Llanos, J; (2019) The Data Paradox in Competition Enforcement. (Transnational Law Institute (TLI) Think! Research Paper Series 13/2019). SSRN: Amsterdam, Netherlands.

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Abstract

There is a data paradox in competition enforcement. Data is an infinitely scalable, widely available, non-rivalrous and non-exclusive asset. The European Commission’s merger decisional practice suggests that these features make data a kind of asset unlikely to be conducive to competition issues. Yet, some observe that digital markets are increasingly dominated by incumbents in possession of large troves of data, raising alarm bells of market power and anticompetitive conduct. To craft sound competition policy, this paradox must be unravelled. To this effect, this article examines the test devised by the Commission to assess a ‘data advantage’, identifying several drawbacks from which that test suffers. It argues that excessive reliance on data’s wide availability and ubiquity to dismiss competition concerns is problematic, since data is not fungible and may not be readily accessible to competitors. Additionally, other factors such as data’s volume, variety, velocity, and spill-overs are decisive for the magnitude a data advantage may reach. Therefore, in spite of its inherent features, data may nevertheless entrench dominance in digital sectors. To solve the deficiencies of the Commission’s test, this article proposes a comprehensive data advantage test that takes due consideration of the dynamics and structural conditions of data-driven markets.

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