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Competition Law and Big Data: Do Competition Authorities Know How To Do It? #CPIChronicle

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ariely

You may remember that just before Christmas I wrote a post saying that Pablo was putting pressure on me to write a joint article on selectivity in State aid during the holidays? Well, it should not surprise you to know that we never got around to it (it will happen, though).

We nevertheless did take the time to do some other non-work writing: Pablo did his thing (probably wrote the majority of his forthcoming books) and I did mine (wrote a couple of short pieces on general issues), namely one editorial for the next issue of the Journal of European Competition Law and Practice on “Competition Law and Fairness” (more on this soon), and one piece on competition and big data (co-written with my colleague Sam) for Competition Policy International’s special Antitrust Chronicle issue on “Competition in Digital Markets”.

The latter contribution -which builds on the Dan Ariely quote above…- can be freely accessed here, courtersy of CPI: cpi-lamadrid-villiers

UPDATE: Pablo tells me that Common Market Law Review has published today an article on this topic by our friends Francisco Costa Cabral and Orla Lynskey; it will certainly provide you with insightful thoughts and views that may moreover diverge from the ones developed in our piece.

Written by Alfonso Lamadrid

24 January 2017 at 10:54 am

Posted in Uncategorized

Yet another presentation on competition and big data

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Picture1

My silence on the past few days has to do with several open fronts thanks to the Commission’s bad habits of summertime desk cleaning, but also to my bad habits of devoting  non-work time to conferences and talks (my only consolation is that Pablo has recently been by far the most active speaker in Chillin’ Competition’s flying circus).

-Some of you have asked for the presentation I used at the VUB’s very interesting debate on big data and competition law; here it is:

Competition-big-data_lamadrid 23 June

You know my views from quite a few previous posts (all links appear at the end of the ppp). The main addition this time was to discuss the joint French-German report issued last May which essentially makes general conjectures about how standard theries of harm could apply to big data (like they apply to any other asset) if the right facts were to arise in a given case. In sum, nothing new under the sun.

The change of attitude on the part of competition authorities is nevertheless remarkable. When I spoke at the EDPS closed-door workshop at the European Parliament in one of the first discussions on this matter my views were perhaps a bit anti-climatic for an audience pre-disposed to use competition law to tackle non-competition issues. But I did -logically- have the support of the only authority in the room, DG Comp. Now, however, we see not only the German Facebook case and the French-German report giving further visibility to a non-issue, but I also hear that some within DG Comp are pushing to do more on this front. That’s disconcerting.

-None of you have asked for the presentations I have used the past two Fridays at the College of Europe Summer Courses (where for the 4th year in a row I’ve lectured on Antitrust Procedure and Article 106). Lack of interest has never precluded me from posting stuff here, but since the two presentations are in Mandarin I’ll spare you the pain…

Written by Alfonso Lamadrid

12 July 2016 at 6:46 pm

Posted in Uncategorized

More on Big Data and Competition Law

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4Vs

To sighs of relief among the audience I have just finished my intervention at ERA’s conference Competition Rebooted: Enforcement and personal data in digital markets”

My slides are available here: Competition Big Data_Lamadrid

Nothing of what I said will sound new to frequent readers of this site; the content of my presentation has a lot to do with previous posts on the subject (see here, here and here).

The contributions from the EDPS himself, Jorge Padilla, Orla Lynskey, Maurice Stucke, Patrick Van Eecke, Cyril Ritter, Amal Taleb, Cecilia Parker and Christian D’Cunha were all much more interesting. If interested in their slides, then you should have registered 😉

Written by Alfonso Lamadrid

24 September 2015 at 4:04 pm

Posted in Uncategorized

On Privacy, Big Data and Competition Law (2/2) On the nature, goals, means and limitations of competition law

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In my previous post I outlined the content of the main part of my presentation at the European Data Protection Supervisor’s recent workshop on Privacy, Consumers, Competition and Big Data, held in the wake of the EDPS preliminary opinion on the subject.

Today I’ll provide you with my views on the great question underlying both the workshop and the opinion: should data protection considerations be incorporated to competition law’s substantive assessments?

The (preliminary) view implied in the EDPS’ opinion is that they should. In essence, the opinion posits that competition law is or should be about consumers’ welfare, and that this comprises much more than only the narrow set of economic considerations that competition law currently looks at. The EDPS tends to believe that public interest would be better served that way. Some lawyers and the companies they represent also hold these views but perhaps for different –less public interest oriented- reasons.

The somewhat anticlimatic view I conveyed to the participants at the workshop on this point was the following (as in the last post, I’ll basically sketch my conference notes):

Competition law is certainly a most tempting instrument given both its flexibility to accommodate creative theories of harm and the ample remedial powers it offers. These reasons explain the recent use (or instrumentalization) of competition law to pursue other public policy goals [I also talked about the latter yesterday at another conference, but I might develop that in another future post].

