EU competition watchdog puts e-commerce companies on notice

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The EU’s competition watchdog has put e-commerce companies on notice to cut out anti-competitive practices or face investigation.

“Certain practices by companies in e-commerce markets may restrict competition by unduly limiting how products are distributed throughout the EU,” Margrethe Vestager, EU competition commissioner, said on Wednesday.

“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.”

The inquiry focused on consumer goods and digital content — such as music, films and sport — and echoed the concerns in last year’s preliminary report.

The commission is expected to open cases based on its findings in the coming weeks and months. Following the preliminary report, three antitrust cases were launched in February, and seven retailers adjusted their contracts: Mango, Oysho, Pull&Bear, Dorothy Perkins, Topman, De Longhi and Manfrotto.

The regulator identified a range of concerns.

For consumer products, real-time price information made it easier to compare prices but also enabled two-thirds of retailers to use software to track competitors and automatically adjust their prices. That may enable price coordination and cut the incentive to lower prices.

Product manufacturers, who now compete with their own resellers online, have added restrictions to their contracts about who can resell their products, at what prices and where the can or cannot sell — for example, banning sales on marketplaces like eBay or Amazon.

Online sellers who refuse to deliver to customers in neighbouring member states or to accept out of country payments — a practice known as geo-blocking — are also in the cross-hairs. Brussels believes cross-border sales can contribute “to the integration of the EU’s internal market”.

For online content — such as sport, music, films and TV programmes — new entrants need access to premium content. However, it can be difficult to get the rights to because the long contracts for content often require big upfront payments, enforce territorial restrictions and bundle online content with TV transmission.

“The investigation’s findings about the durations of licencing agreements are particularly striking. The longer a sport organiser or film producer licenses its content exclusively to a specific broadcaster the harder it gets for competitors to enter the market,” said Monique Goyens of The European Consumer Organisation (BEUC).

The collection and usage of data is another area of interest.

Launched in March 2015 in conjunction with Brussel’s strategy to create a single digital market, the sector looked at over 8,000 contracts from nearly 1,900 companies selling content and consumer goods online across the 28 EU countries.

The inquiry examined contracts from product manufacturers, retailers, marketplaces, price comparison and payment websites. It looked at the most popular products such as shoes, clothing, electronics, appliances, software, toys, books, CDs, DVDs, sports and health products. Digital content included streamed and downloaded films, music, TV programmes and news.

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