UK market study on the Commercial Use of Public Information (CUPI) Tony Donaldson, Director of Economics & Antoinette Graves, Team Leader

Drivers for the study ● Importance of the knowledge economy & value of public sector information:  PIRA 2000 UK top down: €11.2bn  OFT 2006 UK bottom up: £590m  BUT potential for UK to be £1bn ● Complaints about Public Sector Information Holders (PSIHs)

Complaints – market-wide & difficult to address with competition law ● PSIH needs to be an undertaking – though many are ● Excessive pricing difficult to prove because, in the UK, PSIH Trading Funds are not over-recovering on target returns to Treasury which means would need to show PSIH was incurring excessive costs

Complaints – difficult to address with competition law (cont) ● Refusal to supply difficult to pursue:  Intellectual Property Rights (IPRs) mean that product has to be new  refusal is not justified by objective considerations  refusal is such as to reserve to the owner of the IPR the market by eliminating all competition

Complaints – difficult to address with competition law (cont) ● May not be outright refusal to supply but refusal to license for certain purposes ● Margin squeeze difficult to prove because:  often accounts not separated into up & downstream  complicated by use of differential pricing for different uses  complexity of information products/services & determination of substitutable products

Complaints – difficult to address with competition law (cont) ● Resource-intensive ● This means that businesses, especially SMEs, are unlikely to take private action ● Penalties – any fines or financial recompense to the business complainant have to be paid for from public funds

Benefits of developing well- functioning markets in PSI ● Innovative products & services ● Lower prices ● Resources not wasted in re-building what the public sector already has (where that’s even possible) in terms of raw information – related to this is the point that where PSIHs have public duty to collect data they do not need IPRs to incentivise them

Role for competition authorities ● Consider & promote OECD principles on PSI (adopted by Seoul Ministerial 2008) ● Share experiences of tackling anti- competitive behaviour by PSIHs ● Consider how to address cross-border issues ● In the long term consider revisions to PSI Directive

Key messages of CUPI study ● PSI valuable & vital input for businesses wanting to make new products/services ● Improvements could be made to way PSI supplied leading to doubling value to UK economy to over £1bn per year

● Most PSIHs are sole suppliers of PSI – where they also add value to PSI themselves could be in competition with businesses & have incentive to restrict access to PSI in its less refined form ● Range of legislation & guidance should ensure access to upstream information is provided on an equal basis but lacks clarity & inadequately monitored

Supply of PSI in UK ● Income to PSIHs from supply of PSI is £400m ● About three quarters of this to Ordnance Survey, Meteorological Office, UK Hydrographic Office, HM Land Registry & Companies House ● 78% in analysed form: not raw, consultancy, information search or designs

Use of PSI ● 50% income from businesses, 45% from other public sector bodies, 5% from public ● Most businesses use PSI to produce value-added products ● Half use it to produce business products, three in ten consumer products

Common Issues Over one third businesses reported problems, over two thirds were serious ● Inadequate availability of upstream PSI ● Overly-restrictive contract terms ● Inadequate quality of service ● Unduly high prices

Overly-restrictive contract terms ● One obvious instance of PSIH licence exception policy stating that it would not licence PSI for products competing with existing value added products or any it intends to market ● Businesses unable to gain licences of sufficient length to allow them to tender for major govt contract

Unduly high prices ● Costs not allocated between upstream & downstream PSI  Means PSIHs cannot ensure prices charged for both types PSI reflect relevant costs of their provision  Means that it’s not possible to determine that prices of upstream PSI charged to businesses are same as those charged internally

Remedies to achieve equal access ● Considered:  Divestment of refined PSI operations  Making upstream PSI available at no charge  Building on existing regulatory framework

Need to ensure: ● Businesses have access to PSI at earliest point in refinement useful to them ● On equal basis to any downstream information operations of PSIH

Improving pricing ● Ceiling on upstream PSI prices to be the full cost (including any required rate of return) ● Upstream PSI should be available to third parties and internally at the same price and on equal terms for comparable purposes ● Downstream PSI products should be priced at no less than full cost recovery, including any required rate of return and an appropriate share of any common costs.

Conclusion ● Supply of PSI not working as well as it could ● We know that PSIHs can do things differently because there are examples of best practice incl in separating upstream & downstream PSI ● Benefit: doubling value PSI to £1bn pa