The European Commission's Preliminary Report Into The E-Commerce Sector

Author:Mr Richard Ryan, Florence Loric and Patrick Horan
Profession:Arthur Cox
 
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On 15 September 2016, the European Commission (the "Commission") published its Preliminary Report arising from its e-commerce sector inquiry (the "Report"). In essence, the Report highlighted two key points.

First, e-commerce is rapidly and continuously increasing in the EU, with more than half of EU adults having ordered online in 2015. Second, the Commission will closely monitor certain business practices it has identified as potentially anti-competitive relating to both the online sale of consumer goods and supply of digital content. The Report cautions that the Commission is likely to undertake case-by-case investigations into these practices.

ONLINE SALE OF CONSUMER GOODS - HOT TOPICS

Contractual sales restrictions in distribution agreements: The Report finds that manufacturers have responded to the rapid rise of e-commerce in certain cases by imposing price limitations, by restricting retailers from selling cross-border or on online marketplaces and by banning retailers from submitting offers to price comparison websites. The Commission stressed that while such restrictions are not automatically anti-competitive, each arrangement will need to be examined on its individual facts and blanket bans in particular will be scrutinised closely.

Selective distribution systems: These involve suppliers agreeing to supply products for resale to only those distributors which meet certain minimum criteria. The Report notes that the use of these systems is on the rise, with increasingly detailed and complex minimum criteria being applied. The Commission has emphasised that use of such systems must be justified by legitimate commercial aims, such as the need to maintain high-quality distribution facilities and a coherent brand image, and that the restrictions arising from selective distribution must not go further than is necessary to achieve these aims.

ONLINE SALE OF DIGITAL CONTENT - HOT TOPICS

Geo-blocking: EU Competition Commissioner Margrethe Vestager has prioritised tackling the practice of geo-blocking (i.e. creating technical barriers impeding consumers from buying and selling across the borders of EU Member States). In its press release announcing the Report, the Commission notes that "if geo-blocking is the result of agreements between suppliers and distributors it may restrict competition ... in breach of antitrust rules". The Report suggests that...

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