Big data and competition law

Big data and competition law

Organisations that control large reserves of big data could be heading into murky waters as far as competition law is concerned. Big data might well be a source of market power and could potentially be misused, leading to a breach of competition law.

Market power is the ability to act relatively unconstrained by competitors, suppliers and customers. Arguably that ability might be conferred by big data as it arms organisations with targeted knowledge and, as seems to be accepted, confers a competitive advantage, including by allowing an enterprise to act in advance of its competitors. If companies like Woolworths or Coles, for example, were able to use big data for the purpose of damaging or eliminating a competitor or preventing a party from competing in a market, that could amount to an actionable breach.

While Australia’s courts have yet to address the issue it is not unlikely that cases will arise in which big data plays a role. In Europe, vice president and the head of competition issues for the European Commission, Joaquin Almunia, has already canvassed data as a potential competition issue and this will not have escaped the attention of the Australian Competition and Consumer Commission.

Consider the potential impact of big data analysis on supply chains. Say one of the large supermarkets found a pattern of customer spending in its big data that suggested sales of a particular type of jam may in the future increase. Big data is particularly useful for predictive analytics, and armed with that future expectation the supermarket could choose to increase the shelf space for its home brand jam – heading off at the pass the anticipated surge in demand for a rival product.

To be in breach of the law the supermarket would need to have the proscribed purpose of damaging or eliminating a competitor or preventing a party from competing (in, say, the retail market for sale of jam). But given current ACCC interest in the supermarkets and their impact in the supply chain, it is quite conceivable that the ACCC might seek to investigate the role that big data plays in such decisions.

If big data is considered as a form of (information) infrastructure, it would not be too great a leap either to consider the possibility of access to big data falling within the access provisions of the Competition and Consumer Act. If that is the case, there could be a requirement that other organisations be provided access on fair and reasonable terms in the same way as there is the requirement to provide access to other forms of monopoly infrastructure.

Further competition issues that need to be considered include whether access to big data could tip the scales for large M&A proposals. If two companies combined can corner the market in customer data will that be enough to skew competition in a sector and be grounds to oppose a merger?

Woolworths’ recent acquisition of a stake in Quantium may well be very timely. Such a deal in the future may get more regulator scrutiny. But getting in early before the true competitive effect of big data has hit the ACCC’s radar means that the issue has been avoided, at least for the present.

Kathryn Edghill is a competition partner with new economy law firm Truman Hoyle.

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Tags big datacompetition law

More about Australian Competition and Consumer CommissionAustralian Competition and Consumer CommissionEuropean CommissionWoolworthsWoolworths

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