The Data Act – an antitrust topic?

Starting with a spoiler: The answer is a clear YES! The draft Data Act published by the European Commission touches upon and is intertwined with antitrust in many ways. Here is why and how.

The European Commission has tabled its proposal for the Data Act. The new rules are meant to introduce “measures for a fair and innovative data economy”. Basically, the Data Act aims to make data collected and generated by connected devices (such as, e.g., robots, production machinery, or a connected coffee machine) available to the users of such devices, to third parties and, under certain circumstances, to public sector bodies.

As a regulation, the Data Act will be directly applicable in all Member States. The draft will now enter the legislative discussion, so things are in flux and stakeholders still have the opportunity to make their positions known. In a connected world, it cannot be overstated how many companies will be directly affected by the Data Act – the rules basically cover the entire Internet of Things.

Overview of the proposed rules

The draft is split into eleven chapters, all of which would be too much to summarise here. So, I will focus on five of the items that have drawn my attention:

  1. Data Sharing: The draft foresees that data generated by (connected) products and related services will generally need to be accessible to the user (defined as the owner, tenant or lessee of a product or recipient of a service). Upon request by the user, the data will also have to be made available to third parties.
  2. Conditions: Users themselves will get the data free of charge. Third parties will get access under fair, reasonable and non-discriminatory (FRAND) terms. The compensation to be paid by micro, small or medium sized enterprises (SMEs) shall not exceed the costs directly related to making the data available.
  3. Terms: The Commission plans to develop and recommend non-binding model contractual terms on data access and use. An Expert Group will be set up to help with developing these. In the Data Act, the Commission commits an article with eight paragraphs to define what might and what might not be unfair contractual terms.
  4. Gatekeepers kept out: Core platform services under the Digital Markets Act (as things stand, at least Alphabet/Google, Amazon, Meta/Facebook and Apple) shall not be eligible for data access and shall not even receive data from a user that the user has requested and obtained under the Data Act.
  5. Member States brought in: While the involvement of national regulators is still subject to discussions with regard to regulations like the Digital Markets Act, the Data Act is meant to be enforced by authorities designated by each individual EU Member State.

Antitrust implications

In the press release regarding the Data Act, the Commission mentions “fairness in the digital environment”, stimulating “a competitive data market” and “competitive prices”. These terms could all be part of an antitrust debate. The Data Act is not just about data, but rather another example of the intersection between data/data law and antitrust (which we have also written about here). It ties in with recent cases and policy debates. Five particularly noteworthy links include:

  1. Data access has long been subject of antitrust disputes and is destined to become increasingly important in a connected world. A classic example would be the question to what extent a manufacturer of a certain piece of equipment (e.g., production machinery) has to make data available to independent service companies, allowing the service companies to (better) compete with the manufacturer on servicing the equipment. In times where more and more business models are about making profit via selling services while offering the to-be-serviced equipment at relatively low margins, having to give away the data might make the lives of manufacturers more difficult.
  2. The Data Act ties in with the results of the Commission’s Internet of Things sector inquiry (see our post on that here). One of the main concerns identified there was access to data generated by Internet of Things-products and -services and how intermediaries might limit access to that data to the detriment of other players.
  3. At the same time, data access alone does not always help third parties. In many cases, they also require access to documentation (manuals etc.) and spare parts from the manufacturer. There is certain case law on abuse of dominance and having to grant such access, and it seems the underlying issues will not be covered by the Data Act.
  4. Getting data access on FRAND terms will sound like a good idea to many. Still, as one can observe when it comes to standard essential patents (SEP), there can be year-long disputes about what is FRAND, who has to make what kind of offer at what time etc. The Commission suggesting model contractual terms might help with that (and some will wish for the Commission to also publish such terms regarding SEPs), but as the terms will be non-binding, one can see additional disputes on the horizon. And the experience with an expert group for SEPs shows that where industry positions differ fundamentally, an expert group might not even be able to come close to a common position.
  5. With the last overhaul of its antitrust regime, Germany already introduced certain obligations to grant data access. They are not as comprehensive as the Data Act will be, and practical experience with these rules is still limited. However, the fact that these obligations sit within the antitrust regime illustrates the link between the Data Act and antitrust. And, similar to the Digital Markets Act, the question will arise what room will be left for the German rules once the new EU rules enter into force.

Next steps

The Data Act is part of the “European Strategy for data”, a broader approach by the Commission, which inter alia includes the Data Governance Act (meant to facilitate data sharing across sectors and Member States). Timing is difficult to predict, but some consider an adoption of the Data Act in 2023 possible.

The issues outlined in this post are by no means exhaustive. While the Commission clearly sees SMEs as beneficiaries of the proposed rules, it will not necessarily be straight-forward for all companies to determine their own position towards the legislation, in particular when they are both manufacturers of equipment and have an interest in getting access to the data generated by other equipment, or when they are smaller companies building innovative connected products.

In any event, all stakeholders should strongly consider making their views part of the discussion. Ensuring that the Expert Group is balanced in terms of represented interests and position is a more time-critical part of that, as the deadline to apply expires on 6 April.

[Photo by Joshua Sortino on Unsplash]