But just because competition authorities have a hammer, that doesn’t mean they should view every problem –even if unrelated to competition law- as a nail.

In my view, competition law and competition authorities are not well-suited to factor into their analysis (perhaps more important) public policy considerations alien to the specific matters they are supposed to deal with. Competition law is a legal regime of last resort, which means that their existence is premised upon the assumption that, in those areas where regulation doesn’t say otherwise, competition is the best way to allocate resources. When this is not the case, I think the solution may lie in regulating more or in a smarter way, but not in blurring the already blurred contours of a legal regime that –let’s not forget- is of a quasi criminal nature.

Other reasons why competition law might not be well-suited to deal with privacy/data protection issues relate to the fact that it’s only triggered in very specific circumstances; that it is about conduct and not structure; that if authorities are reluctant to intervene in cases of apparent direct harm to consumers in the form of excessive price it’s not easy to see why they should focus on direct harm through lower privacy alternatives (when moreover there is an additional ad hoc legal regime precisely to establish minimum standards). And on top of those there are institutional factors: if competition authorities struggle to strike a balance between strictly economic factors, how would they be supposed to trade-off economic factors with fundamental rights or other public policy objectives? (environment, industrial policy, labor standards, effects on jobs …)

Coming back to the data protection world. The gap (if any) does not lie in competition law not reaching where it should, but on data protection law lacking adequate regulation and remedies. Accordingly, the way to fill in that gap would require devising an effective data protection regime with its own and more effective rules and principles, but not extending competition law beyond its natural limits.

Some person I very much appreciate personally and intellectually (can’t give names because Chatham rules applied) raised the point that the Charter of Fundamental Rights may perhaps be a game changer in that the European Commission would be bound by it and therefore should not only not violate those rights but also facilitate their exercise by citizens. I tend not to agree. In my mind the argument that the Commission would have any obligation not only to comply with the negative obligations Charter but also to positively ensure that private companies comply with it to an extent that goes beyond that required by specific ad hoc legislation –and that may moreover clash with the fundamental rights of others- is stretching the reach of the Charter too far.

I certainly don’t think public policy should be only or mostly about efficiency and competition (as an admired colleague often says, a world exclusively governed by competition would make a great subject for a dystopian novel). There are values, fundamental rights and public interests which might very well trump economic considerations. But my point is that even if one doesn’t trust market forces to promote optimal levels of privacy (due to consumers’ apparent indolence or for whatever reason), one shouldn’t entrust competition law with that task either.

If you ask me, there are issues far too important to be left to competition authorities and competition lawyers.

Written by Alfonso Lamadrid

6 June 2014 at 12:18 pm

On Privacy, Big Data and Competition Law (Post 1/2)

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As I self-advertised in my previous post, I participated yesterday at the European Data Protection Supervisor’s impressive workshop on Privacy, Consumers, Competition and Big Data, where, by the way, this blog received a few mentions.

My impression is that it provided a useful opportunity for various actors to reflect together on the nature, potential and limitations of each discipline in the wake of the EDPS preliminary opinion on these issues.

The workshop touched on competition issues several times. On the EU side, Kris Dekeyser gave the Commission’s view, and on the private side I was honored (and, frankly, a bit surprised) to be the sole EU competition lawyer speaking.

Julie Brill (FTC Commissioner; her speech is available here) and Pamela Jones Harbour (former FTC Commissioner now in private practice) also shared their views on the US approach to these issues.

I was asked to explain to a non-expert audience (by non-experts I mean those who retain the ability to realize sometimes that the king may sometimes be naked…) the notion of market power, why it is important for the application of our rules, how it is assessed in practice, and what are the particular challenges posed by digital markets and big data in this regard.

I’ll spare you the content on my intervention on the most basic issues; suffice it to say that I pointed out that the traditional means to define markets and market power are far from perfect in many ways, but that they’re not supposed to be used mechanically and in the abstract, that the Commission may depart from standard assessment tools to capture the dynamics of competition in any given sector, and that it enjoys wide discretion to act flexibly in this regard.

Moving on to the more interesting stuff. Following a conventional explanation of the main peculiar features of technology/digital markets and of their mixed competition law implications I gave my (non data protection expert) views on the big relevant issues addressed in the workshop, namely (A) What are the implications of data and big data for market definition and market power assessments and (B) Should privacy data protection standards be incorporated to substantive assessment under the competition rules

Today we’ll discuss A, and tomorrow [on Friday] we’ll deal with B, so:

What are the implications of data and big data for market definition and market power assessments?

(i)                 Data is without doubt an increasing important asset/input, and it should no doubts be acknowledged as such. As some of you may remember, some time ago I commented on an article that essentially posited this idea, which I consider to be fairly uncontroversial. In this sense, I’ve no objection to the idea that, depending on the circumstances, data-related issues may give rise to competition concerns.

