Introduction
Data in the present-day world is a relevant input for several markets like e-commerce, advertising and marketing, transportation, entertainment and many others. Entities with data have an increased competitive advantage as they are equipped to deliver enhanced services by leveraging the insights from the data. This is particularly concerning when the firm with control over the datasets of consumers holds a dominant position in the relevant market, as it might lead the firm in establishing a monopoly in the long run.
To ensure competition in the market; a positive obligation can be imposed on the dominant firm by designating the data it controls as an ‘Essential Facility.’ Designating consumer data as an Essential Facility will ensure that the dominant firm provides reasonable access to its data. However, the idea of designating consumer data as an Essential Facility has several contrary viewpoints.
This blog would thereby delve into the concept of recognizing consumer data as an ‘Essential Facility.’ For this purpose, the blog would first engage in understanding the Essential Facilities Doctrine, and thereby, an attempt will be made to engage in the discourse of considering consumer data as an Essential Facility. The blog would also analyse the ‘essentiality’ of consumer data in light of privacy laws and, at last, draw a conclusion on the viability of data essentiality in competition law.
Essential Facilities Doctrine
The doctrine of Essential Facilities, which emerged from the United States of America, propounds that a facility in the hands of the dominant firm that cannot be replicated via any technological or economic means is construed as ‘essential’ and imposes a duty on the dominant firm to allow its access to its competitors. The doctrine emerges from an understanding that with access to these facilities, new entrants can overcome entry barrier, while established firms will face a competitive disadvantage in the relevant market, leading to the healthy competition.
Although emerged in the US, the Essential Facilities doctrine has also developed in India, though its specific applicability continues to be debated. The Essential Facilities Doctrine does not find an express mention in the Competition Act, 2002 (“The Act”). Instead, it is sought to be derived from Section 4 of the Act, which aims to prevent the abuse of dominant power by a firm by way of ‘denial of market access.’ For instance, in the case of Mcx Stock Exchange Ltd. & Ors vs National Stock Exchange Of India, the National Stock Exchange’s denial of access to “integrated market watch” was examined as one of the grounds while determining whether the entity abused its dominant position in the market [¶5.16]. Similarly, in the case of Ms. Anila Gupta, Mumbai vs Best Undertaking, Mumbai Main Order, the non—availability of the wheeling network of the dominant entity resulted in a denial of market access and thereby, the Competition Commission held that there was an abuse of the dominant position. Furthermore, the CCI also looked into the doctrine of essential facility while analysing whether BEST can be compelled to allow access to its networking facility and it was answered in the affirmative [¶23]. Thus, it can be effectively argued by the parties that a denial of this ‘Essential Facility’ will inadvertently lead to a denial of market access by the dominant firm, thus leading to an abuse of its dominant position.
The focus of applying this doctrine lies in determining the ‘Essential Facility,’ which is controlled by the dominant firm. In Arshiya Rail Infrastructure Ltd. case, it was observed that essential facility doctrine was deemed essential if the enterprise in question held a dominant position and there will be lack of effective competition if access to such facility is denied [¶18.3]. Additional parameters for the establishment of the ‘Essential Facility’ were also propounded in Shamsher Kataria v Honda Siel Cars Ltd., which required: a) the Essential Facility to be controlled by the dominant firm, b) incapability to create an alternative, c) the denial of access or use of such facility and d) the viability of offering such a facility [¶3.9.19] . However, such requirements continue to be discussed by the judiciary through case laws, and there continues to be no express provision for the applicability of the ‘Essential Facilities’ doctrine in India in the Competition Act.
Consumer Data as an Essential Facility
Historically, the Essential Facilities doctrine was invoked vis-à-vis access to physical infrastructure projects like ports, pipelines etc. However, several new facilities have been incorporated as being ‘essential’ for a relevant market over time. One such debate that has taken the front stage in recent times is the categorization of consumer data as an essential facility. Consumer data held by entities are often crucial to operate in specific markets. However, contrary viewpoints exist in attributing the characteristics of an Essential Facility to data, particularly consumer data. Both these arguments will be analysed in this portion.
One side proposes the idea that consumer Data is an ‘Essential Facility.’ This is because ‘consumer data’ refers to datasets collected from the relevant customers for commercial purposes. This consumer data is used by firms to enhance the quality of products, offer a personalised experience, and for another multitude of commercial purposes, which is now considered as the core for enhanced business efficiency in specific markets. Thus, data has often been regarded as a currency for online platforms as it is believed that access to a significant database gives a competitive advantage to market players. Such competitive advantage usually exists in terms of enhanced consumer service, as a firm with access to consumer data can provide efficient consumer service. This might lead to entry barriers for the new firms as well as hamper the position of already existing players in the relevant market, not having the consumer data. Thus, it is argued that unless consumer data is recognised as an Essential Facility, dominant firms with access to such data can abuse its position, violating the competition law.
This argument mainly garners emphasis in markets where data is an input for entry, as a lack of access can cause significant prejudice to the firms. In the BookMyShow case, it was observed that data harbours a firm’s network strength as it gives more bargaining power to the one who controls a significant database. The dominant firm can charge exorbitant prices for the data and, therefore, seek to establish a monopoly in the future [¶34].
