Intellectual Property – Advanced Competitive Issues regarding PSI Insights from the analysis of some European cases Muenster, January 27 th, 2011

LAPSI, Muenster 27/01/ THE DATA (1/2) Regarding –Meteorological data (5) –Roadmap data (3) –Financial/Business data (3) –Marine information (2) –Environment data (2) –Property data (2) Occurring –in United Kingdom (4) –in Italy (4) –in Belgium (3) –in Netherlands (3) –in France (2) –in Sweden (1) Difficult access to legal data! Competitive issues arose in 17 case studies, 10 of which are legal cases … – During the 1990 (4) – After the year 2000 (13)

LAPSI, Muenster 27/01/ THE DATA (2/2) Alleging Wrong policy choices (6) Antitrust offences (11) –Violation of article 101 TFEU (1) –Violation of article 102 TFEU(10) The 11 antitrust ended with: No prohibition decisions (7) –No violation (1) –No formal proceeding (2) –Inapplicability (1) –Not enough evidence (2) –Wrong footed (1) Prohibition decisions (4) –Injunctive relief (1) –Damages (2) –Cease and desist order & fine (1) There is a great difference between the policy choices underpinning the boundaries of the playing field and the rules of the game, on the one hand, and the application of antitrust law against specific firms behaviors involving PSI, on the other hand To apply antitrust law is not as easy as one could believe … maybe because the application of antitrust law to PSI is too recent or maybe because antitrust law should be deemed as a remedy of last resort!

LAPSI, Muenster 27/01/ MAIN POLICY CHOICES (1/2) Does it mean to go beyond their public task? Does it mean to supply value added data? …offer their own services at higher prices (Maritime information, Lantmateriet) …compete against private sector firms … loose the money that they already invested in their datasets (Rijkswatersstaat) …spread the information that they hold free of charge Private sector firms run the risk to … Once public sector organizations are allowed to … Why higher prices? Does it mean to develop an activity for which taxpayers did not pay?

LAPSI, Muenster 27/01/ Predatory pricing – Dumping – Cross subsidization Period 1 P < C bm Losses Period 2 Competitors out of the market because they cannot match such a low price Period 3 P >C bm Extra-profits Recoupment = subsidization across periods on the same market Foreign Market P ex < P rivals Lower margins Foreign Market Competitors out of the foreign market because they cannot match such a low price Internal Market P > P bm Extra-profits Recoupment = subsidization across markets during the same period Comp Market P < P rivals Lower margins Competitive Market Competitors out of the competitive market because they cannot match such a low price Regulated Market P > P bm Extra-profits Price squeeze – Price discrimination Public entity holding PSI Final customers Public entity supplying v.a. dataPrivate entity 5 5 > 5 < 5 Monopolized market Competitive market

LAPSI, Muenster 27/01/ MAIN POLICY CHOICES (2/2) Yet, such a demarcation line has to be constantly updated because, due to technological and socio-economic developments, the notion of public task keeps changing (KNMI). Corporate separation the public sector entity fulfilling its public task and, hence, holding raw PSI the public sector entity that competes against private firms, offering value added data in order to guarantee, via separated account books, transparency as to the costs of the exchange of PSI against money between the two public sector entities (Lantmateriet, Trading Funds)

LAPSI, Muenster 27/01/ TWO QUESTIONS Could a proper charging policy prevent the risk of higher prices? Should we consider that the risks of dumping and price squeeze are something different from the risk of windfall, which is inherent to the existence of taxpayers money?

LAPSI, Muenster 27/01/ ARTICLE 101 – ECOMET 1: NO VIOLATION To allow inter-firm exchange of information for their operational functions To ensure the widest availability of basic meteorological data To recover part of the infrastructural expenses of the European National Meteorological Services by a contribution from all commercial users Joint data licensing policy, which includes standard licenses for different user groups, volume discounts and special tariff schemes Free determination of prices Joint venture among national meteorologica l services Efficiency increasing Still competition among the parties of the JV

LAPSI, Muenster 27/01/ ARTCLE 102: THE RECURRING PARADIGM Grievances (2) and formal complaints (9) about: No access, via High charges ex 102(a) (4) Explicit refusals to supply ex 102(b) (4) Anticompetitive foreclosure of private companies ex 102(b) via Predatory prices – Dumping prices – Cross subsidization (2) Margin squeeze – Price discrimination – Rebates (3) Public entity holding PSI Final customers Public entity supplying v.a. data Private entity Monopolized market Competitive market

LAPSI, Muenster 27/01/ MAIN ANTITRUST ISSUES arising from non prohibition cases In general, it has been argued that Antitrust law cannot be applied because the dissemination of PSI is not a commercial activity, but a public service (Direction de la Meteorologie Nationale); or The offence is not a matter of antitrust law (Landmark) The available evidence is not enough (Environment agency, Court of appeal of Milano – also in Rijkswaterstaat) Some concerns, such that for national security, may justify the refusal (Direction de la Meteorologie Nationale) In particular, against the cases of excessive prices and refusal to supply, it has been argued that:

LAPSI, Muenster 27/01/ HOW SHOULD PSI HOLDERS BEHAVE? The Commission gives us some hints in Ecomet 2. It asked for: –equal treatment of private firms and the commercial divisions of the public sector organization with regard to access to the data and the invoicing of that data; –the public sector organization to keep analytical accounts in which its commercial activities are entered separately and which thus ensure that there is no cross- subsidization; –an arbitration procedure for settling disputes between private firms and the public sector organization on any matter.

LAPSI, Muenster 27/01/ A TENTATIVE CONCLUSION Some of the competitive issues that arose from our case studies can be addressed by using antitrust law. This kind of competitive issues are those immediately connected to that specific set of behaviors that a public sector body can endorse to harm competition (see art. 101 and 102). Nevertheless, the major risks are those inherent to the legal framework where the relationship between public sector and private sector bodies is placed. It is here that our job can really make a difference!