At the same time, however, data is an important asset or even crucial asset, but no more; and I don’t see why competition law would be required to adapt its rules to when applying them to data-heavy markets.

(ii)               I see one exception to the above. As I explained in a recent post, our current turnover thresholds are not well-suited to capture mergers in the subsidized side of two-sided markets (which may often be markets where non-traded data is important). Only jurisdictions envisaging market share thresholds (often criticized, also by me) may be competent to assess these transactions. Facebook’s very recent decision to try to have the EU review the acquisition of Whatsapp is to be read within this context. I don’t know what the solution is, but it’s worth a thought.

(iii)             Some (including Pamela Jones Harbour in her dissent to the FTC’s Google/Double Click decision) have advocated for a definition of relevant markets for “data used for x [in that case targetted advertising] purposes”. I’m not persuaded by this proposal (except perhaps when the data is subject to trade) because I’m not sure the intermediate data market is a meaningful market in the sense of competition law. If the alleged problem is that the use of data might have consequences in some markets, then my take is that it makes more sense to assess those markets directly.

(iv)             Regarding the big substantive issue, which is related to scale, aggregation, network effects playing to the benefit of allegedly dominant firms, I essentially said that:

  • far from being an obvious competitive problem this also has mixed implications, for data can also be a source of very significant efficiencies (and big data a source of big efficiencies) in many and important fronts;
  • it is true that access to data may in some circumstances be a barrier to entry and even a very important one depending on the facts (I also noted that barriers to entry are not in themselves a problem requiring intervention because competition law is about conducts and not structure);
  • many people throw out “essential facility” as a buzzword in this context to support the contention that some firms should be mandated to share data. In my view the term is used too loosely. As I explained, the identification of an essential facility is subject to an extremely high legal burden (indispensability, elimination of competition in a downstream market…) which makes it difficult to think of instances where it could be satisfied;
  • some people had formulated the idea that network effects and scale determine that users may be locked-in to a given provider and therefore have no meaningful choice as to the privacy policy applied to them. On this point I recalled, among others, that the recent Microsoft/Skype Judgment (yeah, I’m already starting to quote it) seems to close the doors to any argument based on laziness/stickiness when switching is technically and economically feasible.

(v)              I also observed that the main issue where competition law and data protection policies may converge relates to data portability. In cases where it is shown that scale is of the essence, then practices that could deny rivals a minimum viable scale could fall within the scope of the competition rule (in fact, Google’s proposed commitments -see here and here– already incorporate a section on the portability of data for AdWords campaigns). On the regulatory front, the proposed new EU regulation on data protection (currently stuck at the Council) also incorporates a right to data portability. Btw, some of the major companies cited in these discussions already have tools to facilitate portability (see here or here)

(vi)          My last comment on this point was that privacy policies can also be a parameter of competition (even if admittedly many users currently appear to confer more importance to other parameters).

Apologies for making it so schematic, but having quite some work to do I’ve chosen to basically to a transcript of my notes, plus this is already lengthy enough for a post.

On the next post I’ll state my views on whether non-economic privacy considerations should be included as part of the consumer welfare standard.

Written by Alfonso Lamadrid

3 June 2014 at 3:00 pm

The lifecycle of the competition and data debate and the misconception behind calls for antitrust intervention

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The Economist

The Economist devotes its front page and a feature this week to the question of how data affects competition and competition law. It was not my greatest concern this week, but ok [if this post, written on a Saturday morning, gets published on Monday that’s because Macron won and I have not jumped out of the window]. The newspaper -which we have often echoed on this blog- joins the chorus of those who want “changes” and “new tools” in competition law to deal with this allegedly new phenomenon. In a way, The Economist sides with economic populism on this one (we’ll explain why in a few lines from now).

You already know my views on this topic from the posts and presentations available here, here, etc, essentially summarised in this CPI contribution. Today let me address something fundamentally more important (albeit in a rush, while my kid is miraculously still asleep… )

Creating waves

Step 1. This whole debate was triggered and fuelled by some tech companies who, unlike their rivals, did not operate data intensive businesses, or certainly not to the same scale. For instance, a company whose name we don’t need to mention, appeared to share these views only a couple of years ago, but then -following its acquisition of LinkedIn-  😉 changed views and endorsed these (or at least their spokesperson redirected about 300 different media outlets to this blog, for which we are grateful). This is actually not new (a similar thing happened regarding SEPs) and I actually think it is legitimate, logical, and absolutely not reproachable for private companies to change stance according to their evolving interests. But the origins of the debate are interesting nonetheless.

Step 2. A debate that was part of a business strategy and in its own self-interest finds some well-meaning allies (EDPS and others) who are genuinely concerned about what they see as a problem and a regulatory void and are keen on having their message propelled.

