The Franco/German Study identifies five types of conduct in relation to big data that it fears could be exclusionary: refusal to provide access to data; discriminatory access; exclusive contracts; tied sales and cross-usage; and discriminatory pricing. Each of these exclusionary theories of harm is discussed briefly below.
Refusal to provide access to data
The first exclusionary conduct discussed by the Franco/German Study is a refusal to provide access to data, which can be anticompetitive “if the data are an ‘essential facility’ to the activity of the undertaking asking for access.” Since third-party data are offered to third parties for consideration, this theory of harm could apply where a dominant provider in a particular data market refuses to supply such data to competitors. This is a traditional antitrust scenario, however; the more novel data access issues concern first-party data collected by a company and not otherwise made accessible to competitors or other third parties.
Under the European Court of Justice’s judgments in Microsoft, IMS and Bronner, an authority can order a company to give a competitor access to an “essential facility” if the incumbent’s refusal to grant access (i) concerns a product which is indispensable for carrying on the business of the company seeking access, (ii) prevents the emergence of a new product for which there is a potential consumer demand (this condition being applicable when the exercise of an intellectual property right is at stake), (iii) is not justified by objective considerations and (iv) is likely to exclude all competition in the secondary market. A product or service is “indispensable” for these purposes 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 to develop products or services, even in cooperation with other companies.
These requirements would be met, according to the Franco/German Study, “if it is demonstrated that the data owned by the incumbent is truly unique and that there is no possibility for the competitor to obtain the data that it needs to perform its services.” This statement seems overly broad as applied to first-party big data, for three reasons.
First, for a duty to provide access to arise under EU law, the company holding the data would need to hold a dominant position in a market for a product or service other than the data themselves. As discussed above, first-party data collected by a dominant company may or may not constitute a barrier to entry to competitors or contribute to a dominant position on the part of the dataholder. The existence of the dominant position, and the relation between the dominant company’s data and its dominant position, do not follow from the unique and non-replicable nature of the data.
Second, the potential competitor seeking access to a dominant company’s first-party data would have to require access to the data to develop a new product or service in another market for which there is potential consumer demand. In other words, there is no EU law basis to suggest that a company could be required to share its data to allow a competitor better to compete with it in the same market, even if the data in question are unique and not otherwise available to competitors.
Third, even if the company seeking access to data wanted to use that data to offer a new product or service, it would have to show that developing the new product or service without access to the dominant company’s data would be impossible or unreasonably difficult, and that refusal to provide access would exclude all competition for the new product or service. Whether the need for data meets the required standard would depend on the data and the purpose for which the non-dominant company needs it. If a company seeking access wants to use the data to develop a new type of individually targeted advertising service, for example, the short-lived value of the data in question may make it difficult to show the requisite level of need, while the availability of many different types of data may make it difficult to show that it would be impossible or unreasonably difficult for the company seeking access to use alternative data or that the lack of access would exclude all competition for the new product or service.
The Franco/German Study argues that “refusal to [provide] access [to] data could also be deemed anticompetitive if it is discriminatory.” According to the Study, discriminatory access to strategic information by vertically integrated companies can distort competition, for instance where marketplace operators also operating as online retailers may get access to information about their competitors selling on that marketplace and the behaviour of consumers. Thanks to such information, a vertically integrated platform might be able to adjust its product range and pricing more efficiently than a non-vertically integrated retailer. A vertically integrated platform could also restrict the information received by downstream competitors regarding transactions they are involved in. Such information transfers and limitations could make the integrated platform operator more competitive than its competitors operating on its market place.
The Franco/German Study cites no EU sources for the proposition that discrimination in providing access should be treated as a separate violation from a refusal to provide access, but it cites a French case in which Cegedim, which was dominant in the market for medical information databases in France, refused to sell its OneKey database to customers using the software of Euris, a competitor of Cegedim on the adjacent market for customer relationship management software in the health sector. The French Competition Authority concluded that Cegedim’s behaviour represented an abuse of its dominant position. Cegedim could be analysed as a traditional tying case, however, since Cegedim was dominant in a market for the provision of third-party data, and it tied access to its dominant database to use of its non-dominant data analytics software, foreclosing competition in that market.
The Franco/German Study also cites the Commission’s investigation of Google’s comparison shopping services, where the Commission claims that Google systematically favours its own comparison shopping service over competitors’ in its search result pages. In this case, however, the Commission does not allege that Google discriminates in the provision of access to data, but rather that Google’s favouring of its own comparison shopping service stifles innovation and leads to users not necessarily seeing the most relevant search results.
