Is data really that important to a business?
A quick survey of the top companies by market capitalisation readily reveals that data is key.
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Global | Publication | February 2021
Manufacturers of connected devices or information service providers (such as operators of social media platforms) control access to data which they collect through the provision of their goods and services, by way of contract and / or technical measures. The exclusive possession or control of such data can have antitrust / competition law considerations, giving rise to access disputes.
Sector-specific data access rules are dealt with elsewhere (see Availability of Sector-specific Data as a Result of Market Failure). Here we deal with non-sector-specific data access antitrust / competition law issues.
In the EU the legal threshold required to force access to data held by a single corporate group on antitrust / competition law grounds is very high.
The Court of Justice of the EU has developed four conditions that need to be fulfilled for an action based on antitrust / competition law principles to lead to an obligation to license the use of commercially-held information:
These high thresholds may be relaxed in the near future. The EU Commission has observed that, where the negotiation power of the different market participants is unequal, market-based solutions alone might not be sufficient to: (1) ensure fair and innovation-friendly results; (2) facilitate easy access for new market entrants; and (3) avoid lock-in situations.
A number of measures are already in place in the EU to provide data access for users to address any imbalance:
Faced with the reality that the majority of data is in the hands of just a few, the EU Commission is considering implementing rules (envisaged to appear in an EU Digital Services Act) banning dominant platforms from hoarding data, and to compel them to open up access to their datasets, boosting availability of data and competition.
Other areas of reform under consideration include:
For more information on the EU proposals, see EU Commission Launches Consultations on Ex Ante Antitrust Tool and Platform Regulation.
Canadian jurisprudence has confirmed that controlling significant amounts of data is a source of market power, and a dominant market participant restricting the access and use of data may raise antitrust / competition law concerns.
For example, a 2017 court decision held that a real estate trade association abused its dominant market position by restricting access, use and dissemination of data from a real estate listing service it controls.1 This decision may open the door for organizations to become subject to Competition Bureau investigations, when it is believed that control of data is being misused to punish or exclude competitors.
Under Article 13 of the PRC Anti-Monopoly Law (AML), monopoly agreements (i.e. agreements, decisions or other concerted practices which eliminate or restrict competition), are prohibited.
Information exchange does not constitute a cartel or a monopoly agreement in and of itself under the AML. However, if businesses act in a concerted way because of the information exchange, the existence of the concerted action together with the information exchange may be construed as constituting a cartel or of reaching a monopoly agreement.
As such, information exchange may violate the AML in two ways – either it is part of a wider cartel agreement, or it leads to a concerted practice. The main difference between the two is that the latter does not contain any written or oral, express or implied agreement between the competitors.
In the case of a wider cartel agreement, information exchange is a form of reaching and implementing the agreement, while concerted practice may be established by the finding of an exchange of information (or even the opportunity for such an exchange) and subsequent parallel competitive behaviors.
All cases involving information exchange that have been sanctioned in China so far are cases containing a wider cartel agreement involving price fixing and in some instances market allocation between competitors.
However, while the law is less settled in China that information exchanges are in and of themselves an issue, most multinational businesses operating in China adopt a careful approach as exchange of commercially sensitive information between competitors can easily be considered to lead to concerted practices, if not part of a wider cartel agreement.
Under Singapore’s competition law, a refusal by a dominant firm to supply data to other players in the market may theoretically be anti-competitive if there is evidence of substantial harm to competition and if the behavior cannot be objectively justified.
There has not been any such case in practice and the competition authority would have to meet a high threshold in order to prove its case, as a business generally has the freedom to decide with whom it will deal. However, if the competition authority is able to establish infringement, it is empowered to direct the dominant firm to provide access to its data.
To what extent can data be shared between competitors?
In the EU sharing of competitively sensitive data between competitors is likely to be regarded as a restriction of competition.
Whether information is competitively sensitive, and the likely effects of an information exchange on competition, must both be analyzed on a case-by-case basis, and so require specialist advice. However, as a general guide, disclosure to a competitor of particularly sensitive information, such as relating to future pricing intentions, is likely to be regarded as anti-competitive by object and thus a serious infringement of competition law, regardless of the market share of the participants. In such cases there is no need for the competition authority to prove any actual effect on the market arising from the information exchange.