Step 3. Then it’s the turn for us lawyers and conference organisers: since we have little else to talk about these days (and we like to talk, so much that some even pay to do it, a market failure well exploited by others) we make an issue out of this. The result being that the topic is everywhere (to be sure , I myself have contributed to this speaking about it at the European Parliament, ERA, the VUB, Leeds University, the IEB and others, even if to say it is a non issue). This, in turn, eventually reaches academia. And there we see interesting hypotheses and theoretical reflections, but most of which I am not sure correspond to what we actually see in the markets (and which, to the extent I know, have not offered conclusive answers as to how competition should allegedly be changed).

Step 4. The next phase consists in competition authorities showing that they listen and adapt to public debates and to seemingly changing markets, and we end up with joint reports and strange cases (see here for my comments on the German Facebook case). Only the European Commission has kept its cool, although lately there are signs of changing winds there too…

Step 5 is that part of the media -not an ally of many of these data-intensive business models and companies- echoes it and turns it into a wider issue of public policy. This is where we seem to be now. Admittedly, however, what you see in print may only be the tip of the iceberg;  one day someone should write about how the media is shaping competition law these days -both to widen is net (at least that is what other media reports, see here) and to narrow it (see here).

Step 5 is that politics (the most permeable of all, particularly these days) succumbs to the idea.

And this is how change and sausages are made.

Economic Populism?

Contrary to some, I have always accepted that data can give rise to barriers to entry, market power and that it can be used to foreclose competitors. The circumstances under which this can happen are much narrower that many now claim, but still possible, as precedents actually show. My point is nonetheless that we have the tools to deal with those problems whenever they arise. Caution is what is needed, not substantive changes [a different matter being the procedural reform of merger notification thresholds, a point we actually made here before this debate exploded]. If there is one thing that cannot be criticised if competition law is lack of flexibility. A set of wide, common sense (rule of reason) principles and rules that has been able to apply and adapt to every industry for over a century can certainly be applied to data.

To be sure, our economic and legal tools will not always yield conclusive results when applied to data (they often don’t either when it comes to price, including for market definition and others, but it looks somewhat more objective or seemingly mathematical and we are happy to play along. But when do we have conclusive results in social sciences? (Any pollsters have a view?)

And this brings us to the fundamental misconception of these debates. Whenever politicians, respected economists or the media -including the ones with whom I would generally agree-  discuss competition law, they tend to view it as one more took among those available for economic regulation to pursue legitimate goals [admittedly, competition authorities have facilitated that by using enforcement to shape markets and fill in perceived regulatory voids particularly in recent years]. But it’s not. Competition law, rather antitrust (admittedly we can leave mergers and State aid aside), is a sanctioning regime. Dettaching the discipline from its legal nature (remember?) is wrong, and is a bit populist too.

So, yes, its  correct application will (most often) naturally improve the functioning of markets and contribute to a fairer society (more on this here), and yes, enforcement discretion can be exercised to target the greatest perceived social concerns.

But in a sanctioning regime there are limitations inherent to the very rule of law. We don’t get to change the rules in the middle of the game, we don’t (should not) get to strecth the rules to impose sactions nor do (should) we intervene in the face of uncertainty and doubt. Competition law should not prohibit what it does not understand, it should not meddle with ecosystems or with the very core of business models (including those based on data) when the effects of intervention are uncertain. This, until now, was uncontroversial. It all goes back to basics: general principles of law trump or should trump expediency and effectiveness.

Written by Alfonso Lamadrid

8 May 2017 at 10:56 am

Posted in Uncategorized

A Brave New World: The Potential Intersection of Competition Law and Data Protection Regulation (by Orla Lynskey)

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Intro by Alfonso: Some days ago someone sent me a link to a an opinion issued by the European Data Protection Supervisor dealing with the interface between data protection, competition law and consumer protection.  I already expressed some views on this in a post published last year: Data protection and antitrust law (positing my view that there’s nothing new under the sun), but this time I thought it’d be interesting to have the view of someone who’s an expert not only in competition law, but also in data protection stuff. I found the ideal guest blogger to cover this issue: Orla Lynskey, a very good friend, and an extremely promising academic in the field of IT Law who’s been assistant at the College of Europe, competition lawyer at Howrey, case handler at DG Comp, holds a PhD in European Data Protection Law from Cambridge University and is now a lecturer at LSE focusing on data protection and competition law. I leave you with her:

 

In late March the European Data Protection Supervisor (EDPS), an agency which oversees compliance with data protection rules by EU institutions and advises on the development of data protection law within the EU, issued a preliminary opinion on the intersection of data protection, consumer protection and competition law. Both scholars and the EU institutions have been musing on the relationship between data protection and competition law over the past few years. However, despite this attention, it is not yet apparent whether, and if so how, these two fields actually intersect.

