French and German competition authorities focus on Big Data and Online advertisement

On 23 May the French Competition Authority (FCA) launched an inquiry into conditions of data operations in online advertising that could lead to future competition investigations. Released directly after the publication on 10 May of a joint study with the Bundeskartellamt on competition law and data, this inquiry confirms the interest of competition authorities in the digital economy.

It is well known that data is the fuel of the digital economy; the collection of data grants advantages to companies because it allows them to better suit their products or services to their customers. Where only a limited number of companies are able to access strategic data on customers, abusive conduct may arise. As an example the authorities consider that, in some markets such as that of search engines or social networks, data could raise barriers to entry and allow abuse of a dominant position. At the same time, however, the authorities contend that data could actually reinforce transparency in some markets and even allow cartelists to ensure that other companies respect the terms of a cartel. Given the different effects data could have on markets, the study concludes that a case–by-case assessment is needed in order to seize the reality and the extent of data advantages. This is the issue which the FCA seems to be concerned with by opening an inquiry on data in online advertising.

Online advertising is an area where data may certainly play an important role as the efficiency of an advertiser most often relies on its ability to target the right consumers. The inquiry on data in online advertising may also be the sign of a new tendency of more investigations and competition inquiries in the digital economy.

Before releasing the sector probe, the FCA will hold a public consultation to gather comments from all participants in this sector (advertisers, publishers, firms specialised in the supply and operation on data, etc.). The consultation should begin at the end of this year or early 2017.

The FCA announced it will follow a three-step analysis during its inquiry:

• firstly, the FCA will identify the relevant markets in online advertising;
• secondly, it will assess the existence of market power in order to identify potential dominant positions; and
• finally, it will analyse actual business practices in online advertising that are likely to restrict competition.

The FCA has further warned of its concerns over:

• vertically integrated companies which have businesses throughout the value chain;
• conditions of access to data and commercial data rates;
• the possibility of imposing conditions on different participants of the commercial chain; and
• the issue of access to advertising platforms by data providers.

With its new probe in online advertising the FCA may be starting a new trend of investigations into the digital economy, opening the way for more decisions in the broad range of internet markets.