On 16 July 2020, the European Commission ("Commission") launched an antitrust competition inquiry into the sector of Internet of Things ("IoT") for consumer-related products and services in the EU. The inquiry complements other actions launched within the framework of the Commission's digital strategy, in particular regulatory initiatives related to artificial intelligence (AI), data and digital platforms.
| what you need to know - key takeaways |
- The inquiry will focus on consumer-related products and services that are connected to a network and can be controlled at a distance (e.g. via a voice assistant or mobile device).
- Knowledge about the market gained through the inquiry will contribute to the Commission's enforcement of competition law in this sector and may lead proposals for specific regulation of the sector.
- Many of the concerns that the Commission has already suggested it will focus on as part of this sector inquiry are concerns that it has raised in relation to other sectors of the digital economy.
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Scope
The inquiry will focus on consumer-related products and services that are connected to a network and can be controlled at a distance (e.g. via a voice assistant or mobile device). These include:
- smart home appliances (e.g. fridges, washing machines, smart TVs, smart speakers and lighting systems);
- wearable devices (e.g. smart watches or fitness trackers);
- other smart devices (e.g. music and video streaming services and about the voice assistants used to access them).
Areas of potential concern
Knowledge about the market gained through the inquiry will contribute to the Commission's enforcement of competition law in this sector. The Commission has already raised the following areas of potential concern and focus:
- market players using control over data to distort competition, or otherwise close off these markets for competitors;
- restrictions regarding data access;
- restrictions regarding data interoperability;
- self-preferencing;
- practices linked to the use of proprietary standards; and
- the importance of network effects and economies of scale, which might lead to the fast emergence of dominant digital ecosystems and gatekeepers.
Potential outcomes
The Commission has no power to adopt measures aimed at remedying a situation under investigation in a sector inquiry. However, the information gathered can be used by the Commission to assess whether it should:
- open specific investigations into practices which may infringe the prohibitions on anti-competitive agreements and abuse of a dominant position (Articles 101 and 102 TFEU). This happened after both the Commission's energy and e-commerce sector inquiries; and
- issue proposals for legislation. In the context of the energy sector inquiry, for example, the Commission took an active role in the subsequent debate on unbundling in the third energy package and created political momentum for increased competition enforcement and efficient remedies.
Next steps and comment
Requests for information have already been sent out to a range of players. Recipient companies include smart device manufacturers, software developers and related service providers. A preliminary report on the replies will be published for consultation in spring 2021 and the Commission's final report will follow in the summer of 2022.
Many of the concerns that the Commission has already suggested it will focus on as part of this sector inquiry are concerns that it has raised in relation to other sectors of the digital economy in terms of merger control and antitrust investigations, and in relation to the proposed need for ex-ante platform regulation and new competition tool. The wider digital economy will therefore be watching this space closely.
For more information on EU sector inquires, see our free Quickguide.
