sabato, 18 Novembre 2017

Big data and Antitrust law: main problems and policies

Scritto da  il 08 Giugno 2017

1.What is a big data?

Big data is a hot topic, also for competition authorities and it became clear that competition authorities were trying to get a grip on how to deal with big data.

Generally adopting the word data, we are used it for the results of scientific experiment but in a broader sense, is referred to any kind of information which an undertaking could use in order to block the other competitors, leading to an unfairy competition market.

A big data is often characterized by the three “V – Velocity, Variety and Volume”. This definition of the three Vs was developed by Doug Laney at Gartner analyst in 2001. The velocity is frequently equated to real-time analytics as the rate of changes and also in relation with data immediately available. Yet, the Velocity is the speed at which the data is created, stored, analyzed and visualized and actually machines and devices are able to pass on their data the moment is created. According to the concept of Variety, in the past, all data had a structured data but nowadays a data comes in many different formats: structured data, semi-structured data, unstructured data and even complex structured data. The wide variety of data requires also a different approach as well as different techniques to store all raw data. Big data implies enormous volumes of data, which is quite massive in order to be analyzed, especially actually that data is generated by machines, networks and human interaction on systems like social media.

2.Is big data a source of power in our economic activity?

Our new economy relies on data which can help to improve an undertaking’s product or service and the amount of information about users and their preferences, collected by companies, is rapidly growing. The impact of data as a factor in the competition analysis attracts the different undertakings and so data becomes a market power in order to ensure the fair competitiveness on the market, but not all the data could be gathered especially when the collection of data may result as a barrier at the entrance.”

3.The role of big data in Mergers and acquisitions and the relationship with privacy aspects.

Data could confer a high advantage to undertakings which are going to target a merger or an acquisition but also creating an unfair market in competition law.

Every merger or acquisition requires a well-thought-out and structured plan, carefully explaining how the deal enhances the company’s core strategy. For this to happen, through market research, the due diligence is naturally required, data or better big data has a critical role to play while a merger or acquisition is being targeted. One has to bear in mind that in the planning of an acquisition, stakeholders and shareholders of the merging and target companies, shall be able to visualise the whole undertakings from different point of view. This will help them to maximise revenue and minimise costs. An M&A is often clash of personalities and different cultures and it’s worth keeping in mind that the successful business transaction according to some scholars are those ones where all the subjects involved are able to use and share company information in order to create a new business model plan but WITHOUT CREATING A CARTEL[1]. A cartel encompasses various form of collusion or collaboration between competitors, the most serious of which involves fixing price, diving markets, restricting output and rigging bids.

Considering the above, one of the main factor that could influence the acquisition or the merger is defined by how quickly the process of acquiring data is managed. Businesses must recognise that some data needs some time, dimension and rich definition in order to unlock its value, while other data needs to be put to work immediately as a business decision may be reliant upon it, coming to be known as ‘fast data.’ After all, this speed versus richness characteristic will ultimately determine the best information architecture to put in place. So this aspect leads to affirming that with the availability of so much data and the capability of modern analytic tools, an improving success rate for mergers and acquisitions should be right at hand.

3.1 Google/DoubleClick and Facebook/Whatsapp : merger decision cases and their impact in the European Market

The attention on the relationship between competition and privacy has been increasing since the Google / DoubleClick merger decision in 2008. (Case No. COMP/M.4731).

DoubleClick was a leading provider of "ad-serving" technology. Relying on some investigations[2], many of them were concerned that its merger with Google would create an unfair competition because it would combine databases of personal customer .

The European Commission found, however, that the combination of the databases on search and web browsing behaviour would not create a competitive advantage in the online advertising business; at least, no advantage which could not be replicated by other users with access to similar web-usage data. As such, the merger was cleared.

However the European Data Protection Supervisor argued that the Commission should use the competition-based merger control rules to block mergers where there are concerns regarding privacy, even if the merger raises no substantive competition concerns and moreover privacy policies should become a parameter of competition and in any cases also prohibiting a merger that could be detrimental in the European Market.

Even if this were true, this is not a legitimate basis on which a merger could be prohibited. Decisions to block mergers on competition grounds must be based on a substantiated theory of harm which would be likely to arise if the merger were permitted and which would impede effective competition in the market.

Recently in Facebook’s acquisition of WhatsApp (Case No. COMP/M.7217) the European Commission was reluctant to consider data protection issues in competition cases. This was particularly visible in the merger decisions where the Commission explicitly stated that: ‘Any privacy-related concerns flowing from the increased concentration of data [...] do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules’ “Any privacy related concerns flowing from the increased concentration of data within the control of Facebook as a result of the transaction do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules.”

