Incentives in big data deals need to be examined, DG Comp official says

Janith Aranze

07 June 2017

Incentives in big data deals need to be examined, DG Comp official says

Guillaume Loriot

European Commission information, communication and media director Guillaume Loriot says competition policy must not discourage the use of big data, but must “carefully” assess it in merger control. Janith Aranze at GCR Live

Loriot acknowledged that preserving innovation in mergers while also preserving other market players’ potential to innovate is a challenge. He said the European Commission’s Directorate-General for Competition needs to carefully assess deals that involve combining data sets, as incentives can change post-merger.

“We do not assume because it’s big data, it is a problem; we need to go into the incentives and consequences that the merger may entail,” Loriot said during a keynote speech at GCR Live 6th Annual Telecoms, Media & Technology.

Loriot said DG Comp’s Microsoft/LinkedIn decision illustrates the framework the enforcer applies to data issues. The commission cleared the case with behavioural conditions last year, mostly rejecting big data concerns that were raised by rival Salesforce.

He said the most interesting aspect of the decision was the commission’s assessment of horizontal issues.  

“The aggregation of data sets was not possible for technical purposes in the case, and yet we made the point it can still be problematic,” Loriot said. “This is the case where merging companies are competing pre-transaction, on the basis of respective data sets.”

He said the aggregation of data sets will be problematic where mergers strengthen the market power of merging companies, and would also be problematic where the merging of two data sets increases the barriers to entry to the market for those who need that type of data in order to operate.

“The vertical issues we looked at [in Microsoft/LinkedIn] was when data can be a potential input that can be offered to third parties,” Loriot said. “In this case we followed the classic input foreclosure assessment looking at whether data is likely to be sold, if it’s an important input or if alternative data is available.”

Loriot said one of the reasons for the commission’s rejection of big data concerns in Microsoft/LinkedIn was LinkedIn’s data not being an input that could be considered as decisive to the deal, and there were many other datasets available on the market.

He also highlighted the usefulness of the commission’s e-commerce inquiry to understanding trends in the industry. “One of the big observations we confirmed was the benefit online commerce has been to increase price transparency”, Loriot said.

Loriot said that while the Coty case showed that platform bans are not in themselves hardcore restrictions, the e-commerce report shows that selective distribution agreements will be a cause for concern if they add undue restrictions on competition – such as passive sale bans and cross-border supply restrictions.

GCR Live 6th Annual Telecoms, Media & Technology concluded today.

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