In September, a study entitled “Reforming the Data Protection Package” was published by the European Parliament’s Directorate-General for Internal Policies, analysing the proposed General Data Protection Regulation (GDPR). The study was requested by the European Parliament’s Committee on Internal Market and Consumer Protection and aims to provide background information and advice on priority measures and actions to be undertaken in the reform of the European data protection legal framework.
The study, which was conducted by a Polish law firm and German academics from the European Legal Studies Institute in Osnabrück, focuses on four aspects: mapping new technologies and services; analysing the internal market dimension; strengthening the rights of the consumer, and international data transfers.
Whilst the authors of the study consider that the GDPR promises both to improve the internal market dimension and consumer protection, they also identify a number of shortcomings and weaknesses in the GDPR with relation to each of the aforementioned four aspects and provide several recommendations.
Mapping new technologies and services
The study briefly presents 10 new technologies with specific relevance for data protection, including geolocation services, cloud computing, smart metering, face recognition technologies, RFID, social networking services and the scanning of electronic mail. These technologies all raise similar data protection issues, especially in the area of the definition of personal data, data anonymisation and pseudonymisation, the purpose limitation principle, measures based on profiling and the actors involved; i.e., controller and processor.
Among other things, the study considers that there is some need for further clarification of the definition of personal data—for instance, with respect to the treatment of online identifiers—and that the GDPR does not contain any incentives for the use of anonymisation and pseudonymisation. The study is critical of the controller-processor dichotomy and favours a qualification as controller based solely on the determination of the purposes of the processing. At the very least, the obligations and responsibilities of controller and processor should be precisely divided and determined. Further clarification is also needed with respect to measures based on profiling. Moreover, certain provisions contained in the GDPR—for instance, the inclusion of online identifiers in the definition of data subject, the right to be forgotten, references to electronic format concerning the right to data portability—may not be compatible with the principle of technological neutrality.
The internal market dimension
The study explores the internal market dimension of the GDPR by evaluating key elements, such as the change of legislative instrument (regulation instead of directive), the “one-stop shop” principle and the “marketplace” principle.
Whilst the study welcomes the choice of a regulation, differences in the application of the law are nonetheless still likely to arise because of the principle-based style of legislation, open-textured norms and broad concepts as well as the different legal cultures and traditions in the EU member states. Moreover, the GDPR allows member states to adopt additional measures on matters such as health, employment and professional secrecy and sanctions for any breach of the provisions of the GDPR are left at the EU member states’ discretion. There is also a risk that the level of enforcement will differ considerably, given the variances in the organisation, the resources and the attitudes of national regulators. The study therefore requests that the tools for the regular monitoring of actual implementation and enforcement in all EU member states be strengthened and suggests the introduction of an EU-wide database on the legal practice similar to the “Consumer Law Compendium,” a comparative analysis on how eight EU consumer directives are applied in the EU member states.
The study highlights several gaps or ambiguities relating to the introduction of the “one-stop shop” principle, such as the lack of clarity concerning the definition of “main establishment” or the question as to whether the competent supervisory authority’s competence is exclusive or subject to the constituency mechanism. The “one-stop shop” principle also does not apply to cases where there is no establishment in the EU at all. Pursuant to the study, it could moreover be beneficial to allow groups of businesses to benefit from the “one-stop shop” principle, subject to certain conditions.
The study suggests a broadening of the European Commission’s competences by allowing any data subject or supervisory authority to complain to the European Commission, which could publicly express the opinion that the competent supervisory authority has not properly fulfilled its tasks in a particular case.
The study welcomes the proposed introduction of the “marketplace” principle, according to which controllers established outside the EU, including big U.S. tech companies, would become subject to EU data protection law. However, doubts remain as to how these rules can effectively be enforced against non-EU businesses.
Some of the provisions contained in the GDPR relating to the accountability principle are rather vague and give broad discretion to controllers. For instance, it would be more efficient to attach the Privacy by Design and Privacy by Default concepts right at the source and to also subject advisors, developers and producers of hardware and software as well as processors generally to its provisions. The draft GDPR should also give some model examples, for instance, an obligation on service providers to inform users of the possibility of presetting their browser and prescribing that the presetting feature of browsers should be Do-Not-Track.
