have a look at CREATe’s Creators’ Earnings & Contracts Hub.

Brazil’s digital regulation journey

The discussion at FGV about creativity also involved some conversation about holistic regulation of industries – and co-operation between regulators when they are dealing with similar problems with multiple causes.

This was not the only time regulation would come up during my time in Brazil. In fact, the regulation of digital markets (ex-ante, as opposed to ex-post through competition law) was a central theme of many discussions. Brazil has been pondering whether and how to regulate digital markets. Draft legislation was introduced in November 2022, aimed at regulating competition in digital markets. This Brazilian proposal (PL 2768/2022) is said to be inspired by the European Union’s Digital Markets Act (DMA).

I had the pleasure to talk with several Brazilian experts about their view on whether Brazil needs regulation and what it should look. The comparison with the approaches in the UK and EU formed part of several talks: one at FGV Rio de Janeiro, where I had the pleasure to be hosted by my colleague Nicolo Zingales, as well as at USP with Juliana and Prof Gabriel Lochagin; and one at IDP in Brasilia, where Juliana was joined by CADE Commissioner Victor Fernandes.

The conversations compared the UK’s recently passed Digital Markets, Competition and Consumers Act to the EU’s DMA, highlighting the UK’s more flexible, consumer-focused approach, and the EU’s clearer willingness to let go of the focus on market power and consumer benefits. The conversation addressed how international competition law might be influenced by these frameworks and the cooperation between authorities across regions. A crucial question throughout these talks was whether following the approach of a specific jurisdiction is always the right choice. The challenges the country faces in digital markets but particularly the needs of consumers and society are at times peculiar to Brazil, yet the standard of digital regulation seems likely to become the EU approach. This ‘Brussels Effect’ (see Anu Bradford’s excellent work) in digital regulation means other countries should think critically about the timing of their interventions, and what kind of intervention will leave them the most scope to tailor their solutions to their specific needs. This seems a particularly poignant question for Brazil, given the size of its economy and its particular needs. For an insight about the Brazilian Bill by someone with inside expertise, you can read this article by CADE Commissioner Victor Fernandes.

Brazilian friendship and Brazilian spirit

I had many discussions while in Brazil, more than these covered in this blog (a particular highlight was the roundtable about market definition in Ribeirão Preto). Brazilians are not only great at organising lectures, however, they are also phenomenal hosts and guides in their beautiful country. I had the pleasure of being shown São Paulo, Rio de Janeiro, Brasília and Ribeirão Preto by a group of Professors and students whose hospitality was unparalleled. Thank you in particular to the students and researchers who helped out behind the scenes: Kaira Solla, Matheus Nunes Lima, Lauren Petter, Mariana Zilio, Verônica Marques. And to Juliana Oliveira Domingues and Eduardo Molan Gaban for being the most welcoming of hosts throughout my stay.

I met old friends and made new ones, in formal events and informal settings. In addition to the lessons they taught me about Brazilian competition policy, I take away the hopeful spirit and ambition of the Brazilians, which is a tonic to boost me forward. The students in Professor Gabriel Lochagin’s class at Faculdade de Direito de Ribeirão Preto – USP were shining examples of this spirit.

There is much work yet to be done in both Brazil and Europe, and we can learn from each other. The conversations will continue!