Short Reads

European Commission announced launch of e-commerce sector inquiry (and may conduct inspections)

European Commission announced launch of e-commerce sector inquiry (and may conduct inspections)

European Commission announced launch of e-commerce sector inquiry (and may conduct inspections)

01.04.2015

On 26 March 2015, the Commission announced that it is seeking to launch an industry-wide review of business practices in e-commerce, known as a "sector inquiry".

What is this about?

Sector inquiries are investigations that the Commission carries out into sectors of the economy when it believes that a market is not working as well as it should and it suspects that breaches of the competition rules might be a contributory factor. If it finds grounds on the basis of the information obtained during the inquiry, the Commission may decide to open specific investigations into possible breaches of the competition rules. This is what the Commission did on the basis of the results of sector inquiries into the energy, financial and pharmaceutical sectors.

Why is this relevant?

In the context of previous sector inquiries, the Commission has conducted unannounced inspections at the premises of companies. Note that these inspections are not necessarily focused on companies for which the Commission already has positive indications of wrong-doing. Instead, inspections have been used more broadly to ensure immediate access to relevant information. In this context, companies active in industries where e-commerce is important (see below) should ensure that they are optimally prepared for possible inspections. Checking-up on dawn-raid manuals and compliance efforts can be part of that exercise. Also, the Commission is likely to send out questionnaires to industry participants. A sector inquiry can reveal evidence of infringing conduct which can lead to severe fines.

For whom is this relevant?

Sector inquiries, including the one announced, are characterized by their wide scope. The rise of e-commerce is of course affecting many industries including FMCG, electronics and leisure. Industries and companies that are particularly experiencing increasing pressure on existing business models as a result of online trade, may be involved in the sort of behaviour that can be problematic under the competition rules (see below).

What types of behaviour is the Commission looking for?

The Commission as well as national competition authorities have been expressing concerns for a while about efforts of suppliers to restrict the freedom of online distributors to freely use the internet to reach customers. The Commission has indicated that there are signs that “some companies may be taking measures to restrict cross-border e-commerce”. Furthermore, the sector inquiry "will focus on private – and in particular contractual – barriers to cross-border e-commerce in digital content and goods". This suggests that any direct or indirect efforts by suppliers that hamper online distributors from freely supplying customers throughout the EU will receive particular attention. However, any other e-commerce-related behaviour violating the competition rules discovered in the context of a sector inquiry can lead to fines. This includes agreements that a distributor shall limit its proportion of overall sales made over the internet and agreements that the distributor shall pay a higher price for products intended to be resold by the distributor online than for products intended to be resold offline.

What should I do?

If you operate a distribution network which includes online distributors, the upcoming sector inquiry can be a good reason to re-assess your contracts and business practices from a competition law compliance-perspective. At the same time and as noted above, it may be prudent to assess your dawn-raid readiness.
The sector inquiry is expected to commence in the next few months.

Team

Related news

05.12.2019 NL law
Big tech firms entering banking: be careful what you wish for

Short Reads - Big tech firms, whether entering or already active on payments markets, are under scrutiny. PSD2 has opened up the payments markets to non-bank companies, but this comes with both risks and opportunities. EU regulators are examining anticompetitive risks, for example the possibility of leveraging a strong position in one market into another market. Competition, innovation, privacy and security for financial transactions will all be hot topics as scrutiny increases on providers of payment services.

Read more

05.12.2019 NL law
Court of Appeal applies competition notion of undertaking in civil damages claim

Short Reads - The Court of Appeal of Arnhem – Leeuwarden recently applied the competition law notion of an 'undertaking' in a civil damages suit between TenneT and an entity belonging to the Alstom group of companies. The Court of Appeal ruled that Cogelex formed a single undertaking with its 48% shareholder Alstom. Cogelex could therefore be held liable under civil law for the competition law infringement of its 48% parent company. The Court of Appeal based its decision on a broad application of the ECJ’s reasoning in its Skanska judgment of 14 March 2019.

Read more

05.12.2019 NL law
Walking a thin line: cooperation and collusion

Short Reads - Buying groups are under attack from competition authorities across Europe. Joint buying arrangements are aimed at strengthening participating companies' bargaining power towards their trading partners, usually resulting in lower prices or better quality for consumers. However, these buying arrangements must stay on the right side of the line between legitimate cooperation and anticompetitive collusion. Competition concerns may arise if the participating companies have a significant degree of market power or coordinate their conduct.

Read more

08.11.2019 BE law
Interview with Wouter Ghijsels on Next Gen lawyers

Articles - Stibbe’s managing partner Wouter Ghijsels shares his insights on the next generation of lawyers and the future of the legal profession at the occasion of the Leaders Meeting Paris where Belgian business leaders, politicians and inspiring people from the cultural and academic world will discuss this year's central theme "The Next Gen".

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring