Wednesday, May 28, 2014

Old friends in new frocks? MFN clauses in the online hotel booking sector/19

(Previous installments here)

From a more evolutionary perspective, it is also noteworthy that in an era of big data firms at the different levels of the value chain have the potential to constantly gain better market insights. Based on the results of data analysis, both producers and intermediaries may experiment by way of fine tuning their marketing practices. In some respect, the uninterrupted and abundant flow of real-time, potentially insightful data makes it imperative for every market participant to continually experiment and adapt.




More specifically, with regard to the retail MFNs discussed here, it can be argued that these clauses negatively impact learning and innovation based on  trial-and-error fueled by data within the distribution chain. Thus, for instance, in the context of the UK investigation into the private motor insurance sector, a PCW’s representative was lamenting that, due to wide retail MFNs, customer insight data potentially creating better risk profiles could not translate into experimenting with different insurance premiums offered on her website.


While concerns regarding online consumer privacy should be taken very seriously, competition policy is not best placed to assure that big data evolves into responsible usages in the interest of consumers. Conversely, competition policy would be ill-advised to absolve specific market practices based on balancing harms also in terms of privacy against concrete economic benefits to the other side of the market. More modestly, one of the challenges for competition policy in markets where the impact of big data is felt the most may consist in supplementing the traditional “follow the money” with a thoughtful “follow the data” approach.