On 16 July 2020 the European Commission launched a sector inquiry into the Internet of Things (IoT) for consumer-related products and services.
The inquiry will focus on "consumer-related products and services that are connected to a network and can be controlled at a distance, for example via a voice assistant or mobile device, including smart home appliances and wearable devices". Consumer-related IoT products and services in the Union is already an important sector, which is expected to grow substantially in the coming years. The total number of smart home devices in the EU is likely to rise to 184 million by 2023.
The Commission mentions several restrictions of competition law that could emerge in relation to IoT. It will focus on looking into data access and interoperability practices as well as certain forms of self-preferencing and practices linked to technology standards and standard essential patents (SEPs). Finally, network effects, economies of scale and the emergence of digital ecosystems and gatekeepers will also be investigated as part of the inquiry. Some of these issues have already come up in the assessment of the Google/Fitbit transaction (see here) and the investigation into Amazon's use of data from independent retailers.
The goal of a sector inquiry is to gather market information to better understand the potential competition issues and guide the Commission's future enforcement of competition law in the sector. If, during the sector inquiry, the Commission identifies problematic restrictions of competition law, it can open an investigation to enforce article 101 and/or 102 TFEU. The previous sector inquiry into the e-commerce sector led to cases such as Guess (AT.40428) and consumer electronics (AT.40181, AT.40182, AT.40465 and AT.40469).
For the purposes of this sector investigation, the Commission has sent requests for information to around 400 market players active at various levels of the supply chain. The Commission is expected to publish a preliminary report in early 2021, which will then form the basis for a public consultation. The publication of the final report is scheduled for the summer of 2022.
The sector inquiry complements other initiatives of the Commission's digital strategy, such as the digital services act and the proposed new competition tool, and reinforces the focus of competition authorities on issues related to data access.
Bird & Bird is happy to assist your company in responding to a request of information received in connection with this sector inquiry. Do not hesitate to reach out to your local competition contact for assistance.