On 10 May 2017, the European Commission published the final report on its e-commerce sector inquiry. The report identifies several business practices that might restrict competition in online markets. In the past, sector inquiries have been followed by enforcement action by the Commission in the industries concerned.
The Commission launched its two-year inquiry into the e-commerce sector in May 2015. Subsequently, it published initial findings on geo-blocking in March 2016 and a preliminary report in September 2016 [see our October 2016 Newsletter]. The final report is now available and focuses on the online sale of consumer goods and digital content.
As for the online sale of consumer goods, the report found that online price transparency and price competition has led companies to adjust their business practices. For example, a large proportion of manufacturers have opened their own online shop and now compete directly with their distributors. Moreover, manufacturers increasingly use contractual restrictions to control the online distribution of their products. For example, distributors may be prevented from using online platforms, price comparison websites or certain forms of online advertising. The Commission has warned that some of these practices may not be in line with competition rules because they unduly limit how products are distributed throughout the EU.
As for digital content, the inquiry found that contractual geo-blocking and exclusivity obligations are prevalent among digital content providers. Geo-blocking refers to the practice of restricting cross-border sales via the internet, which can manifest itself in multiple ways. For example, digital content providers may use a consumer's IP address to prevent cross-border access to digital content. In May 2016, the Commission proposed new legislation to address geo-blocking.
In its press release, the 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". Indeed, the Commission has already launched several investigations in the e-commerce sector [see our March 2017 Newsletter].
This article was published in the Competition Law Newsletter of June 2017. Other articles in this newsletter:
- European Commission accepts Amazon's commitments in e-book probe
- Recent enforcement action emphasizes the importance of compliance with procedural EU merger rules
- European Commission issues new rules for State aid to ports, airports, culture and the outermost regions
- District Court of Amsterdam rules on the validity of the assignments and prescription of CDC's claims for damage in sodium chlorate cartel
- Belgian Competition Authority fines undertakings for bid-rigging in railway tender