UK panel to consider 'concentrations of data' effect on competition

Out-Law News | 03 Aug 2018 | 4:46 pm | 2 min. read

The effect that businesses controlling access to data has on competition in markets is to be scrutinised by a new panel that has been set up in the UK.

The Treasury announced that the expert panel on competition in digital markets would consider "the competition implications of concentrations of data among a small number of firms" as part of a broader review it is carrying out.

The Treasury detailed the plans in a new paper exploring the economic value of data (23-page / 498KB PDF).

"The potential value of data for businesses raises particular opportunities and challenges when it comes to competition in the digital economy," the Treasury said. "Many stakeholders have expressed concern that the dominance of a few, key digital companies places significant restrictions on access to data, with potential adverse effects on competition across a whole range of sectors. However, data-driven innovation can also facilitate new forms of competition and disruption in markets that were previously dominated by only a few incumbents."

"To explore these and other issues further, the government is launching an expert panel on competition in digital markets, chaired by Jason Furman, professor of practice of economic policy at Harvard University and former chief economist to president Barack Obama ... This panel will consider whether the competition regime – and pro-competition policy more generally – remains sufficiently robust to meet the challenges of the emerging digital economy, and will make recommendations on any changes that may be needed," it said.

The panel has "a wide remit to consider the important future tools and requirements for effective competition in the digital economy", the Treasury said, including potentially the role that "data portability, operability and common standards" could play in helping "to reduce barriers to switching for consumers in non-regulated parts of the economy".

The panel's work will feed into a broader review of competition policy which the UK government will conduct, the Treasury said.

According to the new paper, data can "enhance economic competitiveness and productivity growth across the UK economy". It said there are opportunity costs to organisations that fail to harness the potential of data.

"According to the ONS, less than 10% of UK businesses use customer relationship management software to collect, store, and share customer information within their businesses, and only 6% of businesses use this information for marketing purposes," the Treasury's paper said. "Some businesses even view data as a liability, particularly where personal data is concerned, and take steps to severely curtail access and usage well beyond the requirements of data protection laws."

"In certain sectors, this opportunity-cost is particularly marked. Health is one example of a sector where data holds significant potential economic and social value, and yet data-driven innovation is only just beginning to emerge. In 2011, McKinsey estimated the potential value of US health data at $300 billion per year, and yet five years later, they estimated that only 10-20% of that potential had been realised," it said.