Antitrust Regulation on Refusal of Data Scraping and ...

Antitrust Regulation on Refusal of Data Scraping and Sharing: Application of the Essential Facilities Doctrine

Jet Deng, Senior Partner, Dentons Beijing Office

@CRESSE, 5 July 2019

I. Typical Cases of Data Scraping and Sharing II. The Application of Essential Facilities Doctrine

III. International Consensus and Unresolved Issues

Contents

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I. Typical Cases of Data Scraping and Sharing

A. Data: Critical Competitive Resource

Social Networking

Ridesharing

Data is a valuable commercial asset and a new competitive edge in the digital economy.

Network effects and economies of scale lead to increasing concentration of data on certain platforms.

Data scraping and sharing disputes are global issues.

Payment

Shopping

Search

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I. Typical Cases of Data Scraping and Sharing

B. Applicable Laws

Platforms

Refusal of Data Scraping

Refusal of Data Sharing

Applicable Laws: − Personal Information/Data

Protection Law − Tort Law − Anti-Unfair Competition Law − Antitrust Law

Refusal to supply? Application of essential

facilities doctrine?

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C. Scraping and Sharing in China

I. Typical Cases of Data Scraping and Sharing

Data scraping dispute between

Huawei and Tencent (2017)

Data sharing dispute between Cainiao and SF Express (2017)

I. Typical Cases of Data Scraping and Sharing

D. Scraping in US: hiQ v. LinkedIn (2017)

？

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LinkedIn is the world's largest professional network.

hiQ scraps LinkedIn users’ data and provides employee performance assessment for client firms.

I. Typical Cases of Data Scraping and Sharing

D. Scraping in US: hiQ v. LinkedIn (2017)

？

HiQ argued that LinkedIn’s refusal to provide data violated the essential facilities

doctrine and it took advantage of its dominant position in the upstream market of

professional networking to secure an unjustified advantage in the downstream

market of data analytics.

The court, out of public interest concerns, ordered LinkedIn to remove technical

obstacles that prevented hiQ from scraping public data within 24 hours.

It is the first case to apply the essential facilities doctrine to data scraping disputes.

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E. Sharing in EU：Bank Data and Fintech (2017)

I. Typical Cases of Data Scraping and Sharing

In October 2017, the European Commission raided several banks in EU member

States, suspecting that they had entered into monopolistic agreements with industry

associations and/or abused their dominant market position by refusing to provide the

user-authorized account information for non-banking fintech companies.

This case also proved that refusals to provide data may constitute abuse of market

dominant position by refusing to deal.

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A. Essential Facilities Doctrine in the US and EU

II. The Application of Essential Facilities Doctrine

Originated in US Case Law

United States v. Terminal Railroad Association (1912)

Verizon v. Trinko (2004): the US Supreme Court has never recognized such a

doctrine

Applied in the EU (IPR Disputes)

Magill v. Commission (1995), IMS v. Commission（2011）

Microsoft v. Commission (2007): whether refusal to license IPR would restrict

innovation

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A. Essential Facilities Doctrine in the US and EU

II. The Application of Essential Facilities Doctrine

At the core of it, when a facility is an essential element in the market

competition, controllers of the facility must provide competitors with the access

to the facility, which could be tangible facilities such as railway, energy, as well

as intangible facilities such as patents. The purpose of applying this doctrine in

antitrust law is to avoid the blockade of competition in downstream market.

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II. The Application of Essential Facilities Doctrine

B. Essential Facilities Doctrine in China

Several provisions and guidelines of China’s Anti-Monopoly law includes essential

facilities doctrine:

− Provisions on Prohibition of Abuse of Dominant Market Position by Administrative

Agencies for Industry and Commerce (2011)

− Provisions on Prohibition of Abuse of Intellectual Property Rights to Eliminate or

Restrict Competition (2015)

− Anti-monopoly Guidelines on IP Abuse (draft for comments) (2017)

− Provisions on Prohibition of Abuse of Dominant Market Position (draft for comments)

(2019)

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II. The Application of Essential Facilities Doctrine

Possession of essential facilities is one of the factors in market dominant position

determination.

Refusal to provide essential facilities under reasonable conditions may constitute

refusal to supply.

Application of essential facilities doctrine shall consider the following factors:

− feasibility of investing in or developing such facilities by other undertakings;

− degree of reliance of other undertakings on such facilities for effective production and

operation; and

− possibility of making such facilities available and its impact on the production and

operation of the facilities controller.

B. Essential Facilities Doctrine in China

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II. The Application of Essential Facilities Doctrine

C. The Requirements for the Essential Facilities Doctrine

1. Facilities are indispensable to carry on the requesting party’s business.

2. Facilities have no actual or potential substitute.

Legal, technical or economic barriers

3. Refusal to provide facilities may eliminate effective downstream/neighboring market

competition and/or restrict innovation.

4. It is possible to provide facilities to the requesting party, which would not cause

unreasonable harm to the facilities controller.

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D. Application of Essential Facilities Doctrine in Refusal of Data Scraping

II. The Application of Essential Facilities Doctrine

Is the data indispensable for downstream/neighboring market competition?

Does the data has actual or potential substitute? (disclosed data v. undisclosed data, network effect)

Would refusal to supply data leads to elimination of effective competition and/or restrict innovation?

Trade off: benefits and harms of compulsory data sharing

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III. International Consensus and Unresolved Issues

A. International Consensus

France, Germany, Netherland, the UK, Japan and Singapore have issued reports on

data and competition.

Data as a source of market power

• Under certain circumstances, data may constitute essential facility

Data-related Exclusionary Conducts

• Refusal to access——Application of essential facilities doctrine

• Discriminatory access to data

• Exclusive contracts

• Tying/bundling

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III. International Consensus and Unresolved Issues

B. Unresolved Issues

What kind of data may constitute essential facilities?

− Undisclosed data, such as credit information and financial

information

− Disclosed data such as public social networking information

The interplay between the Anti-Monopoly Law and the

Personal Information Protection Law

− Data controller cannot provide data to a third party without data

subjects’ prior consent

− Whether data/privacy protection can be used as a ground for refusal

to provide data?

Thank you

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DENG, Jet Senior Partner Beijing Office Tel.：010 - 5813 7038 Email：[email protected]

WeChat Public Account: “Antitrust Practice Review”