This week has seen the EU cast its eye on ecommerce and put ecommerce companies on notice to stop any forms of anticompetitive practices or face investigation. It plans to launch more antitrust investigations into such companies after a two year enquiry by the European Commission has found that there is a plethora or business practices that are designed to restrict competition.
In its initial report on the enquiry, the European Union Executive said that it had found an “increased use of contractual restrictions to control product distribution, which could be in breach of EU antitrust rules.” Talking about the report, Margrethe Vestager who is the European Union’s competition minister said:
“Certain practices by companies in e-commerce markets may restrict competition by unduly limiting how products are distributed throughout the EU. These restrictions could limit consumer choice and prevent lower prices online. At the same time, we find that there is a need to balance the interests of both online and ‘brick-and-mortar’ retailers. All to the benefit of consumers. Our findings help us to target the enforcement of EU competition rules in e-commerce markets.”
The European Commission’s enquiry focused on consumer goods and digital content as part of its campaign to overhaul Europe’s digital market in a bid to boost its growth and try to catch up with markets in Asia and the United States of America. As part of the investigation, the European Commission collected over 8000 distribution and licence agreements from various manufacturers, retailers, comparison websites and other ecommerce platforms and digital providers. In its report, the European Commission said:
“The insight gained from the sector inquiry will enable the Commission to target EU antitrust enforcement in European e-commerce markets, which will include opening further antitrust investigations”.
There were a range of concerns identified:
- Whilst real-time price information helped consumers in one way by making it easy to compare various prices for goods and services, it also enables two thirds of retailers to track competitor pricing and automatically adjust their prices. This could enable price coordination.
- Manufacturers are increasingly competing with their own resellers online have added certain restrictions to the contracts about who can resell their products and at what prices (e.g. banning sales on ecommerce platforms such as eBay and Amazon.)
- Geo-blocking (where an online seller will refuse to deliver to neighbouring EU member states for example) is another practice that the European Commission is concerned with as it believes cross-border sales can contribute to “to the integration of the EU’s internal market”
- For online content, it is increasingly difficult for new entrants to the market to access premium content. Rights can be difficult to get because large upfront payments are often required and territorial restrictions may be enforced.
Talking about the problems found with access to digital content, Monique Goyens of The European Consumer Organisation (BEUC) said:
“The investigation’s findings about the durations of licensing agreements are particularly striking. The longer a sport organiser or film producer licenses its content exclusively to a specific broadcaster the harder it gets for competitors to enter the market.”