Big data: A new frontier for competition law

By Kalyani Singh and Mohith Gauri, Chandhiok & Mahajan
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Big data and data-driven innovations have become an important part of our digital society. Big data has the potential to significantly improve services and products. Given the ubiquity and the impact of big data, the focus is not whether to, but how to implement regulatory oversight. Regulation has been examined in the context of data protection enforcement.

Kalyani SinghPartnerChandhiok & Mahajan
Kalyani Singh
Partner
Chandhiok & Mahajan

However, the regulation of big data through competition law enforcement has also become an important objective.

Big data and merger review: Big data concerns are important in merger cases involving data related markets. Mergers can lead to differentiated access and increased concentration of data if the transaction creates an entity holding a large database. Such a combination of interests is concerning if it is impossible for competitors to replicate or access the information.

In the Facebook (FB)/WhatsApp (WA) case, the European Commission (EC) considered whether the integration between FB’s social networking platform and the messaging application WA would allow the former access to the latter’s user data, thus reducing competition. Assessing the impact of data concentration on online advertising, EC concluded that there were no competition concerns, as alternative providers would continue to offer targeted advertising after the merger. Also, large amounts of internet user data, valuable for advertising purposes, are not within the exclusive control of FB. EC also decided similarly in the Microsoft/LinkedIn merger.

The Competition Commission of India (CCI) in the Bayer/Monsanto merger stated that the combined entity could use its expertise in genome editing and big data technology to stifle competition. Accordingly, the CCI required appropriate remedies.

Mohith GauriAssociateChandhiok & Mahajan
Mohith Gauri
Associate
Chandhiok & Mahajan

Big data and abuse of dominance: The French competition regulator Autorité de la Concurrence and the German counterpart, Bundeskartellamt (BK), in their report identified abusive conduct involving exploitation of big data to foreclose the market and by denying access to such data. Such conduct could also result in an abuse of dominance if the big data is an essential facility. Refusal of access could also amount to discriminatory treatment of customers. For instance, vertically integrated companies may have discriminatory access by operating the online marketplace while being a retailer on it. The preliminary investigation by EC in 2018 into Amazon’s conduct illustrates this theory of harm.

UK Competition and Markets Authority considers that data firms may leverage data controlled in some markets to achieve enhanced power in related markets through bundling or tying-in.

While these are theories of harm traditionally applied in abuse of dominance cases, recent developments in some jurisdictions suggest conduct specific to big data. In 2016, BK initiated proceedings against FB for alleged abuse of dominance. Its conduct also violated data protection principles. Violation of the privacy of users may also amount to an abuse of dominance.

Interestingly, the CCI has currently refrained from this approach. In the WA case, it was alleged that WA violated users’ privacy by sharing data with FB. The CCI did not address this issue as it was pending in a civil court. This deferred approach suggests acceptance of possible jurisdictional conflict between data protection and competition law.

Big data and collusion: In 2015, the U.S. Department of Justice prosecuted a cartel fixing prices for goods sold on Amazon. The cartel used a pricing algorithm, reactive to consumer preferences, which enabled sellers to coordinate prices. The CCI has expressly acknowledged that pricing algorithms resulting in collusion are an enforcement priority.

Enforcement of competition law in data-related markets is now quickening. The CCI has stated that, notwithstanding the benefits of data driven innovation, big data would be subject to scrutiny for possible anti-competitive conduct. It stated in its Google decision : “new business models based on collection and processing of big data [are] currently shaping the world. With the development of data mining and machine learning, businesses are able to offer innovative, high-quality and customised products and services at low or even zero prices, with great gains for consumers. [However] the benefits of providing big data do not come without a cost. Consumers may be increasingly facing a loss of control over their data and are exposed to intrusive advertising and behavioural discrimination.”

While the roadmap is still not clear, there is no doubt that collecting and processing of big data will be enforced within competition law.

Kalyani Singh is a partner and Mohith Gauri is an associate at Chandhiok & Mahajan.

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