EC Competition Commissioner announces a plan to launch an e-commerce sector inquiry

The European Commission’s Competition Commissioner, Margrethe Vestager, has announced a proposal to launch a competition sector inquiry into the e-commerce sector.

The Commissioner’s objective is the creation of a digital single market within the EU, but at present there is a perception that barriers exist to cross-border online sales. The purpose of the inquiry, should it go ahead, is for the Commission to gain a better understanding of digital markets and their evolution and, in particular, to identify (and ultimately seek to reduce or even remove) those barriers that are impeding the development of effective cross-border e-commerce in goods and services within the EU.

The focus of the inquiry would be on private barriers to trade, in particular contractual terms, and would involve the Commission in gathering information from a range of actors in the digital sector, including online retailers, platform operators, price comparison sites, producers, broadcasters and content holders across the EU.

We should have a clearer idea in May as to whether the inquiry will go ahead, when the Commissioner presents her proposal to the College of Commissioners.

The announcement should come as no surprise. Both the European Commission and the UK’s Competition & Markets Authority (the CMA) have identified the online environment as a priority area. In recent years in the UK, the CMA’s predecessor, the Office of Fair Trading (the OFT):

• sent a Statement of Objections to Booking.com, Expedia and Intercontinental Hotels (IC), alleging that each of the online booking companies had entered into separate arrangements with IC restricting their ability to discount the price of room-only hotel accommodation. (The investigation closed following the parties offering commitments to the OFT. However, following an appeal by Skyscanner, the OFT’s decision was annulled by the Competition Appeal Tribunal, and the case has been remitted to the CMA for reconsideration.)
• investigated Amazon’s “price parity” requirements, which restricted sellers from offering lower prices on other online sales channels. (The investigation closed when Amazon announced that it would discontinue enforcement of contractual price parity obligations and remove its price parity policy clauses from its click-through agreements.)

The CMA itself is believed currently to be investigating how manufacturers of branded clothing and luxury goods restrict internet sales platforms from selling their products online. This focus on online sales restrictions is replicated in other jurisdictions. For example, the German Bundeskartellamt has taken enforcement action against manufacturers of sports footwear / apparel.

We have seen previously, for example in respect of the pharmaceuticals and energy sectors, that a sector inquiry can lead to the opening of investigations into alleged competition law infringements by individual undertakings. It is important therefore that those in the sector take time now to ensure that their house is in order. In particular, with the focus of the inquiry likely to be in part on contractual arrangements, undertakings in the sector should review their terms of business for competition compliance. For example, any form of “resale price maintenance” between a supplier and distributor is likely to be of concern to the Commission.

How we can help

It is not always clear whether a clause in a contract, or a business practice, is unlawful. We can review both your agreements and practices and advise.

We can also provide compliance training to flag the competition risks associated with the online environment and explain how to deal with any request for information from the competition authorities.