Does the AVG aim to protect against (unfair) competition?

Smartwatches have grown considerably in popularity in recent years. Nowadays, watches can accurately count our steps, measure heart rate and receive and send messages. Inherent in all these functions is that all kinds of (personal) data are processed. These are sensitive (personal) data, which is why producers of these watches must take measures to comply with the obligations contained in the General Data Protection Regulation (AVG). Suppose, however, that a producer does not take these privacy rules very closely and violates the AVG, giving this producer a competitive advantage in the relevant market. Can other producers then hold him accountable?

GPS watches and unfair competition

Recently, the Zeeland-West Brabant District Court ruled in such a situation. LCT, LifeWatcher and Avium are competing manufacturers of GPS watches for the elderly and the needy. These watches can contact family members or caregivers in an emergency, send private messages, schedule medication times and serve as a heart rate monitor and/or pedometer. The GPS watches come with a software and an app to control the software.

Watches must process a lot of data to enable said functions, and the data obtained by the software and app are stored for the purpose of use. These processing operations are subject to the AVG. According to LCT and LifeWatcher, however, Avium is not complying with the AVG. Indeed, Avium allegedly provides its customers with incorrect and incomplete information in its privacy statement. In addition, Avium allegedly engages in unfair business practices by misleading its customers by providing incorrect and incomplete information on its website.

According to LCT and LifeWatcher, by violating the AVG and using unfair trade practices, Avium is acting unlawfully towards its customers as well as towards them. According to them, the violations allow Avium to offer its watches much cheaper, because Avium's watches are purchased from a Chinese company and use a free downloadable app.

LCT and LifeWatcher believe that this results in unfair competition and damages to them due to lower sales. They therefore brought an action against Avium in tort.

AVG does not protect competitor's interests

First, the court considered that a tort requires that the purpose of the AVG is to protect the interests of LCT and LifeWatcher, as competitors. However, the AVG does not show that purpose. In fact, the AVG aims to protect fundamental rights and freedoms of natural persons.

In addition, the AVG also does not include a provision allowing for private enforcement. This means that the AVG does not grant the power to business owners to hold competing companies accountable for a violation of the AVG. In fact, the power of enforcement is explicitly granted to supervisory authorities. Although enforcement by competitors would help protect natural persons, the court sees no reason to allow it. Therefore, LCT and LifeWatcher cannot invoke Avium's violation of the AVG.

Missed opportunity

The court's ruling could have provided an additional safeguard for citizens' rights. In fact, if companies can hold each other accountable for violations of the AVG, it will lead to better compliance with the AVG. Indeed, if they do not, they run the risk of being sued for damages by competitors. This means that citizens' rights are indirectly better safeguarded by the possibility of private enforcement. We see this, for example, with the Unfair Commercial Practices Act.

By considering that the AVG does not seek to protect the interests of competitors, this opportunity is not being seized for the time being. This is a shame in light of the protection it could have provided.

On the other hand, the question is whether the court could have considered otherwise. In unfair commercial practices, it follows from the recitals - the recitals to that law - that the Unfair Commercial Practices Act also indirectly seeks to protect competitors. There is no provision or recital in the AVG that shows that the AVG seeks to protect competitors. For this reason, the court concludes that the AVG does not seek to protect the interests of competitors. The court notes that the possibility of private enforcement may strengthen the protection of personal data, but finds that this is insufficient to assume that this is an objective of the AVG.

The European legislator could have strengthened the protection of personal data by including in the recitals to the AVG that its indirect purpose is to protect competitors. Indeed, in that case the court could have allowed private enforcement. It is a missed opportunity that this is not (yet) possible. Perhaps one day this will change. 

Conclusion

Personal data protection has not been strengthened by allowing private enforcement. This provides both good and bad news for business owners . The good news is that (for now) you cannot be sued for unfair competition due to a violation of the AVG. The bad news is that you can't sue other companies for it either.

By the way, you are not rid of all danger in case of violation of the AVG. A fine by the Personal Data Authority and an appeal for damages by those involved are among the possibilities. Always make sure you comply with the AVG. Please let us know if we can help.