The Luxembourg Competition Authority (“LCA”) announced that it is launching a market study into the “blockchain sector,” particularly the relationship between Web21 companies and Web32 projects. In its press release, the LCA touted the “high potential of the [blockchain] sector,” stating that “it is important to ensure that Web3 players can evolve in a competitive and well-functioning market.” Importantly, this is the first-ever market study focused on competition in the blockchain industry.
The LCA will collaborate with Professor Thibault Schrepel3 on the study, which has the following goals:
- To document Web3 dynamism and its competitive landscape,
- To assess where and how Web2 companies compete with Web3 projects,
- To map existing interactions between Web2 companies and Web3 projects, and
- To document potential implemented anticompetitive practices against Web3 projects.
Professor Schrepel has written extensively on the intersection of blockchain technology and antitrust laws. In January 2023, Professor Schrepel published a paper analyzing the complex relationship between Web2 and Web3 firms, which may provide insight into the focus of the LCA’s market study. Noting that Web3 firms rely on Web2’s infrastructure and platforms, Professor Schrepel’s paper focuses on two potential areas for anticompetitive conduct by Web2 firms. First, Professor Schrepel argues that Web2 firms could impede competition from Web3 projects by limiting access to necessary web infrastructure, including computational power and storage capacity, Web3 code and websites, and Web2 communication protocols. Second, Professor Schrepel argues that Web2 firms could impede adoption of Web3 projects by preventing access to Web2 hardware and software, and by banning or limiting the use of Web3 assets on Web2 platforms.
Per the LCA’s announcement, the LCA and Professor Schrepel will contact various industry participants in the coming weeks. The LCA has not indicated when it expects to complete its study or if it plans to issue a report based on its findings.
For more insights from Vinson & Elkins attorneys regarding the intersection of blockchain and antitrust law, see our Blockchain and Antitrust Issues Checklist and two scholarly articles here and here.
1The term “Web2” is generally used to refer to the transition from static web pages to dynamic web pages and applications.
2The term “Web3” is generally used to refer to decentralized internet services.
3Associate Professor of Law at the Vrije Universiteit Amsterdam and Faculty Affiliate at Stanford University’s Center for Legal Informatics (CodeX).