Kuschewsky and Geradin have recently published a paper on the impact of data protection in Commission investigations and in particular in dawn raids. The use of fundamental rights as a shield to secure procedural guarantees is now well integrated in competition law (think, for instance, of the integration of ne bis in idem in transnational competition procedures). This narrow intersection between data protection and competition law should therefore come as no surprise.

The EDPS report attempts to identify other areas in which parallels exist, or could potentially exist, between the two fields. For instance, the report highlights that if the new data protection regulation is adopted (a big if at the moment..), both data protection and competition law would apply to entities established in third-country whose actions have effects in the EU. These type of parallels are of course present however they merely help us to compare the regimes rather than get to grips with how they intersect. Moreover, some of the parallels identified are less credible than others. For example, I still fail to see anything beyond a very superficial similarity between ‘substitutability’ for the purposes of the HMT in competition law and the notion of ‘compatibility’ in the data protection principle of purpose limitation (according to which data processed for one purpose should not be processed for another secondary purpose which is incompatible with the initial purpose).

Beyond these micro-comparisons, in a second (earlier) paper Kuschewsy and Geradin had set out some ‘preliminary thoughts’ on the bigger issues at stake. In particular, they questioned whether EU competition law can limit the accumulation and processing of personal data and whether personal data could be deemed an essential facility. However, the EDPS report seems to be kick-starting a much more ambitious discussion than that initiated by Kuschewsy and Geradin. It appears to me that the EDPS is querying, albeit indirectly, whether the notion of consumer welfare should incorporate data protection considerations. By this, I mean that competition law would incorporate fundamental rights into its substantive analysis when conducting an investigation under Article 101 or 102 TFEU or examining a concentration under the EUMR. To be very clear, this would mean a departure from a purely economic analysis of consumer welfare. If Commissioner Alumnia’s speech on the matter is anything to go by, this is not something the Commission is expecting (‘although Coates refers to this potential intersection – but certainly does not endorse it – in his book on Competition Law and Regulation of Technology Markets’.

I realise that this would represent a radical departure from the status quo and as nobody seems to be willing to move beyond ‘preliminary’ thoughts on this matter, I am merely adding my own ‘preliminary’ observations to the mix (that is a disclaimer in case I change my mind tomorrow).

I see two arguments which support this shift in policy. First, the current consumer welfare standard seeks, inter alia, to facilitate consumer choice. In industries which are heavy on data aggregation – social networking sites, search engines, micro-blogging platforms etc – network effects based on personal data constitute a significant barrier to entry. The monopolisation of these industries, in turn, poses serious problems for the application of data protection rules. In the EU, all personal data processing must have a legitimate legal basis and the legal basis most frequently used by private sector entities is ‘individual consent’. This consent must be freely given, specific and informed. However, the argument has been made (for instance before the Irish regulator in the Europe-v-Facebook audit) that consent to processing by a monopoly cannot be ‘freely given’. While this argument would never fly in the US (for reasons which I shall not explain here), it may have some traction in the EU where data protection rules seek (to little avail) to rectify power asymmetries between the individual and the data controllers. Data protection advocates have long been arguing that competition law should help facilitate actual consumer choice.

More convincingly perhaps, since 2009 data protection has been recognised as a fundamental right in the EU legal order, independently of the right to privacy. As such, it is binding on the EU institutions when enacting legislation or adopting decisions. Failure to respect this right will lead to the invalidity of the measure at stake (as we saw last week when the Data Retention Directive was declared invalid on the basis of its incompatibility with this Charter right). This may well therefore be the trump card.

This being said, there are arguments to be made against the incorporation of data protection and fundamental rights considerations into the consumer welfare standard (and I am sure readers of this blog will be very happy to point them out to me!). The primary objections I can identify are threefold. First, intervention on these grounds looks like punishing dominance and might entail significant interference with the commercial freedom of companies concerned. This should ordinarily be the purview of regulation (although as Dunne noted recently in a JCLE article, ‘regulatory competition’ is on the rise in the EU through the rollout of commitment decisions). Second, it is arguable that this would be another example of the ‘instrumentalisation’ of competition law and that it would be detrimental to the internal coherence of the discipline to incorporate fundamental rights into the substantive analysis of competition law. I have a certain amount of this sympathy for this view. Third, it might be argued that data protection regulation should adequately protect the right to data protection of individuals. This is effectively what the Commission stated in the context of the GoogleDoubleclick merger and what the Court determined in the ASNEF Equifax case. However, these matters were determined pre-2009 and the constitutional landscape has changed significantly since then. Moreover, it would now seem a little disingenuous for the Commission to argue that competition law does not apply to regulated sectors.

In short, it seems to me that whether competition lawyers agree or not, this preliminary report may be the first baby step towards a more holistic approach to the protection of data protection within the EU. Arguments to the contrary are also welcome however (I can then include them in my work in progress paper!).

