On 16 July 2020, the European Commission launched an antitrust inquiry into the Internet of Things (IoT) sector, looking at consumer-oriented products and services with a special focus on wearable devices and smart home appliances (e.g. smart speakers).
The purpose is to help the Commission gain information about this young and fast-growing market in order to better assess potential competition issues. Although its inquiry has been criticised for being premature, the Commission wants to stay ahead of possible antitrust problems involving network effects, economies of scale, gatekeepers, consumer lock-ins and tipping market issues, among other things.
The sector inquiry is expected to shape future enforcement action by the Commission in this sector.
Compared to previous sector inquiries, the scope of the IoT inquiry is mid-sized: approximately 400 companies have received requests for information (RFI) containing 130 to 150 questions. Previous sector enquiries (e.g. in the e-commerce sector) surveyed as many as 1900 companies.
For the companies, participation is not voluntary. The deadline for submitting answers is 15 October 2020. A preliminary report on the replies, which will be used for consultation, has been scheduled for spring 2021. The final report is expected to follow in mid-2022.
In the course of previous sector inquiries, the Commission performed dawn raids and raids are also expected during the IoT inquiry.
During a dawn raid, the Commission can – sometimes aided by national competition authorities and local police – enter and search business and private premises to collect information.
Consequently, any company that has received an IoT-inquiry RFI is advised to prepare for a dawn raid (e.g. ensure that its internal dawn-raid protocols are up to date and that employees are trained to apply them).
CMS has lined up a pan-European CMS Dawn Raid Response Team. The free CMS Dawn Raid Assistance app guides anyone through its basic principles. The CMS Competition & EU Group has more than 225 competition lawyers that can assist with additional questions.
For more information on the IoT sector inquiry, contact your regular CMS advisor or local CMS experts Roderick Nieuwmeyer or Merle Temme.