4.Refusal to access as an anticompetitive conduct in using of big data

Refusal to access to data can be anticompetitive if the data are an “essential facility” to the activity of the undertaking asking for access. Platform providers use data collected from online consumers to optimize the services they provide to users. For example, a search platform uses the data it has collected to ensure that the most relevant search results for a particular user are displayed. If those “Big Data” databases are considered an “essential facility”, a dominant platform provider that restricts third-party access to its databases could be defined as abusing its position of dominance. In abuse of dominant position[3], the essential facilities doctrine is a topic used by the complaint to denounce the restriction of access to an infrastructure.

A dominant position can be determined by reference of three factors:

1. Market share of undertakings;

2. Presence of other and potential competitors;

3. Presence of other undertaking’s costumers that can block the market power of the undertaking.

On the other hand an analysis of the relevant marker must be taken into account: a relevant product market is considered interchangeable or substitutable by the consumer because of its characteristics, price and uses; and on the other hand, undertakings are subject to 3 main sources on competitive constraints: - (1)demand substitutability, -(2) supply substitutability, -(3) potential competition. DEMAND SUBSTITUTION constitutes the most immediate and effective disciplinary force on the supplies of given products. It’s determined by operating an hypothetical small variation in prices and evaluating reaction of costumers to that increase.

In order to understand better when an infringement of the refusal to access to an esential facility arises, we have to refer to Bronner case [4]. In 1994 in Austria, Mediaprint had got a combined market share of 46.8% of the Austrian daily newspaper Der Standard. Mediaprint established a home-delivery scheme for delivering newspapers directly to subscribers in the early hours of the morning. Bronner claimed against Mediaprint’s dominant position saying that Mediaprint could cause an abuse of its dominant position in its home-delivery service against payment. He added that this service was unprofitable for Mediaprint in consideration of its small members of subscribers. The refusal by a press undertaking, which holds a very large share of the daily newspaper market and operates the only home-delivery scheme, to allow a publisher of a rival newspaper to have access to it constitutes an abuse of a dominant position within the meaning of Article 86 of the EC Treaty.

Hence in Bronner Case the ECJ ruled that an undertaking can request access to a facility or network if the incumbent’s refusal to grant access concerns a product which is indispensable for carrying on the business activity in question but a product or service is indispensable only if there are no alternative products or services and there are technical, legal or economic obstacles that make it impossible or unreasonably difficult for any undertaking seeking to operate on the downstream market . So for the undertaking concerned

• there is no actual or potential substitute for that database, and

• there are technical, legal or economic obstacles that make it impossible, or at least unreasonably difficult, for competitors to create alternative databases.

Another case law relating to discriminatory access to data, considered as a potential exclusionary abuse, is Cegedim[5]

Cegedim, the leading provider of medical information databases in France, refused to sell its main database (called OneKey) to customers using the software of Euris, a competitor of Cegedim on the adjacent market for customer relationship management (CRM) software in the health sector, but would sell it to other customers.

The French competition authority considered such behaviour as discriminatory and concluded that, given that OneKey was the leading dataset on the market for medical information databases and that Cegedim was a dominant player on the market for medical information databases, such a discriminatory practice had the effect of limiting Euris’s development between 2008 and 2012.”

5.Data and price discrimination

Data collection may facilitate price discrimination. A company collecting data about its customers gains a better insight into the willingness of its customers to pay for a given product or service. If a company holds a position of dominance in the internal market, it could use this information to set different prices for different customer groups. Moreover by collecting data about clients, an undertaking could receive information about their purchasing habits and is in a better position to assess their willingness to pay for a given good or service. This situation lead to a double effect: a negative and a positive one. The former is often viewed as an unfair breach of consumer equality, but consumers can choose to shop elsewhere to escape from unfavourable price discrimination, even if some of them will be going to end up paying higher prices for their purchases than before the discrimination was implemented. However price discrimination could also conduce to reinforce competition for example in the case of an undertaking which can propose lower prices to the customers with a strong preference for another product but the products should be interchangeable and own almost the same characteristic.

6.Exclusive contracts in digital environment

Exclusive contracts are vertical agreements in which the firm in dominant position imposes restrictive clauses to a firm linked with the former (e.i. exclusive purchasing agreement:the purchaser is prevented from purchasing competing products from anyone other than the seller).

In a digital market, each part is free to choose with whom contract with but this may also include some actions which prevent rivals from accessing data through exclusivity provisions with third-party providers or foreclosing opportunities for rivals to procure similar data by making it harder to adopt technologies or platforms. Exclusive agreements can exclude rivals, especially when they are concluded by dominant firms. This is a problem not only according to art 102 but also under Article 101 TFUE .