On the contrary, arguments have also been made against the prospect of categorising consumer data as an Essential Facility. It has been argued that data available to a firm is also available to be obtained by new and existing market players as customers give their personal data to several firms. Data has been categorised as ‘non-rivalrous,’ implying that a firm’s access to consumer data does not limit other firms from obtaining the same dataset.
Apart from consumer data, the debate also invokes discussions around Big Data, which refers to large volumes of data produced with high velocity and from a variety of sources such that its management requires new tools and methods. Although it deals with high volumes of data, there has not been a definite categorisation of Big Data as an Essential Facility by the European Commission even when the opportunity arose to do so in cases such as Telefo’nica UK/Vodafone UK/Everything Everywhere/JV wherein the Commission dealt with whether the joint venture would have access to huge volumes of consumer data which could not be obtained by other competitors. Answering in the negative, the Commission opined that data provided by consumers was a commodity and could be easily accessible to market players and therefore, would not foreclose competition [¶543].
However, a refusal to categorise data as an Essential Facility in some instances does not negate its entire application. In particular, the EU Digital Markets Act requires the ‘gatekeepers’ to provide other business users and third parties access to their aggregate and non-aggregate data in the European markets. Additionally, amendments have also been brought in German laws whereby certain Big Data have been characterised as ‘essential,’ mandating the dominant player to allow access to these datasets.
Unlike the European Union, in India, the Competition Commission of India did not specifically engage in the discussion of data as an Essential Facility. A debate with respect to using data to leverage dominant position had emerged in the case of In Re: National Restaurant Association v. Zomato wherein NRAI had argued that the data collected by Swiggy and Zomato strengthened their market position. However, the Commission did not specifically address the issue of sharing consumer data across various platforms [¶9].
Data Transfer: A Privacy Concern
Though various conflicting opinions exist on the applicability of the Essential Facilities doctrine vis-à-vis consumer data in the Competition law dynamic, significant concerns have also been raised regarding privacy. Consumer data often consists of personal information, and sharing such information amongst firms can lead to a breach of privacy. In India, the Digital Personal Data Protection Act 2023 covers the ambit of data sharing and imposes limitations on the processing of personal data. It regulates the transmission of personal data and prohibits data transfers to certain countries prohibited by the government. Moreover, privacy is a fundamental right enjoyed by the citizens, as observed by the Supreme Court in K.S. Puttuswamy v Union of India.
Privacy concerns about data sharing have also been raised by the European Data Protection Supervisor which criticised the European Commission in neglecting ‘the welfare of millions of users’ [¶70] who were impacted by the processing of data of DoubleClick and Google in the case of the Google/DoubleClick merger, Several other reports have also pointed out the impact of data sharing on privacy. However, when such transfer of consumer data is evaluated from a competition law perspective, authorities have refused to intervene on grounds of privacy. In several cases authorities have held that, the ambit of privacy is outside the scope of competition laws. For instance, the European Court of Justice in the case of Asnef-Equifax had held that the matters related to data protection cannot be addressed by competition laws [¶63] . Similar observations was also enumerated by the European Competition Commission in Facebook/Whatsapp case [¶164]. The authorities opined that studying the data sharing policies from the lens of privacy would seek to affect the Antitrust laws, especially when a dominant firm is in control of data, which is the ‘main input of its products or services.’ However, recently, post the enactment of the Digital Personal Data Protection Act of 2023, there has been an attempt to integrate privacy and competition law. Attempts have also been made by the Competition Commission of India as has been observed from the prima facie order of the in In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users case whereby privacy was held to be a ‘non-price’ parameter of competition law [¶32]. Furthermore, the decision of the Commission ordering Meta to pay fine for abusing its dominant position indicates the necessity of strengthening the protection of personal data under Digital Personal Data Protection Act, 2023. In this decision, the importance of informed consent was highlighted wherein users of a dominant firm like Meta cannot be subjected to a take-it or leave it policy in cases where they are reluctant to provide consent. However, despite the existence of an awareness of the possible privacy breaches that could be caused by data sharing between firms, competition law gives enhanced importance to a competitive market and, to date, has yet to make effective policy changes to address the issue.
Conclusion
Consumer data is vital for firms dealing with markets where data is considered as an important input. However, determining such data as an ‘Essential Facility’ causes both positive and negative effects. Reasonable access to the datasets in control of the more prominent firm will ensure effective competition in the relevant market. However, the concern about privacy breaches cannot be negated. Consumer data generally contains the personal information of the consumers, and sharing such data without the consumers’ express consent can lead to a breach of their privacy. Additionally, determining the essentiality of data is tricky since data can easily be replicated as consumers share their information across several platforms.
Furthermore, the Essential Facilities doctrine needs to be better established in India, and several differing opinions exist regarding the required standard in defining a facility as an ‘Essential Facility.’ Amidst such ambiguity, defining the data of consumers as an Essential Facility and allowing transfer might hamper both the markets and consumers. Thus, policy considerations and proper implementation of privacy laws must be undertaken before determining the essentiality of data. Furthermore, even if data is determined to be an ‘Essential Facility,’ there must be a definite guideline as to its determination, and consumers should be made aware of the possible transfer of their data by the dominant firm to other firms. A competitive market should not compromise the privacy of the consumers.
Author(s)
Doyna Panja
Student at NUJS, West Bengal