(L)awful mind

Procopé & Hornborg Competition blog: Is German competition watchdog stepping over data protection authorities?

02.04.2019 | By Lotta Uusitalo

On 6 February 2019 the German competition authority (“Bundeskartellamt”) has issued a decision prohibiting Facebook from combining user data from different sources. Although the full decision is not yet public, the Bundeskartellamt has published a summary of the case.

As reported by the Bundeskartellamt according to Facebook's terms and conditions users have been able to use Facebook social network under the precondition that Facebook can collect user data also outside of the Facebook website in the internet or on smartphone apps and assign this data to the user’s Facebook account. Consequently, all data collected on the Facebook website, by Facebook-owned services (e.g. WhatsApp and Instagram) and on third party websites can be combined and assigned to the Facebook user account.

Although the Bundeskartellamt has prohibited Facebook from combining user data, it did not impose a fine on Facebook. In order to terminate the infringement, Facebook is required to implement the necessary changes within a period of twelve months. In addition, Facebook has been given a deadline of four months to present an implementation road map for the adjustments.

The Bundeskartellamt has held that the terms constitute an abuse of a dominant position on the social network market in the form of exploitative business terms pursuant to the Section 19(1) (abuse of dominant position) of the German Competition Act and violate the General Data Protection Regulation (“GDPR”).

According to the Bundeskartellamt there were no effective consent pursuant to Article 6(1a) of the GDPR. Moreover, Facebook does not have to process data to fulfil its contract pursuant to Article 6(1b) GDPR. The Bundeskartellamt has held that none of the stipulations of Article 6(1c-e) GDPR apply to justify data processing for special purposes. Furthermore, even an assessment of legitimate interests has not led to the conclusion that Facebook’s legitimate interest in processing data according to the terms and conditions it has set outweighs other interests (Art. 6(1f) GDPR).

The decision raises interesting questions on the interface of competition and data protection laws. Furthermore, it brings into question the demarcation between competition and data protection authorities.

The Bundeskartellamt has considered that the GDPR does not rule out that the Bundeskartellamt can assess whether data processing terms infringe the GDPR. The Bundeskartellamt has referred that in the course of the proceeding it has maintained regular contact with data protection authorities none of which considered they had exclusive competence. The European Data Protection Supervisor Giovanni Buttarelli has supported the Bundeskartellamt and has considered that:

“[t]his case is the tip of the iceberg - all companies in the digital information ecosystem that rely on tracking, profiling and targeting should be on notice”.

Facebook has already appealed against this decision to the Düsseldorf Higher Regional Court. Among other things Facebook disagrees with the Bundeskartellamt’s authority on investigating data protection legislation violations:

“The GDPR specifically empowers data protection regulators – not competition authorities – to determine whether companies are living up to their responsibilities. And data protection regulators certainly have the expertise to make those conclusions”.

The decision leads to an interesting outcome where the competition authority has concluded that the party has breached the GDPR, yet the party has not received any fine under the competition law nor data protection law.

Also, the Finnish Competition and Consumer Authority (“FCCA”) has noted the growing importance of the digital market. In the FCCA’s report “Questions related to competition and consumer protection in data economy” published on 14 February 2019, the FCCA emphasizes that, alongside data protection, competition and consumer protection play an important role in data economy. The report points out that collaboration between competition and consumer authorities and data protection authorities is essential in ensuring the functionality of the digital market.

In the report the FCCA remind us that data may create market power and flaunt the essential facilities -doctrine, although the authority admits that the doctrine applies to data in exceptional cases only. As additional competition concerns brought by digital platforms, the FCCA mentions the threats to competition and the possibility for horizonal effects regarding for example, the MaaS -services.

The novel antitrust argument of the German competition authority in the Facebook case is based on more traditional cases on excessive pricing and detriment to the consumers. However, the idea that, in addition to excessive pricing, exploitative business terms may constitute abuse is not new. What is clear is that data driven business models lead to re-defining of the boundaries of competition law.

For further information, please contact:
Lotta Uusitalo

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