Competitive Aspects of PSI Re-use Bruxelles, January 24 th, 2012

Competitive Aspects Competitive Aspects

of PSI Re-useof PSI Re-use

Bruxelles, January 24th, 2012

LAPSI, Bruxelles 24/01/2012 2

PRELIMINARY REMARKS AS TO THE ANALYSIS OF COMPETITIVE ISSUES

Industrial policy choices promote structural changes in some sectors … identified as “strategic sectors”. They set:

1. the boundaries of the “competitive arena” and who are its characters;

2. the relevant goals that these characters and markets have to pursue; and

3. The “rules of the competitive game”.

Massive and Future oriented

Antitrust actions consist in surgical interventions against

identified business practices (i.e. restrictive agreements and abuses of dominance) that happen within

precise markets…

Highly fact-specific, based on

well-identified market scenarios and more present

oriented

Industrial policy perspective Antitrust perspective

OPEN DATA

STRATEGY


COMPETITIVE ARENA and GOALS (1/2) …

Both Directive 2003/98 and the Proposal acknowledge…

Market of PSI generation

Markets of PSI re-use

Public sector bodies

Private companies

… and want to encourage private sector firms to fully

exploit the economic potential of PSI, by

removing major barriers to re-use

Competitive Arena

Correct?

Policy Goal

while fulfilling their public task, produce,

collect or hold a wealth of information and content of great value – a value that

now is even increasing because of the digital revolution

produce value-added goods, combining PSI with other

inputs

Such precious information will be there anyway … regardless the

charging/ licensing policy

set by the directive and the

proposal

Is this assumption well-founded?

Does it applies to any kind of PSI?


As a matter of fact, Directive 2003/1998 and the Proposal do not ban public sector bodies to re-use their own PSI, that is, to produce their own value-added goods. Moreover,

As a matter of fact, Directive 2003/1998 and the Proposal do not ban private sector firms to move upstream, that is, to produce information goods that are equivalent to PSI (Facebook and Google are two examples)…

Therefore, there are other market scenarios …

COMPETITIVE ARENA and GOALS (2/2) …


Private companies



Private companies

Private companies


Private companies


Private companies

From the in

dustrial p

olicy pers

pective, w

e should

understand wheth

er the “

rules of th

e competi

tive g

ame”

set by th

e Dire

ctive a

nd the P

roposal take o

ne or m

ore of

these sc

enarios in

to consid

eratio

n, and whether

they

choose one o

f them

as a goal


ANTICOMPETITIVE PRACTICES …





From the analysis of case law …

No access, via

• High charges ex 102(a)

• Explicit unjustified refusals to supply ex 102(b)

Anticompetitive foreclosure of private companies ex 102(b) via

• Predatory prices – Dumping prices – Cross subsidization

• Margin squeeze – Price discrimination – Rebates

Private companies

Private companies


Recommend the enforcement of antitrust law against public sector bodies that abuse of their market power!

Indeed, on the basis of the existing law, we know that when public sector bodies hold a dominant position they are subject to Article 102 of TFEU, but for the case where their conduct consists in an «operation of services of general economic interest», as provided for by Article 106 of TFEU.

Yet, such an enforcement action could be costly and burdensome for private sector firms acting against public sector bodies…

CURRENT QUASI-SOLUTION


Both Directive 2003/98 and the Proposal try to provide an optimal legal framework to facilitate and incentivize re-use. They want to secure:

The RULES of the COMPETITIVE GAME …

• The ease of use of PSI and the ban of unjustified refusals as well as delayed supply of PSI – see Art. 2(6), Art. 4, Art. 5 and Art. 9

• Openness to all potential re-users – see Art. 11(1) – with equal opportunity for public sector bodies and private firms – see Art. 10(2)

• Non unnecessarily restrictive, non discriminatory and non-exclusive licensing conditions – see Art. 8, 10(1), and 11(2); and

• Transparent charging policy principles and rules – see Art. 6 and Art. 7

Novelties: Independent

Authority Burden of proof

ruleSome c

hang

es, a

lthou

gh

not al

ways c

oher

ent w

ith

the a

ntitru

st log

ic…


CHARGING POLICY PRINCIPLES (1/2)

PSI free of charge

Zero windfall for public sector bodies

Default rule – Art. 6(1)

P = MC (for reproduction and

dissemination)

• Financial crisis requires public sector bodies to find other sources of revenue; moreover, taxpayers cannot be asked to pay for services that are reuse-specific

• Re-users pay only for services that facilitate re-use. But ..who pays for digitization?

• The “Needed exploitation of IPRs exception” considers the case where the exploitation of IPRs allows public sector bodies to substantially cover the costs of pursuing their public task. But … who are these public sector bodies?

• The “museums, archives and libraries exception” considers that prices equal to marginal costs may discourage these public sector bodies to maintain/improve their high quality raw-data; and that these institutions need further sources of income.

• Anyway, there is a ceiling for the total income …

Exceptions – Art. 6(2) and (3)

Museums Archives Libraries

Needed exploitation

of IPRs

Ceiling– Art. 6(4)

Total income

Given taxpayers’ money…


The proposed Art. 6 acknowledges that PSI in not a “MONOLITH”: it introduces flexibility. Moreover,

With Art. 6(3) exception it creates room for a new phenomenon that may take place thanks to digitization … Some public sector bodies – such as museums, archives, libraries (university libraries included), and research institutions – may re-use their own PSI to gain a new source of revenue and, thus, maintain/ improve the quality of the information that they hold.

Yet

Why the default rule and its exceptions are not directly connected to the amount of economic resources that public bodies actually need to keep on generating PSI? Such a rule would better fit the dynamic process for the generation of PSI?

Given this new charging policy, will private sector companies have enough incentives to remain/enter into the upstream market?

CHARGING POLICY PRINCIPLES (2/2) …


Corporate separation for public entities

the public sector entity

fulfilling its public

task

the public sector entity

that competes against private firms

in order to guarantee, via separated account books, transparency as to

the “costs” of the release of PSI

Arguments against:

(1) It could be costly and, hence, it could reduce the incentives of public bodies to re-use PSI themselves

(2) Cross-subsidization helps public sector bodies financing the production of PSI. It is not always true that public sector bodies would always produce the same volume (and quality) of PSI.

The adoption of different tools for lowering the risk of anticompetitive practices

FURTHER SUGGESTED SOLUTION

Not fo

r muse

ums,

arch

ives,

libra

ries

(unive

rsity

libra

ries

inclu

ded),

and

rese

arch

insti

tutio

ns

LAPSI, Bruxelles 24/01/2012

IN SUM





Private companies

The Directive and the proposal move from …

… and rule over the competition between public sector bodies and private sector companies with specific provisions … giving a lot of space to private sector firms being dowstream, increasing space to public sector bodies going downstream, but forgetting about private companies that could be interested in moving upstream

Something more could be done in order to reduce ex ante incentives to distort competition and make some rules more coherent with the antitrust approach


Thank you

Documents

Competitive Aspects of PSI Re-use Bruxelles, January 24 th, 2012