Written by Alfonso Lamadrid

21 April 2014 at 10:40 am

Data protection and antitrust law

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Regretably I couldn’t attend Concurrence’s New Frontiers of Antitrust conference held last Friday in Paris in spite of Nicolas Charbit’s kind invitation. I hear that the conference was once again most interesting, so congrats again to Nicolas and the rest of the team at Concurrences.

Perhaps the most prominent topic in this year’s program related to the interface between data protection and antitrust law. I’m sorry to have missed the discussions over this issue, for perhaps they would have enabled me to see where’s the substantive beef that justifies all the recent noise. Whereas I understand the practical reasons why this issue has conveniently become a hot one in certain academic circles, I confess my inability to see the specific features that make this debate so deserving of special attention.

The way I see it, personal data are increasingly a necessary input to provide certain online services, notably in two-sided markets. So far so good. But this means that personal data are an input, like any other one in any other industry, with the only additional element that the recompilationa and use of such input is subject to an ad hoc legal regime -data protection rules-.

In my view, competition rules apply to the acquisition and use of personal data exactly in the same way that they apply to any other input, and then there’s a specific layer of protection. I therefore understand that data protection experts have an interest in finding out about the basics of antitrust law to realize about how it may affect their discipline, but I fail to see the reasons why competition law experts and academics should devote their time to an issue which, in my personal view, raises no particularly significant challenges. [The only specificity may be that data protection practices may constitute a relevant non-priceparameter of competition, for companies may compete on how they protect consumer data]. I would argue that this is a serious matter, but one for consumer protection laws to deal with, and in which competition policy may at most play a marginal role (I understand this was also the view expressed by Commissioner Almunia in a recent speech).

To compensate for my absence at Concurrence’s conference, on Saturday morning I read some interesting “preliminary thoughts” published last week by Damien Geradin and Monika Kuschewsky: Competition Law and Personal Data: Preliminary Thoughts on a Complex Issue. The piece provides a contrarian view to the one I just expressed. Since I might very well be wrong (that’s at least what my girlfriend’s default assumption in practically all situations…) I would suggest that you take the time to read it in order to make up your own mind. It won’t take you long, but since behavioral economics (and the clickthrough rates to the links we show) tells us that many of you are of the lazy type, in the interest of a balanced debate here’s a brief account of its content; my comments appear in brackets:

(Click here if you’re interested in reading more)

Read the rest of this entry »

Written by Alfonso Lamadrid

25 February 2013 at 1:47 pm

My first piece as joint general editor of the Journal of European Competition Law & Practice

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JECLAP

I am delighted to have joined the Journal of European Competition Law & Practice as joint general editor (together with my friend Gianni De Stefano, from Hogan Lovells; and an impressive team of editors). JECLAP has become a reference in a short time, and I am really excited to become involved in this venture (I just regret that I will not overlap with Judge Nihoul, who is stepping down).

I reproduce below my first piece published in my new capacity. The journal version is available here. I look forward to your comments, and to your submissions too (I have published in the journal a couple of times and can tell you first hand that JECLAP has the swiftest and most professional process I have seen around; I can also tell you that I will make sure it stays this way!).

I leave you with the editorial:

Changing Times for JECLAP, Changing Times for Competition Law

In less than 10 years, JECLAP has established itself as one of the (if not the) leading competition law journals in Europe. Thus, I felt honoured (and, why not say it, also somewhat overwhelmed) when I was asked to replace Paul Nihoul as one of the general editors—together with Gianni De Stefano. Needless to say, I gladly accepted. Inevitably, doing so made me think about changes in the enforcement of EU competition law since JECLAP’s creation, and about the role that the journal can play in these changing times.

This editorial is prepared at a time when EU competition law is undergoing a noticeable evolution. When JECLAP was founded in 2010, it looked like we were close to reaching the ‘end of history’ in the field. A landmark moment was the adoption of the Commission Guidance Paper on Article 102 TFEU enforcement—which was in fact the subject of an article by Giorgio Monti in the first issue. It looked like efficiency and consumer welfare were just about to become the keystones around which the interpretation and application of EU competition law would revolve.

Things look very different 7 years later. We have witnessed the emergence of new analytical frameworks and new ideas. Concepts like choice and, more recently, fairness, have found their way in academic and policy discussions. Paul Nihoul himself has in fact been one of the most vocal proponents of choice as a guiding principle in EU competition law (see for instance ‘Choice vs Efficiency’, JECLAP (2012) 3(4): 315–316). What these developments show is that the efficiency-based framework has failed to win the hearts and minds of many lawyers. The consensus around consumer welfare that exists on the other side of the Atlantic has not materialised in Europe, and perhaps never will.