Where potentially sensitive information needs to be shared (for example, in order to achieve a pro-competitive benefit), safeguards should be put in place to reduce the competition law risk, such as effectively aggregating and anonymizing the information to reduce its competitive sensitivity.
The sharing of the following kinds of data could, depending on circumstances, be held to be anti-competitive, according to the EU’s Horizontal Co-operation Guidelines, and so require careful consideration:
Owing to the increasing importance and market power that can be conferred by exchange of data, as at the date of publication the EU Commission plans to revise its guidance on data sharing and pooling arrangements by means of an update of the Horizontal Co-operation Guidelines.
With respect to non-personal data, US antitrust enforcers have taken action in the merger context with respect to data. In Bazaarvoice (2014), the Justice Department (DOJ) successfully challenged a 2012 consummated merger involving companies that provide software platforms for online ratings and reviews (R&R) of products created by consumers that manufacturers and retailers host, share, distribute and display. The court found:
To settle the case, DOJ required Bazaarvoice to divest all of the assets it had acquired in 2012.2
The other antitrust enforcer, the Federal Trade Commission (FTC), in 2014 charged that CoreLogic Inc’s proposed US$661 million acquisition of DataQuick Information Systems, Inc. from TPG VI Ontario 1 AIV L.P. would likely substantially lessen competition in the market for national assessor and recorder bulk data.
The FTC’s settlement order3 required CoreLogic to license to Renwood RealtyTrac national assessor and recorder bulk data as well as several ancillary datasets that DataQuick provided to its customers. The order allowed RealtyTrac to offer customers the data and services that DataQuick offered and to become an effective competitor in the market.
In CDK/Auto-Mate, the FTC sued to block a merger of two digital technology platforms where firms were current competitors, but one was a market giant – close to a duopolist – while the other was far smaller. The complaint4 alleged harm to current competition, but focused even more sharply on harm to future, or nascent competition. That harm arose from the smaller competitor’s substantial efforts to remake itself into a greater competitive threat going forward. The parties abandoned the transaction after the FTC filed a lawsuit.
The Competition and Consumer Commission of Singapore (CCCS) recognizes that businesses regularly exchange information on a variety of matters legitimately, with no harm to competition. In general, competition is unlikely to be harmed when the data that is shared is:
However, data sharing among competitors may be anti-competitive where it allows a business to have access to or draw inferences from a competitor’s commercially sensitive information, such as pricing or production figures.
The potential anti-competitive effects of data sharing are greater:
A quick survey of the top companies by market capitalisation readily reveals that data is key.
The value that can be gained from data by businesses will inevitably lead to an increase in the use of data to improve daily operations and to develop new products, services and processes.
In many jurisdictions pure information, or data, is not considered to be property. This is because a claim to property in intangible information presents obvious definitional difficulties.
There is a patchwork of different rights, intellectual property rights and contract rights that may apply to data. Understanding the way in which these rights come into play enables a business to understand how its data assets can be protected.
Disruptive technologies, such as AI, IoT, AVs, distributed ledger technology (DLT), cryptocurrencies and smart contracts, generate many different forms of data. What are the particular characteristics of such data, and to what extent can intellectual property rights or other rights protect them?
In this section, we review the EU’s position with regards to industrial and non-personal data and look at whether other jurisdictions have similar initiatives.
Data location laws (in relation to industrial and non-personal data) can be restrictive (as in banking secrecy laws, which may require some types of data to remain onshore or to be “localised”) or liberalising (as in laws that ban the prohibition of export of data from a locality).
In furtherance of the objective of leveraging existing datasets paid for by public funds, a number of jurisdictions have sought to make public sector information (PSI) available to industry.
The exclusive possession or control of data can have antitrust / competition law considerations, giving rise to access disputes.
The uncertain nature of intellectual property rights in data means that “contract is king” in data transactions.
Data is an incredibly valuable resource for businesses, enabling organisations to effectively operate and to make business improvements. In order to exploit this value most effectively, businesses must invest in good data management.
Errors, incompleteness or biases within data may flow through, and be amplified by, data analytics process outputs upon which a business's strategic and investment decisions may depend, potentially causing business losses. In this section we deal with liability arising out of use of data / datasets that are in some respect sub-optimal.