Competition in Data Feeds: Court Confirms Commission View

September 18, 2016

In Case T-76/14 Morningstar, Inc. v Commission the General Court has refused an application by a rival to the Thomson Reuters group which claimed that the Commission had not gone far enough in seeking changes in the Thomson Reuter’s business practice, with the effect that competing providers were unable to offer a comparable service.

‘Consolidated real-time data feeds’ provide banks and financial institutions with market data from a variety of sources. Banks and financial institutions use the data in numerous IT applications and programs for transaction and monitoring purposes.

An investigation initiated by the Commission in 2009 showed that Thomson Reuters occupied a dominant position in the worldwide market for consolidated real-time data feeds. In particular, the Commission found that ‘Reuters Instrument Codes’ (short, alphanumerical codes developed to identify securities and their trading locations – RICs) gave rise to substantial barriers for customers who wished to switch providers. According to the Commission, Thomson Reuters prohibited its customers from using RICs to retrieve data from the consolidated real-time data feeds offered by other providers and prevented third parties and competing providers from developing and updating mapping tables incorporating RICs that would allow its customers’ systems to interoperate with the consolidated real-time data feeds of other providers. The Commission accordingly concluded that this amounted to an abuse of a dominant position.

In 2012 the Commission accepted the commitments proposed by Thomson Reuters with a view to remedying that abuse of a dominant position (see Commission Decision C(2012) 9635 of 20 December 2012). The commitments included Thomson Reuters promising to offer to grant its customers licences to allow them to use RICs to retrieve data from the programs of competing providers. Thomson Reuters also undertook to provide the information necessary to allow its customers to establish mapping between the RICs and the coding systems of competing providers with a view to switching providers.

Morningstar also offer consolidated real-time datafeed services to customers worldwide. It challenged the Commission’s decision. According to Morningstar, competing providers are expressly excluded from the benefit of the licence and also cannot handle RICs on behalf of licensees. In other words, competing providers remain unable to offer a fully comparable and competing service. Morningstar has therefore requested the General Court of the European Union to annul the Commission’s decision.

In its judgment, the General Court notes that Thomson Reuters’ commitments focus, essentially, on the opportunities available to customers to switch providers, either on their own or by collaborating with a third-party developer. They can thus collaborate and mutually assist each other in the development of mapping tables on the basis of the licences proposed by Thomson Reuters. The Commission thus took the view that Thomson Reuters did not necessarily have to include its competitors in the licence terms in order to remedy the abuse of a dominant position. The Commission also correctly found that granting Thomson Reuters’ competitors access to RICs would go beyond what was necessary to address the Commission’s concerns relating to the abuse of a dominant position.

Furthermore, the General Court observes that Thomson Reuters offered to allow its customers and third-party developers to set up mapping tables between the RIC codes and the symbol system used by the new provider, with the result that the modifications to be made to the applications are not excessively costly. Those commitments therefore represent a genuine improvement for Thomson Reuters’ customers since, in the absence of the need extensively to modify IT applications, they do not face prohibitive costs during a possible switch of providers.

The General Court concluded that the commitments proposed by Thomson Reuters were correctly assessed as being capable of resolving the concerns raised by the Commission and that the latter therefore did not commit a manifest error of assessment in accepting those commitments.

The Court’s judgment can be read here.