The European Commission's digital single market agenda was launched on May 6 2015.(1) It combines a wide-ranging antitrust inquiry with a series of legislative initiatives designed to shake up online businesses across Europe and globally.
The package is a mixed bag of free trade measures, with some of the initiatives reflecting the European Union's strong free trading instincts. In respect of antitrust, the threats are imminent. Most immediately, companies in the clothing, electronics and creative content sectors can expect to receive mandatory information requests within days, demanding information and data on suspected illegal restrictive practices relating to online resale of goods and content. This inquiry is expected to inform the commission's agenda of further antitrust prosecutions in the sector, building on the existing electronic products, pay television and video games investigations that are already underway.
A wide-ranging antitrust inquiry – potentially involving hundreds of suppliers, content owners and online resellers and platforms – has been launched. The focus is on electronics, clothing and shoes and digital content. The first mandatory requests for information have been sent out. They seek information on allegedly illegal practices to restrict online sales of products and content via contractual means, discriminatory pricing or technical geo-blocking measures. The sector inquiry could lead to specific prosecutions of companies that are found to have engaged in illegal restrictions on online sales. Officials have stated privately that, at a minimum, the output of the inquiry is likely to lead to changes to online distribution rules set out in the Vertical Restraints Guidelines. Fierce lobbying can be expected in regards to the rules by which suppliers can restrict products to appointed dealers under a selective distribution system and whether they are permitted to exclude certain e-tailers.
Companies should look out for communication from the commission in relation to the online sector inquiry. The requests carry mandatory response deadlines, likely to be four to five weeks, to provide extensive amounts of information. Companies should review their exposure to antitrust risks in relation to their online sales practices. Restrictions, whether contractual or price related, should be reviewed for antitrust compliance. It is important to remember rules on legal privilege in undertaking this review, since internal communications with in-house lawyers (and any non-European Economic Area (EEA) qualified lawyers) are not protected by legal privilege. Appropriate privilege protocols should be in place to guide staff – including escalation points for engaging external EEA-qualified legal counsel.
All companies likely to be affected by the proposed legislative proposals and changes to soft-law instruments (eg, the Vertical Restraints Guidelines) should consider how they want to feed into the consultation process. They should seek to ensure that their policy position is represented both directly via the consultation and indirectly via trade associations and national governments. National governments will (and already have in some cases) seek industry input in responding to the legislative proposals.
For further information on this topic please contact Bill Batchelor at Baker & McKenzie by telephone (+32 2 639 36 11) or email (firstname.lastname@example.org). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.