In a transaction that may create one of the single largest concentrations of personal consumer data anywhere, British retail giant Great Universal Stores PLC acquired Metromail, a large US consumer data firm, for US$831 million on Friday.
Electronic privacy observers are eyeing the deal closely, given Great Universal's other holdings. Two years ago the company snapped up Experian, the consumer credit information company formerly known as TRW.
"The consolidation [of consumer information] does raise some red flags," said Deirdre Mulligan, staff counsel for the Center for Democracy and Technology.
Metromail's hefty selling price reflects the value of the company's extraordinarily detailed marketing and reference database that encompasses more than 90 percent of US households.
The constantly-updated database is compiled from public sources, such as car, gun, birth, marriage, and property registrations, private sources such as credit reports, as well as "self reported" sources of information, such as the personal demographic data that consumers are invited to include on mail-in product warranty cards.
According to an advertising industry source, each of Metromail's millions of consumer profiles incorporate several hundred fields, specifying an individual's preference for, say, red or white wine, or foreign or domestic vehicles, or business or economy travel.
Long used for targeting direct mail campaigns, the profiles will be used to target Internet banner advertising later this year, according to Daniel Hamburger, Metromail's vice president of Internet services.
Great Universal's acquisition of Metromail opens a number of questions about regulation and the degree of access consumers might expect to their information.
"With the Internet in general, and with mergers of companies by other companies outside of the country, questions about jurisdiction in the area of privacy and consumer protection are moving to the forefront," said Mulligan.
Mulligan speculated whether the deal might spell good news for privacy-conscious US consumers. Currently, the domestic consumer database industry is self-regulating and, unlike credit reports, consumers have no access to their own Metromail profiles. However, in the UK, where Great Universal is based, a law called the Data Protection Act of 1984 ensures UK citizens have access to, and control over, information kept about them.
"It will be interesting to see if there is some change in the privacy protection provided to US citizens," said Mulligan.
Other sources said that the application of the UK and European public initiatives governing consumers' access to data kept about them hinges on a variety of factors, including where that data is stored, and where it is collected.
"To the extent that the acquisition results in a change in where Metromail does its data processing, or the level of cross-border data exchange, [the company must] adhere to two standards," said Joel Reidenberg, a Fordham University law professor.
Metromail officials were unwilling to speculate on any potential change in the regulatory sea.
"We are always extremely mindful of what is appropriate in any given market," said Julie Springer, Metromail's director of corporate communications.
Citing the need to resolve the details of the transaction before it closes on 10 April, Springer said it was too early to say if the acquisition would have any impact on which country's regulations the company would abide by, and under what circumstances.
Metromail says it is complying with a list of self-regulatory privacy guidelines that an industry group of 14 consumer database companies agreed to last December. The guidelines were accepted by the Federal Trade Commission in lieu of legislation, with an agreement that industry companies would consent to a third-party audit of their compliance on an annual basis.
Consumer privacy activists were unhappy with the guidelines. "It's like asking, 'Did I do anything bad today? Nope, I guess not,'" said Marc Rotenberg of the Electronic Privacy Information Center.
Springer said that Metromail already did business in the UK through its wholly owned subsidiary, International Communication and Data (ICD), which she described as one of the top three survey and direct marketing firms in that country.
She declined to speculate on how Metromail's individual consumer profiles business might expand across the Atlantic. In 1996, according to Securities and Exchange Commission documents, the UK-based ICD received lifestyle data for 3.5 million Britons.
The 1996 acquisition of Experian by Great Universal Stores, for a reported $1.07 billion, raised concerns at that time among consumer privacy watchdogs that confidential consumer information would be at risk. However, Mulligan said that the FTC quelled such concerns.
"My understanding from the FTC was 'No, this is still data about US citizens being processed and used here, and it is still governed by our laws,'" said Mulligan.
Great Universal Stores is the UK's leading catalog retailer, with $4.8 billion in annual sales of clothing and furnishings through retail stores and mail order. According to Hoover's, the company's CCN Experian division supplies consumer and business credit, direct marketing, and real estate information services in the US and in Europe. Great Universal has retail subsidiaries in Austria, Canada, the Netherlands, South Africa, Sweden, Ireland, Switzerland, and the United States.
Metromail shares shot up $5.63 to close at $31.50 on the New York Stock Exchange Friday.
Representatives of the Federal Trade Commission were not available for comment.