In addition, new developments in the field are pushing the boundaries of EU competition law. Looking back at the past decade, it looks like authorities in Europe have become less reluctant to interfere with the exploitation of intellectual property rights, to mention one example. Pay-for-delay settlements in the pharmaceutical sector, and the use of injunctions in the context of standard-essential patents (both abundantly discussed in the pages of JECLAP) are clear milestones in this sense. Similarly, discussions relating
to the use of big data and the impact of algorithms on firms’ ability and incentive to engage in collusive and/or discriminatory conduct have moved to the centre stage.

What is, and can be, the role of JECLAP in reaction of these developments? Allow me to share a few thoughts with you.

Place the law at the centre of the analysis: If EU competition law is fascinating, this is in part because it is at the intersection of many disciplines. The downside is that, for that very reason, we run the risk of ignoring that enforcement and policy-making is achieved through the law. It is my hope that JECLAP will contribute to ensuring that the law remains at the centre of discussions. This can be achieved in many ways. One way is to keep up to date with legal developments and putting them in their economic, regulatory and technological context—whether through current intelligence pieces or through the excellent surveys that have greatly contributed to the journal’s name.

I also hope JECLAP will engage critically with new approaches to the interpretation and enforcement of EU competition law. As has been recently argued in these same pages, there is no reason to rule out fairness as a guiding principle for enforcement. At the same time, it is necessary to bear in mind that high-level objectives need to be made operational. If a principle is not, or cannot, be broken down into a set of practicable legal
tests (that is, if it lacks a concrete content that can be anticipated in advance by stakeholders), it may open the door to arbitrary decision-making—and arbitrary decision-making is inherently unfair.

Economics? More of it! This said…: Economic tools are widely used in EU competition law. In fact, never in the history of the discipline has its use been more frequent and pervasive. On the other hand, it is impossible to ignore that the rise of economics has been received with scepticism, if not overt resistance, by some lawyers. Several factors can explain this reaction. The perceived ‘imperialistic’ inclinations of economics—that is, the tendency of economists to apply their approaches and techniques to phenomena that are studied by the other social sciences—is one of them. In this sense, it is hoped that
JECLAP will continue to bridge the divide by encouraging the dialogue between lawyers and economists.

It is also hoped that JECLAP will help understand that economic analysis makes some fundamental contributions to the discipline that are often ignored. Economics in competition law is not just about defining overarching benchmarks (namely efficiency and consumer welfare) and about econometric forecasting. It is also valuable as—if not primarily—a means to define boundaries on administrative action and, by the same token, as a tool that contributes to the clarity and predictability of the law.

A platform to deal with new (and old) ideas: It is exciting to see there is no shortage of new ideas in competition law, and JECLAP editors would like the journal to contribute to their production and dissemination. On the other hand, we would like to encourage discussions that do not miss the forest for the trees and that address transversal issues that are of the utmost relevant in practice. These are the sort of questions that require the combined skills of practitioners—who have a nose for relevant issues—and academically minded lawyers—who have developed the ability to see the big picture.
JECLAP has been and should continue to be the preeminent forum for these exchanges.

In this sense, and as I write this editorial, I can think of some questions of fundamental importance that have not yet been clarified. For instance, there is still uncertainty as to what is exactly meant by an ‘anticompetitive effect’ in the case law. The same is true of other fundamental concepts, including that of counterfactual—which is central to ongoing cases relating to the exploitation of intellectual property rights (just think of Lundbeck and Servier). Readers are hereby invited to contribute to these.

JECLAP is a success story. I have no choice but to work hard, together with the rest of the team, to ensure the success lasts many more years!

Written by Pablo Ibanez Colomo

14 August 2017 at 7:34 pm

Posted in Uncategorized

The innovation offence (by Stephen Kinsella)

with 3 comments

offence

[We are happy to publish a guest post from one of the most respected and interesting practitioners in the EU market, Stephen Kinsella (he’s of course best known for having been a speaker at the first Chillin’Competition conference and for being the husband of a great novelist  who is currently crowdfunding her new novel. Below he gives his views on a very topical matter on which we have also commented before. As always, we will be happy to foster discussion and are open to publishing other views on the matter. Enjoy!]

Mergers tend to get more attention in press coverage than other antitrust activity in Europe.  That is partly because they have compressed timetables and obvious milestones to trigger stories (announcement, filing, enquiries, third party interventions etc) but also because they can be resolved to a binary choice between approval or block, with readily understandable consequences.  Not only shareholders but other financial players follow closely each twist and turn, placing bets on rumours of setbacks or “theories of harm”.

All this froth can sometimes mask a duller reality, which is that at the EU level of an average 350 or so deals notified in Brussels each year, less than one a year is ultimately prohibited. Of those that are permitted only around 5% are subject to any modifications or commitments as the price of approval.

And there is a reason for this. The system is weighted in favour of approval.  It carries within it a presumption that deals will be cleared, and speedily, unless good evidence can be brought forward of some creation or strengthening of dominance causing harm to effective competition, to the detriment of consumers denied the benefits of choice.

