Israeli Competition Authority Prioritizes Data in Merger Reviews
The Israel Competition Authority is updating its merger review process to place greater emphasis on a company's data holdings, a factor previously considered secondary. Tobi Harris, head of the authority's new Markets Department, explained that data can now be viewed as a critical business asset, akin to raw materials or infrastructure, which can significantly impact market competition. The department, comprising 25 economists and lawyers, reviews approximately 200-250 mergers annually.
Harris highlighted that access to unique customer data can provide a company with a substantial competitive advantage, potentially allowing it to identify and target specific customer segments or even push competitors out of the market. She cited a hypothetical scenario where a leading insurance company with access to another's customer data could identify and charge higher prices to 'unsuspecting' customers. The authority's review process now involves assessing the nature and uniqueness of the data, its potential uses, and its impact on competition, considering the 'delta' between the market with and without the merger.
The authority is also examining how data, particularly in conjunction with artificial intelligence (AI), can alter competitive dynamics. AI's reliance on vast datasets can reduce market uncertainty for companies, enabling them to make faster, more informed decisions regarding pricing and expansion. This raises concerns about potential algorithmic collusion, where pricing software used by multiple competitors might inadvertently lead to price coordination, even without explicit agreement.
While acknowledging the evolving landscape, Harris stated that new legislation is not immediately necessary, as existing competition laws are broad enough to encompass these new considerations. The primary challenge, she noted, lies in developing the expertise within the authority to identify and analyze the competitive implications of data and AI in merger reviews. The focus is on understanding the 'behind-the-scenes' aspects of data utilization rather than simply increasing the number of reviewed mergers.
