On 15 September 2016 the European Commission published its preliminary report as part of its ongoing sector inquiry into e-commerce.

The sector inquiry was launched in May 2015 and is looking at e-commerce in two areas: consumer goods and digital content. As part of the inquiry, the Commission has been gathering a considerable amount of information from EU businesses active in these areas.

In relation to consumer goods, the Commission has been looking at a number of product categories, including clothing, shoes, consumer electronics, electrical household appliances, computer games, toys and CDs.

The report identifies a number of business practices that the Commission considers may raise competition concerns. These include a number of contractual restrictions used by manufacturers/suppliers in their agreements with retailers, such as:

  • pricing restrictions on retailers
  • restrictions on retailers from selling on online marketplaces
  • restrictions on retailers from submitting offers to price comparison web sites
  • restrictions on retailers in relation to cross-border sales.

The report goes on to indicate that the Commission may open follow on case specific investigations to ensure compliance with the EU competition rules in these areas.

In addition, the report indicates that the use of certain clauses in selective distribution agreements, such as the requirement for retailers to operate at least one bricks and mortar shop (thereby excluding pure online players), may need further assessment in individual cases, when used for certain types of products which online retailers might be equally qualified to sell.

In relation to digital content, the report discusses a number of licensing practices employed by rights holders, including:

  • the (technological, territorial and temporal) scope of rights defined in licensing agreements
  • the duration of licensing agreements (including matching rights/automatic renewal provisions)
  • the widespread use of exclusivity
  • geoblocking requirements.

The report indicates that the Commission will assess on a case-by-case basis, having regard to the characteristics of the specific product and geographic markets, whether certain of these licensing practices may restrict competition and whether enforcement is necessary in order to ensure compliance with the EU competition rules.

The Commission’s press release is available here.

The report is open for public consultation for two months and the deadline for comments is 18 November 2016. The Commissions expects to publish its final report in the first quarter of 2017.