Commission holds conference on e-commerce sector inquiry report

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The DG Competition of the European Commission held on 6 October a stakeholder conference to discuss the preliminary findings of the Commission’s recent e-commerce sector inquiry. The antitrust inquiry, which was launched in May 2015, looked into emerging trends in the e-commerce sector and the impact of such trends on competition in the digital economy. Ecommerce Europe attended the conference and is closely following developments as the process continues.

The key findings of the Report

The key findings of the inquiry highlighted the growing importance of, and open potential for growth and innovation in the European e-commerce sector. The preliminary report found that while about half of EU consumers shop online, only 15% do so cross-border. Despite this, the inquiry also found that restrictive practices have become increasingly commonplace in the e-commerce sector. These included contractual restrictions for sellers, such as restrictions on cross-border sales and restrictions on sales on certain online platforms such as marketplaces. Meanwhile, in terms of licensing agreements for digital content, the inquiry found exclusivity to be the norm in agreements, while geo-blocking is very widespread. Licensing agreements were also found to be relatively long term in their duration. The Report stressed the importance of the availability of licensing agreements to competition. The Report thus highlighted practices in the e-commerce sector that could potentially attract the attention of EU competition regulators.

The Commissioner’s speech

Margrethe Vestager, European Commissioner for Competition, gave a keynote speech in which she stressed that “e-commerce creates enormous possibilities for consumers”. She also stressed the importance of an e-commerce sector that is engineered to suit the needs of consumers. She stressed that this meant wide consumer choice, short delivery times, and price transparency. Meanwhile, she argued that while there may be some good justifications for restrictive practices, it is necessary for businesses to present such justifications to the Commission. Thus she argued that the sector inquiry was an important and valuable exercise.

The panel sessions

The primary goal of the Commission’s conference on the preliminary findings of the sector inquiry was to allow industry stakeholders to provide legislators with feedback and in-depth sector specific knowledge prior to possible Commission antitrust inquiries into specific practices such as geo-blocking and selective distribution.

As such, the event hosted three panel discussions, featuring stakeholders and national competition authorities, on specific issues to the digital economy. The first of these, with stakeholders on the subject of competition law and online content distribution, representatives of producers of online content, such as Spotify, the European Broadcasting Union and UEFA, discussed the impact of licensing agreements on competition with Monique Goyens, the Director-General of the European Consumer Association BEUC.

The second session, which focused on the impact of vertical restraints in the online sale of consumer goods, featured Loic Armand (European Brand Association – AIM), Iulian Stanciu (CEO of the Romanian online retailer eMAG), Bruno Jullien (Director at the Toulouse School of Economics) who discussed the role played by selective distribution in e-commerce with Oliver Prothmann, President of the German online platform campaigner Choice in eCommerce. The speakers widely debated the impact and necessity of selective distribution models, to the business models of online retailers. It was found that the practice of selective distribution was most commonplace in the clothing and cosmetics sectors. Armand stressed the importance of selective distribution to the protection of brand reputations, in particular in terms of ensuring consistency in brands, and ensuring customer expectations. In contrast, Prothmann argued that selective distribution carried heavy costs. According to a survey performed by Choice in eCommerce, more than 50% of retailers report losses due to restrictions, with up to 30% reporting a loss of more than 25%. Meanwhile, almost 35% report that restrictions have an impact on growth. There was thus a robust discussion on the impact of selective distribution in e-commerce. Also, more than 7,000 SMEs across Europe named nearly 2,000 brands restricting the Digital Single Market different ways.

During the final session, participants discussed the nature of competition enforcement in the e-commerce sector, hosted the Presidents and Chairmen of the Portuguese, Dutch, German and Swedish national competition authorities. They discussed the way in which the e-commerce sector has produced new challenges for competition authorities, particularly in terms of how to approach the use of vertical restraints in the sector. The issue of geo-blocking was also discussed, with national regulators agreeing that this issue was best regulated by the Commission at the European level, rather than by national regulators at the national level.

Next Steps

Moving forward, the European Commission has invited stakeholders to submit their views on the preliminary findings of the inquiry before 18 November. Ecommerce Europe will prepare and submit a response to this consultation.

After this, the Commission will prepare the final report on the inquiry, which is expected to be released in the first quarter of 2017. Following this, the Commission will decide which steps, if any, it will take in response to the findings of the inquiry. Throughout the process, Ecommerce Europe will follow developments closely and continue to work on behalf of its members for an outcome that reflects the interests of the e-commerce sector.

The full conference video, including the presentations gave by participants, can be found here.

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