This article is the third in our "Trends in digital health" series.
From wearable devices that detect diseases to new platforms for analysing vast volumes of medical data, digital technology is transforming the healthcare industry. In order to reap the benefits of this revolution, industry participants must navigate a plethora of legal issues. Much has been written on issues such as data protection, regulatory requirements, and attribution of liability across supply chains. Perhaps less attention has been paid to the competition law implications of recent developments in digital health.
In this article we focus on the relevance of competition law to the data that may be contributed to, or generated through, digital health projects. In a growing number of contexts, data is key to the competitiveness of firms and their ability to develop new products and services. From this perspective, broad dissemination and use of data by industry participants might appear to be desirable. However, as a 2019 European Commission expert report on Competition Policy for the Digital Era recognised, the benefits of broad dissemination must be weighed against a number of other policy considerations, including maintaining investment incentives, protecting privacy and guarding against the risk of collusion.
1. Digital health collaborations and information-sharing risks
Strategic partnerships are increasingly becoming the norm in the field of digital health. In an effort to drive better patient outcomes, MedTech organisations, digital health companies and healthcare providers are collaborating more closely and experimenting with different forms of data sharing. Such collaboration will often be pro-competitive: it enables firms to pool expertise and resources, resolving data bottlenecks and facilitating the development of new products that no single firm could achieve.
Yet at the same time, collaborations have the potential to give rise to competition law issues. Without appropriate safeguards, they can reduce firms’ ability and incentive to compete, increase the likelihood of collusive outcomes, and even put non-participating rivals at a disadvantage, leading to market foreclosure. In 2021, the European Commission fined car manufacturers €875 million for colluding to restrict technical development on emissions cleaning. The Commission found that by exchanging commercially sensitive information and reaching agreement on matters such as AdBlue tank sizes, the manufacturers had avoided competing on the use of better, cleaner technology. Risks of this kind are particularly high where companies collaborate with their direct competitors.
Businesses in the digital health sector therefore need to pay careful attention to general competition law principles and competition authority guidance when collaborating – or risk facing enforcement action. Measures such as limiting the collaboration in time and scope, ensuring that each party to the collaboration brings their own specialist knowledge, and keeping the exchange of commercially sensitive information to a minimum, can help to reduce the competition law risks.
2. Additional competition rules applicable to digital health companies with ‘market power’
The competition rules prohibit firms who enjoy a position of market power (or ‘dominance’) from abusing that position. How do these rules apply to dominant, data-rich firms who might refuse to grant other firms access to their data?
In answering this question, it is futile to analyse data in the abstract: the likelihood of competition concerns will depend on the characteristics of the data and relevant market(s) under scrutiny. In any given scenario, much will depend on whether access to the data is essential (rather than just convenient or useful) to enable third parties to compete. In many scenarios, data access will not be indispensable and authorities will be reluctant to intervene. But in other cases, the foreclosure impact of a refusal to grant access might be significant – for example if a high degree of market concentration is accompanied by a high degree of data concentration and the data provides an important competitive advantage. In such cases, the need to ensure the possibility of rival entry and expansion may point towards mandating data access.
As far as the digital health sector is concerned, it seems questionable whether datasets will commonly give rise to positions of market power, at least for the foreseeable future. However, some datasets may prove to be particularly comprehensive or useful for particular patient populations, such that they give the owner a significant competitive advantage over rivals who do not have access to equivalent datasets. Whenever this arises, the dominant firm will need to take heed of its ‘special responsibility’ not to allow its conduct to restrict competition. The precise scope of that special responsibility has been the subject of vigorous debate in recent years, but following recent cases such as Slovak Telekom and Servizio Elettrico Nazionale, it is now clear that imposing unfair or discriminatory conditions of access on third parties can be abusive if it gives rise to anti-competitive effects.
3. Data concerns in merger cases
The past few years have also seen significant developments in how merger control policy applies to data-intensive sectors such as digital health. Recent decisions taken by the European Commission have articulated novel data-related theories of harm, considered the relationship between competition law and data protection, and involved new approaches to the design of remedies.
The Commission’s conditional clearance of Google’s acquisition of Fitbit in December 2020 is an instructive example. After an in-depth investigation, the Commission was concerned that the transaction might harm competition in several markets:
- Google could use Fitbit’s health and fitness data and technology for the further personalisation of ads, making it more difficult for rivals to match Google’s services for online advertising.
- Google could restrict access to Fitbit users’ health and fitness data to foreclose competitors offering digital healthcare products and services. In the Commission’s view, such a strategy would be particularly harmful to “start-ups and small players” who would “”capitalise even on relatively small amounts of Fitbit users’ data to compete and contribute to innovation and diversification of the digital healthcare sector.
- Google could put competing manufacturers of wrist-worn wearable devices at a disadvantage by degrading their interoperability with Android smartphones.
The Commission also considered, but ultimately dismissed, concerns that the combination of the parties’ datasets could give Google such a competitive advantage in the digital healthcare sector that rival providers would no longer be able to compete. In dismissing this theory of harm, the Commission noted that the European digital health sector was “nascent and fragmented” and that Fitbit had a limited number of users in the fast-growing smartwatch segment.
To address the Commission’s concerns, the parties offered a complex set of behavioural remedies. As well as giving data access and interoperability commitments, Google promised to hold Fitbit’s health and fitness data separate from Google’s advertising business in a virtual storage environment for ten years. This is the first time that the Commission has accepted a ‘data silo’ commitment. It remains to be seen whether remedies of this kind will be a common feature of future cases that raise data concerns, including in the digital health sector.
 Jacques Crémer et al, Competition Policy for the Digital Era (2019), page 76. Report available at https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf.
 Case M.9660, Google/Fitbit, Commission decision of 17 December 2020.
 Para 529 of the decision.