Facebook is being investigated in Germany for suspected abuse of its dominant market position.
Germany’s federal cartel office suspects Facebook’s privacy terms violate data protection laws.
The German authorities are looking into whether Facebook’s “dominance” means those terms also constituted an abuse of market power. The formal probe is the first of its kind the social network has faced.
Facebook said it was confident it complied with the law.
“Dominant companies are subject to special obligations,” said Andreas Mundt, the president of the cartel office.
“These include the use of adequate terms of service as far as these are relevant to the market
“For advertising-financed internet services such as Facebook, user data are hugely important.
“For this reason, it is essential to also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.”
Photo Getty Images
Andreas Mundt’s investigation would focus on Facebook’s US operation, as well as its German and Irish subsidiaries, the cartel office said in a statement released on March 2.
The investigation found that Facebook was dominant in the social media market and relied on advertising revenues generated on the basis of a “large amount of personal user data”.
Users had to agree to this collection of data as a condition of their being able to use the network.
“It is difficult for users to understand and assess the scope of the agreement accepted by them,” it said.
“There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection law.
“If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law.”
A Facebook representative said: “We are confident that we comply with the law, and we look forward to working with the Federal Cartel Office to answer their questions.”
The German authorities are working in “close contact” with the European Commission, the competition authorities of the other EU member states and data and consumer protection officers.
European Commission spokesman Ricardo Cardoso said the EU executive shared the view of the German cartel office that the mere infringement of data protection rules by a dominant company did not automatically amount to a competition violation.
“However, it cannot be excluded that a behavior that violates data protection rules could also be relevant when investigating a possible violation of EU competition rules,” Ricardo Cardoso added, while declining specific comment on the new case.
Speaking in Germany in January, the European commissioner for competition Margrethe Vestager said her agency was taking a harder look at whether the collection of vast amounts of consumer data by big internet companies violated competition rules.
Russian energy giant Gazprom has been charged by the European Commission with abusing its dominant market position in Central and Eastern European gas markets.
The EC said its preliminary view was that Gazprom was breaking EU anti-trust rules.
It added the company may have limited its customers’ ability to resell gas, potentially allowing it to charge unfair prices in some EU member states.
Gazprom rejected the EC’s objections, calling them “unfounded”.
“Gazprom strictly adheres to all the norms of international law and national legislation in the countries where the Gazprom Group conducts business,” the company said in a statement.
The company now has 12 weeks to respond to the Commission’s allegations.
Photo Reuters
The move could further sour relations with Moscow, which are already strained over the Ukraine crisis.
Brussels began investigating Russian state-controlled Gazprom in 2012, but Moscow says the Commission’s allegations are politically motivated.
The EU’s new anti-monopoly chief, Margrethe Vestager, said the Commission had found that Gazprom “may have built artificial barriers preventing gas from flowing from certain Central European countries to others, hindering cross-border competition.
“Keeping national gas markets separate also allowed Gazprom to charge prices that we, at this stage, consider to be unfair.
“If our concerns were confirmed, Gazprom would have to face the legal consequences of its behavior.”
Brussels’ competition authority has the power to impose fines of up to 10% of Gazprom’s global turnover.
The EC questioned the formulae Gazprom used to come up with the different prices at which it sold gas to individual countries.
“Gazprom’s specific price formulae, which link the price of gas to the price of oil products, seem to have largely favored Gazprom over its customers,” it said.
The Commission said that, in its preliminary view, Gazprom was hindering competition in the gas markets in eight Central and Eastern European member states – Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.
Russia supplies about a third of the EU’s gas requirements, with half that amount going through pipelines that cross Ukraine.
Pharmaceutical giant GlaxoSmithKline (GSK) has been accused of market “abuse” by the consumer watchdog, the Office of Fair Trading (OFT).
The OFT alleges that the company paid rivals to delay the release their own versions of GSK’s antidepressant drug Seroxat (paroxetine).
Alpharma, Generics UK and Norton Healthcare all received money not to enter the market with their copies of Seroxat.
Seroxat is a drug used to treat depression.
Consumer watchdog Office of Fair Trading alleges that GSK paid rivals to delay the release their own versions of Seroxat drug
The generic drug makers were attempting to supply the UK market with their versions of paroxetine, which GlaxoSmithKline brands as Seroxat, the OFT said.
GSK accused them of infringing its patent, so to resolve this dispute the pharmaceutical company effectively paid the three companies off, according to the OFT.
If proven, the allegations would be an infringement on the part of all the parties of competition law and on the part of GSK an abuse of its dominant place in the market.
“The introduction of generic medicines can lead to strong competition on price, which can drive savings for the NHS, to the benefit of patients and, ultimately, taxpayers,” said Ann Pope, senior director of services, infrastructure and public markets at the OFT.
“It is therefore particularly important that the OFT fully investigates concerns that independent generic entry may have been delayed in this case.”
The companies will now be asked to respond to its allegations, before the OFT makes a decision on whether or not competition law has been infringed.
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