Granted, merger control, like other aspects of antitrust, is not static.  It evolves in response to evidence, to greater learning about how markets behave and to developments in legal and economic thinking.  But it does so cautiously, trying to balance the risks of excessive intervention (in the jargon, Type 1 errors) against non-intervention (Type 2 errors).  The Type 1 errors could include not only hampering the ability of the merged entity to innovate, but also deterring those who would invest in creating products with the aim of selling them to another who is better able to exploit them.

One area in which we are seeing calls for such an evolution relates to “big data”.  Enforcers at EU and national level are asking themselves whether the mantra that “knowledge is power” literally means that the acquisition or accumulation of data, in particular about the behaviour of and relationships between large numbers of individuals, could confer the power to exploit and exclude.

This is not to be confused with concerns over privacy.  We have seen numerous statements, including from Commissioner Vestager, that competition law is not to be used to try to cure possible concerns that fall more properly in the realm of consumer (or data) protection.  Rather the question is a narrower one: whether a data set might be so special, valuable and non-replicable that its concentration in one undertaking would give it an overwhelming competitive advantage that could be checked only by regulatory intervention.

Such a theory is not controversial in principle if one looks at data as if it were an essential facility.  But it runs up against the objection that unlike a piece of infrastructure such as a port or a pipeline, the data (or substitutable data) may well be capable of being compiled by others, or already exist in the form of other accessible compilations.  Again to cite Commissioner Vestager in a recent speech, the data might quickly go out of date and need refreshing, and “we also need to ask why competitors couldn’t get hold of equally good information”.  And while we sometimes see reference to the question of whether the data is “unique”, the better way of expressing it, as recognised in the Franco-German discussion paper from May this year, is whether it is really “unmatched”.  This recognition has led to understandable caution.  A recent consultation exercise by the Commission is beginning to explore whether the merger rules need to be adjusted – though even here the focus is more on the jurisdictional thresholds that might be appropriate to ensure deals receive proper scrutiny, rather than suggesting that data poses particularly intractable problems.

Against this backdrop, the public discussion around the Microsoft – Linked-in transaction is interesting, and rather curious [my firm has advised Microsoft on a range of antitrust issues but I am not acting on the notification of the Linked-In deal] .  I only have access to what is in the public domain, but it appears to be a case where a company acquires a target with which it is not in competition and where there is no suggestion that the target will alter its commercial strategy in terms of its market behaviour or how it makes available its data to third parties.  According to press reports the acquirer has already given assurances to that effect and those assurances do not seem to  be seriously disputed.  Therefore it is hard to see that any adverse change in the market will inevitably occur that is “deal specific”.

At the same time, though nobody disputes the value of the data held by Linked-In, there are many other players in the market and apparently many other ways of obtaining similar or competitive data sets.  In fact an increasing number of companies hold substantial amounts of data regarding their customers or others with whom they interact and some use that purely for internal purposes while others develop business models around exploiting that data.  Unless there is convincing evidence that a particular data set is genuinely both non-replicable and uncontestable, it would place an unreasonable burden on competition enforcers if they were always obliged to analyse the impact on some rather nebulous “data market”.

But horizontal concerns are not the end of the story.  There have been claims by opponents of the deal that in the future, in some unspecified manner, the two companies could combine their data and expertise. In doing so they would come up with some new product, for which there would be strong consumer demand, and with which third parties would struggle to compete (though I have seen no suggestion that those third parties would be forced to exit the market).  Such reasoning evidently includes a number of leaps and suppositions, but reduced to its essentials it seems to try to take merger theory even beyond the notion of an “efficiency offence” (always rejected by the Commission) into the realm of an “innovation offence”.

One can well understand why any regulator would be sceptical about such an approach.  Merger control has to be to some extent forward looking in that it must try to identify the suppression not only of actual but also of potential competition.  But when asked to go even further and tackle some speculative impact on a form of competition that absent the transaction would not anyway have taken place, combined with the fact that the transaction will in the complainants’ “worst case” scenario introduce a new element of competition through a new product, the levels of abstraction introduce too much uncertainty into the merger review process.

Moreover, it is not as if merger control is the last and only chance that the Commission has to protect competition.  If following a concentration some development occurred that put the new entity into a position of unassailable market power, there remains Article 102.  Indeed we saw relatively recently in the Thomson-Reuters case that the Commission, having cleared a merger, then opened a proceeding to verify the impact on the market of the merged firm’s unilateral behaviour and extracted a package of commitments that the Court subsequently ruled was sufficient to restore competition.

Those opposed to transactions will continue to innovate with theories of harm.  Regulators will continue to welcome and even encourage their contribution, while maintaining a healthy scepticism regarding their agenda.  But the threshold for intervention remains high.

Written by Alfonso Lamadrid

14 November 2016 at 12:08 pm

Posted in Uncategorized