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UK market study on the Commercial Use of Public Information (CUPI). Tony Donaldson, Director of Economics & Antoinette Graves, Team Leader. Drivers for the study. Importance of the knowledge economy & value of public sector information: PIRA 2000 UK top down: €11.2bn
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UK market study on the Commercial Use of Public Information (CUPI) Tony Donaldson, Director of Economics & Antoinette Graves, Team Leader
Drivers for the study • Importance of the knowledge economy & value of public sector information: • PIRA 2000 UK top down: €11.2bn • OFT 2006 UK bottom up: £590m • BUT potential for UK to be £1bn • Complaints about Public Sector Information Holders (PSIHs)
Complaints – market-wide & difficult to address with competition law • PSIH needs to be an undertaking – though many are • Excessive pricing difficult to prove because, in the UK, PSIH Trading Funds are not over-recovering on target returns to Treasury which means would need to show PSIH was incurring excessive costs
Complaints – difficult to address with competition law (cont) • Refusal to supply difficult to pursue: • Intellectual Property Rights (IPRs) mean that product has to be new • refusal is not justified by objective considerations • refusal is such as to reserve to the owner of the IPR the market by eliminating all competition
Complaints – difficult to address with competition law (cont) • May not be outright refusal to supply but refusal to license for certain purposes • Margin squeeze difficult to prove because: • often accounts not separated into up & downstream • complicated by use of differential pricing for different uses • complexity of information products/services & determination of substitutable products
Complaints – difficult to address with competition law (cont) • Resource-intensive • This means that businesses, especially SMEs, are unlikely to take private action • Penalties – any fines or financial recompense to the business complainant have to be paid for from public funds
Benefits of developing well-functioning markets in PSI • Innovative products & services • Lower prices • Resources not wasted in re-building what the public sector already has (where that’s even possible) in terms of raw information – related to this is the point that where PSIHs have public duty to collect data they do not need IPRs to incentivise them
Role for competition authorities • Consider & promote OECD principles on PSI (adopted by Seoul Ministerial 2008) • Share experiences of tackling anti-competitive behaviour by PSIHs • Consider how to address cross-border issues • In the long term consider revisions to PSI Directive
Key messages of CUPI study • PSI valuable & vital input for businesses wanting to make new products/services • Improvements could be made to way PSI supplied leading to doubling value to UK economy to over £1bn per year
Most PSIHs are sole suppliers of PSI – where they also add value to PSI themselves could be in competition with businesses & have incentive to restrict access to PSI in its less refined form • Range of legislation & guidance should ensure access to upstream information is provided on an equal basis but lacks clarity & inadequately monitored
Supply of PSI in UK • Income to PSIHs from supply of PSI is £400m • About three quarters of this to Ordnance Survey, Meteorological Office, UK Hydrographic Office, HM Land Registry & Companies House • 78% in analysed form: not raw, consultancy, information search or designs
Use of PSI • 50% income from businesses, 45% from other public sector bodies, 5% from public • Most businesses use PSI to produce value-added products • Half use it to produce business products, three in ten consumer products
Common Issues Over one third businesses reported problems, over two thirds were serious • Inadequate availability of upstream PSI • Overly-restrictive contract terms • Inadequate quality of service • Unduly high prices
Overly-restrictive contract terms • One obvious instance of PSIH licence exception policy stating that it would not licence PSI for products competing with existing value added products or any it intends to market • Businesses unable to gain licences of sufficient length to allow them to tender for major govt contract
Unduly high prices • Costs not allocated between upstream & downstream PSI • Means PSIHs cannot ensure prices charged for both types PSI reflect relevant costs of their provision • Means that it’s not possible to determine that prices of upstream PSI charged to businesses are same as those charged internally
Remedies to achieve equal access • Considered: • Divestment of refined PSI operations • Making upstream PSI available at no charge • Building on existing regulatory framework
Need to ensure: • Businesses have access to PSI at earliest point in refinement useful to them • On equal basis to any downstream information operations of PSIH
Improving pricing • Ceiling on upstream PSI prices to be the full cost (including any required rate of return) • Upstream PSI should be available to third parties and internally at the same price and on equal terms for comparable purposes • Downstream PSI products should be priced at no less than full cost recovery, including any required rate of return and an appropriate share of any common costs.
Conclusion • Supply of PSI not working as well as it could • We know that PSIHs can do things differently because there are examples of best practice incl in separating upstream & downstream PSI • Benefit: doubling value PSI to £1bn pa