Today’s world is impossible to imagine without the online market place. According to Statistics Netherlands, almost 75% of Dutch citizens aged 12 years and above made online purchases in 2016. By contrast, few of them – just 22% – buy from web shops located in other EU Member States. Given the European Commission’s aim of creating a digital single market, it goes without saying that e-commerce is receiving a great deal of attention from authorities (both national and European). For instance, the European Commission has launched a sector inquiry into e-commerce. The outcome of it, due to be published in the first half of 2017, will serve as a basis for future policy and possible statutory amendments in that regard.
Competition authorities decided not to wait for the results of this sector inquiry before taking enforcement measures against e-tailers. Their approaches to tackle problems in the digital market place vary considerably. For the time being, the focus of most competition authorities is on vertical agreements. Although the Netherlands Authority for Consumers and Markets (“ACM”) does not prioritise the supervision of vertical agreements, it does frequently enforce rules designed to protect online consumers (see also this trend on consumer law). E-commerce also plays a role in cases concerning abuse and merger control.
Most favoured nation clauses
2016 was the year for lawsuits against hotel booking platforms such as Booking.com, HRS and Expedia. These platforms had agreed with hotels that the hotels would refrain from offering rooms, on other websites or even on their own hotel websites, on better terms than those offered on Booking.com. Arrangements of this sort are referred to as most favoured nation clauses (“MFN Clauses”) or price parity clauses. In 2016, a large number of competition authorities took enforcement measures against Booking.com in particular. Interestingly, the German, French and Swedish competition authorities took the position that Booking.com’s MFN clauses solely breached the cartel prohibition, whereas their Austrian (and Turkish) counterparts found that booking.com had also abused its dominant market position. Also striking is the fact that the solutions advocated by the various national competition authorities differ substantially. The Commission has therefore scheduled an ad hoc meeting for 17 February 2017 to discuss this.
In its inquiry into e-books, the European Commission expressed similar concerns about MFN clauses used by Amazon. When applied to e-books, these clauses are also known as APPAs (Across Platform Parity Agreements). The European Commission took the position that, given Amazon’s market power, the use of APPAs constituted an abuse of a dominant market position. At the beginning of 2017, Amazon offered to provide a number of commitments to eliminate the European Commission’s concerns. The European Commission will decide whether or not to declare these commitments binding following a market test that allows third parties to provide feedback.
One measure advocated by the European Commission with regard to the digital single market is to put an end to geo-blocking. Geo-blocking prevents consumers from accessing certain digital content based on their location. This means that consumers can, for example, watch or listen to films, TV programmes or music in one Member State but not in another. Legislative proposals to end geo-blocking are likely to be introduced in the course of 2017.
The European Commission is also using competition law to combat geo-blocking. It achieved its first success in this regard in 2016: film studio Paramount committed to remove clauses from its license agreements which obliged European TV broadcasters to make licensed films available solely to consumers in their own (national) markets. It is uncertain whether this decision will be upheld in 2017. Pay TV broadcaster Canal + has filed an appeal against it before the General Court. In 2017, the European Commission is also expected to impose the first fines for geo-blocking.
Restrictions on online sales via platforms
Finally, the hope is that greater clarity will be provided in 2017 about whether suppliers may prohibit their distributors from offering products via platforms such as Amazon or eBay. Manufacturers of luxury goods, for example, frequently impose such prohibitions on their distributors to safeguard the quality of their products and service as well as to protect their brand image. The question, however, is whether such prohibitions on selling products via platforms qualifies as a hard-core restriction within the meaning of the Vertical Block Exemption Regulation. In principle, hard-core restrictions are deemed to restrict competition. In any case the German competition authority, the Bundeskartellambt, takes the position that such selling restrictions are not allowed. Last year, it therefore penalised the sportswear manufacturer ASICS for imposing similar sales restrictions. That is not the end of it, however. In 2016, the Oberlandesgericht Frankfurt am Main referred a similar matter involving beauty products manufacturer Coty to the Court of Justice of the European Union for a preliminary ruling. In those proceedings the European Commission has taken the position that a prohibition against selling products via online platforms is not a hard-core restriction.
Resale price maintenance
In February 2017, the European Commission opened an investigation into four manufacturers of consumer electronic goods – Asus, Denon & Marantz, Philips and Pioneer – to determine if they imposed fixed or minimum prices on online distributors. Remarkably, in its press release the Commission states that the effects of such resale price restrictions in this market may be aggravated due to the use by many online retailers of pricing software that automatically adapts retail prices to those of leading competitors. See also this trend regarding the growing significance of such algorithms in competition law.
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