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French Competition Authority Opens Inquiry into Data Processing for On-Line Advertising

8 June 2016

Further to the joint report on Competition Law and Data released by the French Autorité de la concurrence (French Competition Authority or FCA) and the German Bundeskartellamt (Federal Cartel Office) on 10 May 2016 (see our related blog post), the FCA launched, on its motion, a full-blown sector inquiry into data processing in the on-line advertising sector on 23 May 2016.

With the ever more widespread use of programmatic buying based on real-time bidding systems, the on-line advertising ecosystem has witnessed the rise of a growing number of intermediary players between publishers and advertisers such as ad exchanges, ad networks and data management platforms. These intermediaries seek to improve the targeting and effectiveness of advertising campaigns through data processing.

In light of growing vertical integration and risks of conflicts of interest, the sector inquiry will (i) examine relevant market definitions, (ii) assess possible market power and (iii) review current commercial practices: 

1. Data and relevant markets. The FCA will examine the degree of substitutability between the different forms of targeted advertising and also between the different sets of data for commercial supply. The investigation will in particular assess the possible existence of a relevant separate market for advertising on social network websites. The FCA will also draw up observations on the relevant wholesale markets and the so-called privacy protection markets (in particular in relation to adblockers and personal data management services).

2. Data and market power. The FCA will also look into possible dominant positions and competitive advantages derived from the ability of certain market players to diversify into neighbouring markets by exploiting certain essential data which could not be easily replicated by a competitor. The FCA will take into account the variety of available third-party data sources, and the role of algorithms and IT infrastructures.

3. Data and business practices. The FCA will also assess to which extent certain data-related business practices in the on-line advertising sector might potentially restrict the development of competition on the merits. The FCA will investigate in particular (i) the conditions set for access to data and the commercial supply of data, and the access by data providers to the advertising ecosystem infrastructures, (ii) possible discriminatory treatment between in-house and third-party suppliers, and (iii) the degree of transparency in the processing of data for advertising campaigns (performance level indicators, data and financial flows) and its effect on competition.

The FCA aims to issue its opinion, alongside possible recommendations to improve competition in the sector, in 2017. Our EU, French and German antitrust experts will continue to follow the FCA's sector inquiry, the EU Commission Digital Single Market Strategy and the enforcement action by the German FCO.

Read the full article here.  

The team

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