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UK regulator looks to build knowledge of how consumer data is collected, used and traded by businesses

The way in which businesses generate value from consumer data and the trade of that information within industry is being scrutinised by the UK's main competition regulator.

The Competition and Markets Authority (CMA) has asked businesses, trade bodies and other stakeholders to provide it with information about the commercial use of UK consumer data (10-page / 262KB PDF). This includes personal data and aggregated, anonymised metadata, it said. The CMA said its 'call for information' is aimed at helping it gain a better understanding of the benefits, concerns and risks relating to consumer data collection and use by businesses.

Alex Chisholm, chief executive of the CMA, said "technological developments" will drive growth in the collection and analysis of consumer data.

"We have witnessed a strong drive to gather our personal data by internet companies," Chisholm said. "This has a positive side, in that it helps us get access to new online services, to receive more targeted advertising and better tailored service offerings. But not everyone appreciates the collection of our personal data and observation of our online behaviour."

"One of our priorities as a new authority is to take a closer look at developments and practices in growing areas such as this. We want to understand better the ways in which consumer data is used, as well as the consequences from this – beneficial or otherwise – for consumers, businesses and the wider economy, and how the CMA may promote competition in this area. As an initial step, we want to get the views of all those involved – consumers, firms, representative groups and those who analyse and use the data," he said.

The CMA said that the collection and use of consumer data by companies can bring "significant benefits" for businesses and consumers, from lower prices for consumers, better targeted products and advertising to "more tailored suggestions and purchasing advice for consumers".

However, it said there are also concerns and risks relating to the collection and use of consumer data, from whether consumers properly understand how that data is gathered and used, to the potential impact on competition and innovation if access to the information is "unduly restricted", as well as if consumers are not given the "tools" to control how their data is used.

Competition law expert Sammy Kalmanowicz of Pinsent Masons, the law firm behind Out-Law.com, said the CMA's consultation hints at how it is approaching the subject of commercial use of consumer data from its position as both a consumer protection regulator and as competition authority.

Kalmanowicz said the increasing attention being given to commercial use of consumer data by the CMA follows a speech on competition, privacy and the digital economy earlier this month by the European data protection supervisor. Giovanni Buttarelli called for competition authorities, data protection authorities and consumer protection regulators to work together more closely (6-page / 462KB PDF) in the 'big data' age to identify "issues of common concern and remedies".

He also said that a number of speeches by CMA officials in recent months suggest that the authority will be taking a closer interest in the collection and use of consumer data by businesses in the future.

"In a speech last month Alex Chisholm said there was a need for competition authorities to currently 'play a more modest role' in relation to questions about how consumers' personal data is collected and used by businesses after suggesting that policy makers and society had still to work out just how comfortable they are with such practices in the digital age," he said. "It is therefore not a surprise to see the CMA looking to increase its own understanding of how companies use consumer data, the extent to which access to data could be restricted, as well as consumers' awareness of business' data collection and usage."

Kalmanowicz said that plans to facilitate greater portability of personal data across service providers via new EU data protection laws is likely to have an impact on competition in markets. However, he said the European Commission, the EU's competition authority, had already considered 'big data' issues when scrutinising the merger of Facebook and WhatsApp and, prior to that, Google's acquisition of DoubleClick.

"The European Commission has, in the merger control context at least, already considered big data and its potential effects on competition even if it has not scrutinised the issue in depth," Kalmanowicz said. "However, it is inevitable, given the reforms to EU data protection laws, the EU's digital single market initiative and the call for greater collaboration between competition authorities and data protection agencies, that we will see a fuller assessment of big data particularly in the merger control framework in future."

There is also potential for big data to become a major consideration of cases concerning the alleged abuse of market dominance, he said.

"This is because as companies become better at harnessing the data at their disposal that information is likely to confer an increasing competitive advantage and give companies with access to data the ability to shut others out of their markets," Kalmanowicz said.

One area the CMA has said it is "looking to explore" is the way in which businesses "generate value from and use consumer data" as well as the aggregation and trade of the data within industry.

"In addition to firms’ internal uses of consumer data, we are looking to understand the licensing, commercial use and re-use of consumer data by different companies," the CMA said in its paper.

The CMA said it also wants to find out more about "the level of consumer understanding about the collection of their data and whether this is being carried out in a fair manner" and how consumer protection rules are affecting business practices. It said it would not be looking into "concerns relating to individuals’ privacy and data protection" as oversight of those are matters is the responsibility of the UK's Information Commissioner's Office.

The CMA said it will conduct additional research into the commercial use of consumer data and publish the collective findings this summer. Its call for information closes on 6 March.

In 2013, predecessor to the CMA, the Office of Fair Trading (OFT), threatened businesses with enforcement action if they were not more transparent about the way they collect information about consumers in order to offer personalised prices for goods and services online.

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