Big data and competition policy

For both the economy and citizens, big data offers significant opportunities. These should be seized on by Europe’s decision-makers. However, big data can also give rise to customer exploitation and competitive harms. As a result, competition authorities should cooperate closely with consumer protection authorities to better understand the challenges raised by big data and, when necessary, to impose remedies.

This is one of the key findings of the CERRE Tech, Media, Telecom report ‘Big Data and Competition Policy’. The authors of the report are two CERRE Academic Directors, Professor Alexandre de Streel (Namur) and Professor Marc Bourreau (Telecom ParisTech), along with Dr Inge Graef (Tilburg & KU Leuven).

The CERRE report offers guidance to policy-makers, regulators and competition authorities on three key issues:

• market power assessment and analysis of the power arising from data control;
• potential abuse of dominance through personalised pricing;
• and potential abuse of dominance in relation to targeted advertising.

The report finds that while data is a key input to developing successful applications and algorithms, it is not the unique or decisive factor. Moreover, the big data value chain (data collection, storage and analysis) exhibits many direct and indirect network effects that need to be captured by competition authorities with a holistic analysis of market dynamics.

Given that each big data application is different, competition authorities should analyse it, as well as the related algorithm, on a case-by-case basis. They should focus in particular on the costs of collecting the data and on the importance of the latter’s quantity and variety.

The report finds no rationale for banning personalised pricing or targeted advertising. It does, however, call for it to be transparent and regularly monitored, and for the relevant general principles of EU consumer law to be clarified.

In developing an analytical and governance framework for competition agencies, the authors recommend that competition/anti-trust agencies:

• improve their understanding of the functioning of the three main parts of the big data value chain (collection, storage and processing);
• enhance their expertise in data and computer science;
• cooperate closely with the agencies in charge of consumer protection, data protection and intellectual property to better understand the common problems they face.

CERRE Director General, Professor Bruno Liebhaberg, says: “Building on the CERRE Report of January 2016 on the economics and the regulation of personal data authored by Pierre Larouche, Martin Peitz and Nadya Purtova, this new paper delivers concrete recommendations that will assist competition authorities and regulators currently grappling with this complex, evolving issue. Those recommendations are also a challenge to those authorities in this crucial sector.  Such a challenge must be met, if Europe is to harness the immense opportunities offered by big data.”