It is not clear from the Franco/German Study’s analysis or the examples it cites why discriminatory provision of access to big data should be viewed as a separate antitrust violation compared to a refusal to provide access, as discussed above. In particular, if a vertically integrated platform could use customer information to adjust its product range and pricing more efficiently than a non-vertically integrated retailer, that advantage, by itself, would not create an obligation for the vertically integrated platform to share its data with any non-vertically integrated retailer.
The Franco/German Study argues that exclusive agreements or networks of agreements involving data access may infringe antitrust laws if they prevent rivals from accessing data or foreclose rivals’ opportunities to procure similar data by making it harder for consumers to adopt their technologies or platforms.
The Franco/German Study notes that the European Commission has alleged that Google’s practice of entering into exclusive contracts in the search advertising market might infringe Article 102 TFEU, because these agreements foreclose competitors from being able to challenge the company. From the Commission’s public statements in this case, however, it doesn’t appear that the Commission alleges that Google used exclusive contracts to prevent rivals from accessing data or foreclosing rivals’ opportunities to procure similar data.
Exclusive contracts in relation to big data could, however, give rise to antitrust concerns in two situations. In relation to the supply of data, a dominant third-party data supplier could use exclusive contracts with its customers to foreclose competition from other third-party data providers. In this scenario, however, the fact that the product market involves big data would not seem to raise any novel issues.
In relation to data collection, exclusive contracts or networks of contracts could potentially foreclose competition by third-party data providers or companies collecting first-party data on other natural or legal persons, such as platform users or consumers. The potential for individual exclusive contracts, or a network of exclusive contracts, to interfere with competitors’ access to data would need to be assessed in light of the substitutability of different types of data for the same purpose, the potential sources for each type of data and the purpose for which the data are required.
As discussed above, the substitutability of datasets can be difficult to assess. For instance, foreclosing access to data from one population of users may not affect competition to develop products where big data are important but the identity of the data provider is not, such as developing search algorithms, spell-check programs or voice-recognition software. In applications where users’ identity is important, such as individually targeted advertising services, the competitive effect of exclusivity in agreements providing for the collection of data from third parties would need to be assessed in light of the population of potential users, the availability of substitutable data from other sources (for instance as a result of multi-homing), the duration of any contractual exclusivity, and how quickly the value of the data in question diminishes over time.
Tied sales and cross-usage
Several authorities warn that tying sales or “cross usage,” i.e., the use of data collected on a given market in another market, can have foreclosing effects. The Commission will normally take action in such cases where an undertaking is dominant in the tying market, the tying and tied products are distinct products, and the tying practice is likely to lead to anti-competitive foreclosure.
In the big data context, a tying issue would only arise where the data in question are offered as a product for consideration, i.e., in relation to third-party data. Indeed, the Cegedim case cited by the Franco/German Study as an example of discriminatory access could be viewed as such a tying case involving third-party data, as discussed above. In the case of “cross usage,” it is not clear why any foreclosure or exclusionary issue would arise unless accompanied by a refusal by a dataholder to give access to data that can be used in more than one market, as discussed above.
Data is also said to facilitate price discrimination, since companies with market power who collect data about their clients’ purchasing habits may be better able to assess their willingness to pay for a given good or service and to use that information to set different prices for different customers. The Franco/German Study notes that price discrimination can be defended on economic efficiency grounds and queried whether “price discrimination in itself is within the scope of European competition law” and suggested that national competition law may be more likely to apply.
Price discrimination is in fact within the scope of EU competition law, though it is not a priority enforcement area addressed in the Commission’s Exclusionary Practices Priorities. In Clearstream, the General Court upheld a Commission decision finding that Clearstream’s charging of a higher price to Euroclear Bank for equivalent clearing and settlement services than to national central securities depositaries constituted discriminatory pricing prohibited by Union law.
In the big-data context, similarly, a company that is dominant in a market for the provision of third-party data could be found in violation of Article 102 TFEU. This theory of harm, however, would not apply to first-party data or to the provision of third-party data by a company that was not dominant in a market for such data.
The Franco/German Study seems to contemplate a different concern, that the use of first-party data could facilitate discriminatory pricing by a dominant company in a different product or service market by enabling such companies to better assess their customers’ willingness to pay for their products and services. The Franco/German Study’s comments on the potential efficiencies to be derived from such practices may reflect a doubt about whether discriminatory pricing by dominant companies should be prohibited under EU law, but this issue is beyond the scope of this article.