Strengthening the rights of the consumer
The study further discusses the impact of new informational technologies and services on consumer protection. The core elements explored in this respect are consent, the right to be forgotten and to erasure, the right to data portability, the right against profiling, the obligation for non-EU controllers to designate a representative and joint operations of supervisory authorities.
For instance, the study calls for several clarifications concerning the right to erasure and the right of portability. In particular, a key political decision needs to be taken on whether the harmonisation or adoption of “commonly used formats” regarding the latter right is compulsory. For the purposes of strengthening the rights of consumers, behavioural advertising should be classified as “profiling.”
International data transfers
In its final part, the study analyses the increased role of the European Commission concerning adequacy assessments; the decreased role of the national data protection authorities in terms of authorisations; data transfers by way of standard data protection clauses and Binding Corporate Rules (BCRs); the definition of data transfer; other mechanisms and instruments, as well as international standards.
For instance, the study promotes adequacy assessments in relation to specific recipients of personal data, such as a specific circle of entities. The rules of conducting the assessments and the further handling of adequacy decisions should be defined in the GDPR. On the other hand, the study is critical of the so-called negative adequacy decisions as the consequences of such decisions are unclear.
The study suggests the extension of the exemption from the requirement for additional national approval to so-called ad-hoc clauses between the controller or processor and the recipient of the data and to introduce processor-to-subprocessor standard contractual clauses. The possibility of basing data transfers on nonbinding instruments should be deleted.
Adoption and approval of BCRs should be facilitated for smaller entities. There should be a possibility to limit the application of BCRs to a certain part of a group of undertakings. The term “data transfer” should be defined and the cases in which the new “legitimate interest” derogation permitting data transfers can be used should be clarified.
The study promotes a stronger “accountability approach” with respect to data transfers, focusing more on risk assessment by controllers and processors, as well as other mechanisms, like the development of an accreditation system or a dedicated Cloud Safe Harbour Programme as well as self-regulatory instruments and industry standards.
The study favours an active role of the European Commission in the discussion concerning technical (international) standards and proposes an amendment of the GDPR in this respect.
The study reflects in some parts criticism raised by industry regarding the GDPR, for example, in relation to the broad definition of personal data, and contains a number of rather controversial recommendations. It remains to be seen, however, to what extent it will influence the decision-making process in the European Parliament, given that the Committee on the Internal Market and Consumer Protection, which is only one of five committees, besides the main committee on Civil Liberties, Justice and Home Affairs (LIBE) that are involved in the review, had already published its draft opinion on the GDPR just days before the publication of the study. The LIBE Committee intends to present draft reports on the reform before the end of 2012, in which case the other involved committees will also need to present their draft opinions before the end of the year.
On 5 October, the Article 29 Data Protection Working Party published its Opinion 08/2012, providing further input on the data protection reform discussion (WP199), which deals specifically with the definition of personal data, the notion of consent and the proposed delegated acts. In particular, the Working Party is of the opinion that the GDPR does not fundamentally change the notion of personal data but merely reorganises its different elements. However, it suggests clarifying that the notion of “identifiability” includes the singling out of natural persons from other members of the group which are consequently treated differently. The Working Party also proposes a clear statement in a recital of the GDPR that online identifiers should, as a rule, be considered personal data. As regards consent, the Working Party considers that it would be highly undesirable if the word “explicit” were to be removed from the current version of the GDPR. Finally, the Working Party has some reservations with regard to the extent to which the European Commission would be empowered to adopt delegated acts. The Working Party has examined the proposed delegated acts, article by article, and in the majority of cases does not consider a delegated act to be appropriate. Whilst in many of these cases it does not consider any further guidance necessary, in other cases it would be more appropriate, for example, to amend the text of the GDPR itself or to leave it for the European Data Protection Board, the successor of the Working Party, to provide interpretative guidance.