Since its inception, EU competition policy has fought to preserve the ability of customers to shop around the internal market for better deals. Three on-going investigations are serving to underline the continuing commitment of the EU to this integrationist goal. One company in particular is feeling the heat….
THE DISNEY PROBES
On 29 July, the European Commission announced it had launched an investigation into Disneyland Paris, following accusations from consumers in relation to unfair and discriminatory pricing practices.
British and German consumers have alleged that they are being made to pay substantially more for online packages than visitors from France and Belgium, with the latter being offered special deals.
Disneyland Paris has denied any wrongdoing, arguing that the pricing discrepancies are linked to demand linked to national holidays. For example, an Irish customer would be made to pay more for a visit during St. Patrick’s Day, while a French customer would face elevated prices during the French public holidays in August.
The Commission appears unconvinced by this explanation and has commenced an investigation in collaboration with the French competition authority, le conseil de concurrence.
If the claims against Disney are substantiated, they could amount to a serious infringement of the EU’s competition rules, which aim to protect the ability of consumers to shop around the internal market for better deals. Disneyland Paris could face serious sanctions, including a fine of up to 10% of its group’s worldwide turnover.
The announcement coincided with separate antitrust charges being brought against Disneyland in relation to the distribution of media content in the UK through Sky TV. Disney is one of six content producers facing investigation from DG COMP in relation to distribution agreements with Sky.
Under these arrangements, Sky is required to block access to films through its online or satellite services to consumers outside of the U.K. In return, the studios undertake to restrict other broadcasters from making their pay TV services available in the U.K. and Ireland.
Whilst this gives Sky "territorial exclusivity", it also limits cross-border access to the same media content. Again, this has the potential to keep prices artificially high to the detriment of EU customers.
EU SECTORAL INQUIRY INTO E-COMMERCE
The probes against Disney come as the EU Commission begins in earnest its more general, “sectoral inquiry” into e-commerce practice across the Union. This is an investigation which aims to uncover practices in e-commerce that may be holding back the development of the single market. The inquiry will also aim to identify any concerns from the perspective of competition policy.
Sectoral inquiries empower the Commission to take a “helicopter view” of a particular industry, to identify practices which could be improved. At the end of the exercise, the Commission will be able to make recommendations and, if it finds specific violations of the law by particular companies, to pursue the organisations concerned.
The Commission is concerned, in particular, that suppliers frequently look to fragment their distribution chain, preventing consumers in one member state from purchasing goods in another one. This can include restrictions on the ability of consumers in one country from purchasing the same goods from websites set up in another Member State.
The effect of such restrictions is frequently to frustrate customers in their efforts to obtain products or services more economically.
Compartmentalising markets in this way can be a serious infringement of EU Competition Law, particularly when it prevents buyers from making “passive sales”, orders placed on the basis of their own initiative after shopping around for the best deals.
Margrethe Vestager, European Commissioner in charge of competition policy has said, "European citizens face too many barriers to accessing goods and services online across borders. Some of these barriers are put in place by companies themselves.
With this sector inquiry my aim is to determine how widespread these barriers are and what effects they have on competition and consumers. If they are anti-competitive we will not hesitate to take enforcement action under EU antitrust rules."
As part of the sector inquiry, the Commission is contacting businesses in all 28 EU Member States as well as inviting comments more generally from interested parties. It is believed that questionnaires have been sent to manufacturers, wholesalers and distributors, as well as e-commerce retailers.
Those companies are required to provide detailed responses to a range of questions and to return these to the Commission by a stated deadline.
Failure to adhere to comply with this requirement can result in the levying of a fixed financial penalty, something which consultees will no doubt wish to avoid. Nonetheless they should not rush to return questionnaires without taking legal advice first.
Presenting evidence in the right way is critical to avoid the impression that the business has fallen foul of competition law and even facing the prospect of enforcement action.