Connected cars and competition law

The connected car is a reality that will make many regulations interplay. The orchestra of the connected car will perform many tunes, but among others, competition law will take part in the musical score.

Introduction

The connected car will soon become a reality. Whether this is in the form of a fully autonomous car or something halfway between the vehicle we currently know and a fully autonomous car, will depend on the market, innovation within the automotive industry and government regulations.

What is certain is that the connected car will bring many competition law implications for businesses and undertakings that participate in its development. Our aim is to give you a first glance at the possible competition law challenges that the development of the connected car could face.

Realities that will affect the connected car

Among many other realities, the development of the connected car will have an impact in the fields of Original Equipment Manufacturers (OEM’s); joint ventures and mergers between car manufacturers and developers; software and hardware development/production; ownership of data; information sharing and exchanges; smart grids; etc.

We will now mention some of the aforesaid realities or developments from the perspective of some of our traditional competition law “boxes”.

Abuses of dominance and essential facilities

As a first example, nowadays a port in our car allows us to connect a dongle, and to transform it into a connected car. The dongle can gather information that would allow many industries (mapping companies; telecom companies; petrol stations; insurance companies; etc.) to offer a wide variety of services to us. However, what if a dominant telecom company offers all of its clients a dongle for free?

Suddenly, the possibility to connect to this dongles’ network becomes the only way that many companies will have to offer their services to this group of clients (or gather the information to do so) and any conditions and clauses contained in the agreements that such telecom company signs with other companies would need to be scrutinized under competition law rules for abuse of dominance, or even under article 101 of the TFEU.

As a second example, smart grids for recharging batteries of electric cars are already in place in many European cities. Some of these grids are owned and managed by private companies that were granted with administrative authorizations. When the use of electric cars and electric connected cars becomes generalized, these grids could be considered as essential facilities, because there will be no space in crowded European cities to set up new smart grids. Thus, the doctrine on essential facilities will need to be applied to them.

Information sharing

Existing undertakings in the OEM, software and car manufacturer sectors will need to collaborate to develop improved and safer connected cars. This, in principle, is good for competition and for consumers, because we will enjoy better and more affordable products and services.

However, such a close collaboration in the form of information exchanges is very near to possible competition law infringements. The current rules on information sharing and collusive agreements would have to be applied to these types of exchanges, and the competition authorities will need to balance the correct application of those rules without hindering the R+D related to connected cars.

Merger control and joint ventures

There is a growing trend to assess mergers, not only under turnover rationale, but also, in relation to the actual value of the transaction. Thus, undertakings will need to assess with care if the envisaged operation will need to be notified, or even if some commitments need to be proposed to the competition authority reviewing the merger (for instance, offering access on fair, reasonable and non-discriminatory conditions to the technology that the target is developing)

Conclusions

Although traditional competition law boxes may appear to be outdated, at first glance, and clash with new realities such as the connected car, at a second glance, we have seen that they are fit for purpose, but close attention needs to be given in the way competition authorities and undertakings apply them while assessing new realities.

In this new context, companies will need to assess and seek advice on the way competition law rules could be applied to their businesses in relation to developments linked to the connected car to avoid any competition law related concerns.