CMA launches investigation into Groupon, CMA clears 02-Virgin merger, Competition concerns about FNZ’s purchase of retail investment platform GBS, Irish DPC investigation into Facebook and more in this week’s round-up of UK and EU techlaw developments.
CMA launches investigation into Groupon
The CMA has opened an enforcement investigation into Groupon, following concerns that some of its practices may be breaching consumer law and undertakings signed in 2012. In 2012, the Office of Fair Trading (the predecessor to the CMA) announced that Groupon had provided undertakings following the OFT’s investigation into unfair and misleading pricing practices. In the undertakings, Groupon committed to change its practices, including to ensure information on its website is not misleading, and to comply with consumers’ legal cancellation and refund rights. The CMA is now investigating whether Groupon is complying with its previous commitments, and with consumer protection law. The investigation will examine issues including: whether Groupon is providing refunds to consumers in accordance with consumer protection law; and whether Groupon ensures that descriptions of items or services on its website are accurate, and that products are delivered within the advertised timeframes. The CMA has written to Groupon regarding its concerns, and has asked for information to understand more about their practices. Once it has completed its analysis of the information provided, it will consider what, if any, further action might be required. At this stage, it have not reached a view about whether there have been any breaches of consumer law by Groupon.
CMA provisionally clears merger of Virgin and O2
The CMA has provisionally cleared the merger of Virgin and 02. The CMA focused on whether the merger could lead to reduced competition in wholesale services as part of its review. Both Virgin and O2 provide wholesale services, with the services provided by Virgin being called “backhaul services”. It was initially concerned that, following the merger, Virgin and O2 could raise prices or reduce the quality of wholesale services, or withdraw them altogether. This could adversely affect the quality of other companies’ services and – if wholesale price increases were passed on by these companies to their customers – their retail prices could go up. This might make Virgin and O2’s own mobile service comparatively more attractive to retail customers, but would ultimately lead to a worse deal for UK consumers. Having examined the evidence, the CMA inquiry group has now provisionally concluded that the deal is unlikely to lead to any substantial lessening of competition in relation to the supply of wholesale services for several reasons. Firstly, backhaul costs are only a relatively small element of rival mobile companies’ overall costs, so it is unlikely that Virgin would be able to raise backhaul costs in a way that would lead to higher charges for consumers. There are other players in the market offering the same leased-line services, including BT Openreach - which has a much greater geographical reach than Virgin - and other smaller providers. This means the merged company will still need to maintain the competitiveness of its service or risk losing wholesale custom. As with leased-line services, there are a number of other companies that provide mobile networks for telecoms firms to use, meaning O2 will need to keep its service competitive with its wholesale rivals to maintain this business.
Competition concerns remain about FNZ’s purchase of GBST
And in another competition case, the CMA has provisionally found that a deal between FNZ and GBST would raise significant competition concerns, following its re-examination of available evidence. The purchase of retail investment platform solutions provider GBST by rival firm FNZ could substantially reduce competition. The CMA is concerned that this could lead to investment platforms - and therefore UK consumers who rely on these platforms to administer their pensions and other investments - facing higher costs and lower quality services. Overall, the available evidence shows that FNZ and GBST are close competitors and few other significant suppliers offer effective and competitive alternatives. The CMA has provisionally found that its current competition concerns would also be effectively and proportionately addressed by requiring FNZ to sell GBST, but with a right to subsequently buy back a limited set of assets from GBST relating to its capital markets business. These assets would be restricted to those that do not affect GBST’s competitiveness in the supply of retail investment platform solutions. Views are invited on the provisional findings and on the proposed remedy?being considered by the CMA by 30 April?2021.
Irish DPC launches inquiry into Facebook regarding a collated dataset of personal data made available on the internet
The Irish Data Protection Commission has launched an own-volition inquiry under section 110 of the Irish Data Protection Act 2018 in relation to multiple international media reports, which highlighted that a collated dataset of Facebook user personal data had been made available on the internet. This dataset was reported to contain personal data relating to approximately 533 million Facebook users worldwide. The DPC engaged with Facebook Ireland in relation to this reported issue, raising queries in relation to GDPR compliance to which Facebook Ireland provided a number of responses. The DPC, having considered the information provided by Facebook Ireland to date, is of the opinion that one or more provisions of the GDPR and/or the Data Protection Act 2018 may have been, and/or are being, infringed in relation to Facebook users’ personal data. Accordingly, the DPC considers it appropriate to determine whether Facebook Ireland has complied with its obligations, as data controller, in connection with the processing of personal data of its users by means of the Facebook Search, Facebook Messenger Contact Importer and Instagram Contact Importer features of its service, or whether any provision(s) of the GDPR and/or the Data Protection Act 2018 have been, and/or are being, infringed by Facebook in this respect.
EU Parliament Think Tank publishes report on EU-UK private-sector data flows after Brexit
The European Parliament Think Tank has published a report on EU-UK data flows. It says that EU-UK data flows – which it says are the lifelines of our shared digital trade – have come under pressure following the UK's withdrawal from the EU. To take regulatory and business decisions, a clear understanding of the state of play and future prospects for EU-UK transfers of personal data is indispensable. The EPRS in-depth analysis reviews and assesses trade dealings, adequacy challenges and transfer instruments under the GDPR.
Tackling digital piracy of live sport events and protecting organisers
The European Parliament Legal Affairs Committee has issued recommendations to address the illegal transmission of sport events and the protection of intellectual property rights of their organisers. It highlights the need to improve the existing framework on enforcement of intellectual property rights for live sport events to reflect the specific nature of live broadcasts, as the exploitation of broadcast rights is an important source of organisers’ income. Sport events as such are not subject to copyright protection and EU law does not provide for a specific right for sport event organisers. The Committee calls for further harmonisation of existing rules on notice and take down procedures in the context of the proposed Digital Services Act. Current legislation needs to be further clarified and concrete measures adopted to reflect the short-time value of live sport events and to allow for real-time take down of illegal live sport broadcasts. Online intermediaries would have to remove or disable illegal broadcasts “immediately, or as fast as possible and in any event no later than within 30 minutes of the receipt of the notification from right holders or a certified trusted flagger”, states the draft report. MEPs emphasise that legal sport content offers should also be better promoted and made easier to find online for consumers. The report highlights those measures should only target illegal content so as not lead to arbitrary or excessive blocking of legal content. They should be proportionate, in particular for small businesses, SMEs and start-ups and allow for access to judicial remedies, including protection of fundamental rights and personal data.