Data Protection Report - Norton Rose Fulbright

On May 10, 2016, the French and German antitrust authorities published a joint study on competition law and the collection and use of data, particularly so-called big data (the Big Data Study). Data protection as such is outside the scope of EU competition laws, but antitrust authorities have considered the significance of data on a number of occasions, often in the context of merger reviews such as the EU Commission’s Facebook/WhatsApp case.

The Big Data Study is the first comprehensive analysis of data-related issues from an antitrust perspective, and it provides important guidance on how antitrust authorities are likely to look at data-related issues in future enforcement actions. The Big Data Study notes that the issues go well beyond search engines, social networks or online advertising to sectors including energy, telecommunications, insurance, banking, transport and product industries increasingly involved in the “Internet of everything”.

Data and competition issues

The Big Data Study examines ways in which data can become a source of market power, how the availability of data can distort competition by increasing market transparency, and conduct involving data that could infringe competition laws, especially when engaged in by a dominant company. The study notes that collection of data may result in entry barriers when new entrants are unable to collect their own data or buy access to the same kind of data as established companies. Scale and network effects encourage the concentration of players in data-driven industries, potentially harming competition.

According to the Big Data Study, this competitive harm can arise in a variety of ways. In the behavioral context, the increased collection and use of data can increase market transparency.  While greater transparency has many competitive benefits, it can also limit competition by facilitating tacit or explicit collusion among competitors.  The Big Data Study also suggests that the use of algorithms can facilitate collusion and distort competition by reducing uncertainty.

In the merger control context, the Big Data study notes that the role of big data is ambiguous. On the one hand, the combination of merging parties’ databases can give rise to horizontal issues (i.e., where competitors are unable to replicate the merged company’s database) and vertical issues (i.e., where the merged company may be able to use its databases to foreclose upstream or downstream competitors).  On the other hand, the ability of a merged company to generate value from a larger database may give rise to efficiencies that could justify an otherwise anti-competitive merger.

Finally, the Big Data Study notes that behaviors involving the collection and use of data may infringe antitrust law, particularly where a company has a dominant position in a relevant market. The Big Data Study highlights five areas of concern:

  • Refusals to grant access to databases that qualify as “essential facilities” for competitors could be abusive, at least where the data are truly unique and there is no other possibility for the competitor to obtain the data it needs to perform its services.
  • Discriminating among third parties in providing access to data can be deemed abusive, for instance where a vertically integrated company such as an online marketplace that also operates as an online retailer can use its larger dataset to compete more effectively against online retailers using its platform.
  • Exclusive contracts, individually or as part of a network of contracts, can be used by companies with large databases to prevent rivals from accessing data.
  • Dominant companies can use data collected in a given market to strengthen their position in another market, for instance through tied sales or cross-usage of data.
  • Data can be used to facilitate price discrimination among customers who are willing and able to pay different prices for the same goods and services. The Big Data Study notes that the antitrust analysis of price discrimination is unclear, and national laws may differ from EU law in some respects.

Antitrust and privacy regulation

In a particularly interesting section, the Big Data Study discusses the relation between antitrust and privacy law. Although privacy concerns as such are outside the scope of EU competition law, the French and German authorities say, this doesn’t mean that competition law is irrelevant to personal data.  “Privacy policies can be considered from a competition standpoint,” they note, “whenever these policies are liable to affect competition, notably when they are implemented by a dominant undertaking for which data serves as a main input of its products or services.”

In merger control cases, data privacy issues might be particularly relevant where a company “benefits from a strong market power towards its end-users.” In the abuse of dominance context, reductions in privacy could raise issues “if an incumbent collects data by clearly breaching data protection law and if there is a strong interplay between the data collection and the undertaking’s market position.” For example, data privacy regulations might be a useful benchmark when assessing terms and conditions imposed on consumers in order to use a service or product as a potential exploitative conduct, especially where most consumers do not read the provider’s terms and conditions and privacy policies.

Our take

The Big Data Study reflects an increased determination among European antitrust authorities to address the competitive effects of companies’ activities in collecting and using data and to push the boundaries between antitrust law and data protection law. So far, these issues have been addressed mainly in the merger context and in a number of discrete studies, including two by UK authorities in relation to the commercial use of consumer data and the use of big data in the insurance sector. Bruno Laserre, President of the French authority, announced plans to conduct a “full blown” sector inquiry into data-related markets and strategies in the near future.

Increasingly, this analytical phase will lead to increased enforcement activity. Indeed, the German authority recently announced that it is investigating whether Facebook’s terms of service on the use of personal data resulted in an abuse of a possible dominant position in a “market for social networks.” EU Competition Commissioner Vestager is keenly interested in these issues and has commented favorably on the German investigation. More generally, the European Data Protection Supervisor advocated expanded antitrust enforcement in relation to the collection and use of data in a 2014 paper.

As the Big Data Study notes, the issues presented by the use and collection of data, generally considered mainly in the context of search engines, social networks and online advertising, have implications across a much wider range of industries. Going forward, companies in all industry sectors will need to examine their data needs and uses from the antitrust perspective, not only from a data protection perspective.