Antitrust: Commission publishes final report on e-commerce
sector inquiry
Brussels, 10 May 2017
The European Commission's final report on the e-commerce sector inquiry
identifies business practices that may restrict competition. It allows the
Commission to target its enforcement of EU antitrust rules in e-commerce markets
and has already prompted companies to review their practices.
Commissioner Margrethe Vestager in charge of competition
policy said: "Certain practices by companies in e-commerce markets may
restrict competition by unduly limiting how products are distributed throughout
the EU. Our report confirms that. 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".
One of the main goals of the Commission's Digital
Single Market strategy is to ensure better access for consumers and
businesses to goods and services. The e-commerce sector inquiry complements the
Commission's legislative proposals in this regard. The objective of the sector
inquiry was to allow the Commission to identify possible competition concerns in
European e-commerce markets.
The report published today presents the Commission's definitive findings,
taking account of comments received on the preliminary report
of September 2016 and confirming to a large extent the preliminary report's
conclusions.
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. In February 2017, the
Commission already opened three separate investigations into holiday
accommodation, PC video games distribution and consumer electronics pricing
practices that may limit competition.
Furthermore, the sector inquiry has prompted companies to review their
commercial practices on their own initiative. This can help consumers to
purchase products more easily cross-border and benefit from lower prices and a
wider choice of retailers. The Commission is aware and welcomes that companies
in the clothing industry – Mango (belonging to Punto Fa),
Oysho and Pull & Bear (both belonging to
Inditex), and Dorothy Perkins and Topman (both
belonging to Arcadia) – but also other retail sectors (the coffee machine
producer De Longhi and photo equipment manufacturer
Manfrotto) have reviewed their practices.
Consistent interpretation of EU competition rules on e-commerce related
practices is essential for businesses when devising their distribution
strategies in the EU. On the basis of the sector inquiry findings, the
Commission will broaden the dialogue with national competition authorities
within the European
Competition Network on e-commerce-related enforcement to achieve this. More
enforcement by the Commission will also provide guidance to stakeholders on
specific e-commerce related practices.
Main Findings
Consumer goods
The report confirms that the growth of e-commerce over the last decade and,
in particular, online price transparency and price competition, had a
significant impact on companies' distribution strategies and consumer behaviour.
The final results of the sector inquiry highlight the following market
trends:
A large proportion of manufacturers decided over the last ten years to
sell their products directly to consumers through their own online
retail shops, thereby competing increasingly with their
distributors.
Increased use of selective distribution systems, where
the products can only be sold by pre-selected authorised sellers, allows
manufacturers to better control their distribution networks, in particular in
terms of the quality of distribution but also price.
Increased use of contractual restrictions to better
control product distribution. Depending on the business model and strategy, such
restrictions may take various forms, such as pricing restrictions, marketplace
(platform) bans, restrictions on the use of price comparison tools and exclusion
of pure online players from distribution networks.
Some of these practices may be justified, for example in order to improve the
quality of product distribution. Others, however, may unduly prevent consumers
from benefiting from greater product choice and lower prices in e-commerce and
therefore warrant Commission action to ensure compliance with EU competition
rules.
Digital content
The results of the sector inquiry confirm that the availability of licences
from contentcopyright holders is essential for digital content providers and a
key factor that determines the level of competition in the market.
The report points to certain licensing practices which may make it more
difficult for new online business models and services to emerge. Any assessment
of such licensing practices under the EU competition rules has however to
consider the characteristics of the content industry.
One of the key findings of the sector inquiry is that almost 60% of digital
content providers who participated in the inquiry have contractually agreed with
right holders to "geo-block".
Content providers can engage in geoblocking for objectively justified
reasons, such as to deal with VAT issues or certain public interest legal
provisions. The Commission has already proposed legislation to ensure that
consumers seeking to buy products and services in another EU country, be it
online or in person, are not discriminated against in terms of access to prices,
sales or payment conditions, unless this is objectively justified for a specific
reason. The Commission has also made proposals on the modernisation of the EU
copyright rules to notably increase the access to audiovisual content online
across borders, while taking into account the important role that territorial
exploitation of audiovisual content plays for the financing model of the
European audiovisual sector. Both proposals are currently being negotiated with
the European Parliament and the Council.
Any competition enforcement in relation to geo-blocking would have to be
based on a case specific assessment, which would also include an analysis of
potential justifications for restrictions that have been identified.
Background
The Commission launched the
e-commerce sector inquiry in May 2015 in the context of its Digital Single
Market strategy. During the inquiry, the Commission gathered evidence from
nearly 1 900 companies operating in e-commerce of consumer goods and digital
content and analysed around 8 000 distribution and license contracts.
In March 2016, the Commission published initial findings
on geo-blocking in an issues
paper and in September 2016 the Preliminary
Report setting out its initial findings. For further background, please see
the sector
inquiry website.
IP/17/1261