This is not new but it may be of interest to note that the European Commission is currently pursuing Google for the anti-competitive strategy on the basis of his behaviour about the pricing for on line advertising in order to sign agreements that oblige third party web sites to obtain all or most of their online search advertisements from Google. According to the European Commission’s investigation, Google gave favourable treatment to its comparison shopping product in its general search results page.[6]

7.Tied sales and cross-usage of datasets

Data collected on a given market could be used by a company to develop or to increase its market power in another market but in an anti-competitive way. For instance, in a report[7] by the UK Competition and Markets Authority (CMA) this possibility could also reduce competition by giving a favourable position to a company which owns the dataset over its competitors in the market for data analytics. An example of this situation arises in France, where the French Competition Authority[8] imposed interim measures to GDFSuez, ordering that gas supplier to grant its competitors an access to some of the data it collected as a provider of regulated offers, in particular consumption data. The aim of this interim measure was to allow all suppliers to have the same level of information to make offers to consumers.

8.Conclusion: Is data seen as a parameter in competition law?

The gathering of data is often seen not as a competition law issue but rather as an issue which concerns data protection enforcement”. But the emergence of firms such as Google that have huge turnovers based on the commercial use of personal data, has changed the discussion of the role of data in economic relationships and the application of competition law. New problematic topics could arise: The collection of data lead to the creation of entry barriers and data is like a sort of source of power. The need of transparency in the market also contributes to manage new regulation in this sector. However exclusionary or exploitative conducts need in this case of an enforcement action by European legislator.

On September 29th 2016 the European Data Protection Supervisor organised a conference on 'Big data: individual rights and smart enforcement. Big Data and the Internet of Things bring policy, regulatory and enforcement challenges that require a holistic approach to ensure that the rights and interests of individuals are safeguarded in the coming decades. The aim of the conference was to analyze the data and consumer protection involving different spheres such as economic and social change.

Paraphrasing the speech[9] of the European Commissioner for Competition.

<<We need ways to make our economy work better for everyone. If big data can help to understand what individuals really need, then we can all hope for better services. I’m talking of more accurate recommendations from an online shop. But I'm also talking about personalised medical treatments, which really work for us.

But this will be much harder to do if people see big data as a threat.

So the future of big data is not just about technology. It's about things like data protection, consumer rights and competition. Things that give people confidence that big data won't harm them.........

Because if we want big data to fulfil its promise, then we need to enforce the rules effectively.Already, people are worried about how big data will affect them. The benefits it has to offer can seem far away – almost like science fiction. But people's sense that they’ve lost control of their personal data, the sense that data is making companies so powerful that no one can control them – these things are very immediate.

Those who work with big data need to take this seriously. It's up to them to convince people that they will use data properly. That they can be trusted to keep people’s personal data safe from hackers. And that they won't use it to stifle competition.But we also have a part to play. We can show people that companies that use big data have to follow the rule >> (Margrethe Vestager, Danish politician, Conference on big data September 2016)

[1]
According to the article 101 TFUE: The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effectthe prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

[2]
European Commission statement: The Commission investigate whether the merger, which combines the leading providers of respectively, on the one hand, online advertising space and intermediation services, and, on the other hand, ad serving technology, could lead to anti-competitive restrictions for competitors operating in these markets and thus harm consumers. The investigation will also make a more complicated analysis when it decides whether Google's purchase has the effect of eliminating a future competitor. http://ec.europa.eu/competition/mergers/cases/decisions/m4731_20080311_20682_en.pdf

[3]
According to article 102 TFUE, an abuse of dominant position could arise in this situation: “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

[4]
Case C-7/97 Oscar Bronner GmbH&Co. KG v Mediaprint Zeitungs- und Zeitschriftenverlag GmbH&Co. KG and Others
For more details: http://www.jonesday.com/files/Publication/e2d79ea9-8440-49e6-a879-c834f4b0b557/Presentation/PublicationAttachment/9cf89b02-295b-43cf-8a00-3cbea13a85bf/Article%20essential%20facilities.pdf

[5]
French Competition Authority, Decision n° 14-D-06

[6]
For more details: https://www.theguardian.com/technology/2013/jan/31/google-antitrust-chief

[7]
Competition and Markets Authority, The Commercial Use of Consumer data (2015), https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/435817/The_comme rcial_use_of_consumer_data.pdf , p.90.

[8]
http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=592&id_article=2420

[9]
https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/big-data-and-competition_en

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